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Businessman working on Desk office business financial accounting calculate
Businessman working on Desk office business financial accounting calculate

Can Accountants Survive an AI World?

Accountants, yes. Green eyeshades and masses of paper, mmm, not so much

In the most recent episode of our Mind Matters podcasts, “Bingecast: Business Intelligence and AI Accounting,” Walter Bradley Center director Robert J. Marks and Jeremiah Marks, Chief Financial Officer at Opera Philadelphia, discuss the way AI is changing the role of the accountant. Not, perhaps the ways we might think:

Excerpt: [12:37ff]

Robert Marks: Everybody says AI is going to take over a bunch of jobs and increase the length of the unemployment line…

Jeremiah Marks: I think AI is just a component of business intelligence. I think, too many times, we equate artificial intelligence with business intelligence and in my mind, that is not the case… It takes a lot of work.

Robert Marks: It takes a lot of work for the writing of the software but to interpret what that software does to your data That’s what takes a lot of work.

Jeremiah Marks: [But] one of the problems is that AI is not auditable.

Robert Marks: Not auditable?

Jeremiah Marks: It means that if a number comes out, how do we make sure that’s that the right number? How do you know where that number came from? For the most part, if you have a number that pops out, you can trace that back through, you can trace the information back to an algorithm, back through its source data. But with AI, you are unable to do that. And so one of the concerns is, and one of the ways we’ve been using it in dynamic pricing, is so if you don’t really understand the business and you don’t really understand the AI that’s driving your pricing, you can get some pretty odd numbers, numbers that actually hurt your business.

Robert Marks: So as the CFO, you get the output and you still have to take responsibility for using the output according to your own judgment…

Jeremiah Marks: Absolutely.

… by virtue of their intimate awareness of a company’s financial position, as the compilers of the numbers, accounting professionals are the obvious persons being looked to for analysis and interpretation of those same numbers. In short, few people in a company are better situated to play these roles than members of the accounting staff.

Mark Kolakowski, “What Does the Future Hold for Accounting Professionals?” at the balance: careers

Robert Marks: The double-entry bookkeeping method revolutionized accounting five hundred years ago. In the old days, little men in green vizors spent their time hunched at a desk adding up columns of numbers eight or more hours a day. Along came Lotus 1-2-3, the spreadsheet system, and it replaced these adders of numbers. Characteristically, the dominating Microsoft killed off Lotus 1-2-3 with what is today everybody’s favorite spreadsheet, Microsoft Excel. Then along came Turbo tax, then Intuit, that kind of hurt the tax accountants.

But accounting is more than just crunching numbers and filling out forms. Just like the men with the little green visors were replaced by spreadsheets, robotic accounting is replacing some accounting jobs.

One of the things that Forbes said is that AI, artificial intelligence, is ready for prime time in accounting. But first of all, what do they man and second, are they using the term artificial intelligence appropriately?

Luca Pacioli (center)

Double-entry bookkeeping, the basis of accounting as we know it today, traces at least as far back as a treatise published by Luca Pacioli (center above) in 1494. As explained by Pacioli, double entry enabled easy identification of internal clerical errors. Double entry would not, of course, detect errors in the original information, only in the way it was handled afterward.

Jeremiah Marks: Absolutely I think Forbes is right on the mark when it comes to artificial intelligence and accounting. I’m seeing changes every single day in how we use accounting functions and how we use algorithms and processes. They’re being taken over more by bots and procedures rather than people punching in numbers. I think that is a good thing.

Robert Marks: You mentioned people punching in numbers. What are some of the other areas that you see impacted?

Jeremiah Marks: Some areas like Accounts Receivable, Accounts Payable, matching vendors with invoices and bank reconciliations. We can see this with MINT already and what it does with your expenses…

If you want a career with a lot of room for salary growth, it’s imperative you invest the extra time and money, and get a master’s degree. Luckily with online programs, and flexible class scheduling, it’s becoming easier to pursue advanced education while working. Some places will even help subsidize your education.

Kim Gottschalk, “5 Things You Need to Know About the Future of Accounting” at accountingWEB (August 2, 2017)

Robert Marks: Any other areas you see impacted?

Jeremiah Marks: Yes, natural language recognition and understanding. One of the biggest issues we have in accounting right now is taking a paper invoice and we have to have some sort of transaction to take that paper invoice and put it into the system. And so there are automated accounting systems out there that are starting to look at data entry through natural language understanding. Essentially, you would scan in your invoice, it would look where this invoice and the vendor you had set up had been done previously and suggest a GL code and you would be on your merry way, rather than absolutely have to enter each invoice with the person.

Robert Marks: I know a big part of accounting these days are governmental regulations and compliance. I would imagine that AI is helping there also.

Jeremiah Marks: Absolutely, especially on the reporting side. If you have your system set up properly, you can use it to easily comply with these regulations.

Robert Marks: What is a bot?

Jeremiah Marks: We’ve looked at the different processes we do in accounting and any process where it’s the same thing, where the logic happens, where it’s continuously the same over and over again. Where there is no decision-making, what we’ve done is, we’ve started to develop some algorithms, automatic algorithms within the accounting system in order to handle these processes.

Robert Marks: And you can specialize the software to do more of what you want it to do by writing these little bots… Now I was reading in Forbes, We expect that by 2020, not only accounting tasks but also tax payable, audits, and banking will be fully automated using AI techniques. This will disrupt the accounting industry in a way it never has for the last 500 years. I guess they’re referring to the double entry system that was invented 500 years ago. This is bringing huge opportunities and serious challenges to the auditing industry.

Jeremiah, what are they talking about? Who has lost their jobs and who’s going to lose their jobs and maybe what are some of these opportunities that they’re talking about?

Jeremiah Marks: What I believe they’re talking about is the robotic accounting department or RAC and what that does is it takes a lot of transactional processes that I mentioned earlier and that’s going to be taken over with computing and accounting software. But we’re still going to need accountants as decision-making. It’s basically taking that information they’ve put into the system, looking at it, amalgamating it in a report and then making a decision. Those jobs will stay.

As it happens, at Opera Philadelphia, no one actually lost a job because the system went high-tech.

Accounting firms are expanding and so are accounting departments at many major companies. The larger concern in the industry is that for the last 10 years, there has been a major shortage of quality accountants, which is great for those looking to enter a field that is not oversaturated. According to data from 2016, the unemployment rate of accountants has fallen to 2.2 percent, compared to the national average of 4 percent.

Kim Gottschalk, “5 Things You Need to Know About the Future of Accounting” at accountingWEB (August 2, 2017)

Here are the Show Notes for the podcast, Bingecast: Business intelligence and AI accounting. Technology has almost entirely replaced the travel agent and many brick and mortar stores. Could high tech tools like robots replace accountants?


Further reading on automation and jobs:

Students, don’t let smart machines disrupt your future! Here are three ways you can avoid life in Mom’s basement and the job pouring coffee. (Jay Richards)

and

Creative freedom, not robots, is the future of work. In an information economy, there will be a place where the human person is at the very center.

Note: The portrait of Luca Pacioli above is attributed to Jacopo de’ Barbari, 1495, (Museo di Capodimonte). He is wearing a Franciscan habit of the day. The young man on his left is unknown and may be an allegorical figure, the serious, inquiring student.


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Can Accountants Survive an AI World?