Understand the Artificial Intelligence (AI) Evolution
Meet Skynet â€¦ Your Professional Role is About to Change!
What is Artificial Intelligence (AI)? How will AI impact the way we work? Serve our clients? In this article, the author explains what AI is and how the evolving technology will impact our professional practice.
The goal of artificial intelligence (AI) in the computer science world is to create human intelligence demonstrated by machines. Once this human intelligence is demonstrated, AI programs would then be able to perform a variety of tasks that, until now, were only done by human beings. AI and the promise of intelligent computers has long been the foil of many sci-fi movie heroes, where we watch as the machines take over and rule the world. Based on this long history, we have built in a steady distrust for AI and lack of understanding of its real-world applications. All those readers who are fans of the Terminator franchise know what we are talking about.
Despite all of this, we have recently seen a rapid increase in real-world AI applications and particularly those in the accounting and finance vertical. This begs the question, should we fear these intelligence machines and worry that they will either take over the world or simply take over our jobs?
Instead of worrying, letâ€™s take some time to understand what this technology really is, where it is currently being utilized, and how it will impact the accounting profession going forward. For too long, accountants, which are viewed as a businessesâ€™ most trusted advisor, have taken a back seat in servicing their clientâ€™s real needs. They have focused on providing historical compliance services which clients often place little value on. AI will prove to be an amazing tool that can automate the compliance aspect of the profession allowing increased freedom and opportunities to move full time into valuation, forensic, and litigation support services.
Before we get carried away into how AI will impact the profession, letâ€™s take a deeper dive into understanding what it is. AI is a tool/computer program that is designed to replicate the behavior and knowledge of a human being. Just like an accountant can review several client receipts and classify them on the income statement or while reviewing expenses as part of a forensic audit, we can determine if the expenses are legitimate or fraudulent. AI built programs to replicate our ability to review a transaction, understand not just the amount, but understand who the vendor or payment was made to, understand how to classify the payment, and even determine if the payment is legitimate or fraudulent. IBMâ€™s Watson is the chief instance of this level of AI technology in the marketplace today.
In todayâ€™s marketplace we now have not just Watson, but many practical real-world applications for AI technology where software developers have been able to replicate human behavior and apply this replication to the accounting industry. For the solutions available in the marketplace today, they have been primarily focused on applying this machine learning to a number of the repetitive tasks we have always performed. This early focus on repetitive tasks is where the greatest opportunity exists in the accounting vertical for growth.
For most people in the profession, they would rather not spend eight hours reviewing thousands of transactions, but in the past, this work had to be done by someone. For larger firms, this meant pushing work down to their staff accountants, but the work still needed to be completed by a person. I remember my days as a staff accountant and one engagement where I spent a whole week reviewing expenses paid by a corporation over the past three years. Now just a few years later, this same work has been replaced by an AI program and the opportunities for AI deployment grow each day.
One of the exciting areas of growth we are seeing with AI is applying the technology to automate the bank reconciliation process, a task that has been manually intensive since well before the first Terminator movie came into existence. This AI application leverages the machine learning to match thousands of transactions in minutes vs. hours. This is the benefit we are seeing from these real-world AI applications is they can quickly learn repetitive tasks without extensive training or being prone to making repeat mistakes. This allows accountants to reach a new level of accuracy through leveraging AI technology.
Another key opportunity where AI is being applied today is using programing tools combined with natural language capabilities and machine learning to review and analyze contracts, leases, and various other legal documents. This is another prime example where AI has made huge leaps forward in real-world application and has quickly been able to learn, adapt, and perform some of the more routing tasks and applications that exist within the finance and accounting industries.
Currently, AI solutions have been focused in labor-intensive areas of the profession where only basic human intelligence was required, the next phase of AI solutions are already being developed to address more complex areas and situations. Programmers are already working on solutions that would allow an AI program to review multiple years of accounting transactions and look for signs of possible fraud or theft.
The first wave of programs that emerged in this space focused on the ability to review expense transactions, apply machine learning, and classify them on the income statement. This first practical application in the marketplace relies on the ability of the AI program to both make intelligent decisions and then learn from past human adjustments. In the past, you may review the bookkeeping work done by a staff accountant and provide them a list of ten corrections. You then rely on the staff accountant to remember those ten corrections, the next time they perform the task. With AI, the program remembers the corrections 100% of the timeâ€”that is the benefit of machine learningâ€”computers have a much more accurate ability to reclass data than a human brain.
It is the ability of various AI programs for these routine tasks, which is the greatest benefit that is currently presented in the accounting landscape. No more is our precious time limited to focusing on routine tasks that add little value to our clients but must get done. By embracing AI in your practice, you suddenly can scale without limits and allow yourself the additional time you have always wanted to focus on adding more value to the clients that you interact with.Â
The next time you hear the AI reference in the accounting profession, stop thinking about Skynet, and instead, think about all the opportunities that are waiting for you. If you want to evolve your career past being solely focused on the compliance aspects of the industry and being held captive to one busy season after another, take a hard look at how AI tools can provide a variety of solutions needed to break free of the box. Remember AI is simply another computer program, no different than tax software, that you can leverage in your career to better service your clients.
Garrett Wagner CPA, CITP, CEO and Founder of C3 Evolution Group, is an industry thought leader and, on a mission, to fuel the entrepreneurial spirit and passion within the industry. With his ability to break free from the traditional CPA box, He has embraced the entrepreneurial mindset and wants to help others embrace the entrepreneurial skills and knowledge needed to evolve into entrepreneurial CPAs.
Mr. Wagner focuses on monitoring the evolving technologies and best practices in the industry to achieve the highest degree of success without being afraid to break free from traditional methods. His background includes working inside successful CPA firms, speaking at conferences and events, and consulting for CPA firms across the country helping them to ignite lasting change by understanding the unique needs of each firm organization.
Mr. Wagner can be contacted at (585) 385-1790 or by e-mail to email@example.com.