The last bastion: Does artificial intelligence represent a threat for accountants?

By Yuriy Kolerov, Head of strategic projects

Passions around artificial intelligence are flaring up. Driverless taxis, phones with face recognition, and Facebook has even shut down a research project in which a computer “span out of control” (although not quite). Elon Musk considers that artificial intelligence is number 1 enemy of mankind and has called for regulating research in this area, while a former Uber employee is establishing a religious organization whose purpose is to create a god based on artificial intelligence.

Yurii Kolerov.jpg
Yuriy Kolerov
Head of strategic projects

Media hype is often based on facts blown out of proportions and sweeps over political and business communities: world leaders and major business publications periodically report that artificial intelligence will soon leave half of mankind without work. They consider that accountants and auditors are among those who will be without jobs first. Let’s see how real this threat is.

Artificial intelligence is advancing

Artificial intelligence is not a new topic. The concept of “artificial neural network” appeared in the middle of the twentieth century, and this branch of science has been constantly developing ever since. Society has seen visible results only recently when the widespread use and power of computing technologies have allowed accumulating a sufficient amount of data to resolve “everyday” tasks. High-resolution cameras, advanced sensors and GPS have made possible the production of driverless vehicles. The huge number of photos which users have uploaded to the Internet has allowed training computers to recognize people’s face. The digitization of medical records and treatments has given rise to electronic doctors. Computers have even made an incursion into culinary art and can now come up with recipes for new dishes.

Fears that such a traditionally computerized industry as financial accounting will be strongly affected by artificial intelligence do not seem groundless. Many think that, if artificial intelligence does not do away with accountants, it will at the very least dramatically reduce the need for this profession.

A McKinsey survey conducted in 2016 forecasts that 86% of the work performed by accountants and auditors could potentially be automated. Another survey conducted by Oxford University in 2013 states that accountants and auditors are among the specialists whose jobs are “threatened” by computerization. Deloitte claims that half a million jobs could be lost in the financial sector in Great Britain due to automation. Journalists and IT professionals refer to these and other predictions when they talk about the triumph of artificial intelligence.

Constant evolution

Bookkeepers, accountants, auditors and financial experts have always been among the pioneers of automation. Along with scientists, accountants became the first users of calculating machines already in the 17-18th century. These machines were later replaced with calculators, and then computers were used not only for calculations but also for storing accounting data. The appearance half a century ago of accounting systems that automate thousands of standard operations should have jeopardize the profession of accountant just like the emergence of artificial intelligence now. The profession nevertheless survived, and accounting specialists, although they work differently, are still valued. SAP and 1С have not taken away work from accountants. On the contrary, they have given rise to new jobs and allowed accountants to work in a new way. This is a key point. Each new round of computerization makes the work of accountants less routine so much so that the profession itself changes and new tasks can be handled thanks to technology advances.

At the same time as technology advances, the number and complexity of accounting rules are growing. They can all be digitized so that the accounting systems follow them, but the problem, as usual, lies in the junction of digital and real world: computers stumble in those places where the solution to a problem cannot be found in a formalized field or requires a creative approach.

Check in field conditions

Major financial and audit companies have already announced that they have started working in the field of artificial intelligence. At the beginning of 2016, KPMG and IBM announced their partnership arrangements to use the artificial intelligence system IBM Watson. KPMG considers that this system “is able to read very quickly thousands of pages of contracts and agreements and almost instantly sum them up as per requested criteria.” On the same day, Deloitte announced that the technology of machine learning from Kira Systems will perform similar tasks to audit various contracts entered into by Deloitte customers.

These technologies can without doubt force many audit and contract specialists out of the labor market, but there is no information about the percentage of errors made by artificial intelligence when they analyze texts in comparison with human text analysis, and it is the auditor’s responsibility to work out this unknown.

Smacc, Shoeboxed, Wave Accounting and many other companies, including in Russia, have announced that they are developing artificial intelligence applications to automate accounting and accounting tasks. However, if we look into how artificial intelligence is used in these applications and the difference between these applications and usual automated accounting systems, then it turns out that in all cases artificial intelligence…recognizes photos and scans of documents, converts them into machine-readable formats, classifies them and conducts basis checks (“so that debit and credit balance out). Recognition and classification are undoubtedly important accounting tasks, and accountants currently spend a lot of time entering data from paper documents into computers, but the fulfillment of these basic functions does not threaten the position of accountant as specialist.

At Intercomp we use IBM FileNet for automatic recognition and verification of paper documents so that our accountants do not waste time on data entry into computers. Computers ask for human help when they doubt whether some digits have been correctly recognized or if, for example, INN checksum does not match.

Accountants have outlived the introduction of calculating machines, laser printers, global integration of information systems because accounting is year after year growing into a skillful practice requiring creativity and flair.

Terminological confusion

It seems that the hysteria around the topic of “artificial intelligence killing the profession of accountant” (and not only accountant – on the BBC website it is possible to check how likely a particular profession will be done away because of artificial intelligence) stems more from a desire for attention and sensation rather than objective reality. In the media, the term “artificial intelligence” is used to refer to anything connected with computers and data processing although in reality it is a new technology able to handle tasks that computers could not previously resolve. The revolutionary nature of artificial intelligence is comparable to the introduction of computers in business, and so like computers, it is able to change the economy and technology completely. But people will remain the last bastion which will stay unattainable for a long time.

Irreplaceable experience

Artificial intelligence is unable to make inventive judgment and make a context-based decision. The most skillful artificial intelligence is not able to conduct an orchestra, considering the nuances of a complex symphony and understand intricate rules of intercompany settlements. Artificial intelligence can “know” that alcohol and food must be accounted for differently in expense reports, but it is not able to decide on its own how to classify the dish tree climbing ants from a restaurant bill. No artificial intelligence algorithms are today able to take into account the complex interconnections at play in the world. A machine cannot make any judgment calls.

The future may come faster than we think, but accountants still have today a huge advantage over any advanced algorithms as they can draw from their human experience.