Accounting and AI: what clients need to know and ask

Article | September 17, 2024

Authored by Weinlander Fitzhugh

AI isn’t just a buzzword anymore – it’s quickly becoming a part of our everyday lives, from the way we shop online to how we manage our finances. In the world of accounting, AI is making its mark, and if you’re wondering what that means for you, you’re not alone. 

Many clients are curious, perhaps even a bit worried, about how AI fits into the services their CPAs provide. You might be concerned whether your accountant is just letting a computer handle your finances or if AI will be another cost on your bill. These are valid questions, and the good news is that AI, when used thoughtfully, can actually enhance the work your accountant does – making processes more efficient, accurate, and potentially more cost-effective.

Understanding AI in accounting: what it is and what it isn’t

When you hear about AI in accounting, or most professions for that matter, it’s easy to imagine a future where machines are doing all the work and human professionals are pushed aside. But that’s far from the truth. AI isn’t about replacing your CPA; it’s about giving them better tools to serve you. 

Years ago, when Excel spreadsheets first emerged, there were similar concerns that they would take over what CPAs do. Instead, spreadsheets became a powerful tool that allowed CPAs to work more efficiently, enabling them to do more, faster, and with greater accuracy. AI is following a similar path.

Think of AI as a powerful assistant. It can handle certain tasks quickly and accurately, like fixing broken Excel formulas, automating accounts payable processes, or drafting emails. This isn’t about cutting corners; it’s about making the most of your CPA’s time and expertise. Instead of spending hours on data entry or composing routine communications, they can focus on the more complex aspects of your financial situation – the things that require human judgment and experience. 

For instance, AI can help generate summaries of lengthy documents, making it easier for your CPA to share concise, clear updates with you. By automating some of the more mundane tasks, AI frees up time for your accountant to engage in higher-level strategic thinking and provide advice tailored to your specific situation. 

So, when your CPA uses AI, it’s typically a sign that they’re leveraging the latest technology to enhance their practice. They’re using AI to work more efficiently, which ultimately benefits you as the client. You get the same personalized, professional service but with the added benefits of speed, accuracy, and, potentially, cost savings. AI is a tool, not a replacement, and in the hands of a skilled accountant, it’s a tool that can make a real difference. 

AI in tax services

When it comes to tax services, AI can process vast amounts of data quickly, identify patterns, and flag potential issues that might be missed in a manual review. 

One of the key advantages of AI is its ability to handle repetitive, data-heavy tasks. For example, AI can review multiple years of financial records to identify trends and discrepancies, making tax prep faster and more reliable. It may even be used to simulate different tax scenarios to find the most beneficial outcome for you. 

AI chatbots can also be a useful tool for answering basic tax-related questions. While these chatbots can provide quick, straightforward responses, it’s important to remember that they shouldn’t be relied on for complex tax issues. Any information provided by AI should be verified with a qualified CPA to ensure accuracy and compliance with tax laws. However, if you’re looking for a basic answer, these tools can be a helpful starting point. 

But let’s be clear – AI isn’t making decisions on its own. Your CPA remains in control, using their professional judgment and experience to interpret the data and make informed recommendations. 

AI in auditing

Auditing is a process that is typically time-consuming and detail-oriented. But CPAs can now use AI to automate tasks like journal entry testing which involves scanning large datasets to detect unusual transactions or patterns that may indicate fraud. AI’s ability to analyze data allows auditors to focus on high-risk areas earlier in the process, enhancing the quality and efficiency of the audit. 

For example, during an audit’s planning phase, AI can process unstructured data, such as bank statements and contracts, at speeds surpassing human capabilities. AI can also link data from various sources, simplifying the process of verifying accuracy and reconciling accounts. 

By freeing up auditors’ time to concentrate on complex, judgment-intensive tasks, AI streamlines the auditing process and improves the depth and reliability of the audit. 

AI in advisory

In advisory services, AI is empowering CPAs to provide more strategic, data-driven advice to clients. For example, AI can help identify market trends or shifts in consumer behavior that could impact a business’s financial strategy. 

One of the primary benefits of AI in advisory services is its ability to enhance financial forecasting. Traditional forecasting methods often rely on historical data that might not account for rapid changes in the market. AI, on the other hand, can analyze real-time data, adjusting forecasts based on the latest information. 

AI can also help CPAs tailor their recommendations to better suit individual needs by analyzing a client’s financial history, goals, and risk tolerance. For instance, when a business considers expansion or new technology investments, AI can analyze multiple financial scenarios, taking into account market trends, competitor activity, and economic indicators. 

Questions to ask your CPA about AI

As AI becomes more integrated into accounting and financial services, it’s natural for clients to have questions about how this technology is being used and what it means for their financial strategies. Open communication with your CPA is key to understanding and benefiting from AI’s capabilities. Here are some important questions you should consider asking:

1. How is AI being used in managing my financial information?

Ask your CPA to explain the tasks AI is handling and how it complements their professional expertise.

2. What type of data is being analyzed by AI?

Ask what type of data AI is analyzing to understand the scope of its impact and how that data is being used to make recommendations. 

3. How does AI influence the decisions and advice you provide?

AI can offer insights and predictions, but your CPA’s experience and judgment are still at the core of the advice you receive. Ask how AI’s findings are incorporated into the decision-making process and how your accountant balances these insights with their own expertise.

4. What measures are in place to ensure my data’s security and confidentiality?

Data security is a top priority, especially when using technologies like AI. It’s important to ask your CPA about the security protocols in place to protect your sensitive information from unauthorized access and breaches.

5. How do you stay updated on AI developments and their impact on accounting?

AI technology is rapidly evolving, and it’s important that your accountant stays informed about the latest advancements. Ask how they keep up with new developments and if they receive any training on new technologies. 

By asking these questions, you’re taking an active role in your financial strategy and ensuring that AI is used effectively and ethically to enhance your financial well-being. Remember, your CPA is there to guide you, and open communication is essential to making the most of AI’s potential benefits.

Have more questions? We’re here to help

If you have any additional questions about how our firm ensures you receive the best possible guidance, please don’t hesitate to contact our office. We’re committed to providing you with personalized service to meet your financial needs. Let’s connect and explore how we can support your goals with expert advice.