As Generative AI continues to advance, driven by ongoing research, technological innovations, and applications in diverse fields, it would be an excellent time to consider the positive impact artificial intelligence could have on the accounting industry.
So, in this article, we will explore how busy accounting firms can get ahead of the next wave of technological advancement by considering the numerous ways to apply generative artificial intelligence in accounting firms' day-to-day operations.
What is generative AI?
Generative AI, or generative modelling, is a branch of artificial intelligence that focuses on creating new and original data samples that resemble a training dataset.
Generative AI involves the development of algorithms and models that can generate realistic and meaningful outputs, such as images, text, music, and even entire simulations, without explicit instructions for each sample.
Generative AI models learn from existing data to understand patterns, structures, and relationships within the data. They then use this learned knowledge to generate new data samples with similar characteristics and follow the underlying distribution of the training data. The goal is to create coherent, diverse, and indistinguishable outputs from the real data.
The future of generative AI looks bright, with this sophisticated tech breaking new ground for various enterprises. Gartner anticipates that:
- By 2025, 30% of outbound marketing messages from large organisations will be synthetically generated, up from less than 2% in 2022.
- By 2030, a major blockbuster film will be released with 90% of the film generated by AI (from text to video), from 0% of such in 2022.
Generative AI has numerous applications across various domains, such as:
- Image and Video Synthesis: Generative models can create new images or videos that resemble accurate visual content. These models can be used for tasks like generating realistic images of nonexistent objects, enhancing image quality, and creating deepfakes.
- Natural Language Processing (NLP): Generative models can generate human-like text, including language translation, dialogue systems, story generation, and text summarisation.
- Music and Sound Synthesis: Generative AI can generate new music compositions or simulate specific musical styles. It has applications in music production, sound design, and interactive experiences.
- Virtual Reality and Gaming: creating virtual environments, characters, and narratives in virtual reality experiences and video games, providing more dynamic and engaging content.
- Data Augmentation: augmenting datasets by generating additional synthetic samples, which can be used to increase the size and diversity of training data for machine learning models.
For more information on how artificial intelligence is more broadly used in the accounting sector, read our guide: how can accountants harness artificial intelligence?
Accounting firms with an auditing function or division may also see a more comprehensive and efficient audit process with AI in the mix. Learn more about AI in auditing in our article: How AI is transforming auditing.
You can also download our eBook: The final frontier of accounting, to find out how the rise of AI in accounting practice management software is changing data analysis for accounting professionals.
How to use generative AI in accounting
Accounting firms can leverage generative AI to enhance operations, improve customer experiences, and drive growth.
This next section will uncover some of the best ways accounting firms could apply generative AI.
Client communications
ChatGPT is the form of generative AI currently gaining the most mainstream attention.
ChatGPT is a deep-learning model which allows users to receive human-like responses to a wide range of queries using Natural Language Processing (NLP) to interpret and generate text based on logic and unsupervised machine learning.
ChatGPT in accounting can augment work and assist firms with smaller micro-tasks, such as writing emails to clients, an extension of the capabilities offered by accounting practice management software.
In just a few short months, we have already seen the accounting industry embrace ChatGPT as a tool to communicate with clients, with one firm owner even using it to write to clients about why their fees have increased.
For more information on ChatGPT's uses in accounting firms, in conjunction with accounting practice management software, check out our article: How can ChatGPT be used by accounting firms?
Content marketing
AI in accounting can automate creating content for time-poor firms, saving effort for accounting firm employees while maintaining consistency and quality.
Generative AI models can assist accounting firms in generating AI content for marketing purposes, such as:
- Blog articles,
- Social media posts, and
- Email newsletters.
Two well-regarded generative AI tools for creating written content are Copy.ai, Writesonic and Jasper. Accounting firms need to do their research first to ensure the AI copywriting tool they have chosen will suit their needs.
Generative AI in accounting content continues beyond the creation side of things. GrammarlyGo is an AI writing assistant in beta testing that could change accountants' communication. GrammarlyGO uses generative AI to rewrite content for tone, clarity or length and assist with content brainstorming.
Improving client relationships with chatbots
Generative AI-powered chatbots can handle basic client inquiries and provide support. ChatGPT is the most well-known of these, with another chatbot, ChatSonic, also based on GPT technology. ChatGPT warns users that it has "limited knowledge of the world and events after 2021", ChatSonic overcomes this by tapping into Google Search to generate text based on current information.
Accounting Daily rightly states, "The accountant-client relationship is a delicate thing – carefully cultivated but easily crushed, built up over many years but squandered at the touch of a button." So, how do we ensure that Generative AI chatbots are improving customer support for busy accounting firms rather than hindering it?
Generative AI chatbots can help accounting firms manage their client relationships more effectively. When used alongside client management software for accountants, AI chatbots that understand queries can provide accounting firm clients with relevant information to resolve common issues.
By automating low-level customer support through Generative AI chatbots, accounting firms could improve their response times, reduce costs, and enhance the customer experience.
