A future of Accounting Professionals
Accounting professionals will be suffered from the influence of artificial intelligence (AI). According to Osborne (2013), the ranking of probability on the occupation of accounting professionals, including auditor, tax professional, bookkeeper, accounting or auditing clerks, shows the high possibility of computation. Osborne stated that these works seem to be replaced by AI in the future. The reason is that these jobs contain many routine jobs that could be replaced by AI.
For instance, the auditor work is that they firstly survey a random sample of all transactions and check the validity of one. It could be replaced by AI because the AI can investigate more samples correctly than humans. On the other hand, the auditor needs to do un-routine work, such as consulting with their clients concerning more difficult matters that AI cannot decide.
Shifting to the AI audit in the Big Four accounting firms
According to Vishal Chawla (2020), the audit service of the Big Four accounting firms, PWC, EY, Deloitte and KPMG, is affected by AI. However, the Big Four are also investing significant money to develop AI technology due to applying the AI for their audit or other services(Michael, 2020). Though this technology could have the possibility of replacing their job, why the Big Four is shifting to the AI?
(EY. 2018) “How artificial intelligence will transform the audit”
The YouTube video shows how EY promotes automation on audit service. It could be said that they intend to shift resources from routine audit to other works requiring decision making by a human.
According to Deloitte (2018), they also try to improve the efficiency of their audit process.When the auditor decides the risk strategy, the AI tool also checks the risk of the client by the past huge database of Deloitte. If the industry is different, the AI can find a similar case in any otherindustry and the auditor can confirm the doubt. It is like a “second opinion” with auditor. However, it is only based on past data. Deloitte state that in the future they want to make AI predict future risks by using someeconomic circumstances like Brexit.
Increasing needs for AI audit
Today, globalization accelerates the overseas expansion of the business and it is probable that the M&A with foreign companies has consequently increased. After the M&A, the headquarter often cannot acquire enough profit because it is difficult to manage overseas subsidiaries perfectly.
For example, in 2015, Toshiba, a Japanese famous electrical and electronic manufacture company made an overstated financial statement because they need to hide their significant losses happen at overseas companies that they cannot manage enough(BBC, 2015). Needless to say, the company has audited by accounting firm every accounting year. However, it is said that the accounting firm cannot point out Toshiba’s error because the existence of Toshiba is very big for them and they want to continue the relationship with Toshiba as a good customer.
In 2017, it appeared that Fuji Xerox, a Japanese large printer company, had made wrong consolidated financial reporting (Steven, 2017). It is because though the foreign subsidiary merged by the parent company made an overestimated financial report for several years, the parent company cannot comprehend the losses and publishedan overestimated financial statement. In other words, the parent company and their auditor cannot find this accounting error.
In each case, if they used the AI for their audit and hadtheir discipline to point outthe error, they could find and defend these accounting mistakes.
The future auditor
By the appearance of AI, we can solve a more difficult problem than ever before. For auditors, they will need to collaborate with professionals of other fields such as data scientists and other computer scientists to develop the quality of their audit services by AI. At the same time, they also need to continue learning something outside of own fields. In the team working, auditors have to play a role as a leaderwho givesan order to other professionals and need to say their opinion to their clients about some transactions from a systematic perspective.
On the other hand, there is the following problem. For accountants, by the appearance of AI, though elder accountants ordinarily have enhanced their ability in practice by doing their works including routine works, how new generation can enhance their ability like elder generation without routine work? Some knowledge required in the job is not just the same as the elder generation, however, the basic skills as an auditor could have seemed the same. As a result, it is required to establish a new training mechanism to obtain enough ability. If they overcome this difficulty, they can realize the fantastic audit service with AI technology.
