How are different accounting firms using AI?

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In today’s fast-paced business world, ignoring technology is not an option, and the field of accounting is no exception.

Artificial Intelligence (AI) has become a game-changer, helping accounting firms streamline processes, improve accuracy, and deliver more value to their clients. The Thomson Reuters ChatGPT and Generative AI survey conducted between May 3-15, 2023, found that 73% of 771 tax professionals acknowledge the tech can be used for tax, accounting, and audit work, yet only about half think that it should be.

This article explores how different accounting firms use AI in their operations to drive efficiency and excellence in their services.

How many accounting firms use AI?

For now, not many. But that number is expected to rise quickly.

The adoption of AI in the accounting industry in recent years has been on the rise. Accounting firms of all sizes from global giants to local boutiques are increasingly turning to AI solutions to enhance their services. This shift is driven by the realization that AI can automate mundane tasks, reduce errors, and free up accountants to focus on higher-value advisory roles.

However, for most accounting firms, using AI is:

• Too new
• Not secure enough
• Offers incomplete, misleading, or wrong answers

Data security and privacy are the two primary risk concerns. Some two-thirds of survey respondents voiced concerns about the risks of using ChatGPT and generative AI for corporate or client work, and 73% of those surveyed have no current plans to use the technology.

“[Generative] AI is not actual intelligence — it’s textual crowd-sourcing,” said one survey respondent.

Despite concerns, about 15% of surveyed accounting firms use AI currently or are planning to adopt it soon.

Only 11% currently use it on a wide scale, yet 51% expect to use it within the next six to 12 months.

How do the Big 4 use artificial intelligence?

The “Big 4” accounting firms—Deloitte, PwC, Ernst & Young (EY), and KPMG—have led the way with AI adoption. They have invested heavily in AI-powered tools and solutions to provide clients with more advanced and insightful services. Here’s a glimpse of how they use AI:

• Predictive analytics: The Big 4 firms utilize AI-driven predictive analytics to help clients make data-driven decisions. This includes forecasting financial trends, identifying potential risks, and optimizing strategies for growth.
• Auditing: AI-powered audit tools analyze large volumes of financial data quickly and accurately. The Big 4 uses these tools to identify anomalies and potential issues, improving the audit process’s efficiency and accuracy.
• Tax compliance: AI assists in automating complex tax compliance tasks. It helps the Big 4 firms keep up with ever-changing tax codes and regulations while minimizing errors.
• Client insights: AI-driven platforms provide deeper insights into client needs and behaviors. This allows the firms to tailor their services more effectively and build stronger client relationships.

How do smaller accounting firms use AI?

Smaller accounting firms might not have the same resources as the Big 4, but they are also embracing AI to stay competitive and offer better services:

• Bookkeeping automation: AI-powered software can automatically categorize expenses, reconcile accounts, and generate financial reports. This saves time and reduces the risk of manual errors for firms.
• Client communication: Chatbots powered by AI can handle routine client inquiries, freeing up staff to focus on more complex issues. These chatbots can provide 24/7 support, enhancing client satisfaction.
• Data analysis and back office functions: AI tools enable smaller firms to analyze client data more efficiently. They can offer insights into cost-saving opportunities, financial planning, and risk management.
• Fast and accurate tax research: Firms use AI-powered algorithms in tax research tools to return data from human-edited, tax-specific content. This provides authoritative answers from trusted sources questions quickly and accurately.

How does AI impact workflow?

The impact of AI on workflow in accounting firms is massive. It enables accountants to transition from being data processors to trusted advisors. Here are some of the many ways artificial intelligence is transforming workflows:

• Time savings: Mundane tasks like data entry and reconciliation are automated, allowing accountants to allocate more time to strategic activities.
• Improved client service: AI helps accountants provide proactive, data-driven advice, which fosters stronger client relationships.
• Scalability: AI enables firms to handle more clients and complex tasks without significantly expanding their workforce.

Rusty Hale, owner of Hale CPA said, “ChatGPT is wonderful in my opinion, because it brings up a lot of things you maybe haven’t thought about. We’ve already used it for some tax research, and we used it for some procedures. For example, we asked it what a good checklist for onboarding a client was, and it came up with some really good thoughts.”

Still, the technology is new and answers from ChatGPT and related AI technology require extensive fact-checking.

Approaching AI with curiosity

In the accounting world, AI is not necessarily a threat but an opportunity. It can empower firms of all sizes to offer better services, improve efficiency, and thrive in an ever-changing industry. As AI continues to advance, those who approach it with curiosity and a willingness to embrace new technology will likely stay ahead of this trend.

If you’re looking to explore the world of AI in accounting, join the AI @ Thomson Reuters community. Here, you can connect with experts, learn about the latest AI trends, and unlock the full potential of AI in your accounting practice.