Utilization And Impact Of Artificial Intelligence In Accounting Field

The emergence of Artificial Intelligence and its significance

The objective of the report is to focus on the utilization and impact of AI (artificial intelligence) in the accounting field (Bench-Capon, 2014). The explanation of AI’s influence in the accounting field highlights on how development of this technology has transformed the accountants work as well as efficiency in providing better services to their clients.

While working in huge accounting firm, it is usually identified that clients basically shows their interest in understanding possible opportunities as well as threats, which can arise owing to adoption of AI. Therefore, the audiences of this specific report mainly involve both accounting experts and non- accounting experts.

The vital decision that is to be made by the accounting firm is mainly about the adoption of AI in the workplace. The main reason behind this is that although AI helps to generate numerous opportunities, it might pose threat to hacking of data (Bond & Gasser, 2014). Moreover, there are some clients who think that existing business framework can be in threat owing to implementation of AI.

As the basic aim of this report is to highlight on the different aspects of AI to the accountants, proper information is needed for making these decisions. In fact, the information required by the managers of this accounting firm is the impact of technological development on accountant’s business practices.

While carrying out this study, the keyword that is searched in database mainly involves the concept of AI, its significance in the accounting field along with its opportunities and threats.

Cohen, P.R. and Feigenbaum, E.A. eds., 2014. The handbook of artificial intelligence (Vol. 3). Butterworth-Heinemann.

Greenman, C., 2017. Exploring the Impact of Artificial Intelligence on the Accounting Profession. Journal of Research in Business, Economics and Management, 8(3), pp.1451-1454.

Kanal, L.N. and Lemmer, J.F. eds., 2014. Uncertainty in artificial intelligence (Vol. 4). Elsevier.

Müller, V.C. and Bostrom, N., 2016. Future progress in artificial intelligence: A survey of expert opinion. In Fundamental issues of artificial intelligence (pp. 555-572). Springer, Cham.

Ramchurn, S.D., Vytelingum, P., Rogers, A. and Jennings, N.R., 2012. Putting the’smarts’ into the smart grid: a grand challenge for artificial intelligence. Communications of the ACM, 55(4), pp.86-97.

Russell, S., Dewey, D. and Tegmark, M., 2015. Research priorities for robust and beneficial artificial intelligence. Ai Magazine, 36(4), pp.105-114.

Wenger, E., 2014. Artificial intelligence and tutoring systems: computational and cognitive approaches to the communication of knowledge. Morgan Kaufmann.

Williams, A., 2012. System and method for patent evaluation using artificial intelligence. U.S. Patent 8,161,049.

Wu, D.D., Chen, S.H. and Olson, D.L., 2014. Business intelligence in risk management: Some recent progresses. Information Sciences, 256, pp.1-7. 

Goals of Artificial Intelligence

Resource citation Greenman, C., 2017. Exploring the Impact of Artificial Intelligence on the Accounting Profession. Journal of Research in Business, Economics and Management, 8(3), pp.1451-1454.

Author’s Credentials C greenman was the associate professor of accounting , who joined as faculty in business department in Presecott in the year 2011.

Audience of author This journal has been written in order to provide information to shareholders, investors, analysts and other associated with accounting firms.

Facts given by author The application that is pertaining to AI is one of the vital aspects for accounting firms. AI that is developed on the cloud solution provides advantage in maintaining privacy of data.

Significance of resource The significance of AI in accounting profession is utilization of machines that is one of the vital part in technological sector.  The acceptance as well as effectiveness of AI has also increased over the years.

Question occurred from this source The question raised from this journal is the impact of AI in the accounting profession.

Conclusion Advancement of technology has lead to reduced error margin, which in turn ensures improvement in the financial performance of organization. Moreover, the accountants ability in assessing statistical values have improved owing to technological advancement.

Resource citation Ramchurn, S.D., Vytelingum, P., Rogers, A. and Jennings, N.R., 2012. Putting the’smarts’ into the smart grid: a grand challenge for artificial intelligence. Communications of the ACM, 55(4), pp.86-97.

Author’s Credentials The authors of this journal article are the professors in the “ University of Southampton, UK”.

Audience of author The audience of this article are the accounting professionals, shareholders, investors, managers etc operating in accounting organizations.

Facts given by author The accountant’s ability to interpret data and evaluate statistical values in effective way has increased owing to development of technology.

Significance of resource Advancement of technologies have direct effect on the financial management at which accuracy is vital for task.

Question occurred from this source This journal article raised questions about the challenges for the artificial intelligence and technological advancements impact on different practices in accounting.

Conclusion This article provides an overview about how the implementation of software programs in the accounting field will increase efficiency in the upcoming years. It can also be viewed from this article that the accountants work can be carried effectively owing to advancement in technology.

Resource citation Russell, S., Dewey, D. and Tegmark, M., 2015. Research priorities for robust and beneficial artificial intelligence. Ai Magazine, 36(4), pp.105-114.