For more ideas on nurturing those all-important client relationships, check out our blog: Mastering client relationships for accounting practices.
Images for marketing materials
Accounting firms may want to consider how they can fit some of the best AI art generators into their workflows. AI art generators can fast-track images for marketing materials, for example.
DALL-E 2, from Open AI, is one such AI art generator. DALL-E 2 can create realistic AI-generated images and artwork that accounting firms can use. All users need to do is type a description of the image they want to generate, and DALL-E 2 can create it in seconds.
Adobe Firefly, now in beta-testing for Photoshop, uses ground-breaking generative AI known as generative fill. Generative fill enables users to add, edit, extend or remove content from images using simple text prompts. Firefly's revolutionary generative AI uses Adobe's expansive stock image library as its primary source.
Fraud detection and cybersecurity
Generative AI technologies can address both fraud and compromised cybersecurity for accounting firms.
Generative AI can analyse large volumes of financial data to detect patterns that may indicate fraudulent activities. ChatGPT can assist Certified Fraud Examiners with prompts to create Excel formulas that identify data set anomalies.
This empowers accounting professionals to mitigate risks to their financial data and supports their need to remain compliant and maintain their internal controls.
For further reading on cybersecurity in accounting, look at our blog: Cybersecurity for accounting firms: what are the biggest concerns?
Day-to-day operations
Microsoft Teams Premium has been released, which can use generative AI to provide accounting firms with a more personalised, intelligent and protected experience. Microsoft Teams Premium can create AI-generated meeting notes and transcripts, offer recommended tasks for firms, and more.
Microsoft has also announced that it will introduce generative AI into its Office 365 suite. When released, Microsoft Copilot will embed AI into day-to-day operations for accounting firms using Word, Excel, PowerPoint and Office, and the promising data from GitHub shows that it will revolutionise productivity for various industries, including the accounting sector.
What are the risks of generative AI?
Generative AI has inspired a great deal of awe in 2023, and it is easy to mistake these impressive early results as technology that is fully-fledged and ready to go. However, this is not the case.
Accounting firms looking to reap the rewards of generative AI need to proceed with some caution while Generative AI technologists fix issues that arise, and we also have an abundance of practical and ethical issues that need to be addressed.
Courtesy of McKinsey, here are a few risks to be aware of when using generative AI too heavily in your accounting firm:
- Accuracy: ChatGPT, for example, sometimes "hallucinates," meaning it confidently generates entirely inaccurate information in response to a user question and has no built-in mechanism to signal this to the user or challenge the result. Sometimes, the tool has been observed to generate several incorrect facts when prompted.
- Systemic biases still need to be addressed: generative AI systems draw from massive amounts of data that might include unwanted biases when applied to accounting firms.
- Generative AI doesn't reflect norms and values: currently, accounting firms must adapt generative AI to incorporate their culture and values, which requires technical expertise and computing power beyond what some firms may have easy access to.
- IP is still debatable: When a generative AI model brings forward a new product design or idea based on a user prompt, who can claim it? What happens when it plagiarises a source based on its training data?
Using generative AI responsibly
Artificial intelligence has generated many recent debates around digital ethics, resulting in the coinage of the umbrella term “responsible AI.”
Accounting firms worldwide that apply artificial intelligence in ways that deliver value instead of tolerating risks are meeting the requirements of responsible AI.
Responsible AI is defined as making appropriate ethical and business decisions when adopting AI. As a result of responsible AI, accounting firms will have additional safety, privacy and regulatory compliance obligations when they adopt artificial intelligence in their practice, including the generative AI uses discussed in this article.
By applying an artificial intelligence trust, risk and security management (AI TRiSM) framework to support AI model governance, accounting firms in the next decade will adhere to uses of artificial intelligence, including generative AI, that is trustworthy, reliable, fair and respectful of privacy.
Gartner expects that by 2026 "organisations that operationalise AI transparency, trust and security will see their AI models achieve a 50% result improvement in adoption, business goals and user acceptance." They also predict that AI will drive 20% of our global workforce and 40% of all economic productivity by 2028.
Accounting practices that do not manage AI risk are much more likely to experience breaches. When not used responsibly, artificial intelligence could pose many privacy and security failures harming both accountants and their clients and damaging the practice's overall reputation.
Accounting firms are already prime targets for cyberattacks because of the sheer amount of sensitive financial data and personal information about their clients, including bank account information, financial records, tax identification numbers, payroll information, and investment data. In an age where AI could be used irresponsibly and convincingly, we may see increased sophistication in threats to accounting firm cybersecurity.
In summary
From small accounting practice start-ups to the largest accounting firm powerhouses, there's no escaping from the fact that it is an exciting time for technological innovation. Artificial intelligence in accounting bridges the gap between the old and the new.
Accountants need to assess their specific needs when considering the implementation of generative AI within their practice. Additionally, firms should prioritise their data security and ethical considerations.
Generative AI in accounting could help free up time-poor accountants when used in tandem with smart and scalable accounting practice management software.