As the use of artificial intelligence (AI) in accounting becomes more prevalent, the question on many accountants’ minds is ‘can artificial intelligence replace accountants?’
There’s no easy answer to this question. But the general consensus is that while AI will certainly change how accountants do their jobs, it will not replace accountants. Simply put, AI is designed to enhance human capability, not replace it.
What exactly is artificial intelligence?
Artificial intelligence, or AI, is the simulation of human thinking and learning by computer systems or machines that improves every time new data is introduced. Machine learning often powers AI by analyzing patterns in data through algorithms. The more data collected and analyzed, the better it performs.
AI and Human Interaction
As incredible as artificial intelligence may seem, AI-powered accounting software cannot perform without human interaction. For example, accountants will need to teach it how to properly categorize expenses and match receipts to credit card transactions from a digital feed before the software will be able to automate the process. Over time, AI learns how to manage these tasks, saving accountants valuable time and minimizing costly errors.
How has AI changed accounting?
Artificial intelligence, while still in its infancy, is changing the accounting profession in a number of productive ways. By automating tedious manual tasks, AI has been able to streamline bookkeeping processes allowing accountants to focus on higher-value activities. Some of these tasks include:
- Categorizing transactions
- Reconciling bank transactions to receipts
- Identifying data entry errors and potential fraudulent activity
- Updating the ledger
The Bottom Line
The accounting industry has been grappling with a shortage of qualified professionals for over a decade, and this problem has continued well into 2023. The American Institute of CPAs states that the shortage is due to fewer people graduating with accounting degrees and a decline in the number of individuals taking the Uniform CPA Examination. Consequently, the demand for accounting professionals is expected to increase as fewer people are actually entering the field.
As to whether AI will make human accounting professionals obsolete in the future, there are several irrefutable reasons why it is unlikely that AI will completely replace accountants:
- Complex Decision-Making: While AI can handle routine tasks, complex decision-making requires human judgment, experience, and critical thinking. Accountants not only process data but also interpret financial information, provide tax advice, and offer financial planning services.
- Client Interaction: Accountants frequently work closely with clients, providing personalized advice and guidance. Building trust and rapport is essential and AI is unable to replicate the human element of these interactions.
- Regulation and Ethics: Accounting is a highly regulated field with strict standards and ethical considerations. Accountants are required to adhere to professional codes of conduct and ensure compliance with legal requirements. Only human accountants are capable of understanding and navigating such complex regulatory environments.
- Adaptability: Accounting professionals continuously evolve with changes in tax laws, financial reporting standards, and business practices. Humans can adapt and apply their knowledge and skills to new scenarios, AI cannot.
- Data Accuracy and Interpretation: AI relies on the quality of the data it is fed and the algorithms it follows. Inputting bad data or flawed algorithms leads to inaccurate results. Accountants are trained to identify discrepancies, verify data accuracy, and make sense of complex problems.
There’s no question that AI will continue to affect the accounting profession by augmenting repetitive tasks and processes. According to the latest Mordor Intelligence Growth Trends & Statistics Report, AI in the accounting industry is projected to reach a CAGR (Compound Annual Growth Rate) of over 30% year-over-year from 2023-2028. That said, the relationship between AI and accountants is likely to be one of collaboration, with AI supporting and complementing human accountants versus fully replacing them. In the words of Santiago Valdarrama, a distinguished software developer recently named one of the most influential people in machine learning, humans will not lose their jobs to AI but rather to other humans who have embraced it.
Is AI accounting software right for my business?
While using AI-powered software can be advantageous, the results you’ll achieve depend on the application you use. Many accounting software applications bill themselves as automated accounting software, but it’s important to note that automation does not equal AI.
If you want to truly automate your business processes, from managing expense receipts to paying bills, you’ll need an application that not only performs automated tasks such as importing bank feeds but one that can also digitize and extract data from paper bills and receipts, identify the data extracted and then organize that data into workflows. There are plenty of accounting applications on the market today that do some of those things. But only Docyt does all of them.
AI may not be poised to replace accountants, but accountants can leverage accounting automation software, Docyt, to work more efficiently. Spend less time on tedious data entry and manual tasks and more time honing your financial and strategic expertise.
The future of accounting is AI-powered accounting software. Don’t settle for automating only a portion of your business. To see how Docyt can help you manage your business, set up a free consultation today.
Editor’s Note: This article was originally published on October 6, 2022, and has been updated to reflect the latest advancements in AI technology.