Discuss About The Frankston First Computerized Spreadsheet?
Artificial intelligence is powerful system which provides outputs that can be extremely accurate and replace human efforts. However, they cannot replicate human intelligence. There is need to recognize the opportunities and threats of this different form of intelligence, and develop understanding of the best ways for computers and human to work together. The purpose of this report is to identify the use of artificial intelligence (AI), its opportunities and threats in the accounting profession and to provide an overview of the different AI elements to both accounting and non-accounting professionals AI techniques in the accounting profession have changed accounting work and efficiency in providing services to the clients. These techniques such as machine learning are not new, and the speed of change is fast. Moreover widespread acceptance in business and accounting is still in early stages (accountantsone.com 2018). To make a positive vision of the future, there is a need to develop a deep understanding of how artificial intelligence can solve accounting and business issues, the practical challenges and the skills accountants require to work alongside intelligent systems.
Artificial Intelligence (AI):
As pointed out by Christensen, Nikolaev and Wittenberg?Moerman (2016), AI is a technology enabling to make decisions in critical tasks, which the human beings use to carry out previously. In other words, AI is psychology that enables computers to do decision-based tasks previously done by humans. It shows up in many forms like machine-based learning that can gradually become better at analysis and decisions the more it is used and speech-based technology that can understand different voices and languages (Articlesbase.com 2018).
The advantages of artificial intelligence are the machines are programmed in a manner that work for longer hours.
The jobs that are monotonous can be conducted with ease through the help of machines.
- Artificial intelligence results in unemployment and would enable individual to lose their creative power.
- The creation of artificial intelligence involves huge amount of cost with complex machines.
In case of business organizations employing AI, they are able to seek a competitive advantage, which has helped in enhancing their overall business productivity. When such computer engineering technology is employed in organizations, it would lead to greater analytical and decision-oriented calculations. Several accounting firms are engaged in implementing modern technology such as AI, which has a probability of dramatically changing nature of the profession of accounting. Accountants have embraced waves of automation over several years to increase the efficiency and effectiveness of their work but technology will not be able to replace the need for expert knowledge and decision-making (Bizfluent 2018). In fact, earlier generations of intelligent systems have demonstrated the ongoing influence of human expertise and the limits of machines. Since 1950s, Artificial intelligence has been an aspiration of computer scientists, and it has seen great progress in recent years. However systems progressively generate outputs that far exceed the consistency and accuracy of those produced by humans, on a task-by-task basis. AI brings many opportunities for accountants in short to medium term, to increase their efficiency, deliver more value to businesses and provide more insight (Bls.gov 2018). AI raises opportunities in the longer term, for much more drastic change, as systems progressively take over decision-making tasks currently done by humans. The artificial intelligence would fail to create design and lacks creativity because it does not involve human brain.
It has been seen that several clients have shown interest in the likely opportunities and threats arising due to AI in a big consulting firm. According to a few clients, there is threat to the current business models of companies (Community.accountantsworld.com 2018). On the other hand, the other clients perceive that AI would help in creating a number of potential opportunities. No one can deny the fact that AI can become a very useful business enhancement tool in professions where significant training is essential requirement like In the Accounting Profession where technical precision and right-minded judgments are needed also has large scope for AI applications
The application associated with machine learning and AI into the professional context of the accounting firms is an intriguing aspect. Artificial intelligence makes the life of human easier and introduces general intelligence and emotions quotient to the machinery. Cloud solution is used to develop AI that helps in providing unparalleled advantage, as it helps in maintaining the privacy and security of confidential data of various users (Journal of Accountancy 2018). Innovation is propelled with the help of machine learning in accounting profession, which is a principal edge in the AI context. Paul Bulpitt, head of accounting for Xero UK, spoke about the potential of AI in the accounting industry at London Tech Week in Shoreditch. According to him Small businesses always face difficulties with account codes. Every onefiles things differently and the evidence is the 10,000,000 different account codes on Xero”. However, machine learning features such as automatic coding provide simple solutions to these problems. These tasks are eliminating mistakes that humans can so easily make.
Role played by technology in changing the work of the accountants in recent decades:
Technology evolution has changed the accounting profession in the following ways.
Most of the People believe that access to new software has made the accountant’s job easier. The days are gone where accountants use paper, pens, and calculators to balance the books and verify the ledgers accuracy. All these sensitive jobs are properly done by technology.
