How artificial intelligence (AI) is disrupting accounting

In this article, we are going to be looking at how artificial intelligence (AI) is disrupting accounting. We will start by looking at what artificial intelligence (AI) is in a general sense, and some examples of it that you are probably already familiar with in your day-to-day life. We’ll also be exploring some of its benefits and the different ways that it can be used. We will then look at some of the specific ways that artificial intelligence (AI) can be used in accounting in more depth. Finally, we will wrap up with a quick overview of what the future of artificial intelligence (AI) in accounting is likely to look like.

What is artificial intelligence (AI)?

In simple terms, artificial intelligence (AI) is a type of technology that involves tasks that are typically performed by humans instead of being performed by computers. The key is that artificial intelligence (AI) technologies strive to “understand” and “think” like humans, so that they perform these tasks in a human-like way, rather than in a computer-like way.

Generally speaking, to do this, the artificial intelligence (AI) technology will be “trained” using large amounts of data. By analysing this data, the technology will then be able to identify patterns and correlations, which it can then apply in the future when carrying out similar tasks in the same way. It can also use this to make predictions. These predictions essentially allow the artificial intelligence (AI) technology to “predict” the best way to carry out a particular task, or predict what a result is likely to be based on the patterns and inferences it identified in the data it was trained with.

Later in this article, we will be looking at some of the different types of artificial intelligence (AI), so that you have a better idea and understanding of how these computer systems use different technologies and models to carry out these tasks. Before we get into this though, let’s look at two examples of artificial intelligence (AI) technologies that we already commonly use in our day-to-day lives.

Examples of AI

Although artificial intelligence (AI) sounds like a fairly futuristic concept, the fact is that there are actually already a range of different technologies that use artificial intelligence (AI) in use in the world today. In fact, you are probably already familiar with some of them, and may even use them to perform different tasks in your work and home life.

Perhaps one of the most well-known examples of an artificial intelligence (AI) technology that we currently use in our day-to-day lives is ChatGPT. ChatGPT is an app by OpenAI that acts as a chatbot, and uses language processing models to respond to questions and prompts entered by the user. It has a range of generative functions, and draws upon the models and data it has been trained with in order to hold a conversation, write copy, explain concepts, and carry out other text-based tasks in a human-like way. For example, if you enter into ChatGPT, “How can artificial intelligence (AI) be used in accounting?”, it would generate a text response that provides an explanation in response to your question.

Another example of artificial intelligence (AI) technology is digital voice tools like Siri or Alexa. These tools rely on natural language generation and processing, machine learning, and other types of artificial intelligence (AI) models to be able to “understand” the verbal prompt or question being asked by the human user, and provide an appropriate and accurate response that sounds like it is actually being given by a human. For example, if you asked Siri or Alexa, “Hey Siri/Alexa, what is today’s weather going to be like?” you would receive an almost immediate verbal response that tells you exactly what the weather forecast is for the day, read out in a human-like voice and structured in a human-like way.

Both ChatGPT and Siri/Alexa are examples of how artificial intelligence (AI) can be used in our day-to-day lives, to automate manual tasks that we, as humans, would typically carry out ourselves (e.g. checking the weather forecast or researching a particular question or concept).

Artificial intelligence (AI) versus machine learning

One other term that you’ll likely hear being thrown around a lot when it comes to artificial intelligence (AI) is machine learning. While artificial intelligence (AI) is an umbrella term that covers all kinds of different technologies that use computers to automate tasks that have conventionally been performed manually by humans, machine learning is actually one particular subtype within the artificial intelligence (AI) field.

Like all artificial intelligence (AI) technologies, machine learning uses computer systems to perform tasks that have been conventionally performed by humans, and do these things in a human-like way. The distinction between this subtype and other types of artificial intelligence (AI) technologies is the method by which machine learning achieves this. Machine learning involves the use of algorithms to analyse data, identify patterns, and make inferences, which then enables the computer to “learn” how to perform the given task in a human-like way.

Some of the other subtypes of artificial intelligence (AI) include:

Reactive machines (which imitate the human mind when responding to different types of stimuli)
Limited memory machines (which are trained using large volumes of data, to enable them to form and store in their memory a reference model that will enable them to solve future problems)
Deep learning (a type of machine learning that requires even less human input or interaction, which can process a wider range of data sources and produce more accurate and higher-quality results)
Theory of mind (AI technology that is able to perceive and “understand” the human mind, including our needs, emotions, beliefs, and thoughts)
Self-aware AI (a futuristic type of AI that will have emotions, needs, beliefs, thoughts, and desires of its own)
Generative AI (a type of AI that uses machine learning algorithms to produce new audio, text, code, image, video, or other content or data)

