The Role of AI in Accounting: Debunking Myths

ChatGPT Can Pass the CPA Exam But Here’s What It Can’t Do (Yet)

If the headlines are to be believed, humanity is mere months away from being enslaved by artificial intelligence or, at the very least, being permanently unemployed (cue sounds of the Going Concern audience celebrating here).

You may have seen clickbait articles about entire marketing departments being turfed in favor of ChatGPT (we never liked the people in marketing anyway!) and we’ve been hearing for at least as long as this website has been alive that AI will all but eliminate accountants. No doubt, as time goes on, AI will get better and more positions may be replaced by AI but do you, the accountant, have to worry about your job? Haven’t they been saying for at least ten years now that 95% of accountants will be replaced by 2030? See also: this 2013 Oxford University research entitled The Future of Employment: How Susceptible Are Jobs to Computerisation?

There are already AI tools out there doing the more menial tasks accountants, bookkeepers, and interns once did. There are still plenty of flesh and blood humans doing those menial jobs because, let’s face it, a mom-and-pop business isn’t going to use any AI tool if the work volume (or the price and perceived difficulty in implementing it) doesn’t warrant it. Good luck convincing someone who still isn’t in the cloud to take AI out for a spin.

You can get anxious about the future if you want but to determine whether or not your job is at risk, it might be worth busting a few myths about AI.

Myth #1

Artificial Intelligence is Actually Intelligent

It’s important to know that AI is not sentient, aware, or conscious, and far from being intelligent in the traditional sense (for now). If you’ve played around with ChatGPT at all you know this. It’s simply a series of code, lacking all impulse to enslave the human race (but so was HAL 9000). Like interns, AI in its current form is trained on data sets provided to it for the purpose of achieving a specific task; in the case of ChatGPT, the specific task is actually a wide variety of functions, the depth of which we are only just now discovering.

When AI accounting software is used to automate manual data entry to do things like scan and interpret invoices, it has to be trained by humans to recognize specific fields such as addresses, company name, dates, purchase order number, etc, for each vendor. The software company has created the AI software to be able to learn these things, and once learned, will recognize this data at a later time, and be able to code and enter the data for you. This isn’t much different from a sole proprietor CPA teaching his high school daughter how to enter receipts in Excel to make a little extra cash over the summer. Over time, she gets faster and better at inputting the data with a little practice.

AI doesn’t know anything in the fundamental way you do. For example, we’ve all heard stories about Roombas not recognizing dog crap and smearing it all over the house. Roomba is now using AI to recognize dog turds but the AI wouldn’t intrinsically know dog turds = bad unless we tell it that. Roomba’s anti-poo technology was such a big deal when it debuted in 2021 – iRobot founder Colin Angle literally said It’s a big deal for us when the company did its big media run – because it took a lot of time and effort to get to the point where the AI understood poop = bad. Even three-year-old humans can be taught this more quickly than AI (Imagine what a thankless job that was!) and we know toddlers aren’t taking your job any time soon.

Myth #2

AI Will Take Your Job

There’s always a lot of worry about the unknown. That’s perfectly natural, especially in high-strung accountants. Your job may not be the same in five years, but you’ll still have a job. AI isn’t going to take it, but it does promise to change it. Accounting, as we know, isn’t a purely mechanical function, but there’s a lot of repetitive work that can – and should – be automated.

AI does promise to make your job easier, by automating routine work; work that is easily repeatable, such as entering invoices. This foundational work does require accuracy, and your job may change to auditing AI-entered data to ensure it’s accurate, and to look for non-routine data that AI is unsure about how to handle or code. What happens if your vendors change the format and structure of their invoice?

What about one-off vendors? Do you have a purchase order system to match invoices against? Humans will also be able to perform an audit role here to ensure invoices are legitimate and not a scam. First, those sorts of invoices may not even be submitted to AI for entry or, if they are, removed from the system if there is an issue.

Just make sure to be nice when you’re training your AI system. You know, just in case it does actually become intelligent in the future and remembers when you were being an ass to it in the early days!

AI promises to free up your time from those routine tasks and allow you to focus on higher level tasks that you may not have had time for before. We’re hopeful at this stage that this optimism is based in reality and not delusion.

For the futurists and statistics geeks out there, you should check out this working paper GPTs are GPTs: An Early Look at the Labor Market Impact Potential of Large Language Models. AI in its current state is stochastic, it’s the human input (that’s you) that really makes it shine. And that’s the exciting part!

Myth #3

AI Will Eliminate Grunt Work

Given time and training, any kind of work can be regarded as grunt work. Familiarity breeds contempt, as they say. Grunt work will never really disappear in any job. Once you get good at it, it becomes routine, and probably kind of boring.

What is considered grunt work will change, and more and more of that grunt work will eventually be performed by AI as we figure out ways to make it routine.

Once your time is freed up from your current grunt work, you’ll move on to higher-level tasks, master that future grunt work and the cycle continues. Sorry, this probably isn’t what you wanted to hear.

Myth #4

AI Will Transform Accounting, Change the World and Save Humanity

Wait, I thought AI was going to destroy the world? I guess it depends on whom you believe, how many fringe websites you visit, and if you buy into the marketing hype. Either way, if your name is Sarah Connor, you may want to consider changing your name. Our robot overlords of the future might be a little touchy about it!

Let’s break this down. First of all, AI will change accounting, not transform it. It’s simply going to be a tool to make our lives easier so we can focus on other tasks that we’ve likely been neglecting, or simply haven’t had the time to do. We’re still going to have debits and credits, financial statements, and audits.

Every seemingly radical new technology seems to have its share of sycophants that buy every bit of marketing hype and beg for more. At the same time, there are the tinfoil hat Chicken Littles out there bemoaning the end of humanity. Search hard enough and I’m sure you’ll find 5,000-year-old hieroglyphics that proclaim the Earth (what was known of it) would end in mere months.

Will AI change the world? Well, maybe. It’s hard to know for sure what its effects will be. Will it be the radical change some claim? Not likely. Humans are still human. We tend to be reluctant to accept change, so the effects of AI are likely to be less radical than claimed, but change will happen gradually. Time will tell.

And finally, nothing will save humanity. We’re all doomed! Unless we make it off the planet to other galaxies, we have about 5 billion years left until our sun turns into a red giant and wipes out our solar system. (I know, I’m being very optimistic!)

OK So Now What?

AI tools are so new, and we’re so early in the process with them, that it’s hard to tell exactly what will happen, and how everything will shake out.

Some sound advice would be to learn how to use the emerging AI tools. Accept them, understand their strengths and limitations, learn how to use them, and craft queries that get the results you’re expecting. Prompting will become the new Googling, those who create good prompts get the best output. Also, learn how these tools might benefit your organization. Pay attention to thought leaders in this space and the future-forward accounting firms harnessing this technology to get things done. Try not to read too many fringe websites talking about AI taking over the world.

It is guaranteed that AI will play a big part in the future of accounting, and setting yourself up as an expert in this space now will set you up for a spot at the table in the future. Figure out how you can use these tools to make your work life easier, even if your firm isn’t using them on a grand scale (keeping in mind that your firm may have an AI policy and if not, it’s always a good idea to never input PII or confidential information).

Soon to be gone are the days when you can simply outwork fellow accountants by putting in more hours. With these new AI tools, you’ll be able to work smarter, achieve substantial time savings, and realize productivity gains, allowing you to focus on higher-level tasks which, hopefully, will provide more value to your company and clients, all while offering you a few more hours of sleep than you’re used to. At least that’s what we’re hoping for.

Read More: How to Use Google Bard AI Effectively?