Your Firm and Your AI Future

A Top Technology Initiative Article – Dec. 2023.

Artificial intelligence (AI) has rapidly transitioned from science fiction to everyday reality, transforming industries and disrupting long-held paradigms. AI’s influence is pervasive and ever-growing, from self-driving cars to personalized healthcare. As we enter 2024, it’s natural to wonder what the future holds for this transformative emerging technology, especially for accountants.

At the Ensuring Success Conference in Dallas, a session called “AI For Real: How Can Accountants Use This Technology?” with panelists Andrew Hatfield, Garrett Wagner, and David Cieslak addressed how Artificial Intelligence (AI) has reached a critical inflection point, is poised to disrupt completely, and will forever change virtually all service-based industries, including the accounting profession. You should be able to listen to this session and others from Ensuring Success at https://www.cpapracticeadvisor.com/.

As a reminder, colleague Brian Tankersley and I have recorded podcasts on the topics of AI with ChatGPT4, Microsoft AI, DALL-E & AI Competitors, AI Truthiness & Hallucinations, Large Language Model (LLM) considerations, Microsoft Copilot, Developments in Generative AI and How to Determine Valid Content on AI. Please ensure you have checked out these AI podcasts and our podcast discussions of various other products at The Technology Lab.

As you prepare your firm for a new year, here are my top 10 predictions for the future of AI in 2024, specifically focusing on the accounting profession, supported by other author’s opinions.

Top 10 AI Predictions for 2024 with an Accounting Focus

First, remember that we want to keep client data confidential, that privacy is paramount, and that hallucinations in AI can be an issue in AI. Further, regulations like those just passed in the European Union, the AI Act, could change AI’s development arc. Sources on this include Wired’s “The EU Just Passed Sweeping New Rules to Regulate AI,” The Wall Street Journal’s “Sweeping Regulation of AI Advances in European Union Deal,” CNN’s “European Union agrees to regulate potentially harmful effects of artificial intelligence,” Reuters’ “What is the EU AI Act and when will regulation come into effect?“, The New York Times’ “E.U. Agrees on Landmark Artificial Intelligence Rules,” and The Washington Post’s “E.U. reaches deal on landmark AI bill, racing ahead of U.S.“

1. Rise of AI-powered Accounting Tools: We expect to see a significant increase in AI-powered accounting tools designed to automate tedious tasks, streamline workflows, and improve accuracy. These tools will handle tasks like data entry, reconciliation, and bookkeeping, freeing accountants to focus on more strategic activities like analysis, planning, and consulting.

Source: https://www.accountingtoday.com/list/the-best-accounting-firms-for-technology-for-2023

• Enhanced Financial Reporting and Auditing: AI will improve financial reporting and auditing processes. AI-powered algorithms will analyze large datasets and identify anomalies and potential risks more precisely, leading to more accurate and reliable financial statements. Additionally, AI will automate audit procedures, improving efficiency and reducing the risk of human error.

Source: https://www.business.com/articles/ai-and-accounting/

• Personalized Tax Compliance and Advisory Services: AI will enable accountants to offer clients personalized tax compliance and advisory services. AI-powered platforms will help individuals and businesses comply with complex tax regulations, optimize tax strategies, and minimize tax liabilities.

Source: https://www.spiceworks.com/finance/accounting/guest-article/artificial-intelligence-ai-impact-accounting/

• Increased Adoption of AI-powered Tax Software: Tax preparation software will become increasingly sophisticated in 2024, incorporating AI capabilities to automate data collection, calculations, and filing processes. The sophistication will significantly reduce the time and effort required for tax compliance in tax season, as noted in November’s column “Your Firm and Your AI: How AI Can Help with Tax Season,” benefiting accountants and their clients.

Source: https://tax.thomsonreuters.com/blog/staying-up-to-speed-with-artificial-intelligence-in-accounting/

• Emergence of AI-powered Fraud Detection Systems: AI-powered fraud detection systems will continue to evolve and become more effective in identifying and preventing financial fraud. These systems will analyze financial transactions and identify anomalies more accurately, protecting businesses from financial losses.

Source: https://www.techtarget.com/searchenterpriseai/feature/AI-in-accounting-boosts-compliance-and-fraud-detection

• AI-driven Insights for Strategic Financial Planning: AI will provide accountants with valuable insights to make strategic financial decisions. AI-powered tools will analyze financial data and historical trends, identify patterns, and predict future financial performance. Historical insights will enable accountants to provide clients with more accurate and actionable financial advice.

