The field of accounting has been undergoing changes in the recent years as it is significantly influenced by the improvements within the technology. The evolution of latest information technology devices has facilitated integration and communication possible anywhere in the world. As such, the integration of information communication technology and devices within the accounting field has lead to the development of accounting and information systems. It can be defined as a system of collection, storage, managing, processing, retrieving and reporting the financial data in an effective manner. The automation of the accounting jobs with the integration of the information technology systems would lead to increase within the efficiency in the workplace. This could have a positive impact on the productivity and profitability of the business firms. One such advancement within the accounting profession achieved is with the use of artificial intelligence. Artificial Intelligence (AI) can be described as an information technology system which can be described as a software or computer-controlled robot having the power of thinking and acting as humans. It is stated to be an interesting filed of computer science that emphasizes on creation of intelligent machines that can work and react like human beings. AI is nowadays providing to be very useful within the finance and accounting departments as it implies the tedious work of accountants easily and quickly.
In the context of the above background, this report is being developed for undertaking an analysis of the possible opportunities and threats associated with the use of AI within the accounting profession. The report is being developed from the perspective of an accounting graduate working for consulting firms. As such, it aims to provide an insight into the impact of AI on the accounting profession for the clients of the consulting firm.
The issues that are discussed within the report are background of AI, impact of technology on accounting profession and the possible threats and opportunities of AI. The report has not discussed the impact on AI on the finance field and has only considered the accounting profession.
Research Methods
The report adopts the use of qualitative research methodology for carrying the overall analysis. This involves selecting, analyzing and extracting of important qualitative data from the journals, online articles and textbooks for developing the various sections of the report.
Definition of Terms
Limitations
The overall analysis carried out within the report has been impacted by the constraints of searching and extracting quality resources that has involved large consumption of time.
Assumptions
It has been assumed during carrying out overall analysis within report that the reader possess on overview regarding the accountant roles and the increasing use of information technology systems within the field. It has been developed for accountants and also for non-accountants to [provide them an insight about the research topic to analyze the future changes within the accounting field with the development of new technology and devices.
Artificial intelligence (AI) is very broad term and it refers to advance technologies that make the machine smart that they are capable of performing the functions that human cannot perform. The artificial intelligence technology helps in developing the system that is extremely powerful and has capability to improve very quickly. The results or outputs gained through the adoption of artificial intelligence technology are very accurate, improved and in few areas they are even capable to supersede the human actions. But there are certain limitations with the artificial intelligence that is why AI systems cannot replicate the human intelligence. In order to incorporate proper use of artificial intelligence there is need to recognize the strength and limits of the different types of intelligence and build proper understanding between humans and artificial intelligence so that they work together (Luo, 2018).
Artificial intelligence is a very old concept and it was first introduced purely by the American company General Motors at their manufacturing process center. It has helped them to double their production and save a lot of money. Artificial intelligence has suffered many criticisms due to its impact on human skills and their capability. It has been argued that due to increase use of automation many skilled workers have forced to retire at an early stage. But due to increase in production rate and improved capabilities, artificial intelligence has gained huge attention and its use has also seen in accounting profession (Yaninen, 2017).
In its report, ICAEW has explained the relation of AI and accountancy. As per the report the AI techniques has gone under major change during the past 2 decades and there has been widespread adoption of AI in business accounting but its adoption is in early stage (ICAEW, 2018). Although AI has seen major improvement in accounting profession but there is need to build strong vision that helps to solve the question on how AI can be effective in solving the accounting problems, replace most of accountant work, face practical challenges and how AI system can work together with the accountants. Some of major use of AI in accounting and auditing profession was by Big 4 accounting firms in their business process. KPMG has used McLaren Applied Technologies (MAT) to process the major part of accounting and audit processes since 2015 and it is also using the cognitive computer known as Watson made by IBM. Similarly Deloitte is using AI platform popularly known as Kira System that helps to enhancing the quality of work (Neill, 2016).
This section of the report will lay emphasis on how the use of artificial intelligence has impacted the work of accountant during the past few years. The systems developed through use of artificial intelligence have an ability to solve the complex accountant process that takes many hours by an accountant to process. The process of an accountant starts with the outdated methods that includes data analysis and reports formation. It has been seen that, human intervention is necessary to make the final job done, despite of hundreds of advance and highly accurate accounting software are available to take the place an accountant. It is essential to verify and review the data processed through the software as machine only do what has been feed to do it and mistakes do happen while making the data entry. So it can be said that artificial intelligence has taken over the major work processed by accountants earlier but there is still need to make improvements in artificial intelligence so that it can become a necessity for accountants. Currently artificial intelligence has taken over some of the major functions of accountants such as data analysis, coding of transactions and processing the same to produce the reports. It helps the accountant in lower the cumbersome tasks and free their hands to move the focus on role of advisor and other high value work that artificial intelligence has no reach (Chukwudi, 2018).
