According to a study conducted by Oxford University, it is predicted that more than 40% of jobs will be automated by 2033. However, history has shown that similar claims were made during the industrial revolution, suggesting that manual labor jobs would be eliminated in the future. But, those predictions didn't come true, and technology has only opened up possibilities for more creative and analytical work, accelerating innovation in all fields.
The same thing is happening with Artificial Intelligence (AI), it seems to be everywhere, from Netflix to Notion, from Intuit to Oracle, and it's definitely here to stay. AI has revolutionized work processes, increased productivity and efficiency, and lowered costs.
However, the accounting industry is concerned. In this blog, we explain why AI and accounting automation is not a threat to job roles in accounting, but rather an opportunity for growth.
Is Accounting Old-Fashioned?
Contrary to popular belief, the accounting industry has embraced technological advancements, from abacus to calculators, digital spreadsheets like Visicalc in the 1970s, and the emergence of accounting and ERP software. This constant quest to simplify mundane and repetitive tasks has allowed accountants to focus on critical analysis and providing tailored solutions to clients.
Accounting has long ceased to be an all-fashioned profession and for years it has adopted all kinds of accounting software. To this day, accounting automation is not merely a passive data recording tool but an active participant in invoicing, transactions, real-time data recording, and reporting. They integrate international payment systems and update bank records, resulting in quick and accurate bank reconciliation, freeing up accountants from repetitive tasks.
At Vintti, we believe that the advent of AI will further improve and empower the accounting industry. We just need to change the lens through which we view AI's impact on accounting. So, how will AI and accounting automation affect the industry? Let's find out.
Can Accounting Be Done By An AI?
The answer is yes, an AI can handle basic accounting tasks or at least the ones that come to mind first. Machine learning is revolutionizing bookkeeping and accounting by recognizing patterns in financial data, categorizing transactions, reducing errors, and speeding up the bookkeeping process. Even small businesses can solve their accounting needs with simple AI-powered tools, making reliable accounts accessible to non-financial people.
It is true that some mid-career accountants may struggle to adopt new technologies and feel left behind. However, for those who can embrace technology, there is a sea of opportunities to enhance the delivery of value through machine learning. AI technology has freed up time for accountants to focus on higher-level tasks, such as providing more advisory services to clients. Accounting automation has also expanded the role of CPAs to include more high-level thinking, analysis, and complex human interactions, which has resulted in the ability to provide better services to clients.
With accounting automation saving up to 80% of the time CPAs spend on sorting records and data, they can deliver more value to clients by providing insightful analysis and interpretation based on real-time financial data. This partnership between technology and human expertise has led to a demand for new skills, such as social and people skills, that are essential for CPAs to succeed in the modern accounting landscape.
AI Will Transform Not Replace Accountants
The role of AI in accounting cannot be overstated, but it is important to note that AI is not meant to replace accountants. Instead, it enhances their capabilities and streamlines their work processes. AI requires structured data and use cases, which can only be provided by human oversight. Humans play a critical role in structuring the data and building use cases for machine learning and deep learning.
While machines are smart, they still require human intervention. The best decision-making models and processes rely on a combination of humans and machines. Machines can see things that humans cannot, while humans provide the life experience and professional context to complement and interpret machine work.
AI and Human Ethics
Machine learning is only as good as the data from which it learns. Humans add ethics and judgment that machines lack. For example, in 2018, it was reported that Amazon had created an AI-based recruiting tool that was trained on the resumes of job applicants from the previous 10 years. However, the system was found to be biased against women, as it had been trained on a predominantly male workforce. The system was ultimately scrapped due to concerns about the fairness and ethical implications of using an AI system to make hiring decisions.
So, while AI can be very powerful, We still need to exercise ethical judgment over AI-supported decisions, just as we would over decisions we researched ourselves, understanding the process (the algorithm).
AI and Human Review
To effectively operate, AI requires extensive amounts of properly structured data. If the data is incomplete, poorly structured, or does not align with the desired outcome, the resulting AI solutions will be ineffective. Therefore, humans are responsible for overseeing the quality and context of the data to prevent bias or missing information.
Additionally, it's crucial to have a clear understanding of the problem we want AI to solve and how it can be integrated into our processes to enhance decision-making, judgment, and ethical responsibility. While AI can be a valuable tool for accountants, it cannot replace the importance of the human element in accounting practices.
AI and Accounting Jobs
It is difficult to predict exactly how the accounting industry will evolve in the next 10 years, given the fast pace of innovation. However, there are at least two immediate changes that can be anticipated:
- Automation as a Service (AaaS): The automation of routine and mundane tasks has paved the way for intelligent accounting automation, according to survey findings by Deloitte. AaaS will enable companies to access cutting-edge technology and specialized expertise without investing in expensive infrastructure.
- The emergence of accountants and CFOs as leaders: Accounting is no longer confined to a single department in an organization, but rather a critical component of a company's leadership team. Accountants and CFOs are actively participating in setting the mission, vision, and goals of their organizations, and may even define the way forward based on their insights and analysis.
So, Is AI the End of Accounting as We Know It?
While the rise of AI and accounting automation may raise concerns about the future of the industry, it's important to note that AI will not bring about the end of accounting. In fact, AI will revolutionize the field by taking care of mundane and repetitive tasks, allowing experts to focus on critical analysis and value-added delivery based on AI-empowered data.
While it's true that some mid-career professionals and technology-averse individuals may find their opportunities reduced, accounting jobs are not disappearing. Instead, AI is creating new opportunities for those who are well-adapted to the technology, such as freshers, technocrats, and residents of high-tech cities. These individuals are being paid above the median salaries of similar traditional profiles.
As AI takes over basic accounting functions, the value of higher-order and human skills will increase. Therefore, rather than being the end of accounting as we know it, AI is ushering in a new era of accounting that values both technical expertise and human skills.
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Kevin Mitchell, CPA
Senior Manager and CPA with over 20 years of experience in accounting and financial services, specializing in risk management and regulatory compliance. Skilled in managing audits and leading teams to deliver exceptional services. Proud father of two.
