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Artificial Intelligence’s Influence on Accounting

Artificial Intelligence (AI) used to only be seen in movies with characters like Marvel’s Jarvis or Space Odyssey’s Hal 9000, but, with the release of ChatGPT in late 2022, computers that “think” for themselves now live at the fingertips of internet users across the world. As nearly every industry begins to dip its toes into the world of AI, let’s take specifically look at how ChatGPT and subsequent AI models could affect the world of accounting.

What is ChatGPT?

Before diving into its applications, let’s examine some basic facts about ChatGPT. It is known that ChatGPT is an incredibly powerful chatbot, but what does “GPT” mean? “GPT” stands for “Generative Pre-trained Transformer.” “Generative” means the AI is generating a response to human input. “Pre-trained” refers to the fact that ChatGPT is not learning as it responds to a prompt; all the learning or training necessary took place before its release. Finally, “Transformer” means that the AI is paying attention — a technical term — to the words the user inputs in order to understand the questions it is being asked.

Advantages of AI in Accounting

With a definition covered, let’s turn the attention to ChatGPT’s potential effects on the accounting industry. Beginning with the potential positives, one of the most anticipated uses for AI has been the automation of repetitive tasks. For example, AI may be used to automate bookkeeping, making the process more efficient and cost effective. An automated bookkeeper is also far less likely to make the “careless” mistakes humans are apt to do. In addition, it can handle a much larger amount of data in a much shorter time.

ChatGPT can also be used to help accountants save time writing emails and letters. Drafting and sending what feels like an endless series of emails and letters is a regular occurrence, no matter what area of accounting one works in. In preparation for this article, I asked ChatGPT to write an email to a potential client explaining the different types of SOC audits offered by firms, such as McKonly & Asbury, which it generated in mere seconds with perfect grammar and spelling. It even left places for me to enter our corporate information, as well as our clients’. The ability to generate these messages in seconds could increase client outreach and engagement without requiring staff to do anything more than fill in the blanks.

ChatGPT has the potential to automate many repetitive tasks a firm must perform every day in order to function and can do so with a level of speed and accuracy only available to a machine. However, the concerns this technology raises must also be considered.

Concerns of AI in Accounting

Two of the biggest concerns about the rise of ChatGPT and subsequent AI models are the automation of jobs and data security. Although AI can be used to automate repetitive tasks, those tasks provide jobs to many people. Workers in nearly every industry worry they will find themselves replaced by robots and unable to support themselves and their families. Yet, most in the technology industry believe that there will be many new jobs for those displaced by AI, revolving more around monitoring or training new AI models.

As cybersecurity awareness is on the rise, many are concerned that AI models such as ChatGPT are not secure enough to handle the sensitive data that passes through an accounting firm. ChatGPT itself saves every question it is asked. While this is often done to help train other AI models, it does mean any sensitive data passed through ChatGPT is stored in a repository that is likely not designed to handle it with discretion. ChatGPT even recognized this as fact when asked about the concerns over the potential use of AI in accounting. It also cited job loss and other ethical considerations, such as ensuring the data used to train the AI is unbiased and accurate.

As we start to emerge into the world of AI and begin to see AI models such as ChatGPT enter accounting firms, we can look forward to greater automation in activities such as bookkeeping and writing. However, we must also prepare for some worker displacement, along with new risks in cybersecurity.

If you would like more information regarding how your organization and its internal controls may be affected by AI, McKonly & Asbury would be happy to help. Be sure to visit our System and Organization Controls (SOC) service page and don’t hesitate to contact us with any questions.

This article was written by SOC intern Carolina Hatch under supervision of Principal Lynnanne Bocchi during McKonly & Asbury’s 2023 Summer Internship Program.

About the Author

Lynnanne Bocchi

Lynnanne joined McKonly & Asbury in 2018 and is currently a Principal with the firm. She is a key member of our firm’s System and Organization Controls (SOC) Practice, preparing SOC 1, SOC 2, and SOC 3 reports for our clients. She holds th… Read more

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