The major impact of use of artificial intelligence in accounting profession has led to increase in unemployment of many of skilled accountant as their position has been taken over by the advance system that has more capability and has low maintenance cost. In next one or decade artificial intelligence will take over major part of accounting profession in all over the world and accounting profession will completely depend upon the artificial intelligence to solve the hideous tasks.
There was increased role of computers having compatibility of sophisticated AI, has ability to take control over the financial roles and other accountant jobs as they are more accurate, precise and better fiduciaries as compare to their human counterparts. It is the main reason why many business organizations are introducing computer loaded with artificial intelligence that can keep complete control over funds that includes monitoring and other decision making roles. On the other hand, highly skilled accountants are tends to make mistake due to tendency of human error although it might be rare. But a small mistake can have a damaging effect on the business which no management wants to take (Marr, 2018).
Artificial intelligence can impact the accounting business in many ways if it is implemented properly. The business accounting functions can be improved through the adoption of artificial intelligence with precision and due care. The use of artificial intelligence leads to rise in productivity by better allocation of resources. The accountants are adopting the use of such business process management tools for achieving better informed decisions. Thus, it can be said that with the advancement of technology there will be improvement in AI and it will open more avenues to the accountants.
The development of information technology systems such as AI has provided immense opportunities for advancement of accounting professionals. The accountants can adopt the use of AI systems for carrying out their complicated tasks thus enabling them to focus more on the advisory roles and thereby maximizing the value of the firms for which they are working. The key opportunities presented by the AI for the accounts can be described as follows:
Maximizing the Operational Efficiency by Automation
AI enables the accountants to automate their daily working roles as it facilitates the use of a robotic system possessing the skills and competence of humans. As such, it provides the opportunity to the accountants to carry out their tedious tasks with more efficiency and in a quick manner with the use of automatic systems provided by the AI. For example, robotic process automation (RPA) has enabled the accountants to reduce audits and time of contractual processing from several months to just few weeks. In addition to this, the accountants can easily perform the task of entry and categorization of accounting data that enables them to evaluate the financial performance of the firm more quickly and easily. It has gradually reduced the manual efforts of accountants that were used in creation and processing of invoices, purchase orders or delivery orders. This is because these processes are now automated by the AI software that enables to analyze and export data directly into the ERP system of a firm. This also enables the business managers to gain full access to the accounting information that can be used instantly for making important decisions (Vasarhelyi, 2014).
Fraud Prevention
The most important benefit that business managers can gain with the use of AI is gathering and storing error-free accounting information that can be accessed at any point of time. This is because the complexity of the accounting tasks makes them more prone to errors and mistakes. This can have a negative impact on the strategic decision-making because faulty information can result in wrong decisions taken for the future growth and development of a firm. The computer based systems having IA compatibility can perform the accounting roles in more accurate manner having more precision and thus reducing the chances of any error occurrence (Boobier, 2018).
The use of AI software tools enable constant processing of the accounting data and thus keeping a continuous track of their performance. It can also help in providing suggestions to the accounting managers regarding the effective ways that can used for developing more close relations with clients. The error-free processing of accounting information of the clients can prove to be largely useful for the accounting consulting firms to develop trustworthy and long-term relationships with the clients (Polson and Scott, 2018).
Achieving better Investment Management
The investing managers can adopt the use of AI trading algorithms for market forecasts and thus reducing the future performance of entities on the basis of evaluation of past and present accounting data. This will help the investment managers to develop a portfolio for the clients that will be able to provide them maximum returns and is associated with lesser risk (Susskind and Susskind, 2015).
Restrictive Cognitive Ability
The rise of AI within the accounting field though has presented more opportunities for the expansion of the field by increasing the efficiency of the different accounting tasks. However, at the same time it is often facing some contextual challenges as it cannot imitate the contextual decision-making of humans. The accounting professionals take decisions on the basis of different contextual factor and select the best alternatives that seem to be more appropriate in a given situation. They posses in-depth knowledge regarding the rules and regulations that also has a major impact on execution of an action in particular situation. However, the use of AI systems and devices cannot handle adequately the decision-making in certain situations where there is any emergency situation. As such, it can sometime result in making wrong decisions which can impact the long-term performance of the firm. The system of artificial intelligence cannot adequately imitate the cognitive abilities of human beings and this seems to be major threats that are associated with its use (Nilsson, 2009).
Job Creation
The development of new technology such as AI systems will have a negative impact on the field of accounting roles and profession as it can result in taking the jobs of accountants. The artificial intelligence can result in losing the jobs of the accountants and as such can present a major threat for their future career growth.
