Advantages and Disadvantages of Artificial Intelligence in Accounting Industry

Advantages and Disadvantages of Artificial Intelligence in the Accounting Industry
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November 7, 2021
Understanding the importance of technology in the development of accounting is essential for any accounting professional. It allows him to take advantage of these emerging technologies and increase his efficiency and effectiveness in performing his work. However, similar to any other technological improvement, these new tools can cause more harm than good when misused. This is particularly the case considering that the practice of accounting is vested with the public interest. In line with this, this article would focus on one emerging technology that is also applied in this field – Artificial Intelligence. Artificial intelligence (AI) is usually defined as the field of computer science with the main task of developing machines that can simulate human intelligence by being adaptive through the acquisition and processing of new information. Accordingly, although the application of AI can significantly improve field accountancy, the succeeding sections would describe both the advantages and disadvantages of using this new technology.
Advantages of AI Application in Accountancy
One of the main advantages of AI in the field of accountancy is the reduction of manpower and the increase of work efficiency. One of the most tedious parts of accounting is keeping records and collating data, especially if it comes from a number of sources. This takes up a lot of time and resources even with the use of current software (i.e., Excel) because the accountant is also required to determine the veracity of the information and check whether there are entries that could make the overall results inaccurate. Accordingly, by using AI, most administrative functions could be done with the use of machine learning. For example, if the AI determines that a particular cost is recorded in the company books as a long-term debt, subsequent entries would automatically use the same format as the organization. In other words, AI can help automate data entry and reduce the efforts needed to check for any erroneous entries in the system CITATION Gra20 \l 1033 (Gracey, 2020). In turn, this would make the accountant's job easier and help the company reduce its manpower costs since the AI system can do the bulk of the administrative workload.
Aside from increasing efficiency, another vital function of AI in accountancy is the improvement in the accuracy of records. These kinds of inaccuracies could be due to a simple mistake or malicious attempts to modify the data. In one article written by Berry (2015), the author noted that human errors account for the highest source of inaccuracies in bookkeeping and accounting in the current-day use of technological tools. The author noted that about 27.5% of professionals had "reported that incorrect data had been manually input into an enterprise system at their firms." Additionally, other types of errors were reported, including overriding system data using external programs (13%) and deletion of pre-designed excel formulas (17%), among others. In line with this, it could be seen that while modern-day software is improbable to commit a mistake, errors attribut...