In today’s fast-paced business world, ignoring technology is not an option, and the field of accounting is no exception. Artificial Intelligence has become a transformative asset, helping accounting firms streamline processes, improve accuracy, and deliver more value to their clients. AI in accounting is transforming how firms operate, yet many are still cautious about adopting Generative AI (GenAI) technology into their workflows. According to the 2024 Generative AI in Professional Services Report from the Thomson Reuters Institute, 30% of tax and accounting firms are in the consideration phase of whether to use GenAI tools, while 49% have no current plans to use them.
The Current State of AI Adoption in Accounting
According to survey respondents, 8% of tax firms identified as using GenAI technology, with 13% of firms planning to use the tech soon. The adoption of AI in the accounting industry in recent years has been on the rise. Accounting firms of all sizes, from global giants to local boutiques, are increasingly turning to AI solutions to enhance their services. This shift is driven by the realization that AI can automate mundane tasks, reduce errors, and free up accountants to focus on higher-value advisory work.
Interestingly, accountants seem to be implementing GenAI tech through personal, open-source tools for their work over industry-specific tools. 27% of tax firm survey respondents who already use a GenAI tool are using open-source technology (i.e., ChatGPT) over 8% using an industry-specific tool. This trend highlights a growing preference for flexible, customizable solutions over more rigid, industry-specific offerings.
AI Utilization by the Big 4 Accounting Firms
The “Big 4” accounting firms—Deloitte, Ernst & Young (EY), PwC, and KPMG—have led the way with AI adoption. They have heavily invested in AI-powered tools and solutions to provide clients with more advanced and insightful services. Here’s a detailed look at how they use AI:
Document Review
Deloitte has internally developed an automated document review platform. The tool uses cognitive technologies to scan and evaluate an entire population of contracts, extracting key information and identifying critical clauses. This platform integrates seamlessly into their practitioners’ existing workflows, enabling faster and more accurate document analysis. By leveraging AI for document review, Deloitte can reduce the time spent on manual contract evaluations and minimize the risk of oversight, thereby improving overall efficiency.
Auditing
EY has embedded AI technology into their audit process, revolutionizing how they handle large datasets. AI tools are used to analyze and extract data from unstructured sources, such as contracts and emails, providing deeper insights and more comprehensive risk assessments. For instance, AI can identify patterns and anomalies in financial transactions that might indicate potential fraud or errors. This proactive approach to auditing helps EY respond more effectively to the risks of material misstatement due to fraud, ensuring higher standards of accuracy and reliability in their audit reports.
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— EY Singapore (@EY_Singapore) June 4, 2024
IT Solutions
PwC’s in-house teams have developed a suite of customized software applications designed to enhance productivity and streamline operations. These AI-powered tools can synthesize vast amounts of data, automate code review and generation, and create detailed documentation. PwC reports productivity gains of 20% to 50% in their development processes due to these AI implementations. Furthermore, PwC professionals have access to an enterprise version of ChatGPT-4o, enabling them to utilize advanced AI capabilities for both internal processes and client-facing solutions, thereby enhancing service delivery.
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Check out some pictures of the events 👇#MicrosoftCopilot #HardSkills #AI #GenAI pic.twitter.com/oDzRGWgzyL
— PwC_Luxembourg (@PwC_Luxembourg) June 4, 2024
Client Solutions
KPMG has developed the Trusted AI framework, a comprehensive approach to help their clients design, build, deploy, and manage AI solutions responsibly. This framework ensures that AI technologies are used ethically and transparently, fostering trust and reliability. KPMG’s clients benefit from tailored AI solutions that address specific business challenges, enhance decision-making, and drive innovation. By prioritizing ethical AI practices, KPMG strengthens client relationships and positions itself as a leader in responsible AI adoption.
KPMG announces a multi-billion-dollar investment in Microsoft’s generative AI and cloud services that will accelerate the use and development of generative AI for KPMG’s audit, tax and advisory clients and its 265,000 people globally https://t.co/soH1ArJudf pic.twitter.com/wJu2TPDH8z
— Bloomberg (@business) July 12, 2023
AI in Smaller Accounting Firms
Smaller accounting firms might not have the same resources as the Big 4, but they are also embracing AI to stay competitive and offer better services.
According to the GenAI report, the top five use cases for tax firms using or planning to use GenAI were:
Accounting/Bookkeeping Automation
Smaller firms are leveraging AI-powered software to handle routine accounting tasks, such as categorizing expenses, reconciling accounts, and generating financial reports. These tools not only save time but also reduce the risk of manual errors, leading to more accurate and reliable financial data. By automating bookkeeping processes, smaller firms can allocate more resources to strategic activities and client advisory services, enhancing overall service quality.
Tax Research
AI-powered tax research tools enable firms to quickly retrieve accurate information from a vast repository of human-edited, tax-specific content. These tools use sophisticated algorithms to analyze queries and return authoritative answers from trusted sources. This capability allows tax professionals to access critical information swiftly, improving the accuracy and efficiency of their research efforts. With AI handling complex research tasks, accountants can focus on providing strategic tax advice to their clients.
Tax Return Preparation
AI is transforming the tax return preparation process by automating the extraction and analysis of data from various financial documents. This technology significantly reduces the time and effort required to prepare accurate tax returns, while also identifying applicable deductions and credits tailored to individual or corporate financial scenarios. By ensuring compliance and optimizing tax liabilities, AI helps firms deliver better outcomes for their clients and enhances the overall efficiency of tax preparation processes.
Tax Advisory
AI tools are increasingly being used to generate predictive insights, helping clients plan for future tax implications based on their financial decisions. These tools analyze historical data and model potential scenarios, providing clients with strategic advice on tax planning and optimization. This proactive approach allows tax professionals to offer value-added services, positioning their firms as trusted advisors capable of navigating complex tax landscapes.
Document Review
AI technologies are also being employed to streamline document review processes in smaller firms. By summarizing key points from contracts, invoices, and receipts, AI can quickly identify anomalies and issues that require further investigation. This capability not only speeds up the review process but also enhances the accuracy and reliability of financial audits and compliance checks. Smaller firms can leverage AI to improve their audit quality and provide clients with more thorough and dependable services.
Among the firms actively using or planning to use GenAI, 42% said they use the technology daily, if not multiple times a day. An additional 31% said they are using it weekly. This frequent usage underscores the growing reliance on AI tools to enhance various aspects of accounting operations.
Approaching AI with Curiosity…
In the accounting world, AI is not a threat but an opportunity. It can empower firms of all sizes to offer better services, improve efficiency, and thrive in an ever-changing industry. As AI continues to advance, those who approach it with curiosity and a willingness to embrace new technology will likely stay ahead of this trend.
If you’re looking to explore the world of AI in accounting, join the AI @ Thomson Reuters community. Here, you can connect with experts, learn about the latest AI trends, and unlock the full potential of AI in your accounting practice. To read and download the full 2024 GenAI in Professional Services Report, visit Thomson Reuters.
Photo by Kelly Sikkema on Unsplash
