Artificial intelligence (AI) is revolutionising the way accountancy practices run and the services that they are able to offer.
What exactly is Artificial Intelligence?
The official definition of AI is the ‘theory and development of computer systems able to perform tasks normally requiring human intelligence such as visual perception, speech recognition, decision making and translation between languages’, which can be simplified to ‘the creation of intelligent machines that work and react like humans’.
However, AI is an evolving area with many subsets, which means the definition of AI has also changed over time. One subset of AI is machine learning, which involves teaching a machine to learn how we learn. It can then draw conclusions from large quantities of data and adjust its activities based on those conclusions.
Technology in accountancy practices
Accountants in practice have evolved over the years, from using pen and paper and a printing calculator, to using spreadsheets on computers, to engaging with modern accounting software packages. This in itself has been a big change – however, accounting software packages are still evolving, with cloud accounting becoming increasingly popular due to ease of access and use, allowing both clients and accountants to have immediate access to their financial information.
Along with the internet and cloud computing, mobile phones have also become another popular method of obtaining access to financial records. Apart from using mobile-friendly websites, there are now accounting apps available which can be downloaded onto a smartphone, again providing more accessibility to data and allowing people to work on the go.
The speed at which accounting software has evolved is both impressive and exciting. AI allows for time-consuming processes to be automated, freeing up the accountant’s valuable time.
AI’s impact on accountants
In the future, an increasing amount of the core business of the accounting profession could become automated. In auditing, where traditionally a 10% sample was selected to check for fraud and errors, AI can now check 100% of the transactions, easily picking up on any issues.
AI can help with tax structuring, forecasting and access to funding, as well as spotting weaknesses or problems in cash flow and can contribute to more accurate valuations in mergers and acquisitions.
Such changes will enable accountancy practices to spend more time offering advisory services such as tax planning, discussing operations and offering clients strategies on how to drive their business forward.
AI’s impact on SMEs
A recent report by software firm SAP suggested that AI will be ‘critical’ to firms’ survival over the coming five years.
HMRC’s Making Tax Digital initiative will be an important first step for many SMEs. This will provide a good opportunity for accountants to help their clients’ businesses to prepare their data, especially as many SMEs lack internal controls and structures that allow data to be processed and stored electronically.
For accountants in the SME market, keeping up to date with new technologies and reviewing the systems that they already have in place will be key to remaining competitive in the marketplace.
Nevertheless, communication with clients, whether face-to-face, by video conference, phone or email, still remains an important part of the accountant’s role. Having AI generated data will ensure meetings are more efficient and informed, but empathy and experience are hard to replace.
For more information on how you can help your clients with technological advancements, including information on our useful Tax App, please contact us.