Author’s Credentials Russell ,S is a computer science professor at the “University of California” also known for contribution for AI. Daniel Dewy was the representative of US who has done research on risk from advanced AI. Tegmark is a professor at Massachusetts Institute of Technology who investigated risk from advanced AI.

Audience of author The audience of this article are analyst, business executives, investors etc.

Facts given by author The facts given by author reflect AI have the ability to access as well as preserve the data. In addition, human brains are also asociated with ability of AI.

Significance of resource The importance of this resource is to analyze benefits of AI in the accounting firms.

Question occurred from this source The journal article raises questions about the opportunities as well as risk that AI poses after its adoption in accounting firms.

Conclusion From this article, it can be concluded that AI provides opportunities to the accountants for increasing efficiency and reducing their workload.

The present report provides an overview about the accounting theory and contemporary issues relating to accounting from the perspective of accountants. This section focuses on the Artificial Intelligence (AI) and its significance on the accountants work.  AI has been accredited as one of the biggest boons of engineering, which revolutionized the global market with its varied potentiality and functionality (Brodie, Mylopoulos & Schmidt, 2012). This technology was initially developed for military purpose, which became beneficial to them for achieving their target.  AI has been uncongenial to psychology and thus has benefitted largely to the accountants. Since then huge development has been done in AI in order to improve the performance of the organization. However, it also acts as a link between the capability of human thinking and machines and thus allows the machines to make a replica on human thinking capabilities.  In addition, AI has helped to reduce the extent of human being effort in any kind of work.This section also depicts how the technology has changed the accountants work in the present decade. It also highlights on risk analysis of AI for assessing various scope of having advantage from using this technology based on the perspective of accountants. Lastly, the recommendations for this AI for making it highly beneficial for accountants have been mentioned in this report.

AI refers to the simulation of the human being’s intelligence processes by the machines mainly computer systems (Ennals, 2012). These processes basically include- reasoning, learning and self- correction. The Defence department of US has introduced this AI in the year 1956 basically at the time when it was not available in the society. The utilization of AI was limited only to usage of defence and had inhibited popularity for advancement in technology. In the year 1970, DARPA (Defence Advanced Research Projects Agency) had utilized it for mapping street for the first time, which brought it to public domain. Furthermore, in the year 2003, DARPA again introduced personal assistants and this further exposed AI in the global market. At the last quarter of 2011, AI gained huge popularity in the global market due to its application. This became a standard for using it in certain fields that includes- medical, automobile, banking, accounting etc. Ghahramani (2015) opines that the best utilization of AI was in accounting field and thus has revolutionized this sector from different perspective.

The main goals of AI includes-

• Creating expert systems- The systems that reveal intelligent behavior, demonstrate, describe and provide advice to the users.
• Adopting human intelligence in the machines- Innovating systems that learn, understand and think like that of human beings.

Impact of AI on the accounting industry

John McCarthy who is known as father of AI defines AI in four ways, which is depicted below:

• A system that can think as that of humans
• A system that can perform as that of  humans
• A system, which thinks rationally
• A system, which act rationally

AI contributes not only in engineering field but also in the field of psychology, philosophy, sociology, maths, neuroscience and biology. The vital components of AI make it updated technologically as well as promote it as replications of humans.

Accountant plays vital role in business organization as they control their profitability level. Based on the accounting concept, the companies evaluate their capacity of production and hence adopt their marketing strategies accordingly (Shoham,, 2014). Increasing advancement of technology in this accounting field has made it highly productive, effective and user friendly based on the ethical viewpoint. In addition, numerous developments occurred after the introduction of AI in the field of accounting in the year 1980. Various instances reflects that implementation of AI has mainly revolutionized financial analysis.  Expert system is one of the important developments that occurred owing to utilization of AI, which in turn helped the accountant in making accounting calculations in simpler way (Sol, Cees & Robbé, 2013). In short term, AI has brought several opportunities for the accountants in order to enhance their efficiency as well as deliver high value to the business. On the other hand, in longer term it has also raised opportunities for bringing about additional radical change in the systems for taking over decision related task presently done by individuals.

Recent evidences highlights that AI has increased scope of accountants as new accounting system reduced human efforts through automation. As a result, it increased the efficiency of accountants, simplified their work and improved their performance. For example, implementation of accounts software helps the accountant in doing the work through inserted data and also decreases error (Ginsberg, 2012).  However, with less error, the firm faces no extra tax and thus it facilitates to have sustainable organizational structure. In the present era, near about 95% of the accountants faces threat owing to advanced automation capabilities that has been provided by AI. For this reason, the accountants in business are now providing various opportunities to their clients that include- strategy as well as advisory services. Thus, this is how AI reshapes the accounting sector.

