Generative AI and the Future of Accounting

Headshot - John Weaver
John F. Weaver
Director, Corporate Department and Chair, Real Estate Practice Group and Chair, Artificial Intelligence Practice
Published: New Hampshire Society of CPAs Connection Newsletter (Fall 2023)
November 9, 2023

This summer, the Wall Street Journal published an article that discussed how accounting will be disrupted by generative artificial intelligence, a form of AI technology that identifies patterns in large quantities in training data and then generates original content – text, images, music, video, etc. – by recreating those patterns in response to user input. In doing so, it quoted Mark D. McDonald, a senior director at Gartner, a technology research and advisory firm, as saying that a decade from now “accounting professionals will have a totally different set of skills than the experienced professional of today and will largely look more like data scientists and systems engineers.” Although this might sound depressing to some people, the article also noted that generative AI would allow accountants to “take on greater responsibility and decision-making authority than in the past,” making the profession more rewarding for those involved and more attractive for young professionals making career decisions.

Those potential benefits come with risks. Generative AI carries the possibility of great functionality… but not all those possibilities are realities yet. The most well-known generative AI program, ChatGPT, famously attracted 1 million users in its first five days, and more than a billion users within three months, but it has also produced well-publicized “hallucinations,” the industry’s term for the confident, seemingly correct answers a generative AI application provides that are in fact incorrect and not supported by any outside resources. Other prominent generative AI applications – including Google’s Bard (which also produces natural language), DALL-E 2 (images) and Synthesia (videos) – have been similarly unreliable. Nonetheless, the adoption of generative AI is on the rise, and Bloomberg has reported it will be a $1.3 trillion market by 2032.

With that in mind, it is useful for CPAs to consider how generative AI can help their operations, the pitfalls of adopting generative AI applications, and the need for appropriate thought and precautions.

How Generative AI Can Support a CPA’s Practice

Numerous CFOs have identified functions that CPAs can push to generative AI software. These include (i) preparing the first drafts of financial reports and statements, which accountants or other employees can later revise and improve; (ii) reviewing and summarizing companies’ financial statements as part of the audit process; (iii) drafting communications to third parties, including clients; (iv) conducting research; and (v) preparing marketing materials, including graphics and articles. Assigning these tasks to AI platforms could reduce the time required to perform these duties, saving money for clients. That would also, as the Wall Street Journal noted, free up CPAs for higher-level functions that are more intellectually challenging and rewarding.

How Generative AI Can Undermine a CPA’s Practice

I frequently say that we overestimate what AI will do in the next two years and underestimate what it will do in the next ten. That is a relevant point here because the technology is not yet capable of reliably providing all the support described above. The potential for hallucinations makes research performed by generative AI suspect. The privacy policies and terms of use documents maintained by most widely available generative AI applications make it virtually impossible for accountants to provide any client data to those platforms. Their parent companies retain broad rights to use data you provide, meaning you cannot share client data without violating your obligation to confidentiality. Generative AI more reliably prepares marketing materials, but even in this area, you should carefully review any work product to ensure the information is correct; there is also a chance that text or art could be similar to other copyrighted works, producing an infringement claim.

AI Use Policies

Each organization will take a different approach to generative AI. I recommend that leaders educate themselves about the technology and form an opinion about how, and the extent to which, they want to incorporate AI into their operations now and in the future. Some companies may look at the risks identified above (and others) and decide to wait until the technology improves and there are more options available. We will almost certainly see generative AI applications designed to interact with an individual firm’s data to produce research and document drafts, while also treating the firm’s data as private and confidential. Other organizations may decide that the benefits of early adoption outweigh the risks, and choose to engage with existing generative AI solutions now.

During this process, leaders should also seek input from employees. How do they use AI? What issues have they encountered? How do they hope to use the technology in the future?

If it decides to develop an AI strategy, the organization should work with counsel to prepare an AU use policy, which can be a standalone document or incorporated into existing policies. Depending on the company’s needs, an AI use policy may detail what applications are acceptable, what uses are acceptable, whether employee use will be monitored, what training is required, etc. The goal should be to protect the organization from the risks associated with generative AI while also giving employees an opportunity to experiment, which can help the company in the long-run, as such experimentation can allow it to identify and adopt useful AI faster and better going forward.

Generative AI and the Future

Although the liabilities should give accountants pause before incorporating generative AI into their operations, the industry is moving toward the technology. Organizations should take a careful look at its possibilities and consider how they might use it safely and appropriately.

One other consideration: If AI is able to perform the duller, baser parts of an accountant’s career, he or she might have more time for counseling clients and human engagement. Some AI researchers have suggested that, in this way, AI could be re-humanizing rather than de-humanizing. If that’s true, accountants, like many other professionals, may have a lot to look forward to from generative AI.