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Accounting in the Age of AILock Icon

6 min read

True to his name, Harding University instructor Joe Faith believes in a positive future for artificial intelligence in accounting, one profession that machine learning is predicted to affect most.

“There are a couple of different ways to look at it, the doom and gloom scenario that people are worried about: total displacement,” said Faith, who teaches in Harding’s College of Business Administration. “But I’m more of a tech optimist.”

He doesn’t expect a modern disruption on the scale of the Industrial Revolution. “I don’t think it will be a dystopian outlook like some people like to say online,” Faith said. “I do believe there is going to be a need to change the skill set. With accounting, you’re going to need to add more into that software-savvy side of your job to remain competitive.”

A recent report from OpenAI, which rocked the business world by introducing ChatGPT in November 2022, lists accountants, tax preparers and financial analysts on a list of top 10 jobs with the most exposure to AI influence.

The Jobs Most and Least at Risk of AI Disruption

Jobs Most Exposed

Occupation

Categorized By

AI Exposure

Accountants

AI

100%

Admin and legal assistants

AI

100%

Climate change policy analysts

AI

100%

Reporters and journalists

AI

100%

Mathematicians

Human & AI

100%

Tax preparers

Human

100%

Financial analysis

Human

100%

Writers and authors

Human

100%

Web designers

Human

100%

Blockchain engineers

AI

97.1%

Source: OpenAI

The company declared these workers are likely to see AI reduce the time it takes to do occupational tasks by at least 50%. Other occupations with 100% AI exposure include administrative and legal assistants, climate change policy analysts, web designers, mathematicians and, yes, reporters and journalists.

Jobs Least Exposed

Occupation

Athletes

Short-order cooks

Large equipment operators

Barbers/hair stylists

Glass installers and repairers

Dredge operations

Automotive mechanics

Power-line installers/repairers

Masons, carpenters, roofers

Plumbers, painters, pipefitters

Servers, dishwashers, bartenders

Source: OpenAI

But Faith and Chief Financial Officer Jeff Weatherly of Lexicon Inc. in Little Rock say large language model AI is more likely to change the way people work than it is to put them out of work.

‘Where AI Fits In’

“Technology has changed [the accounting profession] incredibly already,” said Weatherly, who was Arkansas Business’ large companies CFO of the Year for 2023. “We’re still trying to figure out where AI fits in.”

Weatherly, who has heard pitches from various AI companies, said that Lexicon already uses optical character recognition tools, which “have been around awhile.” The algorithm scans invoices like payables from vendors, finds purchase order numbers and matches them up. “It’s essentially using AI because it learns more each time you scan something through. Then you find exceptions, and you clean those up.”

Artificial intelligence can streamline processes and improve accounting accuracy, its supporters say. It can automate routine tasks, but many professionals are suspicious of it. According to a recent Thomson Reuters ChatGPT and Generative AI survey, only about 11% of American accounting firms now use AI on a wide scale. However, 51% expect to use it within the next year.

Most resistant accountants said they consider the technology too new, too insecure or too apt to offer “incomplete, misleading, or wrong answers.”

“One of the problems we have right now is when you’re dealing with things like financial reports, financial statements or research papers, sometimes the algorithms aren’t as good at matching the correct formatting all the time you need for that,” said Faith, a Searcy native who stayed in town for two degrees at Harding. “But I do believe, through time, the tolerances for that will get tighter, and the accuracy will get better to where you could use it to automate some of the report generation that people have to spend so much time on now.”

The Big Four accounting agencies — Deloitte, PwC, Ernst & Young and KPMG — lead the AI vanguard. They use the technology to perform predictive analytics, letting clients make data-driven decisions, and harness its prodigious computing power in auditing and tax compliance work. In auditing, AI sifts huge files of financial data, finding anomalies and potential snags. Smaller companies have used AI tools to automate bookkeeping, communicate with clients and perform back-office functions.

But for now, Weatherly said, he sees more immediate business uses in tasks like corporate letter- and report-writing.

Reducing Drudgery

“We just went to a big conference a few months ago — we haven’t totally digested all of it,” Weatherly said. “But my understanding is you can put [into ChatGPT] information about your own company, you can load your own profile, say you started in 1868 and have this many employees, here are our core values and purpose statement. Depending on the type of letter you’re writing, it might request a quote and start picking up that stuff and putting the letter together. Then when you’re working on another document, it will pick that stuff back up again.”

Faith said large language models will reduce drudgery at work and give employees more time for creative thinking and problem-solving. AI won’t destroy the world, he said, but it does need to be used carefully and ethically.

“It’s interesting that the real application of AI in business hasn’t really been a really big thing until November of last year, you know, when ChatGPT exploded on the scene.”

The AI chatbot produced human-sounding responses, understood and correctly answered thousands of questions, and was able to research and write essays and news stories and letters. Its developer, OpenAI Inc. of San Francisco, noted that it can even tell jokes.

“In education, a lot of places kind of freaked out about it,” Faith said. “I remember that New York City’s public schools just banned any and all use of it there for a while.”

He said that Harding’s business school teachers are emphasizing that the technology is something students will see in the workaday world.

“This is a tool that many employers are looking to see the benefits of, and it’s OK,” he said. “But you have to do it in a way that’s ethical, and figure out how to best get productivity out of it.”

Faith said students shouldn’t use AI to write their papers, of course, but they could feed their papers into a program to get critiques, for example.

“In some of our programming classes, maybe I have some lines in my code that’s not working, and I can get some feedback from AI,” he said.

Automated Data

In business, companies will look to AI to automate processes and get more efficiency from employees, Faith said. “For accounting specifically, if you’re looking to automate the collection and aggregation of data, you can allow an algorithm to perform those steps for you.”

Weatherly, of Lexicon, said accounting professionals will always have to apply human thought and work to their duties. And AI could “kickstart some people into a little higher gear,” he said.

“We don’t have assistants here at our company, and we’re pretty good size,” Weatherly said. “We don’t have secretaries, so we write all our own letters. That’s where I see it being helpful.”

Algorithms might be useful in writing drafts of financial statements for publicly traded companies. “You could have it start with last year’s financial statements and update it. You provide the information, or it would already have it, and it would be smart enough to create an update. And it’ll automatically do that. And so that’s what’s so impressive.”

He was telling his accounts payable staff about new technology recently, he said. “I’m saying, hey, I think your job is going to be more fun, more challenging. You’re going to become a problem resolution person. But from what I’ve seen so far is that the written word is easier to manipulate in AI than the numbers.

“I think we may start using AI, but it may just be a replacement for OCR. I’m not sure it’s going to be a whole lot of efficiency over what we’ve already got,” Weatherly said.

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