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Practical Generative AI in Accounting - INTHEBLACK

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30 views9 pages

Practical Generative AI in Accounting - INTHEBLACK

Uploaded by

Bobby ALO
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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TECHNICAL SKILLS

Practical generative
AI in accounting
Generative artificial intelligence (AI) is set to
change the way we do business, and
accounting is no exception. There are
already many firms starting to see the
possibilities of how it can assist with day-to-
day financial tasks, but caution is required.

Megan Breen · 12 Jan 2024 · 7 min read time


Generative artificial intelligence holds the promise of more
productivity with less effort and better results. It is no wonder that the
launch of ChatGPT in late 2022 saw a million users sign up within the
first five days . Within two months, 100 million users had become
active.

Among ChatGPT’s early adopters was Jason Robinson CPA, director at


Future Advisory, who says now is the time to assess the capabilities of
generative AI and be part of history.

“When used well, these systems can quickly extract and analyse
content … to collate information and data, to respond to a user’s
specific questions, to produce written materials and even undertake
mathematical tasks,” he says.

“Like other significant developments in history, generative AI will get


things wrong, and it will cause major issues, but either way we’re
going to push forward – it’s here, and it’s not going away.”

What is generative AI?


At its essence, generative AI is a class of artificial intelligence
algorithms that can generate or create content – text, images, music
and even video – without any direct human intervention.
Early adopters across all areas of society and business are putting the
technology to work, discovering and taking advantage of the
opportunities it holds. In the process, they are also making mistakes
and learning from them.

The accounting industry is no exception, with many firms already


starting to see the possibilities of generative AI. This includes
streamlining previously manual tasks, such as creating financial reports,
performing data analysis and generating forecasts.

The technology can also be used to analyse large volumes of financial


data, detecting trends and patterns that would be challenging for a
human to identify.

Working with the machines


Tim Timchur FCPA, director at IT firm 365 Architechs, says generative
AI is a powerful tool for day-to-day business operations – provided you
know what you are asking it to do.

“The prompt you put in is crucial,” he says. “The more information


you give it the more specific it will be.

“The best advice we have for accountants is to start engaging with it


now, develop a policy for its use and train your staff to be able to see
where it can best be used. It is not really an option not to use it,”
Timchur says.

If a user asks ChatGPT to come up with some ways accountants can


use it, within a few seconds it produces a list of tasks – expense
tracking and receipt scanning, compliance and audit support,
customer queries, data analysis, forecasting and budgets.

However, ChatGPT also offers the following warning:

“’It’s important to note that while ChatGPT can be a valuable tool, it


should complement human expertise, and accountants should exercise
discretion when relying on AI for critical financial decisions.

“Additionally, data privacy and security considerations should always


be a priority when using AI in accounting practices.”

For Robinson, a warning like that should not be ignored, and users
should be aware the technology is in its infancy.

“At the moment, it’s very experimental. There’s no guarantee that the
answer you’re going to get back is correct, so it is important to have
some processes in place to be able to check everything before you
send it out,” he says.

The system is designed to make you think it is providing you with


correct information – it wants you to believe it, Timchur says.
“Left to their own devices, these systems will ‘hallucinate’, which is the
term that is widely accepted for it ‘making stuff up’.

“It is designed to convince you that what it said is accurate, and it will
go to the extent of making up articles and referencing those articles to
convince you,” Timchur says.

Robinson points to a response he got to a query about a client’s tax


status as a sole trader.

“It told me a barrister in Victoria could operate under a company


structure. I knew that to be untrue, and when I interrogated Chat GPT,
it told me that it was wrong and even showed me how it had got the
information wrong.

“It was a convincing answer, though, and if I hadn’t questioned it, it


could have been a very different outcome with that client,” Robinson
says.

“The simple mitigation strategy is simply to review and check, and not
just blindly go along with what it’s telling you.”

Understand the security and privacy


risks
Like any ground-breaking technology, there are security and privacy
risks attached to the use of generative AI.

The best way to mitigate those risks is to not share any private or
identifiable information with the platform.

“We’ve created procedures for our firm to never share information


about who the client is or provide specific information about their
business, such as ABNs, tax file, numbers, names. We always use it
almost like a fake avatar or a fake character,” Robinson says.

This kind of approach is critical, says Matt Dunn, director at cyber


security and technology company The Missing Link. However, as the
technology is further developed, there will be stricter protections
available.

“Up until now we’ve seen accounting firms using it more in their back-
office functions, such as marketing and sales, and for client
communications, newsletters and even developing draft agreements,”
Dunn says.

With the recent announcement of Chat GPT Enterprise , which offers


enhanced security and privacy features, advanced data analysis
capabilities and customisation options, Dunn says professional services
firms will be able to use the technology more safely for tasks like
financial analysis.

“That includes collating messy client data, analysing it and preparing


draft financial statements with commentary on the numbers.

“It’s very good at putting together analysis on numbers that aren’t


necessarily all that clean, and we’ve actually tested it on public
financial statements, and it does a great job of providing insights and
financial ratios as well as forecasting,” Dunn adds.

Productivity gains ahead


The productivity gains offered by generative AI are enormous, Dunn
says, most significantly in the way it performs mundane tasks.

“MIT did a study recently of about 450 ‘white collar’ employees,


and the average increase in their productivity simply by using ChatGPT
effectively was 37 per cent.

“That’s a massive boost for any firm adopting it in terms of their


profitability, but also just in society in general, us being able to work
on higher level tasks and being more productive and more creative as
well as a result,” Dunn says.
Robinson also points to the boost in productivity that generative
AI can bring, bearing in mind that the more information you give it,
the better its responses will be.

“You’ve got to give context, character and set the challenge that you
want it to do, and you have to be really clear [on] what you’re
expecting,” he says.

“For example, to generate an email response to a client, you need to


tell Chat GPT that it’s acting as an accountant to assist you to reply to
some client emails. So, there it’s got the character – it’s a tax
accountant.

“The context is, I need help replying to emails. And then the challenge
will be to draft a response to an email that I copy and paste in.”

Being able to use the technology in this way frees up time for a senior
employee who may then only need to check the response before
sending, but it also helps develop more junior staff.

“It allows you to fast-track juniors and administrative and bookkeeping


teams – assisting with some of these responses may have been out of
their league before, but now they’re able to verify the information
using AI and then have it approved by an accountant before it goes
out to the client,” Robinson says.
What is clear is that this is the time for testing generative AI and, while
there are already benefits being released, there is more to come.

“You’re either part of this ongoing development of civilisation and you


jump on board to test it, or you sit back and watch everybody else
dive in,” Robinson says.

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