By starting, let me share some examples of equivalent phenomenon in the past. Firstly, it is the story of automation. When the automated machines were first released, they were expected to replace the huge number of employees in labour-consumed industry. Based on that, someone went further to worry about mass unemployment. What's the result? There was no such mass unemployment, labour reallocation among industries only.
Second, in the 1980s, Microsoft launched the Excels. Thanks to Excel, calculations could be done automatically, which clearly impacts on the accountant’s workload. At that time, as accountants worked on the paper-based and most tasks were manual, a lot of people thought about the end of the accountancy, mentioning that Excels and other upcoming software could do all those tasks. What's the outcome now? Excel has been becoming a useful supplement tool to accountants, not a replacement.
Thirdly, in the second half of 2022, many people were crazy about ChatGPT. The quality of ChatGPT's answers rocked the world, promising the situation when AI can replace employees in various professions, such as consulting, law, accountancy. However, interestingly the early version of ChatGPT failed the Assurance paper exam - the basic in ICAEW CFAB. Until recently, the latest ChatGPT could pass it. It proves what? Assurance practice is not easy to learn, not easy to do, and not easy to replace.
By running through the above examples, what can we get? The most obvious impression is that the scare is always there when a new thing occurs. The risk and the benefits are parallel, but the risk is exaggerated in many cases. Does the same thing happen to AI?
To be honest, the implication of AI in accountancy are very promising. In combination with the current problem of attractiveness – how the accountancy attracts young students to join and retains staff, AI is expected to be an ideal solution to deal with that issue.
Does AI save costs? By using AI, the company can reduce the headcount and the size of the finance/accounting team. The audit firm can replace a part of their staff with AI. As a result, the manpower expenses will be likely decreased. Additionally, AI can operate on the 24/7 basis, except in maintenance period, without any paid overtime.
Does AI save time? Once installed and implemented, AI is expected to save a lot of working time to the company. Thanks to its quick speed and fast processing time, AI can analyze large volumes of data, and resolve a big number of tasks, especially those manual & repetitive ones in the blink of an eye. That's even more crucial in the current fast-paced business environment.
Does AI improve the quality? Using AI can eliminate or minimize the human errors, such as wrong calculation, fill-up wrong data input, refer to wrong source of data, etc. Also, AI can offer the real-time insights on financial performance, which is crucial in strategy and decision- making process. In addition, the employee performance is affected by several factors which are uncontrollable by the employers, such as mood, personal events, etc. Clearly, AI does not suffer the same experience, so AI can generate the consistent results.
On the contrary, there is always some skepticisms on the AI's impact on accountancy. It is understandable that there is still a long road to go.
First, it is the level of required judgement. In contrast to the common belief, a lot of accounting and auditing tasks are heavily dependent on professional judgement, such as impairment assessment, fair valuation, provision, etc. Those items usually have a huge impact on the company’s financial performance. The outcome will depend on the competence, experience, and skills of auditor/accountant, which is, fairly to say, different people will have a different point of view. Does AI apply it? Due to the complexity of accounting standards and GAAP, does AI handle all those things? We are not sure now.
Secondly, it is the communication matter. At the end, the financial statement, supplement information & other information not only reflect the financial aspect and pure numbers, but also “tell” the company’s strategy and vision to the public. Because of that, the information given is carefully drafted, evaluated, and reviewed by the responsible parties before publishing.
The more complex the business environment is, the more “handle with care” in those documents. Does AI collaborate with it?
Thirdly, we cannot ignore the cybersecurity risk. Using AI can increase the likelihood and impact of cyber-attacks, which makes the company more vulnerable to damage. AI can be a target, which will impact hugely on the operations, reputation, and finance of the company. To deal with this challenge, the company is required to invest heavily in the IT infrastructure at the beginning, then continuously strengthen and apply robust protections. It then raises the concern about expenditure. Will it be “costly”? It depends on each company.
So, how can the accountants prepare for the “AI-era”? Generally, the first clear thing is that AI is an unavoidable trend. Therefore, it’s better for accountants to use AI as an “assistant” on some tasks to save time and increase productivity. At the same time, accountants should increase awareness and be an “expert” or “early adopter” in AI, especially in related cybersecurity risks. Currently, much essential software in accountants’ daily work is gradually integrated with AI. Thirdly, accountants should enhance knowledge and learn additional essential skills. The more manual & repetitive tasks an accountant handle, the higher chance that that staff can be replaced by AI. Then, upgrading yourself to the position that it makes harder for AI to handle. In summary, I strongly believe that the accountant will not be replaced by AI. Instead, an accountant will be replaced by another accountant who uses AI.