References
Carl Benedikt Frey and Michael A. Osborne. (2013). The future of employment: How susceptible are jobs to computerisation?. Retrieved February 12, 2020 from https://www.oxfordmartin.ox.ac.uk/downloads/academic/The_Future_of_Employment.pdf
Michael Kapoor. (2020, January 2). Big Four Invest Billions in Tech, Reshaping Their Identities. Bloomberg Tax. Retrieved February 13, 2020 from https://news.bloombergtax.com/financial-accounting/big-four-invest-billions-in-tech-reshaping-their-identities
Vishal Chawla. (2020, January). WHY THE BIG FOUR AUDIT FIRMS PWC, EY, DELOITTE & KPMG ARE INVESTING HEAVILY IN AI. Retrieved February 12, 2020 from https://analyticsindiamag.com/why-the-big-four-audit-firms-pwc-ey-deloitte-kpmg-are-investing-heavily-in-artificial-intelligenc/
Deloitte. (2018). 16 Artificial Intelligence projects from Deloitte Practical cases of applied AI. Retrieved February 12, 2020 from https://www2.deloitte.com/content/dam/Deloitte/nl/Documents/innovatie/deloitte-nl-innovatie-artificial-intelligence-16-practical-cases.pdf
EY. (2018). How artificial intelligence will transform the audit. Retrieved February 12, 2020 from https://www.ey.com/en_gl/assurance/how-artificial-intelligence-will-transform-the-audit
EY. (2018, August 2). How artificial intelligence will transform the audit. Retrieved from https://www.youtube.com/watch?v=58suyR5E6fI&t=18s
PWC. (2019). Harnessing AI to pioneer new approaches to the audit. Retrieved February 12, 2020 from https://www.pwc.com/gx/en/about/stories-from-across-the-world/harnessing-ai-to-pioneer-new-approaches-to-the-audit.html
KPMG. (2018). Auditing with Artificial Intelligence. Retrieved February 12, 2020 from https://home.kpmg/uk/en/home/insights/2018/06/auditing-with-artificial-intelligence.html
BBC. (2015, July 21) Chief executive resigns over scandal. Retrieved from https://www.bbc.co.uk/news/business-33605638
Steven Kiernan. (2017, August 7). False accounting and fictitious sales at Fuji Xerox Australia, NZ. CRN. Retrieved from https://www.crn.com.au/news/false-accounting-and-fictitious-sales-at-fuji-xerox-australia-nz-470035
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Hi, Masato. I think your blog is great. Artificial intelligence (AI) has become an unstoppable trend. For the Big Four accountancy firms, AI has reduced the costs of auditors and indirectly enhanced audit quality control because it may avoid more audit fraud and audit failure cases. However, I do not think it is good news for primary auditors. For example, auditors who engaged in audit drafts and audit inventory may lose their jobs. In addition, AI may not be used in some small firms and developing countries because they cannot afford the software copyright or because the costs of labour are lower than those of AI in plenty of regions. Senior certified public accountants (CPAs) will not be replaced. Some personalised questions in the audit process must be solved by subjective judgement. In addition, when the AI program has bug or failure, auditors will be needed to test and repair the audit system. In all, auditors need to improve their professional skills to escape redundancy.
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Hi, Masato. I think It is really an interesting blog. I also think that AI brings benefits to the audit field, which could be an auxiliary tool. The audit conclusions become more accurate by analysis a large amounts of samples. Although AI could help auditors a lot, I think the auditors could not be wholly replaced by it. This is because professional judgment can not be digitized. Besides, I also have a problem in the third part. You said that AI could help auditors to point out error, but in the first example about Toshiba. The accounting firm did not point out since they just want to have a good relationship with Toshiba. When AI points out the error, is it possible for the firm not to report it? Maybe this example could not support very well for your opinion… Looking forward to your reply. 🙂
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I’m happy to see the topic that you had chosen. I studied account for four years and have a bachelor of accounting in Taiwan. During the period on school, I always think about the issue that would AI replace our job? People do regular stuff in their work time, sometime might emerge errors or certain situation is difficult to be solved. However, I believe that AI cannot totally replace the auditor and accountant, there still need employees understand the principle and monitor for it. In case that one day technology might counterattack or control us.
I agree with your conclusion view and think that knowing the theory is not enough, putting it to the real case is a significant point. Without routine practice, it is hard to become an ability. In spite of the jobs might not be disappear, people still need to train other capability, more skills, more opportunities.
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Hi Masato, I like your post. Indeed, whether the development of artificial intelligence (AI) will replace people’s work is a very controversial topic. However, we may need to look at it from different perspectives. People are often polarized and choose the positive or negative of AI without considering the larger space between the two.
(https://www.futurelearn.com/courses/creating-your-future/4/steps/652897)
I don’t think AI will replace auditors, but its rapid development will hurt auditors themselves. Older auditors who are still working and unable to adapt to the new technology will face serious challenges. Also, it appears that AI programs have not reached the level of 100% regular operation. Moreover, we also need to consider whether an enterprise can use artificial intelligence by comparing local labour cost. For example, in India, the general cost of labour is lower than the cost of introducing AI technology.
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