The whole profession of accounting is at the centre of a technological revolution. It’s all about the rise of the machines.
Just about every aspect of bookkeeping appears set to be changed by Artificial Intelligence technologies. Just how much of bookkeeping is likely to be disrupted? More than 85 per cent, according to a forecast by the world’s leading management consultancy McKinsey & Company.
But inside the next twelve months there are four major changes that will become apparent.
1. More efficient workflows – within limits
AI is set to cut a swathe through the boring stuff, but it’s not quite there yet.
Even relatively simple AI advances such as automatic data entry are expected to be great liberators of accountants’ productivity.
How much time does automatically populating fields with clients’ information save? Estimates vary, but according to the tax office a pilot study by Deloitte estimated time savings of 80 per cent for financial statements through use of Standard Business Reporting software through pre-filling data alone.
And other processes have also been made redundant, such as double checking of work.
But while companies such as KPMG invest heavily in robots that can read documents, they haven’t quite got there yet. Any bookkeeper can tell you that when receipts and financial information come in for reconciliation from a client, it’s often stuffed into shoeboxes, poorly scanned, disordered, missing (or even worse). We’ve still got a way to go before machines can do all the legwork.
2. A role for human partners and outsourcing
One of the greatest challenges to artificial intelligence, the old adage goes, is human stupidity. That’s a little harsh. Human disorganization may be more like it.
But enabling capabilities such as number crunching, automatic reconciliation, data matching and data analysis requires information that is in clean, simple and machine readable formats – which is not how humans operate.
Many companies are beginning to realize that cheaper efficient labour is a great complement to AI. Outsourcing the data entry, the filing and the comprehension required to make sense of scraps of information, half-completed excel files, non-machine readable PDFs and receipts helps lay the foundation that allows AI to do its work.
3. No-mistakes compliance and better detection
Good accounting software updates in line with the law.
This means updating to ensure compliance with the new regulations the tax office issues each year and also Australia’s ever-changing business environment.
Intelligent machines are also increasingly able to monitor irregularities such as suspicious transactions and spot patterns that suggest a compliance problem much faster than the human eye.
4. The importance of insight
The most exciting aspect of AI is the possibilities it unlocks for accountants to generate new insights.
AI and cloud computing greatly increase the scope of information that can be provided to an accountant and also the speed with which it gets there. Information that once used to come in between one-and-four times a year at tax time can now update continuously and in real-time. This is a de facto dashboard of a business’ finances and its financial health. Accountants will have access to larger data sets than ever before and be able to direct AI to match patterns and generate analysis that has never before been possible.
A new frontier
All this means new opportunities for business insight.
Ironically, artificial intelligence will emphasize the importance of human insight in accounting, and give depth to the very human skills of judgment and analysis.
With support from efficient human labour, AI can, in 2017, start to do some of the analytical heavy lifting: the calculations, the regulatory compliance, form filling and calculations. But this will change the role of the accountant from an advisor a client trusts to stay on the right side of the law come tax time, to one who can give insights into business performance year-round. (Good) accountants should cheer on the rise of the robots.
This study is not publicly released, but it’s been mentioned repeatedly by Treasury and ATO in speeches, viz from Deputy Tax Commissioner: “A Deloitte Digital pilot demonstrated similar benefits – it showed an 82% saving in time for the preparation of financial statements from SBR”.