Artificial intelligence (AI) can also be classified as being one of three types: artificial narrow intelligence, artificial general intelligence, or artificial superintelligence. These three categories essentially describe the level of functionality or number of different capabilities that the artificial intelligence (AI) technology has been programmed to carry out. To look at these three types now in more detail, these are:

Artificial narrow intelligence (AI technology that is programmed to autonomously perform a specific task in a human-like way, but which can only perform this task and not any other tasks)
Artificial general intelligence (AI technology that is programmed to autonomously perform a range of different tasks in a human-like way)
Artificial superintelligence (AI technology that, like artificial general intelligence, has a much more varied range of multi-functional capabilities; however, this type of technology has more memory, faster data processing, and better decision-making capabilities than general intelligence does)

Artificial narrow intelligence can also be referred to as “weak AI”, whereas artificial general intelligence and artificial superintelligence may also be referred to as “strong AI”.

For the purposes of this article, we will be discussing artificial intelligence (AI) in a very general sense. However, it is helpful to have a basic understanding and knowledge of some of the different artificial intelligence (AI) technologies that exist.

What are some of the benefits of artificial intelligence (AI)?

Artificial intelligence (AI) technologies come with a huge number of benefits. For one thing, they can be used to automate time-consuming and repetitive manual tasks, meaning these can be carried out quickly and more efficiently by a computer, so we no longer need to carry out these tasks by hand ourselves or pay someone to do so.

With this in mind, some of the key benefits of artificial intelligence (AI) technology include that it:

Saves time by reducing the time taken to complete tasks that were traditionally time-consuming to complete manually, meaning these tasks can now be completed more quickly.
Provides a more efficient means of analysing large data sets.
Increases staff productivity, as they are now able to dedicate more time to completing tasks that require their personal input or skills, whilst allowing artificial intelligence (AI) to take care of the more repetitive or time-consuming “menial” tasks.
It ensures that a consistent approach is taken when carrying out a particular task.
It reduces the risk of human error.
It can be easily personalised (such as in customer service applications).
It can be used 24/7 (such as in customer service applications, to provide round-the-clock customer support - as unlike human staff, the computer will never need to sleep or go on a break).
It can be used to perform tasks that are too dangerous for humans to complete.

Whilst artificial intelligence (AI) comes with a number of benefits, it can also come with some drawbacks (just as any new technology does). For example:

It can be expensive, making it inaccessible for some smaller businesses and companies.
It can take some level of skill and knowledge to be able to operate effectively, depending on the type of artificial intelligence (AI) technology being used.
The number of workers currently trained in the development and implementation of artificial intelligence (AI) technologies is limited.
People may be hesitant or reluctant to adopt these new technologies as they prefer to do things the way they know how, which can be a major barrier to uptake and adoption.
It can sometimes be biased or inaccurate.
It can eliminate the need for certain human jobs, which may lead to an increase in unemployment.

How can artificial intelligence (AI) be used?

As you saw in the previous section, artificial intelligence (AI) has a range of benefits. Given these benefits, this kind of technology has already been adopted across a range of different industries and sectors, and is currently being used to simplify, streamline, and improve the efficiency at which a range of different tasks are carried out. Not only does this improve the productivity of individuals and businesses, but these technologies can also be used to add convenience in our day-to-day lives, making things easier for us, and helping us to carry out tasks in a better way.

At the start of this article, we looked at two key examples of how we already use artificial intelligence (AI) in our daily lives (ChatGPT and Siri/Alexa). However, some other examples of the practical applications of artificial intelligence (AI) include:

Face ID (which allows us to unlock our phones using biometrics, so our phone can “recognise” us and tell whether it is us or not that is trying to open the phone)
Social media (which uses artificial intelligence to suggest posts that you will like, people you may know, and pages you may enjoy)
Auto-complete (such as when we enter a query into a search engine or start typing an email, and it suggests how we might like to finish that query or sentence)
Online advertising (which is tailored to your recent search history and interests, to ensure you only see ads that are likely to be relevant or of interest to you)
Digital voice assistants (e.g. Siri, Alexa, Google Home, and Cortana, which interpret verbal prompts and provide verbal responses in return)
Smart home devices (such as smart fridges that tell you when you have run out of a particular product or ingredient, or smart heating and cooling systems that recognise the current temperature and adjust it accordingly to align with the preferences you have set)
Netflix and other online streaming services (which use artificial intelligence to suggest what you may like to watch, based on what you’ve watched previously)
Automated translations or subtitles (which allow us to quickly translate or add subtitles to online content)
Smart cars (which may use artificial intelligence technologies to power innovative safety functions)
Navigation (as sat-navs and the maps app on our phone uses artificial intelligence to provide real-time traffic monitoring, advice on weather conditions and driving conditions, and identify the fastest route to your destination)
Banking (as artificial intelligence is currently used to assess loan applications, identify fraud, and flag suspicious transactions based on the customer’s spending history and usual habits)
Automation of manufacturing and production processes (e.g. in factories)
Research (e.g. to analyse data in the healthcare field, in order to identify patterns and improve diagnostics and treatments)
Cybersecurity (as artificial intelligence is used to recognise and fight cyberattacks and other threats by identifying patterns from data being received)

Today, artificial intelligence (AI) is already being used in all kinds of sectors and industries, ranging from healthcare and farming to public administration and transport. It is also being increasingly used in the accounting field, which is what we are going to be exploring for the remainder of this article.

