Your smartphone alarm goes off, and a new day has begun. You roll over in bed, grab your phone from the nightstand, and then briefly stare into it, allowing the device to recognize your face and unlock itself. You then mutter, “Hey Siri, what is the weather for today?”

While you learn it will be 41°F and rainy, your smart thermostat has already bumped up the temperature knowing you soon will be rolling out of the warm comfort of your bed.

Then, before heading to the shower, you take a peek at your Facebook feed, where an ad appears for that restaurant you and your friend were just talking about.

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In just the first 10 minutes of your day, the influence of Artificial Intelligence (AI) can already be felt in your daily life. AI, automation, and machine learning technology are making in-roads into every facet of our existence.  And the CPA profession is no exception.

“Alexa, what is AI?”

Referred to by some as the fourth industrial revolution,¹ AI is technology that enables computers to perform decision-based tasks previously left to humans. It shows up in multiple forms, including machine-based learning that can progressively become better at analysis and decisions the more it is used, and speech-based technology that can understand different voices and languages.²

According to a recent study conducted by MIT and The Boston Consulting Group, almost 85% of executives believe AI will allow their companies to obtain or sustain a competitive advantage, and 79% believe it will increase their company's productivity.

AI has the potential to assess vast quantities of data and formulate new kinds of insights, recognize complex patterns and detect anomalies. Services, analytics, and tasks that have historically relied on an intensive use of human capital will all be transformed by AI.

“Hey Cortana, where is AI being used in accounting today?”

In professions with rote tasks like accounting, AI is beginning to replace human eyes. There are tech companies that already offer fully automated accounts systems that do everything from matching purchase orders to flagging invoices for payment. It has reached the point where some companies no longer require dedicated accounts payable and receivable employees.³

And many large accounting firms and all the Big Four are investing in the development of advanced AI technologies. Here are a few examples of where AI is being embraced in accounting to perform more complicated operations.

• Deloitte auditors employ AI tools with natural language processing capabilities to interpret thousands of contracts or deeds. The technology extracts key terms and analyzes that information to perform risk assessments or other functions. Entire populations or datasets are assessed in significantly less time.
• At Crowe Horwath, data scientists used machine-based learning to sift through the disparate billing systems of its health care clients and flag potential problem accounts for claim processing and reimbursement. Now, the health care companies use the technology to proactively deal with those complicated cases.⁴
• KPMG is using IBM Watson to support its tax professionals and engineers in R&D departments who spend thousands of hours manually reviewing materials to discern the appropriate evidence for tax credits, where missing a detail could mean missing out on millions.⁵

“OK Google, how should small CPA firms prepare for the rise of AI?”

Like all technology, there will soon come a time when the innovations funded by these large firms will become more accessible and less costly, and when early adopters will have forged a path by vetting these new tools and working out many of the kinks. Now is the time to ready your firm with strategy, funding, and skills to be poised to commit to AI accounting tools.

Pilot a small project to introduce some form of AI at your firm. Assemble a small team to acquire database and IT skills, and to attend seminars and classes. Then have them work with you to put a plan in place. This will collectively raise your company’s comfort level with AI.

In parallel, you must strive to evolve the non-technical skill-set of those at your firm. With more of the mundane accounting tasks being accomplished by technology, your team’s value will rise as accountants shift from being traditional practitioners to business and financial advisors.

“Hey Siri, what does this all mean for my CPA practice?”

Ultimately, AI will create new opportunities in the accounting field, with accountants and financial professionals assuming more important roles. Here at CTI, we at the forefront of marrying tax expertise in credits and incentives services with advanced secure in-house technology. Let us help your CPA practice embrace change and capitalize on the real success that artificial intelligence will deliver.