Three Ways AI Transforms Accounting

Safe Use of AI

Before we discuss the three ways in which AI is transforming accounting, let’s take a moment to talk about the safe use of AI.

First, never input confidential information into publicly available AI tools, such as the free version of ChatGPT, CoPilot, and others. Although some of these tools promise to keep information confidential, and you can determine confidentiality parameters in your account settings, there is no guarantee that the information will be kept out of the public domain.

In fact, this past August, ChatGPT admitted that it had accidentally released chats from a number of users; they had failed to disclose what happened when users hit the ‘share’ button (many thought it was a private link). Err on the side of caution when using public AI tools or use a paid version with embedded security features.

AI is powerful, but it makes mistakes. One of the first rules of AI use is “trust but verify.” In other words, double-check whatever information you receive from your AI platforms. If using an AI tool that seeks information online, ask it to cite source links and click through to read them to make sure it is accurately quoting the information.

Three Ways Accountants Can Use AI to Enhance Efficiency

Assuming you’re taking appropriate precautions when using AI, it can be a game-changer to your daily workflows. AI is very good at analyzing vast amounts of data quickly and can perform numerous tasks to make an accountant’s life easier.

Improving Audits

The auditing process often relied on sampling rather than analyzing all data due to the volume of material available. As mentioned, AI is very good at analyzing large amounts of data quickly. AI can swiftly analyze data sets to detect abnormal patterns and flag fraud. A skilled CPA or accountant can then review AI findings and determine the next steps. This is definitely a huge time-saver for those preparing for and conducting audits.

Financial Planning and Analysis

Another task that relies on data is financial planning and analysis. AI can quickly review cash flows, receivables, and external data sources to provide baseline financial analysis. From there, it can act like an assistant during the planning process. You can also use AI to model best and worst-case scenarios. After performing the analysis, you can then step in and help your clients interpret and understand the results.

Assist with Tax Preparation and Compliance

Taxes are one of the most complex areas of accounting, and keeping track of tax changes can be a full-time job for some organizations. AI embedded within accounting programs can help accountants monitor, track, and report the appropriate taxes. It can also help you prepare tax returns and flag any inconsistencies or missing information. Both can be a huge help to a busy accountant.

Artificial Intelligence: Like a Smart Entry-Level Employee

For those still hesitant to tap into the power of artificial intelligence, it may help to think of it like an entry-level employee, rather than a computer program. Just as you wouldn’t trust an entry-level accountant to prepare a full audit, you wouldn’t trust an AI program to complete and submit audit findings. You would review the work of a newcomer to the profession, make corrections to their work, and then share it with the client.

While AI will never rise to the level of a CPA, it can provide support just like an entry-level employee and handle tasks quickly. It can improve many areas of your work, including audits, financial planning and analysis, and taxes. Using your skills and experience with AI’s speed can be a game-changer for your team and deliver better outcomes for your clients.

Welter Consulting

Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact us for more information.