Is there any recent topic that’s stoked our interest, imaginations and fears as much as artificial intelligence (AI)?
Let me start by saying there’s no way to sugarcoat the fact that, since 2000, several hundred thousand jobs have been lost to automation in the US—although automation is also predicted to create jobs, too.
But the undeniable fact is that automation and its “child,” AI, are now a part of our world and here to stay. This means you’re going to see a lot of information about AI over the next few years—and much like robots, some will be intelligent, and some will be scary.
Since I’m both fascinated and enthusiastic about how AI can take the accounting profession to another level, I’ll mention now that I’ll be one of those trying to put intelligent, truthful and non-scary information about AI out there—with an accounting-related twist, of course.
Fair warning, you’ll see some upcoming Thought Leader columns here and there on the topic of AI. So, let’s consider this article the first in an occasional series. And where’s the best place for a series to start? With the basics.
OK, so what can AI do?
AI can analyze massive amounts of data—organized and labeled information, as well as text, images and videos—quickly and efficiently. That enables it to uncover patterns, trends and insights that might not be immediately obvious to us humans. With that ability, AI can:
- Automate repetitive tasks, freeing up humans for more complex and creative work.
- Understand and interpret both written and spoken human language, enabling chatbots and voice assistants (like Siri or Alexa) to communicate with users.
- Analyze user preferences, behavior and historical data to provide personalized recommendations—as when Amazon suggests products to you.
- Make predictions and forecasts based on historical data, which enable business leaders to make informed decisions.
- Detect fraudulent activities in sectors like banking, insurance, accounting and cybersecurity by identifying patterns and anomalies in large datasets.
It’s important to note that while AI can perform specific tasks at a high level, it doesn’t have the general intelligence and creativity of humans. So, while it can provide doctors with added insights, help weather forecasters predict disruptive weather patterns, and enable self-driving cars to perceive their surroundings and navigate safely, it relies on human guidance and oversight.
ChatGPT vs Clippy
Isn’t an AI like ChatGPT just a more complex version of Microsoft’s old Clippy assistant? I already have help functions for that.
Chat GPT and Clippy both involve elements of AI, but they serve different purposes and are built on different technologies:
- Clippy was an intelligent user interface assistant introduced in Microsoft Office 97. It would pop up when the user might need help with, say, typing a letter in Word. Because it was a rule-based system, not one that used machine learning, user interaction was mostly one-way. It couldn’t engage in a detailed conversation or provide context-specific advice beyond its programming.
- ChatGPT, developed by OpenAI, uses machine learning—a form of AI called a transformer neural network—to train on internet text. Unlike Clippy, ChatGPT generates new text based on its training. Its unique responses to prompts allow for more detailed, complex and context-specific conversation, so it’s primarily used for generating human-like text based on the prompts it receives.
Clippy was more of a pre-programmed assistant designed to help with specific Office tasks. ChatGPT is a much more advanced language model that can generate creative, contextually relevant responses and support complex conversations.
All right, it’s not another Clippy…but what can AI do for accounting firms?
I’m glad you asked. How about help enhance your business operations, build client relationships and increase profits, for a start? Here are some areas where AI can—and has already started to—benefit and help firms of all sizes:
- Automating routine tasks like data entry, bookkeeping, invoice processing, expense management and basic reporting. By eliminating manual tasks, accountants and admin staff can reduce errors and focus on more strategic, higher-value tasks that require human judgment and expertise.
- Analyzing tax regulations and financial transactions to identify tax deductions, assure tax compliance and help accountants prepare accurate tax returns. AI can also detect irregularities, potential fraud or errors to enhance audit accuracy and stay up to date with changing tax laws and regulatory compliance.
- Enhancing decision-making by analyzing large datasets that would be difficult to obtain manually. The resulting insights can assist firm leaders in strategic planning, risk management and financial decisions.
- Analyzing past data and predicting future trends, which can assist firm owners with strategic decision-making. For example, AI can predict cash flow trends, identify potential financial risks, or suggest optimal tax strategies.
- Personalizing learning for accountants with AI-based training systems that can help firm staff stay updated with the latest accounting laws, regulations, standards and practices.
- Handling basic client inquiries, which frees up time for accountants (and even admin staff to a certain extent) to handle more complex questions. AI chatbots or virtual assistants can be trained to answer frequently asked questions, provide real-time support and schedule appointments, among other routine tasks.
- Assisting with tasks that accountants don’t love to do, like writing letters to fire a client, sending responses to tax authorities, or drafting blog articles and emails. You ask AI to write a basic draft, you or your team check the output and add your own personalized touches, and something that once took hours or even days can be done in much less time.
- Building new advisory services—which, you won’t be surprised, is my favorite benefit. Using data analytics similar to Insights, AI can help firms practice Smart Client Management by tapping into the client intelligence that already exists in their sales data. They can use the data to determine the best and not-so-great clients, develop pricing strategies, proactively offer the advice and products clients need, and give clients insights into their own businesses.
As you can see, the benefits of AI extend through pretty much every corner of your firm, and even ripple out to your clients.
Can you guarantee that AIs won’t rise up and take over the world?
Honestly? No. But if it happens—and I don’t think it will—I’ll fight back right beside you.
All joking aside, though (you were joking, right?), I understand the reasons people are hesitant to try AI: the previously mentioned job displacement, ethical concerns, the potential of bad actors to misuse AI, natural anxiety about the unknown and the sci-fi “evil robot” stereotype.
All right, you’ve convinced me. But how do I start?
To me, peacefully co-existing with artificial intelligence is all about committing ourselves to knowledge, transparency and ethics. That’s why I used AI (ChatGPT, to be specific) to help me come up with these six resolutions, which I hope you’ll adopt in your own firm as a sort of “AI in Accounting Mission Statement.”
- We will not be afraid to explore the potential of AI in our firms.
- We will address our concerns through the responsible use of AI technology.
- We will educate ourselves and our teams on the technology—including learning about AI’s potential, its current applications in accounting and how to implement AI-based tools.
- We will develop ethical guidelines and safeguards for use.
- We will integrate AI into our firms by first identifying areas where it can deliver the most value, then gradually expanding its use as we become more comfortable with the technology.
- We will keep an open dialogue flowing on the positives and the negatives we find as we use AI, so we can alleviate the negatives.
If you decide to test AI in your firm, these guidelines will help minimize potential risks and ensure that the tech is used for the benefit of the accounting profession and society.
So, your first AI 101 assignment, should you choose to accept it, is to keep an open mind and experiment with an AI like ChatGPT (which is free at the basic level—plus easy to use) to see where and how it can make business better in your firm.
In future columns, I’ll discuss how other facets of artificial intelligence, like Microsoft’s AI Copilots, hold promise for the accounting profession. In fact, here are a couple of interesting video links about the Copilots to hold you over until then.
- The era of the AI Copilot keynote from Microsoft’s recent Build conference (warning, this is a bit technical, but it’s fascinating)
- How Microsoft 365 Copilot works (interesting for all, even the less technically inclined)
Also, we’ll have more sessions and information about AI and automation at our Inspire conference, which will be held November 28-30, 2023, in Sarasota, Florida. It’s always a great conference, so check out the agenda and hopefully, you’ll be inspired to join us.
I think I can promise that once you take the first steps into AI, you won’t be sorry—and I’d love to think that you might even become as excited about its possibilities as I am!