5 Reasons AI Will Revolutionise Accounting and Why Accountants with Tech Know-how Are in Demand

By the SMU Social Media Team

Every industry is trying to figure out how to use big data and artificial intelligence (AI) to drive faster growth and more efficient processes, and the accounting sector is no exception. These new technologies enable accountants to analyse the internal and external forces influencing their companies’ performance, which means they can help to create competitive advantage.

In 2017, the Singapore government launched AI Singapore (AI.SG), a national programme aimed at developing deep national capabilities in AI. The initiative has spurred the accounting sector to recognise AI’s transformative potential and become more open to incorporating such technology.

Assistant Professor of Accounting (Practice), Clarence Goh

Clarence Goh, Assistant Professor at the School of Accountancy and Director of Professional Development at Singapore Management University (SMU), is intrigued by the potential of using AI in the accounting industry. He worked with Associate Professors Gary Pan and Seow Poh Sun, and Lecturer and SMU alumnus Benjamin Lee, in collaboration with Certified Practicing Accountant (CPA) Australia, to write the book Charting the Future of Accountancy with AI. It was launched on 11 July 2019 at the CFO Connect Symposium. Asst Prof Goh, together with key insights from the book, sums up 5 ways AI is poised to transform the world of accounting.

1. Computers got cheaper and faster

According to the book, “the IBM 3380, in 1980, was the first hard disk drive to have a storage capacity of 1 gigabyte (GB) and had to be housed in a cabinet, making the 250kg device almost as big as a refrigerator. Contrast that with the first commercially available 1-terabyte (TB) SD card (just slightly bigger than a $1 coin) released by Lexar in January 2019 and it is obvious how readily available storage space is. Even though the Lexar 1TB card costs US$500, which is high by today’s standards, that is less than 0.5 per cent of the IBM 3380, which cost upwards of US$100,000.”

These tumbling costs, coupled with increased portability and the exponential growth in processing speed, means that AI has become a readily available tool for businesses.

2. Algorithms are now more accessible and customised 

“Much like computing power, AI techniques and algorithms have improved greatly in recent years and there is now a whole suite of AI techniques which can be used to solve a variety of accounting problems,” says Asst Prof Goh.

“A growing community of developers continuously revise and refine these algorithms while also consolidating them into packages that are accessible for free through open-source programming languages such as R and Python. In the past, programming and coding was seen as extremely technical and even agonising to do. But today, R and Python’s plethora of libraries and packages of AI and machine learning (ML), coupled with developer communities such as GitHub and Stack Overflow, allow businesses to pick and choose AI algorithms best suited for their work.”

3. Gateway technologies are leading companies to AI

Cloud computing is the practice of using a network of remote servers hosted on the Internet to store, manage and process data, rather than doing so on an individual computer. Companies have begun migrating to cloud-based platforms, so as to run their operations without being bogged down by the physical limitations of hardware and device storage.

Cloud providers such as Google Cloud have integrated AI and ML services into application programming interfaces that allow businesses and accountants to develop customised solutions in a fraction of the time they used to take.

Another AI gateway for companies is robotic process automation (RPA), which is an emerging form of business process automation technology based on the notion of software robots or AI works. In short, one of its key functions is the application of technology that allows employees to configure software robots to capture and interpret applications for processing a transaction among much more.

“For many organisations, RPA is often the first step taken in adopting AI,” notes Asst Prof Goh. “This can be attributed to the relative simplicity of the technology and its ability to significantly improve operational efficiency. RPA solutions are characterised by rules-based automation, structured data processing and unattended automation.”

Once programed, RPA can run unattended to automate specific accounting processes that are structured and repetitive, such as data entry and reconciliation activities. When deployed at scale, RPA has the potential to act like a virtual workforce.

4. AI can analyse new types of data 

Traditionally, data collected for analysis has primarily been numerical and structured. But texts, videos and images can now also be analysed.

“These kinds of data are unstructured and were previously not thought of as usable for analytics, AI and ML,” notes Asst Prof Goh. “However, big data storage systems, whether physical or cloud-based, are now able to store and process such unstructured data.”
With more data available for analysis, solutions crafted for clients can be even more customised and optimised.

5. Wanted: Accountants who understand what tech can and cannot do

While AI may seem to present limitless possibilities, it’s still important to match human skills and knowledge to these technologies. “There are limits to what can be done using AI at the moment,” says Asst Prof Goh. “While AI techniques can mimic the human cognitive ability of learning and recognising patterns, it cannot yet replicate human intuition and logical reasoning that responds well to complexity and ambiguity.”

Therefore, as the adoption of AI and other related technologies becomes more prevalent, “organisations will also increasingly need accountants who have technology skillsets as well as a deep understanding of the business and accounting context that surrounds data and insights derived from that data”, he believes.

In other words, if the next generation of accountants possess sound accounting knowledge and proficiency in accounting technologies, including AI, then the combination of technological and human strengths can lead to exponential improvements.

For that to happen though, aspiring accountants need to up their game. At SMU’s School of Accountancy, the launch of second majors such the Accounting Data and Analytics, as well as Financial Forensics, and the SMU-X Accounting Analytics Capstone course for undergraduates mean that the accounting data and analytics curriculum is keenly attuned to future developments. Professor Goh is optimistic that a sustainable pool of technologically adept accounting professionals will emerge to keep up with technological advancements.