- Reduction in error
Nowadays with specialized accounting software and word processing tools, it is fair to say that technologies have improved accuracy and reduced the margin of inaccuracy. Whereas for data entry, some accountants still use Microsoft Excel and running ledgers, many companies will purchase special software that provides simplified data entry and accurate ledgers results in more accurate financial reports. This is advantageous for businesses because inaccuracy can lead to tax penalties or uninformed decision makers (Logica.ugent.be 2018). Up to a suitable level, reduce margin of error results in financially stable companies that are better equipped to stay afloat.
Technology has changed the accounting procedures
Various structural changes are taking place in the operational trenches, particularly regarding the procedures of administration. For example, one of the most significant changes is affecting compliance, because the way in which data is managed and processed becomes fully automated which allows the accounting professionals to obtain fast and reliable data incorporated in each tax report generated. Thus, automated entry of data is the rule after accomplishment of maximum efficacy (Resgroup.com 2018).
A need for basic accounting training has declined
Moreover, the need for basic accounting training has declined due to the use of special software programs namely the digital technology. Without spending years completing core training, an accountant with access to a computer and the right systems can easily perform statistical analysis, tax preparation services and forecast modeling much more efficiently and effectively. Accountants are no longer number crunchers. In fact, they are professionals having diversified roles such as high end interaction with the users and saving of human resource.
- Skill Upgradation
Nowadays the professional accountant needs a long list of skills before they will land a position with a reputable organization. Being knowledgeable in accounting practices and skilled communicator, accountants also need to be able to apply the processes learned and integrate these processes with IT programs. Although there are a few professionals who are not highly equipped with the latest Enterprise Resource Planning Systems, professionals in the field will need to be able to integrate accounting and IT. As Technologies are always advancing, the American institute of CPAS requires from those who wants to become CPA must keep up with emerging advanced technologies.
- Technology increases accountant’s productivity by saving time
Keeping all benefits in mind, some accounting organizations have started to implement AI for running their business operations smoothly. Before the introduction of accounting computer programs, accounting entries were manually done, mistakes could mean hours of recalculation, finding mistakes was tedious task. In contrast to periods when cloud technology was not known to the accounting professionals, the industry players are now implementing new technology in their routines and the AI adoption is growing at a faster pace (ThoughtCo 2018). More than 80% of executives believe AI leads to a competitive advantage, and 79% believe it will increase their company's productivity (recent MIT Boston consulting group survey).
Categorization of accounting data becomes easy
In an identical fashion, AI has strong influence on the categorization of data. The machines and computers now have the ability to ascertain and categories all information into various accounts, which implies that artificial intelligence has made accounting easier for accountants. For example, if an organization has a monthly subscription phone bill and purchased phone bill from the identical phone carrier, the software programs would understand automatically that their nature is different. As a result, they would be placed under different chart of accounts (ThoughtCo 2018). Machine learning could be observed as well, since software programs could learn from different human input to undertake greater judgments. In the current era, the administration jobs are reduced and some operational tasks that the accountants use to perform traditionally are now performed on the part of AI like accounts receivable and accounts payable (ThoughtCo 2018).
Opportunities from the use of Artificial Intelligence:
- Artificial intelligence is applicable to issues pertaining to audit and assurance
The technology related to AI is applicable to issues pertaining to audit and assurance in the accounting profession. Thus, it is crucial in identifying the accounting information in an effective way favoring the needs of the clients as well as the accountant work (Resgroup.com 2018). For example since 2015, KPMG has been using McLaren Applied Technologies (MAT) in its audit processes, which allows for the automation of evidence collection and the creation of complex data reports, improving client services and saving time. Similarly, various audit firms are currently deploying software programs in their audit process. These predictive analytics makes the audit procedure easy, As a result, the client services are improved along with efficiency in data collection and evaluation. This is because the monotonous jobs can be easily carried out with the help of machines. Accountants are giving advice, performing future forecasts and introducing new processes that a computer cannot be trusted to do
- Artificial intelligence helps accountant in effective interpretation of financial information
The digital process helps in organizing data and the documentation of the clients effectively, which forms the basis for effective interpretation of the financial information that the clients have provided. The artificial intelligence is regarded as the progressive tool that is developed in financial planning and management accountants have considerable opportunities to use data analytics, which help the business organizations manage decisions. The finance and accounting sector is considered as the premier candidate for the automation procedure, which AI offers due to higher reliance on numbers and data (Resgroup.com 2018).
Many businesses are using robotic process automation systems. For example, Kensho, the world’s first robotic computational knowledge engine for financial industry, is an intelligent computer system commonly used by investors and stock traders to predict marketing changes and automatically analyses portfolio performance. The accountants use it with degree of precision to reduce their errors.