Recent evidences reflect that AI has been growing at rapid scale in all sectors owing to its several advantages. Through development of automation, it can be predicted that AI will make more decision making task in future (Sutikno, Facta  & Markadeh, 2013). Moreover, it will also enhance the deliverables quality and make the business more sustainable.  Apart from this, it has also wider possibility in making business highly sophisticated in future. The opportunities from utilization of AI in different fields are given as under:

• Reconciliation of Bank- Bank reconciliation refers to the procedure of matching balances in the accounting records of a business organization for cash account corresponding to bank statement information (Nilsson, 2014). The organizations that are equipped with this AI aids them by generating accounting information. It also increases the data adequacy scope and also decreases the operation time (Marwala,, 2013). Moreover, adoption of AI with bank reconciliation also helps in tracing out data discrepancy, which in turn aids the business in tracing the source and also highlights the person responsible for the action.
• Analytical calculation-This mainly requires accuracy as well as complicated information. However, implementation of AI benefits the company by providing accurate results if correct information are inserted as well as rules to execute the work has been given in the introduced system.
• Auditing procedure- The process of auditing is one of the vital tasks in accounting.  For the accounting organization, it can be programmed for having knowledge about existing accounting system as well as their expenditure policy (Pannu, 2015). By applying these data, it can facilitate the accountants to perform their duties. In context to this, it is required to mentioned that AI can also perform concurrently with data from different companies. However, this will help the accountants to perform their operations in effective way in comparison to previous operations.
• Automation and increase in efficiency- AI improves the efficiency in practice systems and workflows in the accounting firm. It automatically codes their transaction, which means speeds up receipts inputs and thereby increases productivity.
• Assessment of risk- Evaluation of risk is one of the vital parts of accounting. With adoption of AI, the entities can evaluate the risk that can occur in the competitive business environment. Thus, it helps the firms to mitigate the challenges in better way.

Opportunities and Threats

By taking into account these benefits of AI, it can be said that all business should adopt this for making their operations better. With less error as well as higher efficiency in work, AI will transform the industry.

Technology has been advancing at rapid speed with increasing growth in business. It has been argued by some researcher that although AI increases the opportunity to decrease the workload for humans, sustainability of human being might be at stake in the present period. On the contrary, there are certain threats that the business faces from the use of AI. From the perspective if accounting, the threats from AI includes-

• Deficient in ethical consideration- AI might pose a threat of deficiency in ethical consideration in the field of accounting (Krause & Clark, 20.12) The accountants mainly work with confidential information including growth structure, adoption of strategy by firm, total profit margin etc. As AI cannot be used without internet, it might pose threat to the firm as hackers might hack their sites and collect confidential data.
• Dependency on machine language- As the accountants has to work with large amount of data, it is impossible to transform this data into machine language and hence this hampers AI. This in turn creates threat to the accounting firm as they do not provide accurate results.
• Cost ineffective solutions- AI cannot be considered as cost effective choice for all size of accounting firms. In case of small sized firms, it is beyond their limitations to adopt AI as it requires high cost in maintenance. Moreover, these firms also upgrades the AI programming based on the changing needs in the business (Michalski, Carbonell & Mitchell, 2012). Thus, if AI breakdown in some situation, then it becomes difficult for these firms to provide huge cost in repairing.

Although AI poses threat to the accountants, thereby it can be perceived that this can benefit humans in the long run by increasing efficiency and decreasing error in work. Therefore, AI has generous scope of huge development in the accounting firms.

From the above analysis it can be seen that adoption of AI in the accounting firm involves some risk also. However, recommendation has been given in this report for reducing threats for AI and improving efficiency in technology. These recommendations might also help in improving AI performance as well as internal control of the accounting firm. These includes-

• The maintenance cost of AI is higher than the methods applied in the accounting firm. Therefore, the accounting firm should introduce several researches in the technology for making its highly cost effective.
• The regulators in the accounting firm should require in building better understanding in AI application as accounting requires wider institutional support. Therefore, the firms should develop their institutional support for attaining change in few areas that includes financial reporting, auditing etc. In addition, active involvement of the regulators in the accounting company is also essential for bringing about this change in future (Müller & Bostrom, 2013).
• The firm should also focus on adopting security measurement as AI has high potentiality of data hacking from the perspective of the accountant.
• The firms should also provide training and development to the accountant, so that they require better knowledge about the techniques of machine learning. In addition, it will also help them in exceptionally preparing the data as well as manage inputs and outputs.
• As AI has the ability in reducing effort as well as disposable income of the workers, the firm should ensure the balance between the human being effort and the machines.  This however will help the firm to maintain balance environment in the workplace.
• The firm should give more effort in R&D in order to make the AI safe from going into wrong hands.

Conclusion

From the above study, it can be concluded that AI has huge significance in the field of accounting. It highly affects the accounting firms by bringing about automation technology in work. Owing to development in cloud based technologies and reduction of error margin, the performance of the accounting firms has improved. Moreover, AI also poses threat to the accountant job since the advancement of technologies starts to perform tasks that are undertaken by the accountants. As AI has technologically upgraded over the years, it increases the scope of data hacking owing to excessive internet usage. Furthermore, the recommendations provided in this report should be implemented by the firm in order to increase efficiency as well as accountability of AI for the accountant. Hence, it can be said that adoption of AI will be highly advantageous for the accounting firm as it will aid them in increasing productivity.  

References

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