Increase in Cost
The creation of smart technologies can be very expensive due to the complexity in their nature and the need for repairing and ongoing maintenance of the systems. The software program requires regular up-gradation and their breakdown can result in losing the important data. The restoration of data is very time-consuming and costly process. As such, it can be said that development and maintenance of such a system requires huge investment on the part of a firm and can also be risky sometimes (Shrobe, 2014).
Conclusion
It can be summarized from the overall report to the accounting consulting firms on the basis of overall discussion carried out within the report that accountants need to develop in-depth knowledge regarding the current information technologies and tools used within the accounting profession. The recent advancements within the information technologies are causing the need for accountants to integrate information system within their daily tasks and roles. As such, the use of artificial intelligence and tools is proving to be very helpful for accountants to automate their daily job roles. The major opportunity that the field of AI is presenting to the accounting professionals is reducing the complexity of the accounting tasks and thus facilitating in taking more accurate decisions. However, it is also associated with the threat of increasing investment in cost and risk of data loss in the case of breakdown of system. As such, it can be said that business firms should adopt the use of AI only in processes that requires calculation and technical precisions. The analytic decisions should be made by the accounting managers to ensure that right decisions are taken for promotion of organizational growth.
On the basis of overall discussion on impact of artificial intelligence on accounting profession there are few points that are need to consider by the clients while adopting the artificial intelligence within the accounting processes. Every new system comes with benefits and limitations but if due care is taken than limitations can be avoided up to some extent. After analyzing impact, opportunities and threats of adopting the artificial intelligence within the accounting profession, there are some recommendations that need to be followed by the business clients. Currently artificial intelligence has not been fully developed in the field of accounting so it is recommended to the clients to implement the artificial intelligence up to some level that might impact the whole accounting processes if artificial intelligence proves to be drastic. No system has been developed that can take the accountants completely, so it is suggested that artificial intelligence system must be implemented for few process such as data analysis, report making and other similar process. It is recommended that for analytical process business must be rely upon the accountants as it requires key judgments to be taken which artificial intelligence system cannot make. All these recommendations will helps the clients to successfully implement the AI system with the business and make successful use of that.
References
Boobier, T. 2018. Advanced Analytics and AI: Impact, Implementation, and the Future of Work. John Wiley & Sons.
Chukwudi, L. 2018. Effect of Artificial Intelligence on the Performance of Accounting Operations among Accounting Firms in South East Nigeria. Asian Journal of Economics, Business and Accounting 7(2), pp.1-11.
Greenman, C. 2017. Exploring the Impact of Artificial Intelligence on the Accounting Profession. Journal of Research in Business, Economics and Management 8(3), pp. 1451-1453.
ICAEW. 2018. Artificial intelligence and the future of accountancy. [Online]. Available at: https://www.icaew.com/-/media/corporate/files/technical/information-technology/technology/artificial-intelligence-report.ashx [Accessed on: 20 January, 2019].
Luo, J. 2018. Analysis of the Impact of Artificial Intelligence Application on the Development of Accounting Industry. Open Journal of Business and Management, 6, pp.850-856.
Marr, B. 2018. The Digital Transformation of Accounting and Finance – Artificial Intelligence, Robots and Chatbots. [Online]. Available at: https://www.forbes.com/sites/bernardmarr/2018/06/01/the-digital-transformation-of-accounting-and-finance-artificial-intelligence-robots-and-chatbots/#652be4c44ad8 [Accessed on: 20 January, 2019].
Neill, E. 2016. How is the accountancy and finance world using artificial intelligence. [Online]. Available at: https://www.icas.com/ca-today-news/how-accountancy-and-finance-are-using-artificial-intelligence#content-main [Accessed on: 20 January, 2019].
Nilsson, N. 2009. The Quest for Artificial Intelligence. Cambridge University Press.
Polson, N. and Scott, J. 2018. AIQ: How artificial intelligence works and how we can harness its power for a better world. Random House.
Shrobe, H. 2014. Exploring Artificial Intelligence: Survey Talks from the National Conferences on Artificial Intelligence. Morgan Kaufmann.
Susskind, R. and Susskind, D. 2015. The Future of the Professions: How Technology Will Transform the Work of Human Experts. OUP Oxford.
Vasarhelyi, M. 2014. Artificial Intelligence in Accounting and Auditing: Towards New Paradigms. Artificial Intelligence in Accounting and Auditing 4, pp. 1-190.
Yaninen, D. 2017. Artificial Intelligence and the Accounting Profession in 2030. [Online]. Available at: https://cpapng.org.pg/data/documents/CPA-Presentation-Artificial-Intelligence-and-the-Accounting-Profession-in-2030_1.pdf
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