How is artificial intelligence (AI) being used in accounting?

Artificial intelligence (AI) is already making waves across a range of industries and sectors, and changing the way that we do things for the better by allowing us to carry out manual, time-consuming, or repetitive tasks in a quicker or easier way. The accounting industry is no exception, with many new artificial intelligence (AI) technologies starting to be rolled out within the sector.

For one thing, many contemporary accounting and bookkeeping softwares use artificial intelligence (AI) to streamline many accounting processes. For example, common accounting softwares like Xero and MYOB allow you to generate accounting reports within seconds, rather than having to carry out calculations and prepare these reports manually. Many softwares also allow you to integrate these with other softwares, systems, and even your bank feed, so that you can seamlessly port financial data over between different platforms without the need to do this manually (which could make for a boring, repetitive, and highly time-consuming task if you were to do this by hand, which would also leave room for human error and inaccuracies).

Some other examples of how artificial intelligence (AI) is currently being used in accounting include:

To reduce human error (which may result when processing large amounts of data or performing calculations manually)
To automate manual data entry processes (a conventionally boring and time-consuming task), making this quicker and more efficient to complete whilst reducing the risk of human error and inaccuracies
To enable the real-time processing and analysis of financial data (by integrating a range of different data sources, such as bank feeds and payment gateways, to get up-to-date insights into a particular client or company’s financial position and financial health)
To analyse and identify patterns and trends in large amounts of financial data (which can assist us to prepare cash flow forecasts, profitability analysis, and budgets in a quick and easy way)
To generate reports instantly (rather than having to carry out calculations and prepare reports manually)
To minimise security risks (as artificial intelligence can identify patterns in data and monitor for any deviations from the “norm”, which can aid in the identification of fraud or other security risks)
To improve compliance (as many accounting softwares use artificial intelligence to analyse data and flag where regulatory or compliance requirements may not be being met, or to automatically calculate an individual or company’s obligations under relevant legislation or regulations - e.g. to calculate taxes)
To reduce client costs (as the use of artificial intelligence powered systems can help to cut down on the amount of time that it takes staff members to complete tasks, resulting in a saving of time and money that can then be passed on to the client)
To respond to common client queries (for example, by using chatbots that clients can engage with, which will answer any common questions - saving accountants time in having to respond to the same queries all of the time, such as when providing general explanations or advice)

The future of artificial intelligence (AI) in accounting

Across all industries (not just accounting), it is expected that the use of artificial intelligence (AI) in the workplace will only continue to grow and become more common. Research shows that, as of this year, 37% of businesses have started using artificial intelligence (AI) in one form or another, which represents an increase of 270% in the last four years. Artificial intelligence (AI) is expected to create 58 million new jobs in the coming years, with over half of all jobs expected to be have been automated by artificial intelligence (AI) in the next 10 - 20 years.

It certainly appears that artificial intelligence (AI) is set to be the future, which will mean that a number of changes need to be made in the workplace - not just in accounting, but across all kinds of industries and sectors. For example, staff will need to start developing a new knowledge and skillset that reflects the new artificial intelligence (AI) technologies being used in the workplace.

Certain jobs and positions may also become redundant, with these being replaced with new roles that align with the types of artificial intelligence (AI) technologies being introduced and rolled out in the workplace. Even where a particular role or position continues to exist, job descriptions may need to change, along with policies and procedures that guide how different tasks are carried out, to reflect the huge changes taking place in the way that we do these things.

Managers and business owners will also need to facilitate continuous improvement and change management processes, whilst dealing with the wariness, hesitance, and reluctance to adopt artificial intelligence (AI) technologies that some staff members may have.

As you can see, artificial intelligence (AI) is likely to take on an ever-increasing role in the accounting field, simplifying the way in which we carry out many of our routine, everyday financial tasks. Whilst many accountants fear that their jobs may be taken over completely by artificial intelligence (AI), it is better to view this as a tool that can be used to enhance our profession, rather than replace it.

For this reason, it is important that professional accountants remain up-to-date with the latest developments in the field, and continue to educate themselves about the newest artificial intelligence (AI) technologies emerging in the field. This will ensure that they continue to possess the knowledge and skillset to adopt new technologies as they emerge, whilst at the same time providing the highest standard of accounting practice to their employers and clients.