Machine learning in accounting continues to gain popularity as more and more companies are looking for cost-effective solutions to speed up their business processes.
What is machine learning?
Machine learning refers to a computer program’s ability to learn and adapt to new data without external intervention. As a subfield of artificial intelligence (AI), it makes use of inductive reasoning where the computer utilises existing data patterns to figure out and provide the information the user needs.
One of the main benefits of machine learning is automation. This feature allows companies to perform repetitive and predictable accounting tasks more efficiently.
Cloud accounting software with machine learning ability, for example, can automate bank reconciliations, tax calculations, invoicing, accounts payables, and reports. As a result, they can save hours of manual data input and calculation.
Businesses undergoing digital transformation can also expect positive returns. As the report from the McKinsey Global Institute stated, early adopters from the financial services sector with proactive AI strategies have higher profit margins compared to their counterparts,
Is machine learning a threat to accounting professionals?
Accountants will remain indispensable to companies even in the face of automation.
The intelligence of computer programs cannot be compared to an accountant’s critical thinking, emotional intelligence, and human insight.
While machine learning can provide valuable financial information, it won’t make sense to a person unless he/she has sufficient accounting knowledge. Organisations will still need accountants’ expertise to interpret the numbers and provide assurance in decision-making.
In other words, accountants are critical to businesses because of their insights and not solely because of their number-crunching and data gathering capabilities.
Instead of seeing AI as a threat, accountants can reap bigger benefits if they will look at it as a tool to advance in their careers. AI, when paired with human intelligence, will help them work smarter. Not only will it make their jobs more efficient but it also frees up the time they spend on menial tasks. This way, they can focus on meaningful tasks and contribute better results to the organisations they work with.
Impacts of machine learning in accounting
Machine learning can bring several changes to the finance and accounting industry. Let’s take a closer look at how it will affect certain roles:
One of the downsides of machine learning is biased data or the tendency to provide analyses that can leave a negative impact on the organisation. Because of this, companies with organisation-wide AI initiatives would need the help of management accountants in ensuring that there are proper governance and internal controls in place to mitigate risks caused by machine learning.
Instead of spending significant time to generate and analyse data, machine learning can help financial planning and analysis (FP&A) accountants make the process easier. In addition, AI also enhances data quality and accuracy.
However, similar to management accountants, FP&A accountants must also be wary of machine learning’s inherent biases and should exercise due care.
Machine learning is forecasted to augment audit procedures and automate financial statement analysis. This means that auditors won’t have to perform the procedures themselves. Instead, they are expected to focus more on designing the audit procedures, interpreting results, and evaluating the effectiveness of the governance and internal controls over machine learning.
Tax accountants will experience lesser impact compared to other roles because of companies’ need for specialised advice and tax planning services. Corporate taxation, including the recent proposals to amend tax policies, is way too complicated for AI to handle.
On the other hand, tax authorities are already exploring the use of machine learning to resolve issues regarding tax evasion and fraud. They’re also looking for ways to make it easier for tax accountants to better predict deductions.
The next steps for accountants and businesses
There’s no stopping the world from heading towards a more digitalised future. As long as there are technological wins, the best thing accountants and entities can do is to accept and adapt to the changes it brings.
Accountants, as with any other professionals, should continually upskill to meet the new demands of the job market. Organisations, on the other hand, should find out how to utilise and invest in technology to make their business operations more efficient.
By embracing machine learning, accountants and businesses can maintain their competitiveness.
D&V Philippines invests in the training and development of its people to make sure they have extensive knowledge in using cloud accounting solutions. If you need more staff like them in your firm, you may get in touch with us now or download our whitepaper, Finding the Right Talents: D&V Philippines’ Solutions to Modern Accounting Firms, to learn more about the solutions we have for you.