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Will AI Ever Replace Accounting? The Surprising Answer

Will AI Ever Replace Accounting? The Surprising Answer

Can artificial intelligence (AI) make accounting jobs obsolete? The answer is more complicated than a simple “Yes” or “No.”

AI can automate repetitive accounting tasks and reduce human error. However, AI can’t fully replace human accountants at its current level. Repetitive accounting tasks include basic bookkeeping, bank reconciliation, and contract interpretation.

To explain AI vs. human accountants debate, we want to cover a few things. Specifically, we will discuss how accounting professionals use AI, the impact of continued AI usage on accountancy jobs, the downsides of using AI for accounting, and how accountants can stay relevant in an increasingly AI-reliant world.

How Is AI Used in Accounting?

How Is AI Used in Accounting?
How Is AI Used in Accounting?

Artificial intelligence relies on rules. Rules are the bedrock of the accounting profession, so AI and accounting work well together.

AI can automate accounting tasks such as:

  • Data entry
  • Report generation
  • Payroll
  • Bank reconciliation
  • Contract interpretation

Let’s talk about these tasks and the software that can perform them in more detail.

Data Entry

The first step in accounting is to record and classify financial transactions. Even for small businesses, these transactions can multiply to the point that they render manual bookkeeping tedious and impractical.

Lucky for business owners, they don’t have to record each transaction manually anymore. For example, Expensify can capture expense data from receipts and integrate with other software like Xero, Sage, Quickbooks, and Oracle.

Report Generation

Once a business records and classifies its financial transactions, the next step is to summarize them. Summarizing involves grouping similar items together, and AI excels at that sort of thing.

For small businesses, software such as Expensify and Xero are enough to generate the financial reports they need. For large companies, BlackLine or Fathom may be a better option. Programs like these can analyze financial data, create cash flow forecasts, and generate reports for management, among others.  

Payroll

Payroll
A young dark-haired woman with glasses working on a virtual payroll screen.

Unless you’re the only person running your business, you’ll need payroll management software. After all, your employees are valuable assets, and you don’t want to deal with the consequences of withholding anything they are due them. 

Gusto is a good choice as far as payroll management software is concerned. Not only can it ensure that you pay your workers fairly, but it also serves as an integrated HR management tool. 

Bank Reconciliation

The figures in accounting books hardly ever match up with those from bank statements. That’s because accounting transactions like deposits in transit, outstanding checks, and bank errors don’t appear in bank statements. 

The purpose of monthly bank reconciliation is to account for the differences between the business books and the bank’s records. Bank reconciliation also helps detect potential fraud. 

Accounting software like Xero can perform basic reconciliation tasks for small businesses. On the other hand, Reconart is a dedicated bank reconciliation software that works on a larger scale. Aside from bank reconciliation, Reconart also performs accounts reconciliation for receivables and payables, intercompany reconciliations, and financial close management tasks.

Contract Interpretation

Deloitte, one of the largest professional services companies globally, uses dTrax to manage its contracts. dTrax is an advanced AI that analyzes contracts (including accounting contracts) to determine factors such as cost, risk, and compliance. 

Please, see some of our other interesting articles on artificial intelligence, such as “Why Is AI So Expensive For Business?” and “Can AI Help?”

Will Accounting Jobs Disappear?

Articles about how AI will replace accounting usually cite old reports like this 2015 report from PricewaterhouseCoopers or also from 2015, NPR’s article on this 2013 report from the University of Oxford “The Future Of Employment: How Susceptible Are Jobs To computerization?” These reports state that 97.5 percent of accounting jobs will disappear within the next 20 years. However, the articles refer to accounting clerks and bookkeepers, which differ from accountants. 

Accountant jobs will grow 7 percent from 2020 to 2030, according to projections from the U.S. Bureau of Labor Statistics. Although AI eliminates repetitive accounting tasks, it’s not sophisticated enough to perform high-level accounting tasks, such as strategic corporate planning. 

Aside from the lack of sophistication technology-wise, AIs have a few other downsides as accounting tools. We will explain them further in the next section.

What Are the Disadvantages of AI in Accounting?

What Are the Disadvantages of AI in Accounting?
What Are the Disadvantages of AI in Accounting?

In many ways, AI works better than human accountants. It’s faster, more cost-effective, and less prone to errors. That said, it’s also worse in some ways than humans.

The disadvantages of AI in accounting are:

  • AI can’t perform strategic accounting tasks.
  • AI assumes that the source data is reliable.
  • AI brings up unaddressed ethical and security implications.

Let’s dig a little deeper into these disadvantages.

AI Cannot Perform Strategic Accounting Tasks

Sure, AI can crunch the numbers and generate the reports. But can it tell a busy CFO what to do with those numbers and reports? AI excels at putting together data in a way that is easily digestible to a human. However, the strategic decisions based on that data ultimately lie with the humans who use AI. 

AI Assumes That the Source Data Are Reliable

It has been proven that AI can perform certain tasks faster and more efficiently than humans. That doesn’t mean AI is perfect, though.

For one, AI is susceptible to trickery. If, for example, an unscrupulous employee charged a personal expense to the company account and passed it off as a company expense, the AI can’t immediately flag that expense as suspicious.    

AI Brings Up Unaddressed Ethical and Security Implications

Let’s assume AI becomes sophisticated enough to perform tasks at the strategic or organizational level. If the company designs the AI to work to its advantage (in the same way Enron used Arthur Andersen to “cook its books” before both companies went under), who’ll be held liable for any accounting scandals after that? 

What is the guarantee AI will be 100 percent secure when safeguarding sensitive company and client data?  

What Skills Do Accountants Need in the Age of Automation?

What Skills Do Accountants Need in the Age of Automation?
What Skills Do Accountants Need in the Age of Automation?

We have established that AI isn’t replacing human accountants any time soon. Still, accountants should upgrade their skills to keep up with an AI-heavy future.

In the age of automation, accountants need:

  • Big data skills
  • Programming skills
  • ERP skills

We elaborate on these skills below:

Big Data Skills

“Big data” refers to data that moves so fast in such high volumes that traditional data crunching methods aren’t enough to make sense of them anymore. If you’re an accountant, you need to be comfortable with visualization software like Tableau to analyze and interpret big datasets.

Programming Skills

Suppose your tech-savvy enough and can’t find accounting software that meets your specific needs. In that case, you can learn programming languages like Python, Java, and C++ to design your accounting software. Luckily, many online courses offer programming lessons specifically for accountants, like Coursera’s Accounting Data Analytics with Python.

ERP Skills

Unfortunately, what you learned in accounting school is no longer enough to survive in an AI-dominated future. You need to develop a well-rounded skill set that includes knowledge of Enterprise Resource Planning (ERP) software like Oracle and SAP. 

Most importantly, you need to think like a CFO, whose mindset goes like, “Okay, I have all these data and reports. What do I do with them? How can I use this information to move the company in a direction that’ll benefit the organization as a whole?”

Final Thoughts

Final Thoughts on Will AI Ever Replace Accounting

Accountants shouldn’t see AI as a threat to their jobs. Instead, they should see it as a tool to free up their time and as an opportunity to develop skills that make them more valuable to their employers.

References:

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POST CATEGORIES

We are a website that writes helpful articles about the latest technology for emergency preparedness and power grid energy. We try new devices and analyze their quality, durability, effects, for emergency preparedness.

This site is owned and operated by Fremontii, LLC. Fremontii, LLC. is a participant in Amazon Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com.