Accounting has existed for centuries. The introduction of the ‘Indo-Arabic numeral system’ in the Western world gave a new outlook to the way accounting is conducted. With double entry bookkeeping & accounting enjoying the limelight, there is hardly any business where accounting is not performed.

For any firm to be operational, it needs to concentrate on regulatory & compliance requirements, stay ahead in the competition and make profits to sustain in their business environment. Therefore, one cannot undermine the role of the accounting department as it creates an accurate financial picture of the firm, through accurate reporting.

In that case, if the cursor is laid on accuracy then making any form of accounting errors is a luxury. For instance Bank of America revealed an accounting error in its calculation of capital reserves costing the company four billion dollars. Apart from tossing the public reputation of the bank, it was rebuked by the federal reserve board.

This reveals a reality of accountants dealing with accounting errors and adding to the injury are the accounting team doing the same repetitive functions. They take the form of data entries, bank reconciliation, opening and closing accounting etc. If the firm employs additional accountants it accumulates the operating costs in the form of unproductive man-hours, time consumption and persistence of errors. It is necessary to press the brakes and find a constructive solution.

In the zeitgeist, such a feasible and universally acceptable solution emerges in the form of accounting automation. It is backed through Artificial Intelligence and recommended by the users. Covid-19 changed the way we function and automation is a ‘blessing in disguise’ where all services from services, logistics, hospitality, and industrial workshops keep the world on the wheels.

Also read : How AI accounting automation solutions provide your accounting firm a competitive edge?

What is the significance of Artificial Intelligence in accounting?

Artificial Intelligence is a branch of computer science where it uses its capacity to analyze the input data from its algorithms, pattern recognition etc. It educates itself like humans at every instance to tackle complex problems. Automation takes place when a software bot is directed to perform tasks as per the predefined rules.

AI robots can automate tasks where human rationality is not required. It mimics human actions and does processes which are repetitive, standardized and error prone. From its inputs it delivers predictable outcomes with accuracy and speed.

If Artificial Intelligence sets its parameters through rules, then accounting is the likely customer as it is grounded on rules. Their union can script a new story in the financial world.

What are the processes where AI can be used in accounting?

• Data entries - is the base that needs to be strong and accurate. It is also the ground zero where all forms of accounting errors happen such as incorrect value, wrong invoices / PO number, different vendors etc. To capture the correct data and allocate it on right books like expenses statements etc. is done error free though AI.
• Bank reconciliation - is a tedious process where both the firms’ accounting books and bank statements hardly reconcile. Reasons being outstanding checks, deposits and errors hardly appear in the statements. In order for proper concurrence between both accounts, AI plays its role by updating internal records instantly by fetching transactions from the bank statements as and when it occurs.
• Accounts payable / receivable - these two processes determine the health of the firm in specifics like
  • liquidity
  • cash flows
  • payment it owes and receives
  • areas of bottlenecks to initiate payment cycle / receivable cycle
  • avoid unnecessary expenditure
  • and able to make financial decisions

With huge strides taken by AI through automation, now the question asked by experts are. Will automation make the job of an accountant redundant? There is not an iota of doubt, automation has shifted the power equation from accountants to a greater extent. But, is the accounting profession obsolete, we need to go forward to answer them.

Which places do accountants score better than Artificial Intelligence?

According to the US Bureau of Labour Statistics, accounting and auditors profession employment is likely to generate employment by 7 percent from 2020 to 2030, From this we can infer, though AI is successful in eliminating repetitive tasks, yet it needs the expertise and breakthrough to scale high performing tasks.

Let us have a peek what are they:

• No alternative to human traits:
  Humans are not just endowed with just cognitive abilities but also emotional intelligence. Some of its attributes are creativity, intuition, empathy etc. which AI is devoid of. Though AI can bring to the table the projection of risk analysis, plot the variances in the charts etc.
  Yet it cannot succeed to apply the natural abilities of humans to make distinct decisions depending upon the situation. This attribute is very much humans’ call and that cannot be replaced.
• Authenticity of the data:
  AI runs its program based on the input data and makes its own permutations and combinations based on the feed. There is not an iota of doubt about its accuracy and speed in delivering its results. However, it opens a ‘pandora box’ where it is highly susceptible to misappropriation. For eg a personnel expense can be charged to the company account and there is no way AI can red flag it.
• Interpretation of the data:
  Artificial Intelligence output provides us numerical data and we are able to generate umpteen filters to produce our desired reports. From the charts at hand, only human analytical abilities can translate those percentages into strategic decisions for the betterment of the firm’s economic activities.
• Consultation and Interpersonal skills:
  Artificial Intelligence helps to bring efficiency to the financial data, but fails to conduct relationships with its customers/clients. Consultation with clients is a nuanced field where humans excels through their interpersonal skills. Accountants perform consultation with the clients and management to help them understand the data by interpreting the figures, which AI lacks momentarily.

Also read : Myths and Misconceptions Surrounding Robotic Process Automation

How do we summarize the evolution of Artificial Intelligence?

No one can stop the evolution of innovation and Artificial Intelligence gives accountants to maneuver their time to a much elevated job skills in the form of data analytics, consulting etc, to provide better solutions.

Humans need to understand that technology brings forth additional tools for simplifying the process but cannot substitute them. There is no denial to the fact AI has revolutionized the way accounting was done in the past and how it is done in the present. So, the much awaited future is the collaboration and treated as equals between human emotional intelligence and robots. Artificial intelligence to bring the much desired results.

Our firm has strived all the years to bring the much needed balance to deliver to our clients their requirements by bridging the gaps where AI can be used in their firm. If you are interested in knowing more about how you can use AI robots for accounting services, please call us for a demo.