Repetitive tasks shift to machine
Rather than fear changes that Artificial intelligence will have on accounting jobs, it’s an opportunity for accountants to be excited. The profession is going to become more attractive as repetitive tasks are done by machines. This is important in seeking competitive positioning and obtaining efficiency in providing client services. Nowadays accountants are expected to advise best-practices to management and advise best ways to reduce costs while maximizing profit. The task-oriented accountant is outdated. The accountants are now considered as a business consultant rather than a mathematical tool.
- Opportunities to use data analytics in making strategic decisions
Artificial intelligence could have wide range of effects on the accounting profession like tax return. Tax return preparation duties and audit activities that are performed now by accountants may be fully handled by machines in the coming future. Robo advisers have established a foothold in financial planning domain, while management accountants have unbelievable opportunities to use data analytics to assist their organizations in making strategic decisions. Accountants, who want success in business field, need to think about ways they can deploy technology (said Calum Chace).
- Opportunity to create a whole new market
According to report from Deloitte states, in the very near future, AI could help to develop a whole new paradigm of products and services, creating a whole new market with large investor profits (Bizfluent 2018).
The recent technological progress has a direct effect on managing financial process and book-keeping, in which the tasks require precision. Hence, technology and software programs would be indispensable in the accounting profession in future, as the performance of accounting tasks would rely on advancement of technology. The integration of AI in the accounting profession offers various advantages to the accounting profession like risk minimization, time saving and taking business management to a new stature (Articlesbase.com 2018). According to Derek Bang, chief strategy and innovation officer in USA, Investments by big firms in AI saves time the accountants spend on asset estimation and complex audits. Now every firm should think about how to adopt artificial intelligence, it can be by contracting with specialized technology firms or building their own departments.
Paul Bulpitt, head of accounting for Xero UK, spoke about the opportunities from use of AI in the accounting industry, he said that it can help businesses to save time, reduce mistakes and move business management into a new realm.
Threats from the use of AI:
i) Threat of economic singularity
Accountants will be among the first professions affected by the use of artificial intelligence. Up to 95 percent of accountants will face some threats related to the new automation capabilities.(Oxford University and Deloitte in 2015).According to Chace, the author of the book “Surviving AI and The Economic Singularity”, accountants should consider the long term effects of AI. Inside the span of 20 to 30 years, AI will reach the point whereas lot of people no longer will have jobs because machines will be able to do the job better than humans. This is the point of “economic singularity. ”Having them lose their jobs all at once could have overwhelming effects. To deal with possible huge job losses suitable plan with thorough research is required, both public and private organizations need to support the efforts of error reduction, with the input of communities across the world. In addition, according to economist (Keynes in 1930), the Use of AI in the accounting profession has a 94% chance to cause losses, in the next couple of decades. Keynes called it a “new disease”: “technological unemployment. This is because people under this circumstances would lose their creativity and would become lazy.
ii) Threat of technological singularity
Moreover, According to Chace, second threat for humans will come in coming future within 50 to 70 years, when humans will develop an artificial general intelligence, the creation of machines that have all the cognitive abilities of a super intelligent human rather than just having knowledge of one thing, like driving a car. This is called “technological singularity.” This makes humans the second most intelligent beings on the planet. It will be uncomfortable and important challenge for human.
iii) Threat associated with additional cost
Most of the organizations consider AI as cause of additional expenses; the major threat is associated with costs to be spent in repairing and maintaining and upgrade technology. Companies such as Apple and Uber could consider artificial intelligence as threat or rising cost.
iv) Threat in relation to ethical and moral values
There is another threat of AI in relation to ethical and moral values. The incorporation of machines into the working system of the organizations might lack efficiency and they are not as accurate such as the gift of nature (Articlesbase.com 2018).
From the above discussion, it could be stated that numerous benefits are inherent in the profession of accounting, if AI is incorporated in the business process. AI leads to a competitive advantage which increases company's productivity. It makes accounting job easier, and reduces the margin of error as machines are programmed with longer hour of constant work.
Accountants are expected to advise best-practices and now considered as a business consultant rather than a mathematical tool. As discussed earlier technological and economic singularities are big challenges for human but can be solved by the help of research institutes which are already dedicated to dealing with this challenge.
We can conclude that AI will bring about another revolution in the industry, which doesn’t put accountants out of job, but in reality artificial intelligence is regarded as recommendations since it helps them and their services get more business value and efficiency.
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