Among the never-ending debates and discussions like ‘Does life exist on Mars?’, ‘Will World War 3 ever happen?’, etc., ‘Can AI replace humans?’ tops the chart.
But do these studies present a ‘true and fair view’ of the situation? Do they ‘journalize’ the judgement capability of the human professions?
When researchers, experts, consulting firms and their studies position AI as a genuine threat to the accounting profession, they commit a fundamental mistake.
- Recording invoices and bills in the books of accounts;
- Preparing financial statements such as Balance Sheet & Statement of Profit & Loss;
- In case of auditors, auditing the books and presenting a true and fair view on the financial statements.
Are accountants number-crunchers or analysts?
Accounting and auditing are not restricted to number-crunching.
Accountants and auditors exercise judgement and carry professional skepticism. They look beyond the numbers. In doing so, they keep an open and reasonably analytical mind to assess probable impact of future events, determine materiality limits and make necessary assumptions.
Does AI have the same capability?
AI will transform how accountants and auditors have approached their responsibilities traditionally.
- Automation of mundane administrative tasks : Human accountants (especially the fresher accounting professionals) have to do several time-consuming data-entry tasks, which AI can do in a few minutes or even seconds.For example, with Optical Character Recognition (OCR), recording of suppliers’ invoices has become effortless because the software can retrieve necessary information from each invoice and record data in a spreadsheet.
- Processing of complex data and detection of anomalies in real-time : AI can process vast amounts of complex data in much less time as compared to a human (if at all a human would have the strength to even do it). Unlike humans, machines don’t get bored or irritated in doing monotonous work.
- Elimination of errors : Auditors can perform audit checks on samples; AI can perform checks on the entire data – which reduces chances of errors or audit risk. Further, AI can also identify unusual hidden patterns and give enough evidence to the auditors to analyze further.
- Augmentation of cognitive capacity: Humans have a limited storage capacity. If an accounting firm has recorded hundreds of thousands of transactions or carried out thousands of audits, human professionals cannot analyze all of them to find necessary inputs. But AI, because of inductive reasoning capability, can go through all the transactions and audit reports, recognize the patterns, derive its algorithms and refine them based on continuous inputs.
But where does it lack?
AI cannot look beyond numbers – not at least how skillfully humans can look beyond the numbers by applying critical judgement.
The role of accountants and auditors has evolved where they have taken the roles of advisors and business partners in the companies and organizations, which can’t ever be replaced by machines and technologies.
What’s the end result of this debate?
Collaboration. If AI and human professionals can collaborate and complement each other, the professionals can add greater value to their clients, contributing to the overall business success.
AI can process data much faster and accurately, which will give more time to the human professionals to analyze and draw laser-focused conclusions. As a result, the client experience will enhance, creating a win-win situation for all the stakeholders.
In terms of audit, AI will help the auditor minimize or even eliminate audit risk. Because of 100% data checking, the auditors will give a more confident opinion on the accuracy and correctness of financial statements.
Instead of running away from the technology, the accountants and auditors should learn how to embrace it and upgrade their skills to stay relevant in the industry.
Technology is already disrupting the tax and accounting function as companies like QuickBooks, Turbo Tax, Intuit etc. are using technological solutions and software to reduce the mundane tasks.
But with the advancement in AI, the entire landscape will transform significantly, as accounting and auditing will become sources of process improvement.
Prudent AI is here to become a friend of human professionals. Together we can achieve greater heights and enhanced client experience.