With technology, the accounting profession is no more about counting beans

By Michelle Lee Twan Gee

SMU Office of Research & Tech Transfer – It is an exciting time to be in the accountancy and finance sector. Forget about bean counting – with technology, the role of accounting professionals is fundamentally altered.

The accelerated development of technology – especially in artificial intelligence and machine learning – is rapidly changing the way that accountants work. With the ability to learn and adapt, AI is poised to develop increasingly sophisticated capabilities that will allow it to execute a growing number of tasks that accountants perform today.

How AI is transforming accounting

In the 2019 book “Charting the Future of Accountancy with AI” that was authored by Singapore Management University (SMU) Assistant Professor of Accounting (Practice) Clarence Goh together with three colleagues (Professor Gary Pan, Associate Professor Seow Poh Sun and Lecturer of Accounting Benjamin Lee) and Melvin Yong of CPA Australia, the authors observed that:

“Prediction is a critical component of AI and is the reason why AI is so powerful today. Machine learning, a subfield of AI and the driver of most of AI’s recent progress, is defined today as the use of techniques that enables computers to learn and continuously improve without being explicitly programmed. In essence, AI and machine learning (in their current form) consist of techniques which learn to recognise patterns in order to make predictions that facilitate decision-making.”

The book coins the acronym ABCD for the four reasons why the profession is embracing AI.

A refers to the Availability of affordable and powerful machines. What might have taken weeks to process a decade ago can now be done in minutes. Affordability, portability and speed are why AI is now readily adopted by businesses.

B is for Better algorithms. AI techniques and algorithms have improved by leaps and bounds.  There is now a whole suite of AI techniques that can be used to solve a variety of different problems.

C is for Cloud-based platforms, which allow companies to run operations directly from the cloud without being bogged down by physical limitations.

D is for the growth of Big Data, which has led to an unprecedented boom in the amount and types of data that can be used in analysis.

So what’s ahead for the accounting profession?

With AI, machines are now able to execute manual tasks in a speedier fashion. This intimidates accountants because a big part of their work is manual.

But this is actually a good thing, says Professor Goh. “It has been a long time coming and accountants should look forward to the day when they are finally liberated of laborious and boring tasks, so that they can focus fully on adding and delivering more value to businesses, which is at the core of what they do.”

For one, machines can be put to work executing repetitive, mundane accounting tasks while freeing human accountants to focus on aspects of their work that require them to apply professional judgment, such as when dealing with issues relating to revenue recognition or when making fair value measurements.

A trusted partner

Rather than completely replacing human accountants, Professor Goh sees AI becoming a trusted partner. Explains Professor Goh, “It will complement the human accountant in completing accounting tasks in the most effective way possible.”

AI will help its human counterparts by enabling data-driven decision-making and analytics-derived actionable insights.

For instance, AI and machine learning can be implemented in accounting projects involving fraud detection, forecasting and prediction (such as of cash flows, inventory, revenue), rules identification to improve process automation and full-scale audits (no more need for sampling!).

And no fear about AI wresting away the jobs of accountants. Currently, AI is unable to fully capture context and string together pieces of physical, visual, behavioural, psychological, and emotional information and connect them together like humans do so spontaneously.

The landscape right now

Today, firms are on different stages of the evolution map. 

“While some larger organisations have been pioneers in adopting AI and other technologies, and have developed significant capabilities in AI, others are at the early stages of their journey,” Professor Goh observes.

For most organisations, robotic process automation (RPA) is often the first step taken in adopting AI. This is because of the relative simplicity of the technology and its ability to produce significant hikes in operational efficiency.

RPA solutions are characterised by (i) rules-based automation, (ii) structured data processing, and (iii) unattended automation. Once programmed, RPA can run unattended to automate specific accounting processes. RPA robots work best when processes are structured and repetitive – data entry and reconciliation activities are good examples. At scale, RPAs has the potential to act like a virtual workforce within an organization.

Currently there are a few major obstacles to more widespread adoption of AI. One area of concern is how accountants can include ethical considerations when implementing AI. “We need to ensure that even as AI systems make decisions or take action autonomously, they do not do so in a manner that causes harm to people,” Professor Goh points out.

How to be part of the solution

As the adoption of AI becomes more widespread, companies will increasingly need accountants who possess technology skillsets as well as a deep understanding of the business/accounting context that surrounds data and insights derived from that data.

The next generation of accountants is expected to possess sound accounting knowledge underscored by a strong proficiency in accounting technologies, including in AI and related areas such as machine learning.

Comments Professor Goh, “The accounting sector had begun to realise that there is a need to close the widening skills gap, and there is growing momentum in upskilling workers in the accounting sector and also training this next generation of professional accountants.”

SMU is taking the lead to groom future accountants to meet these new demands of the accounting sector. The SMU School of Accountancy has launched the second major in accounting data and analytics which aims to provide students with the skillsets to use technology to solve accounting problems. As part of the second major, students are required to take data technology related courses to equip themselves with the requisite technology skills.

These include courses such as statistical programming and data modelling & visualisation. In addition, students are also required to take courses that require them to apply these technology skills in the accounting context. These include courses such as audit analytics, forecasting and forensic analytics, and the accounting analytics capstone course.

“I think that the accounting analytics capstone (SMU-X) course – which I also teach – is particularly relevant because it gives students the opportunity to see how technology can improve the ways that accountants work. Overall, I am optimistic that a sustainable pool of technologically adept accounting professionals will emerge. Over time, I expect that accountants will acquire the required skillsets to fully leverage the benefits that AI can bring to their work.”

Back to Research@SMU May 2021 Issue