By Eli Fathi, CEO, MindBridge Ai
The drivers for change in the field of accounting are real. Regulators are taking an increasingly tough stance on audit failures, and too often today’s headlines are highlighting how easy it is to fall from grace and be trapped in the midst of an auditing scandal. This threat of bad publicity and litigation has made auditors and organisations more fearful than ever of errors and has even caused some of the biggest accounting firms to refuse to work with certain companies.
This caution is understandable as organisations are required to retain enormous amounts of data, and accountants are given the heavy responsibility of processing it correctly. While accountants strive to provide assurance and value, the current techniques aren’t always giving them the right results. Outdated sampling and testing processes are often to blame for missed errors and material misstatements, and these are issues that need to be examined.
No profession is immune to the technological revolution and accounting is no exception, in fact, it’s among the best positioned to benefit from it.
Artificial Intelligence (AI) can help to solve many of the issues related to the auditing process, not only can it analyse all of the data near instantly, it can assess the entire transaction and shine a light on all of the risks in the data. This means that organisations can rest easy, knowing that it will identify any unknowns lurking in the data and allow accountants to focus on solving the problems, and reducing the time spent sample checking. Rather than taking over the role of the accountant, AI instead can help to redefine the very definition of reasonable assurance and empower finance teams to deliver added value, and leave the number-crunching to computer-sized brains.
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The most progressive firms have identified AI capabilities as an important differentiator, but still appreciate that the best practice is a collaborative approach, one that augments human and artificial intelligence. In the same way that the human brain cannot compute hundreds of thousands of data points in a split second, a machine cannot understand the subtle dynamics and context of real-world accounting. In combination, an accountant fueled by AI-powered data analytics is turbo-charged to make faster, more accurate decisions, while having more time to put providing guidance, value and insights at the heart of their service.
Although proactive firms are deploying AI to help drive efficiency, reduce risk and increase quality in their compliance processes, there still remains hesitancy in some parts of the market. It’s a reticence that’s driven by myth, as often the adoption of AI tools remains hamstrung by the idea that they are costly, complex and difficult to implement. The fears are misplaced.
There is a misunderstanding and misconception regarding the perceived black-box nature of artificial intelligence. Good technology is easy to use, transparent and understandable. AI analysis platforms ought to be designed to expose exactly why and what, compelled by the system to mark transactions as risky. They’re supposed to demystify AI and be intuitive to use, not be an additional puzzle to crack. If the AI isn’t explainable then the right solution hasn’t been implemented.
The cost of AI is often another barrier to its adoption, but the return on investment in time savings and assurances far outweigh the initial costs. The advent of cloud based services has also tempered this argument, as this has made many tools more affordable and accessible to all. Bigger firms have often benefited from the idea that AI is too expensive to implement, as some smaller companies believed themselves to be hindered by budget and therefore never explored how they might apply it. This however is no longer the case, and everyone now has the opportunity to harness the power of AI and improve their processes.
In the age of AI, each company must become a technology company in order to defend and grow their market, including the financial industry. It’s time to forge forward and recognise that accountancy will actually thrive with the rise of artificial intelligence, unearthing more of the risk in financial data, and providing greater assurance than ever before. AI won’t replace auditors, but auditors that use AI will replace those that don’t.
Many industries are experiencing the benefits of technological advancements, and accounting firms shouldn’t overlook not just the functional benefits AI can bring, but the reputational benefits. Auditing, in particular is an area in need of a reputation refresh. Using high technology auditors can regain the trust and confidence of their clients and ensure that no stone remains unturned, with minimal amounts of manual assessments. With the pressure rising on auditors and organisations to be fast, accurate and competitive, AI couldn’t have arrived at a better time.