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AI in Accounting – Can Tech Solve the CPA Shortage?

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AI in accounting

Artificial intelligence is a source of considerable concern and consternation for many professionals. With its remarkable potential to automate most human processes, it’s hard not to feel concerned that AI may put us out of a job soon.

However, AI in accounting paints a completely different picture—one of hope and optimism.

Like many technical fields, the accounting industry is hounded by a severe talent shortage. Simply put, the number of accountants and bookkeepers can’t keep up with the demand.

“We are facing a talent shortage
— there is no doubt about that.”

Emily Brock

Director, GFOA Federal Liaison Center

Thankfully, with AI technology, short-handed accounting firms can breathe a temporary sigh of relief. But the operative word there is “temporary.”

Although AI can help alleviate some of the dreadful effects of understaffing, it’s crucial not to solely depend on it to solve your staffing woes. There’s only so much AI can do before productivity issues and practice inefficiencies creep back in.

We’ll explain why that is the case further along this post. But before we get into the “why,” let’s first understand the role of AI in accounting and finance.

What is AI in Accounting?

Broadly speaking, artificial intelligence refers to the technology that enables machines and computers to simulate human behavior and thinking. While there are different types of AI models, the most commonly used today are:

  • Machine learning—where software detects patterns in data
  • Predictive AI—which recommends actions based on the patterns it learned
  • Generative AI—where software creates new content based on its learned patterns or an existing database (think ChatGPT, Midjourney, etc.)

 

Every industry implements and leverages AI differently. In the accounting sector, most firms adopt predictive AI to help sort and organize their data, identify patterns in financial records, make better business decisions, and automate repetitive tasks like data entry.

Use Case Examples of AI in Accounting

As the number of AI tools for accounting grows, it’s also becoming increasingly important to identify which areas of your practice to implement them in.
“80% of CFOs we surveyed in 2022 expected to spend more on AI in the coming two years, for example. Around two-thirds of finance leaders we surveyed think their function will reach an autonomous state within six years.”

Matthew Mowrey

Sr Director Analyst, Gartner Finance

Here are some specific use-case examples of AI in accounting:

Cash Flow Forecasting

By analyzing patterns in accounts receivable (A/R) and accounts payable (A/P), AI-powered tools forecast future cash balances, aiding in proactive financial planning.

Invoice Reconciliation

Identifying unpaid balances can be labor-intensive and time-consuming. Thankfully, AI accounting software can scour business bank accounts for deposits with corresponding outstanding invoices, ensuring you appropriately track the unpaid ones on the receivables list.

Scanning Receipts and Invoices

With AI-powered software, you can scan both electronic and paper invoices and receipts, automatically capturing essential data and saving them into your accounting ledger. Not only does this accelerate your processes, but it also saves you and your staff from the grueling manual work.

Tax Compliance

AI tools for accounting can examine and analyze financial information to identify tax deductions and credits, avoiding stress and cramming during tax season and helping minimize tax obligations.

These tools also identify any inaccuracies or oversight in tax submissions, guaranteeing improved adherence to regulatory standards and optimizing tax benefits.

Transaction Categorisation and Reconciliation

Based on the transaction amounts and vendor information, AI accounting software can intelligently recommend matches between bank statement transactions and entries in the ledger. Additionally, it offers recommendations for categorizing these transactions, with users retaining the ability to accept or override the suggestions.

Will AI Replace Accountants?

Is that not the million-dollar question these days?

Concerns about AI snatching jobs away are a valid sentiment. However, you can put that worry aside for now.

According to Thomson Reuters, there’s no concrete evidence that AI is putting accountants out of a job. Even the leaders of the finance industry’s Big 4 (Deloitte, Ernst & Young, PricewaterhouseCoopers, and KPMG) all agree that despite its powerful automation capabilities, AI can never replace human accountants.

If anything, accounting firms and professionals should embrace AI, especially in the face of a severe CPA shortage.

From an accountant’s perspective, AI tools for accounting can improve your quality of life and work. As AI enhances automation, you can accelerate your workflows, increase accuracy, and reduce errors.

From an accounting firm’s point of view, AI can improve operational efficiency without having to hire more employees and inflating salary costs.

However, as we alluded to earlier in this blog, AI is not the end-all-be-all of the CPA shortage. If your practice is understaffed, don’t expect AI to act as an extended member of your team.

AI in accounting functions more like an enhancement to how accountants and bookkeepers work. It’s a tool designed to complement accounting professionals, not replace them.

Beef-Up Your Firm’s AI Transformation
with Outsourced Accountants

Beef Up Your Firms AI Transformation with Outsourced Accountants
The numbers, as they say, don’t lie. Unfortunately for the U.S. accounting sector, the numbers paint a grim picture.

According to the U.S. Bureau of Labor Statistics, more than 300,000 accountants left the profession between 2019 and 2021. That translates to a 17% decline in the U.S. accounting talent pool.

Unsurprisingly, businesses and accounting firms across the country are feeling the brunt of the increasingly thinning number of locally available accounting professionals.
While AI adoption is a step in the right direction in mitigating the impact of the worsening CPA shortage, there’s still nothing like having an experienced accountant or bookkeeper to augment your team.

The best way to bulletproof your firm is to hire US-trained outsourced accountants.

With over 10 years of experience providing accounting outsourcing services to over 1,100 U.S., Canadian, Australian, and other international clients, TOA Global can help you fill your firm’s staffing gaps, increase capacity, and ensure business continuity for a fraction of the cost.

Try our salary cost calculator to see your potential savings when you get outsourced accountants from the Philippines.

Want to learn more about professional outsourced accounting? Book a FREE strategy call today and we’ll reach out to you to discuss how we can tailor our solutions to your unique needs.