Source: https://www.forbes.com/sites/forbestechcouncil/2021/09/30/top-five-ways-ai-is-revolutionizing-the-financial-planning-industry/?sh=7bb5abe53f6d

• The Rise of the “AI-powered Accountant”: A new breed of “AI-powered accountants” will emerge, equipped with skills to leverage AI for enhanced efficiency and effectiveness. These professionals will possess a deep understanding of accounting principles and AI technology, allowing them to provide clients with a broader range of services and value.

Source: https://www.forbes.com/sites/forbesbusinesscouncil/2023/11/22/unlocking-the-potential-of-ai-for-accounting-firms-and-clients/?sh=4a9894687d2e

• Continuous Learning and Upskilling for Accountants: As AI continues to transform the accounting profession, it will be essential for accountants to learn and upskill themselves continuously. New knowledge needed will involve acquiring skills in data analysis, machine learning, and AI ethics to remain competitive in the evolving landscape.

Source: https://www.forbes.com/sites/jeanbaptiste/2018/01/22/why-artificial-intelligence-is-the-future-of-accounting-study/

• The Need for Ethical AI Implementation: Ethical considerations will become paramount as AI becomes increasingly integrated into accounting practices. Accountants must ensure that AI is implemented responsibly and transparently, focusing on fairness, data privacy, and security.

Source: https://www.wired.com/story/anthropic-ai-chatbots-ethics/

1. Collaboration between Humans and AI: Despite the advancements of AI, the human element will remain essential in the accounting profession. AI will not replace accountants but augment their capabilities and enable them to focus on higher-value activities. The future of accounting lies in a collaborative approach between humans and AI, leveraging the strengths to achieve optimal results.

Source: https://www.cpapracticeadvisor.com/2023/02/21/accounting-thought-leaders-discuss-future-of-advisory-and-tax/76941/

According to the IDC FutureScape report, the following are the top 10 predictions for AI in 2024 (not accounting-specific). Predictions 3-10 are “By 2024.”

1. Core IT Shift: IDC expects the shift in IT spending toward AI will be fast and dramatic, impacting nearly every industry and application. By 2025, Global 2000 (G2000) organizations will allocate over 40% of their core IT spending to AI-related initiatives, leading to a double-digit increase in the rate of product and process innovations.
2. IT Industry AI Pivot: The IT industry will feel the impact of the AI watershed more than any other industry, as every company races to introduce AI-enhanced products/services and to assist their customers with AI implementations.
3. AI-First Development: 75% of commercial enterprise applications will use AI, over 90% of consumers will interact with customer support bots, and over 50% of new industrial robots will leverage AI.
4. AI-Enhanced Security: 50% of all security operations centers will leverage AI to detect and respond to threats, and 75% of all security solutions will include AI components.
5. AI-Driven Infrastructure: 30% of data centers will use AI to optimize power and cooling, resulting in a 25% reduction in energy consumption and a 10% reduction in operating costs.
6. AI-Enabled Edge Computing: 50% of new edge devices will include AI-enabled computer vision, speech recognition, and natural language processing capabilities.
7. AI-Enhanced Automation: 50% of all new business process automation will leverage AI, and 75% of all enterprises will include AI-enabled automation in one or more application deployments.
8. AI-Enabled Personalization: AI personalization algorithms will enable 40% of all digital commerce transactions.
9. AI-Driven Customer Experience: 50% of all customer experience initiatives include AI-enabled sentiment analysis, natural language processing, and speech analytics.
10. AI-Enhanced Employee Experience: 50% of all employee experience initiatives will include AI-enabled performance management, wellness, and career development.

These predictions offer a compelling glimpse into the future of the IT industry and the pivotal role of artificial intelligence (AI).

So, Where is AI Headed in the Profession?

The accounting profession is no exception to the impact of AI. AI is already transforming the accounting profession in several ways. For instance, AI can automate repetitive tasks such as data entry, allowing accountants to focus on more complex tasks. AI can also reduce errors and improve efficiency, leading to cost savings for accounting firms.

However, AI is not without its risks and challenges. One of the most significant risks of AI in accounting is the potential for job displacement. As AI becomes more advanced than it is currently, it may replace specific accounting jobs that humans now perform. However, AI will augment rather than replace professional accounting skills. Additionally, there is a risk of data breaches and cyber-attacks, which can compromise sensitive financial information.

Despite these risks, the future of AI in accounting is bright. AI has the potential to revolutionize the accounting profession, making it more efficient, accurate, and cost-effective. In the future, we can expect to see more AI-powered accounting software, as well as AI-powered financial analysis tools.

In conclusion, AI is rapidly transforming the accounting profession. With the advent of AI, accountants can now automate repetitive tasks, reduce errors, and improve efficiency. However, AI is not without its risks and challenges. As we move forward, accounting firms must embrace AI while also being mindful of its dangers. By doing so, we can ensure that AI continues to drive innovation and growth in accounting.