Managing change in an increasingly digital world is both a challenge and an opportunity for accounting firms. Today, we are entering the era of the “Smart Internet,” as machines can be taught to learn. As a profession, we must be thinking about how we will embrace these rapid changes in technology as they are headed straight toward us at an accelerating pace.
Yesterday, it was all about focusing on the cloud, social media and mobile technologies. Now, it is necessary to begin integrating emerging technologies like big data, blockchain and cognitive computing into our daily tasks. Why? Because new methods of doing familiar things can bring explosive growth and be very disruptive — or they can create great opportunity.
This is especially true when it comes to cognitive computing. Very soon, it will begin to impact the accounting profession. Let’s look at how.
What is it?
First, let’s start with the basics. Cognitive computing, by definition, is technology that simulates human thought processes in a computerized model. When it comes to use in the accounting profession, cognitive computing combines artificial intelligence and machine learning to simplify, machine-assist and transform how professionals find information, how they interact with applications to perform knowledge tasks, and how they make decisions.
Cognitive applications require three key ingredients: domain expertise, content and technology skills, as well as four key characteristics: the ability to understand, reason, learn and interact. With these capabilities, it’s no wonder that there is a 95 percent likelihood that the jobs of today’s accountants and taxation experts will be automated, per the BBC.
How will it transform the profession?
Generally, cognitive computing can be used in risk mining, grouping and connecting entities, detecting abnormalities in structured and unstructured data, and improving the user experience.
When it comes to the accounting profession, the future of cognitive computing will revolutionize the audit process because it can be used to provide assisted decision-making for auditors. This judgment involves things like identifying key audit risks and determining how to design audit procedures to respond adequately to those risks. Because audit judgment skills are typically developed and refined through years of experience, training, and interaction with colleagues, the latest technologies can harness these judgments from across thousands of audits to aid auditors in real time, while keeping client information private.
Tax systems will simply be smarter, not only in guiding us through the calculations and highlighting areas we might need to review, but also in providing advice and guidance for the client. Accountants will not be required to do detailed research work, as that will be done through artificial intelligence. True business analytics will come into play given the amount of data we’ll be able to collect and the machine assistance we’ll have to put real meaning around the data, and that will assist us in providing guidance for our business clients.
There will be massive changes in how we perform audits. “Sampling” will fall by the wayside as data can be ingested and catalogued in total with the computing power we have today. The concept of the continuous, real-time audit will come into play, and we’ll be assisted in our judgments — although the human element won’t entirely disappear. Fraud detection will be easier, and far faster.
What can my firm do to keep pace?
Forward-looking CPA firms are investing heavily in emerging technologies. Big Four firm KPMG announced an alliance with IBM Watson’s artificial intelligence unit last year to develop high-tech audit tools, and most all major audit firms have similar initiatives underway. Additionally, the American Institute of CPAs and Rutgers Business School have partnered on a research initiative to advance the use of analytics in auditing.
However, most CPA firms don’t have access to the capital to make large-scale investments in technologies like cognitive computing. Instead, small and midsized firms should look to software providers to incorporate this technology into their offerings so they can capitalize on its abilities.
In the end, the most important takeaway is to embrace this change early on so your firm can take advantage of the opportunities cognitive computing offers. Being open to this change will ensure that your firm is viable and profitable now and in the future.
Source: Accounting Today