Forms of artificial intelligence (AI) have permeated nearly every facet of our daily lives, from smart homes to predictive shopping and even news generation. Its potential to disrupt and even replace certain professions is something many people have been wondering and asking themselves, “Should I be worried?”
Accounting is a profession that has benefited immensely over the past 20 years from the advancements in technology, which include, but not limited to: bookkeeping software, enterprise resource planning (ERP) systems, data visualization tools, and other software that makes certain labor-intensive tasks such as financial consolidation more efficient and accurate. In fact, AI in the accounting market is anticipated to surpass USD $39.57 billion by 2030.
Recent AI advancements have made accountants and business leaders wonder if technological advancements will move beyond simply more powerful accounting tools to replacing altogether. In this article, we will discuss whether AI is on a path to replace accountants, the strengths and limitations of AI, and why accountants should embrace technical change to both enhance their careers and provide greater value to their clients.
Will AI Replace or Partner with Accountants?
Artificial Intelligence has already shown its capabilities in automating mundane and repetitive tasks. A report by Microsoft found that 90% of businesses want to use AI in some form. With certain accounting functions considered manual or repetitive, such as journal entries and month-end reporting, the profession has become an easy target for drive-by theories of its demise. However, there are many compelling reasons why AI is unlikely to replace accountants, primarily because of the required human elements needed to be a successful accountant.
These human elements include understanding nuances, the potential impact of seemingly unrelated variables, and recommending decisions with incomplete or uncertain information. These higher-value tasks and activities can only be learned and applied after years of training and professional experience and are the primary arguments against AI fully or materially replacing accountants.
Let’s take a closer look at three of the differences between how AI tools and accountants conduct their work:
1) AI and Accountants: Excel and Different Functions
AI, as a whole, excels at repetitive process-driven accounting tasks that it can do in a fraction of the time an accountant can do and with greater accuracy. However, while AI can help an accountant perform certain tasks, it lacks the nuanced understanding, judgment, and personal interaction that enhances the value of the end product.
For example, AI tools can quickly help an FP&A analyst forecast revenue and expenses for the next 12, 24, or 36 months using historical data and applying reasonable assumptions for revenue and expense estimates. However, it can’t determine on its own how information or events outside of its repository of data may potentially influence the forecast. This could include the impact of pending regulatory changes, competitive landscape, technological disruption, and so on. AI can’t analyze, interpret, and forecast financial data with the same depth and understanding as an accountant.
2) Quantitative vs. Qualitative
AI and accountants are very adept at the quantitative aspects of accounting. While they both can perform quantitative calculations, an AI can complete them exponentially faster and with greater accuracy. In fact, in a recent accounting debits and credits test, ChatGPT scored 18/20, which was nearly as good as experienced accountants. However, AI falls considerably short in the qualitative value provided by accountants.
Accountants provide businesses critically important strategic advice that will significantly influence the direction of their business and is derived from both quantitative and qualitative analysis. The qualitative aspects of human insight, like intuition, empathy, and the ability to contextualize information within a broader business, economic, regulatory, and political landscape, are simply unmatched by an AI.
3) Human Touch
Beyond qualitative and quantitative data interpretation, an accountant’s human touch is critical in forging mutually beneficial and trusting business relationships. Companies require number-crunching experts and advisors they can trust. They need professionals who can empathize with their business anxieties, understand their vision, and guide them in decision-making. No matter how advanced AI becomes, it cannot replicate the depth of human interaction, the subtleties of empathy, and the trust forged in a face-to-face meeting.
While AI will undoubtedly redefine the accounting profession by automating more routine tasks like data entry, bookkeeping, and initial auditing processes, it will not make human accountants obsolete. Instead, it will allow them to focus on strategic, advisory, and interpretive roles that bring added value to their organizations and clients. Thus, rather than replacing accountants, AI is set to become an indispensable partner with accountants – enhancing their capabilities, efficiency, and the value they provide.
Future-proofing your Accounting Career in the Era of AI
As AI becomes increasingly embedded in the accounting industry, accountants must adapt to maintain their relevance and efficacy. The key to this evolution lies in continuous learning, and embracing emerging accounting AI, technologies, and capabilities.
Here are four current and emerging technologies that could prove invaluable to the modern accountant.
