I cannot help but be overly fascinated as my passion for information technology accounting topic grows. This passion has made me research deep into Machine Learning (ML) and Artificial Intelligence (AI). My findings are the basis of this article on evaluation of the impact of ML and AI on accounting profession.
It is no longer headline news that the accounting profession has undergone a profound transformation with the advent of machine learning (ML) and artificial intelligence (AI). These technologies have reshaped the way accountants work, offering a multitude of benefits, but also introducing challenges and considerations.
In this article, we will explore the pros and cons of the impacts of ML and AI on the accounting profession.
Positive and negative impacts of ML and AI
Automation of Repetitive Tasks:
Repetitive tasks easily becomes boring thereby leading to complacency which may in turn lead to avoidable errors. ML and AI never gets tired of doing one thing over and over again as long as the computer system is kept on.
Pro: ML and AI have automated routine and repetitive tasks, reducing manual labor and allowing accountants to focus on more value add activities.
Con: While automation streamlines processes, it may also lead to concerns about job displacement in certain roles. This may not really be a problem if as accountant you constantly upgrade your knowledgebase from time to time.
Improved Accuracy and Reduced Errors:
The main importance of accounting is to keep records that would aid in decision making. Of what use will this record be if it lacks credibility due to errors and inaccuracies?
Pro: AI-driven systems enhance accuracy in financial reporting and auditing, reducing the risk of human errors.
Con: Heavy reliance on AI may create vulnerabilities when information system security is not taken very seriously.
Faster Data Analysis:
In most cases, the real value of data lies in the speed at which it is analysed for insightful information – I need speed is what I can hear data saying. No human can possibly do data wrangling better than ML and AI.
Pro: ML algorithms process financial data rapidly, enabling quicker analysis and informed decision-making.
Con: Rapid decision-making can lead to hasty choices without considering the broader context. But then the risk of making mistakes from rapid decision in my opinion outweighs the risk of losing out on opportunities that never lasts for long.
Enhanced Fraud Detection:
The increased use of business technology increases the prevalence of fraud and fraudulent activities. The use of technology to counter technology induced fraud remains a veritable fraud prevention strategy.
Pro: AI excels in detecting anomalies and patterns indicative of fraudulent activities. This is even sweeter when the machine has more information to work with.
Con: Overreliance on AI for fraud detection might lead to false positives or negatives if not appropriately configured.
Predictive Analytics:
One of my mentors always wish that having the power to predict the future is something that money could buy, that he would have bought it. Imagine how much gain would be made from the stock market for example if someone can definitely predict the movement of stock with certainty all the time.
Pro: ML and AI empower accountants with predictive analytics, aiding in forecasting and strategic planning. This predict power has its limitations but not attempting is not a better option.
Con: Predictions are based on historical data and may not account for unprecedented events or changes in market dynamics.
Improved Audit Efficiency:
One of the main problem with traditional auditing is the fact that events are not audited 100%. The wise men and women before our time introduced this thing called sampling that auditors eventually fell in love with. Well, ML and AI can give 100% coverage.
Pro: AI-powered audit tools enhance efficiency and comprehensiveness. No more flimsy excuses for not auditing 100% – thanks to machine learning and artificial intelligence.
Con: The need for human judgment in auditing remains crucial, and automation should supplement rather than replace this expertise.
Cost Savings:
We sadly live in a world where resources are not in excess. Nothing worthwhile will be achieved if we don’t keep an eye on costs.
Pro: Automation leads to cost savings. Any automation that is not powered by the desire to save cost is simply a waste of time.
Con: jobs of unprepared people may be taken.
Skill Shift:
One thing I like so much about the field of accounting and finance is that there is never a dull moment. Your place at the summit will quickly be taken if you fail to keep up with the constant changes.
Pro: Accountants develop new skills in data analytics and technology.
Con: Adapting to these changes requires time and investment in education and training. But, what good thing does not require time and investment?
Regulatory Compliance:
Law and order exists for valid reasons. We won’t be where we are today if not for the existence of law and order.
Pro: AI can aid in regulatory compliance.
Con: Over-reliance on AI may overlook subtle compliance issues, requiring human oversight.
Enhanced Decision Support:
Pro: AI offers valuable insights for decision-making. Humans cant keep up with the demands from decision makers.
Con: Blindly following AI recommendations without critical thinking may lead to suboptimal decisions.
Cloud-Based Accounting:
It is not my intention to bore you with some technical details in this article but I need to give a contextual meaning to this topic of cloud accounting.
So what is cloud accounting?
Cloud-based accounting refers to a modern approach to financial management where accounting software and data are hosted on remote servers, accessible via the internet. Instead of relying on traditional desktop software, businesses and accountants can securely store, access, and manage their financial data in the cloud.
This offers several advantages, including real-time collaboration, remote access from anywhere with an internet connection, automatic updates, and enhanced data security.
Cloud-based accounting solutions often provide features like automated backups, multi-user access, and seamless integration with other business tools, making it easier for organizations to streamline financial processes, improve accuracy, and adapt to changing business needs. This technology has become increasingly popular due to its flexibility, cost-effectiveness, and scalability
Pro: Integration of AI with cloud-based accounting enhances collaboration.
Con: Data security and privacy become paramount concerns in cloud-based systems.
Customized Financial Reporting:
One size does not always fit all circumstances. There are numerous instances where the only feasible solution is the one that is intentionally and deliberately customized for a certain situation.
Pro: AI generates customized reports tailored to stakeholder needs.
Con: Ensuring these reports are comprehensive and accurate is essential to maintain trust.
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The impact of ML and AI on the accounting profession is undeniable. While these technologies offer substantial advantages in terms of efficiency, accuracy, and decision support, they also introduce challenges related to job displacement, data privacy, and the need for ongoing education and oversight.
To harness the full potential of ML and AI, accountants must strike a balance between automation and human expertise, ensuring that technology serves as a powerful tool to enhance, rather than replace, their vital role in financial management and reporting.
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