Can AI get out of accountancy?

  • By Emma Woollacott
  • Business Reporter Technology
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Owen Hewitt hopes AI will take over mundane tasks in accountancy.

Owen Hewitt is a trainee chartered accountant at accountancy firm haysmacintyre.

He is two years into his training and has more exams coming up this year.

What is unusual about him and his colleagues is that they will be the first generation of accountants to use artificial intelligence (AI) early in their careers.

Mr Hewitt is hoping that AI will take over some of the more troublesome parts of the job.

“It (AI) can take the burden off time-consuming tasks, such as analyzing financial data,” says Mr Hewitt.

This allows humans to focus on more subjective – and more interesting – decisions, such as whether a business is viable, or whether debts are likely to be repaid.

“While AI can learn from data and make predictions, it cannot yet replace the human judgment required to evaluate various variables and make an informed decision,” he says.

Therefore, AI is increasingly being used for routine and time-consuming tasks such as document summarization, content creation, document drafting, advanced searching, analytics and insight and knowledge management – ​​often more junior accountancy. is carried out by the staff of

“When you look at some of the things that auditors were doing — crunching data around some boring, mundane tasks and turning it into a format where you can actually do something valuable with it — it’s that is where artificial intelligence can play a huge role,” says Matthew Campbell, audit chief technology officer at KPMG UK.

Given that auditing is a relatively low-margin business, there are concerns that more widespread use of AI could lead to job losses.

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A KPMG survey found that 40% of senior auditors expect AI to result in smaller audit teams.

According to a KPMG survey, four in 10 senior audit professionals expect increased AI efficiency to lead to a reduction in the size of auditing teams.

Already, many of the manual audit and reporting tasks have been outsourced to other countries, with most of the major UK banks now hiring large numbers of qualified accountants in India, who are responsible for month-end financial reporting. perform a significant proportion of tasks.

Chartered accountant Alex King, founder of finance platform Generation Money, says this means junior accountants working in audit will need to focus more on client-facing skills.

“In general, the nature of a junior accountant’s role is likely to shift more towards systems management – AI-powered software and databases – and relationship management, and away from traditional reconciliations and ledgers work,” he says. do”.

As a result, training programs are changing.

“We’re still hiring a lot of people, graduates, and we’re also hiring a lot of apprentices. I think what will change over time is the skills of some of them,” says Mr Campbell. are,” says Mr. Campbell.

“We’re already starting to see that, so we’ve invested in putting a number of our auditors through a master’s degree in applied data science, so they can apply that auditing and accounting knowledge to their data science expertise. can bring together, so that really the best of these skills are together.”

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Accountants will have different skills in the coming years.

The accountancy industry has seen some high-profile failures in recent years.

In March, KPMG was fined £1.5m for failing to conduct a 2019 audit of advertising agency M&C Saatchi. And it’s not alone in making mistakes.

Meanwhile, the UK’s accountancy regulator, the Financial Reporting Council (FRC), carried out 19 investigations in the 2022-2023 financial year, fining auditing firms and their clients £40.5 million for audit failures.

As a result, auditing firms are now under greater scrutiny. And to tighten their procedures, many are turning to AI.

“As creative AI plays a more prominent role in contributing to early drafts of content, the role of the human auditor can be elevated to focus on areas of judgment and challenge,” says Mark Baena, digital audit leader at PwC UK. Is.”

“The ability to analyze data on a much larger scale also means we can better assess and analyze risk.”

AI is particularly good at finding anomalies in vast amounts of data, making it useful when evaluating what could amount to billions of transactions by a single client.

KPMG itself uses AI for high-risk transactions to detect anomalies, such as unusual amount postings, postings made by an unusual person or weekend postings.

“We’ve gotten to the point where it’s truly a data-driven audit, where we identify risks within the data population and use that to refine our audit efforts for the most complex, high-risk ones. , helping to focus on the most critical areas,” says Mr Campbell.

As for high-level jobs, AI can help here as well. Auditing firms are finding it difficult to retain talent, with 90% of auditors telling Caseware last year that it was either somewhat or extremely difficult.

Overall, auditing job openings grew by one quarter over the past year, according to a survey by automation platform DataSnipper. However, 86% of auditing staff agreed that AI helps reduce time spent on repetitive work – and 83% said they would be more inclined to stay at a company where AI initiatives are in place.

“They can go through some laborious, time-consuming tasks to actually capture the value of analyzing, outputting and interpreting,” says Mr. Campbell.

“The pieces of their character that it’s taking away are the things that they weren’t enjoying.”

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