- Cloud computing is changing how data is stored and accessed, allowing accountants to work remotely and collaboratively. Software as a Service (SaaS), Platform as a Service (PaaS), and Infrastructure as a Service (IaaS) are cloud computing services that provide flexible, scalable, and cost-effective solutions for businesses.
- Blockchain technology is revolutionizing financial transactions, with its decentralized ledger system offering enhanced security, transparency, and traceability. It could fundamentally alter how accountants process and verify transactions.
- Big data, with its ability to handle vast and complex data sets, can provide deep insights that enable better decision-making. Its integration with AI can automate financial forecasting and risk analysis, pushing the boundaries of what accountants can achieve.
- The Internet of Things (IoT) and the fusion of AI technologies with a network of interconnected devices offer real-time tracking of transactions and ledger entries. This could help accountants monitor financial activities more closely and efficiently.
Adapting to these technologies and leveraging their strategic benefit can offer accountants a competitive edge.
Continual Learning and Embracing Change
Beyond technological fluency, the importance of a learning mindset can’t be overstated. Accountants should seek opportunities to expand their knowledge and skills through online courses, training programs, or taking on new responsibilities within their existing roles. It’s important to embrace the changes these new technologies bring, as they represent challenges and opportunities for growth.
Finally, diversifying professional networks is crucial. Engaging with professionals from various backgrounds and industries can provide fresh perspectives, expose accountants to new ideas, and keep them updated on industry trends. A diverse network can be a vital resource in a rapidly evolving world.
Leveraging the Best FP&A Software in Accounting
Financial Planning and Analysis (FP&A) is a crucial component of modern accounting. As a discipline, FP&A focuses on budgeting, forecasting, and analysis that supports major business decisions. By leveraging the best FP&A software, accountants can enhance their roles and contribute more strategically to their organizations.
In the era of AI and advanced technologies, FP&A software solutions have evolved to offer an array of functions that streamline and improve traditional accounting processes. From sophisticated financial modeling to seamless data integration, these platforms enable accountants to perform tasks more efficiently and accurately. With AI capabilities embedded within these platforms, data processing and analytical tasks become faster, allowing accountants to focus more on high-value strategic tasks.
While AI continues to augment accounting operations, FP&A software is a testament to how technology can transform the accounting profession. By incorporating the best FP&A platforms into their workflows, accountants can streamline their daily tasks and play a more strategic role. This, in essence, reflects the ongoing and potential synergy of AI and human intelligence in accounting – a combination that continues redefining the profession’s future.
FP&A software solutions, such as Datarails, are powerful tools that every modern accountant should leverage. Far from making accountants obsolete, these technologies equip them with advanced capabilities, ensuring their relevance and increased value in the future business landscape.
Conclusion
The transformative influence of AI on most professions, including accounting, cannot be understated. However, it is critical to underscore that this does not equate to the eventual demise of the accounting profession. Instead, AI is a powerful tool and partner that adds significant value to the profession – enhancing efficiency, precision, and allows accountants to focus on providing greater value to their clients. The future of accounting is strong, not with the solitary glow of AI, but with a blend of human intelligence and AI capabilities. This partnership promises an exciting evolution for the accounting profession, powering it toward new heights of client value creation.
Frequently Asked Questions
Is AI a Threat to Accountants?
AI is not a complete threat to accountants but rather a technological evolution that can enhance their work. By automating repetitive tasks and enhancing accuracy, AI allows accountants to focus on higher-value tasks that require human intellect, such as strategic decision-making and client relationship management.
Why AI Can’t Replace Accountants?
AI Can’t replace accountants because critical aspects of the accounting profession require human expertise and judgment. These include interpreting complex financial data, making strategic decisions, understanding the context behind numbers, and building trustful client relationships. While AI is excellent at handling large volumes of data and automating repetitive tasks, it lacks the human touch, intuition, and ability to comprehend the complexities of the business environment.
Will Accountants Be Gone in the Future?
No, accountants won’t be gone in the future. The role of accountants is expected to evolve with the integration of AI but not become obsolete. The increasing incorporation of AI in accounting will free accountants from mundane tasks, enabling them to focus on strategic, advisory, and client-facing roles. This shift signifies not the end of accountants but rather their transformation into more valuable contributors in the business landscape.