AI in Singaporean accounting firms
The accounting profession in Singapore is evolving rapidly. As of January 2024, over 425,000 companies were registered with the Accounting and Corporate Regulatory Authority (ACRA)[1]. This dynamic environment highlights the need for innovative solutions like AI to enhance efficiency and productivity.
Challenges of AI in the Singaporean accounting industry
First, let us look at the potential barriers that can stop AI in accounting before they hamstring your accounting firm's operations.
From data management and analytics platforms to defining and overseeing a governance model to staff training, systems monitoring, and algorithmic performance – AI is a dynamic solution that requires regular maintenance.
Major barriers to AI in accounting
- Staff Resistance: Even the most future-forward organisations will have detractors of modern technologies. The benefits of AI in accounting tools can be abundantly clear, but implementing such technologies in financial management and getting buy-in from all staff can be challenging and frustrating for business leaders. In Singapore, a study found that only 15% of accounting firms had adopted AI by 2020, indicating significant resistance [2].
- Data Limitations: While rarely an issue for larger firms and multinationals, smaller accounting businesses may find they collect insufficient data to build models around specific areas for financial analysis. Collecting and housing that data can be not just an expensive process but one that requires the integration of new cases and tools and the establishment of key financial processes. In Singapore, the adoption rate of AI was only 10% in 2021, lagging behind other developed countries [2].
- Cybersecurity and Data Risks: As with any innovative technology, there are always fears, whether they are valid or otherwise, about the risks of potential exposure to cybersecurity for accounting firms. Hackers understand the value of data and will exploit poor internal practices to steal personal data or confidential client information. These malicious actors are particularly interested in the value of data from the accounting and finance sectors.
Is AI a threat to accountants?
Artificial intelligence solutions cannot do their jobs without human accountants who support them.
As reported by Accountants Daily, a study by KPMG found that almost 60 per cent of Australians distrust the use of AI at work in 2023, for example, the hugely popular generative AI tool ChatGPT.
However, a 2024 report by Karbon showed that the sentiment is beginning to shift. 71% of accounting professionals currently believe that AI has the potential to bring substantial changes about to the accounting industry.
The fear of automation technologies eliminating the human worker, particularly in accounting firms, is untenable. Especially if you consider what humans can add to data that robots simply cannot. It would also seem that this fear is dissipating as these tools are becoming more mainstream.
According to a recent study by OpenAI, creator of ChatGPT, accountancy is one of the occupations most exposed to AI. Through accounting intelligence, accountants can interpret and analyse relevant data about their clients' finances and provide business advisory services to their clients.
Humans can give the data structure, which is why data preparation is such a critical and context-sensitive task. This element of ‘data science’ demands that human workflows feed smart data to machines in a way that supports their activities for greater end results.
Accountants can take a proactive approach to our ever-growing reliance on artificial intelligence when they identify the essential soft skills they'll need for their long-term financial performance and productivity.
The benefits of artificial intelligence for accounting firms
Artificial intelligence could be the technology that drives your firm into the future.
A study by EY found that 84% of US CEO's and business leaders see AI as an essential driver of their companies' success. This is because accounting AI tools can boost firm efficiency, minimise human error, and enhance firm productivity. However, this is not without risks, especially for Australian accounting firms that implement AI technologies without understanding the associated challenges.
The continual evolution of AI technologies means accounting, bookkeeping and data entry professionals armed with the right knowledge can adapt to changing responsibilities and roles within their firms. AI in accounting can indeed streamline its own day-to-day accounting processes, and workers are still required with competencies beyond traditional accounting jobs.
The mindset of ‘routine work’ must now shift to ‘strategic thinking’, and this will be achieved by knowing how to analyse and interpret the data that AI accounting software parses. Moreover, financial professionals will be able to develop a new set of expertise, all revolving around data.
Thanks to the rise of artificial intelligence, accounting and finance professionals in the future will have robust data skills, a better understanding of how to interpret disparate data streams, and greater data analysis skills that will be critical for decision-making.
How is AI used in accounting?
Savvy accountants can use AI capabilities for a variety of purposes, such as:
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Automating routine tasks,
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Workflow automation,
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Managing cash flow,
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Project management,
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Business communication, including composing emails and managing inboxes,
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Data analysis,
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Scheduling,
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Invoice processing and expense management,
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Detecting fraud,
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Forecasting.
Accounting firms that are not actively leveraging AI in accounting software are already falling behind the competition.
There's no getting away from the fact that AI systems are helping the accounting sector to evolve. Far from being the technology that replaces accountants, machine learning is freeing up humans from internal accounting processes that were one time-consuming, as well as handling repetitive accounting tasks.
AI adoption in your firm means you can focus on more important opportunities while the tech does the rest. These important opportunities could include business advisory, client-facing duties or tasks that require the application of soft skills.
AI in accounting can be combined as part of a single intelligent strategy with predictive analytics (PA). AI and PA in accounting together have the potential to enhance efficiency and accuracy with the resources you have. They'll also increase the ability to parse the enormous amount of valuable financial data that your accounting firm collects.
Accounting firms with a continuous auditing function or division may also see a more comprehensive and efficient audit process with AI in the mix.
How does the Big 4 use AI?
The accounting profession has rapidly adapted to AI applications to get ahead of the game.
All the Big 4 accounting firms: Deloitte, PwC, KPMG and Ernst & Young (EY) have fingers on the pulse of AI. They are continually investing heavily in AI-powered tools and solutions to give their clients advanced, insightful accounting services.
Here are some accounting use cases that demonstrate how the big players have recently employed AI:
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Deloitte: Developed an AI-enabled document-review platform that automates review and extraction processes from contracts, freeing up time-consuming human efforts.
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PwC: Invested significantly into AI-driven natural language processing (NLP) to parse “complex lease agreements, revenue contracts, and board meeting minutes to form meaningful insights for clients.”
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KPMG: Used NLP to predict future events and convert customer calls to “unstructured text” within its call centres.
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EY: Automated its auditing processes, allowing AI to handle up to 80% of a simple lease's contents electronically, leaving only a small remainder for human employees to manage.
Artificial intelligence and the future of accounting
The evidence is clear: AI in accounting, especially when deployed in tandem with predictive analytics, is an incredibly valuable tool that different accounting firms of all sizes should be leveraging.
From smaller accounting firms to the largest accounting firm powerhouses, there's no escaping the fact that data is now our most valuable commodity.
To derive the most value from that exponentially expanding mountain of data, more accounting firms must adapt their way of working.
AI's role in accounting can be the bridge between old and new. It is a way to free up time-strapped staff from unnecessarily mundane and repetitive tasks like data entry. When used simultaneously with smart practice management accounting software, AI can help accountants to parse huge data sets for key business insights.
According to a study from Mordor Intelligence, artificial intelligence in accounting is projected to grow 30% year-over-year through to 2027, which demonstrates its long-term staying power.
This is no longer a prediction for the future – AI in accounting is essential for any firm that wishes to stay competitive today. The best time to adopt this critical technology was yesterday. The next best time is now. Are you ready to push your accounting firm to its limits?
References
[1] ACRA Business Registry Statistics
[2] Singapore Department of Statistics (DOS) | SingStat Website