The impact of artificial intelligence on the future development of accounting

Innovations in artificial intelligence will make accounting a lucrative profession, and accountants can capitalize on its value.

Artificial intelligence can make accounting careers more attractive through technology and innovation. Some accountants worry that AI will replace their jobs, but the real chance is that accountants who know how to leverage AI software may one day replace those who don’t.

If we were not completely isolated from the world, we would not be exposed to the headlines about artificial intelligence (AI) every day. Whether through ChatGPT, Bard, or one of the many apps that take advantage of its capabilities, artificial intelligence is helping people with writing, shopping, personal assistant tasks, and more. As with any new technological development, there are opportunities and challenges. As artificial intelligence continues to advance at a rapid pace, leaders in organizations across industries will need to navigate the complexity of these tools and learn how to leverage them for enterprise success.

Artificial Intelligence in Accounting

Artificial intelligence has a wide range of uses in almost every industry. While there are many ways this new technology could improve lives, redundant considerations and concerns about human ethics are almost as common. As artificial intelligence becomes more common in the accounting industry, the question many accountants have been asking is: “Will artificial intelligence replace us?” The answer is no. Artificial intelligence will change the way accountants work, but it cannot and will not replace them. What is really worrying is that accountants who know how to use AI software to improve efficiency and efficiency may in the near future replace those who do not use AI well.

Accountants may worry that machines will take over their jobs, but the real pressing issue is the lack of talent in the accounting profession. In fact, a 2022 Deloitte poll found that 82% of hiring managers for accounting and finance positions at public companies and 69% at private companies said accounting talent retention is a challenge. Because AI can reduce tedious accounting tasks, freeing accountants to focus on higher-level tasks, implementing AI may make job openings more attractive to younger job seekers interested in technology and innovation.

Artificial intelligence can do the drudgery of accounting

When people think of better career paths, accounting may not be the first career they think of. That's because, historically, the job has often involved the drudgery of months-long billing cycles, endless Excel formulas, and never-ending audits. While automation can take on some of these tasks, AI goes beyond understanding rules and can actually extract and feed information into other areas and provide users with concise summaries of information who would otherwise have to read hundreds of pages of documents .

Artificial intelligence increases the efficiency of accountants and even allows non-accountants to handle some of the busy work while focusing on more complex tasks such as managing relationships, developing strategies, evaluating opportunities and making strategic decisions.

Artificial Intelligence Adds Value

As user-friendly cloud-based software solutions become more common, service providers across industries are faced with the challenge of understanding their customers business complexities and help them achieve their goals in a more strategic way. Microsoft's recent Guardians of the Future Economy report shows that 80% of finance leaders believe it's more challenging than ever for them and their teams to add value outside of standard roles and responsibilities. As accounting professionals look for more ways to work smarter (not harder), automation and artificial intelligence have the potential to free people up, allowing for more collaboration and therefore more strategic work.

Applications of Artificial Intelligence in Lease Accounting

One area of ​​the accounting industry that has recently added new complexities is the lease accounting department. The new lease accounting standard ASC842 issued by the Financial Accounting Standards Board (FASB) sets out how entities record the financial impact of their lease agreements.

Considered one of the most sweeping changes to lease accounting in decades, ASC 842 requires all public and private entities that report under U.S. Generally Accepted Accounting Principles (GAAP) to now record the vast majority of their leases in assets in the balance sheet. The new standards are designed to enhance transparency of liabilities arising from leasing arrangements and reduce off-balance sheet activities.

So, what does this mean for CPAs? For many, fully understanding ASC842 has become an immediate source of frustration as they determine the implications of the updated standard and begin implementing the required changes. In the past two years alone, nearly 300,000 accountants have left their jobs; last year alone, more than 40% of auditing and accounting work was not completed. The leasing accounting profession is certainly not becoming any more attractive to new applicants as the heavy burden of understanding and successfully complying with the new standards looms over their heads.

This is where artificial intelligence comes in and will make life easier for accountants. Leasing accounting software uses artificial intelligence technology to effectively reduce the time required for tedious and repetitive tasks, while also reducing the probability of human error. It gives people more time to think deeply about the business and the impact of accounting practices on it, making people's jobs more valuable.

Artificial Intelligence in Action

The above discussed a lot of issues about artificial intelligence from a theoretical perspective. Taking a deeper look from a product perspective, how AI actually plays a role in the management workflow of the lease accounting process.

If you have rented items before, you will know that this usually involves a large number of printed documents that need to be signed in about 500 places. Then, after using up the ink in the pen, the lease may be scanned with a copier or printer, uploaded and stored as an image in a non-searchable PDF file. Using AI-powered lease accounting software, users can upload lease documents, which are then processed through computer vision and OCR technology to produce clean and searchable digital copies. This process alone can save hundreds of man-hours and make information more accessible.

Next, using the searchable lease copy, AI technology is able to accurately extract key data for verification and enter this data into the system. However, AI accuracy is not the only important factor. When used to its full potential, AI should be combined with tailored experiences to help users understand the lease more quickly, rather than having to read the entire document to find important terms such as renewal, termination, HVAC or maintenance cost. Understanding these terms means lessors and lessees can understand their responsibilities and report them where appropriate. Embedding AI helps all users easily and accurately enter their leases into the product, automating accounting and completing compliance.

The compliance journey does not end with the adoption of new lease accounting standards. There are always new leases and modifications to existing leases. Artificial intelligence has unlimited potential to continue to reduce the burden of tedious tasks and take on the daily tedium of accounting.

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