How could AI change the accounting world?

Artificial intelligence is the latest buzzword, with generative AI applications being released by Big Tech at breakneck speed and sending share prices soaring. It’s enough to make your head spin, but the new tech is here to stay - and it got us thinking about how AI-driven accounting could soon be the norm.

Of course, there are pros and cons to introducing new tech to the UK accounting system - but as it stands, the benefits outweigh the negatives. Let’s take a look at how AI could revolutionise accounting.

AI in the jobs landscape

There’s already been some theorising about generative AI’s impact on the jobs market as a whole. The World Economic Forum’s earlier report found that 75% of respondents expected to adopt AI in the future, while a Deloitte survey from July reported that 64% of those who had heard of AI in the UK sample thought AI would take jobs away.

But it’s not all bad - Goldman Sachs’ study on AI in the workplace found that 60% of jobs today didn’t exist in 1940, so there’s plenty of room for new jobs around AI. Microsoft’s AI work report also found that employers are more interested in increasing employee productivity than reducing headcount - they make AI products, though, so take those findings with a pinch of salt.

So, while the future might look worrying with artificial intelligence taking over roles from humans, it’s a reminder that jobs will spring up around the industry to accommodate it. And likewise, the accounting profession and accounting technology will innovate in kind.

The AI accounting transformation

No matter your thoughts on AI, it’s clear the new tech will impact every sector going forward - and accounting is no exception. But that’s not necessarily a bad thing! In fact, we could see a world of good emerge from AI in accounting. 

Here’s how we think generative AI could affect the future of accounting - for better or worse.

Accounting automation

Automating routine tasks like data entry, invoices, and expense management is AI's most obvious use case in accounting. Generative AI software could free up valuable time spent tracking and analysing spending to focus on more complex tasks (not to mention lightening everyone’s admin load).

We’re already halfway there with cloud accounting services like Xero and Quickbooks making everyone’s lives easier, so it’s not a far reach to expect these platforms to offer AI automation services soon.

Fraud detection

Online fraud is a massive headache for individuals and businesses - in 2022, over £1.2 billion was stolen through financial fraud and almost three million cases across the UK. Artificial intelligence could be a game-changer for spotting fraud in accounting records.

Machine learning can potentially monitor real-time transactions and flag fraud much earlier or protect businesses with better security measures for sensitive financial data. From an accounting perspective, it could help the industry spot fraud quicker and easier when filing tax returns.

AI in compliance and auditing

The possibilities are endless regarding artificial intelligence and compliance - everyone’s favourite topic!

AI could help generate reports for corporation tax, VAT returns and PAYE submissions for HMRC. With the upcoming Making Tax Digital changeover, AI would be a massive help in converting paper records into digital formats quickly and efficiently.

As for audits, much of the grunt work could disappear with AI in auditing, like sampling, testing and cross-checking transactions. We could even imagine AI allowing for continuous auditing instead, complete with real-time monitoring and assessments.

The dangers of AI in accounting

Of course, the industry will need to get a handle on some drawbacks to using AI in accounting.

AI accuracy

One of the significant issues around generative AI at the moment is how accurate the results are that it comes back with. One tiny error in a machine learning algorithm could have a cascading effect, leading to an accounting process disaster.

Data protection

AI systems need access to vast swathes of sensitive financial data to work effectively. Naturally, this raises issues around cybersecurity and the human safety checks in place to help ensure everything’s working correctly.

Auditing AI

AI algorithms can be challenging to understand at the best of times - so how do you go about auditing its decisions and actions? Not to mention there’s currently no legal framework for AI in the UK to work from, so we’re in a bit of a Wild West position until there are some laws and regulations in place.

Final thoughts

AI in accounting sounds like a dream when it comes to minimising admin, drastically reducing fraud and making accountants' lives easier. But the drawbacks to the tech are still very apparent, and we’re still a long way off from AI replacing entry-level positions or becoming an accounting assistant.

At BXD Accounting, we’re excited for the AI revolution to take on accounting. If you want an accountant who stays up-to-date with the latest tech, book a call today to find out how we can help.