The accounting industry has witnessed the same type of technological evolution which other industries have in the past decade. The technological evolution hasn’t only helped us in improving our lifestyle and working habits but it has also played a significant role in simplifying the business processes and solutions. Earlier, people were limited because of the traditional business solution but now with the introduction of advanced technologies, people have been able to work at their peak efficiency and the same goes for the accounting industry.
The accounting industry has shifted from pen and papers to accounting software, from accounting software to cloud accounting solution and now the next big thing in the accounting industry is artificial intelligence which is taking the world by storm. Artificial intelligence is being considered as one of the greatest technological inventions since the evolution of mankind and it will change our world completely. From sending robots on Mars to beating the world’s best chess player through a robot, artificial intelligence has helped us achieve new heights of technology.
Nowadays, audit professionals are using the advanced artificial intelligence solution in ways that are very surprising for many people. The modern artificial intelligence system has allowed the auditors to categorize risk across the entire ledger and feeder system without the need of a person to go through the vast amount of data.
The advanced AI learns about the data which it is analyzing and then it determines patterns while identifying outliers over time. One of the best things about AI is that it can go through a very large amount of data which is not possible for a human and then with more data analysis, it can give better results like after going through a large amount of clients data, it can quantify and flag behaviors or outliers to auditors that it consider risky.
Many accounting experts and professionals might claim that all the benefits of using the AI technology in auditing are just a hypothesis and in papers but the truth is that the benefits of AI in auditing is now available for the auditors on a large scale.
How AI works in the auditing process?
One of the best examples of how AI is being used in the auditing process is the identification of material misstatement by applying unsupervised learning. This learning technique works on the science of what is usual versus unusual in order to report the oddity without any biasness and by allowing the data to speak for itself.
You should know that a popular accounting and consulting company named K Coe Isom is currently using the advanced AI technology for providing an in-depth view of the financial status of their clients. And this is just the one case where a company is using AI and getting good results as in future, we might see most of the accounting firms and accounting professionals using AI in their accounting operations. Remember once the cloud accounting technology also used to be an alien solution for the accounting industry and many people called it just a theoretical solution but now, cloud accounting solution has become a new normal for most of the businesses.
Using AI in the auditing process saves a lot of time which was earlier wasted in examining the entire datasheet. With AI, both client and the accounting firm are able to save time as all the data is ready and there is no need to go through the past data or ask the client to provide such data.
How AI is helping in fraud investigation?
If we go by the ACFE Reports to Nation 2018, we can say that the top two frauds in the accounting industry are assets misappropriation and financial statement fraud. Both the methods of fraud can include manipulation in the records and therefore the best way to investigate such frauds is through AI as it can find such activities over the whole set of data, regardless of how big and broad it is.
AI an also help in increasing the public trust
There is no denial in the fact that the trust of the public in government budgeting, fiscal management and reporting has lowered down to an alarming situation. The global financial crisis has damaged many fiscal contracts and due to this, the public has lost their trust in government controlling the finances and its effort in making it stable.
Newspapers are filled with cases of fraud, scams and other financial issues and that’s why the public has slowly stopped trusting the government and its bodies. But with the help of AI, all the government bodies related to finance can win back the trust of the people as AI will help them to analyze, report, find pattern and pick frauds and cases of misrepresentation over a large chunk of data which in turn will help the taxpayers as well.
So, AI is going to be the next big thing in accounting and therefore you should start preparing for it. Soon, we will see every accounting firm and accounting professionals, using AI in order to get better and faster results.