BACK in 2017, I remember watching a video of a CNBC interview with Sophia, the world's first robot citizen, at the Future Investment Institute Panel in Saudi Arabia. Sophia was a robot designed by Hanson Robotics with advanced artificial intelligence allowing Sophia to engage in conversations, and express emotions through facial expressions. This was one of my first glimpses of AI and back then, and I recall having the feeling of both awe and fear from watching the said video.

Fast forward to 2024 — while we don't yet see humanoid robots like Sophia walking on the streets, it is clear that AI has started to conquer many aspects of our lives. Individuals and companies have started to use AI in various areas such as sales, marketing, customer service, product analysis and many more. Accounting and finance were not exceptions.

AI has been defined in many ways but it is generally referred to as any technology that is capable of performing tasks that typically would require human intelligence. Its use and application encompass a wide range of activities from simple tasks such as image or speech recognition to more complex ones such as analysis and decision-making.

In finance and accounting, AI is integrated in existing systems for areas like record to reporting, order to cash, procure to pay, payroll, treasury and financial planning. Several accounting and business applications have started including AI as part of their interface given the increasing demand for its benefits such as but not limited to:

– Automation of repetitive tasks such as data entry, reconciliation and financial reporting;

– Transforming the way financial data are processed by identifying patterns, detecting exceptions and making forecast based on historical data;

– Enhancing interaction with technology through virtual assistants and chatbots, allowing communication through voice commands or text-based queries;

– Improve risk management and compliance through enhanced reporting and system detection of any irregularities.

With the above-mentioned features, AI is reshaping the way accounting and finance professionals work, allowing them to focus on higher value activities such as financial analysis and strategic planning.

While the potential of AI is evident, there are several risks and considerations with its use. Due to the accessibility of AI, concerns on data privacy and security, data integrity, regulatory compliance, cybersecurity and even in its decision-making capability must be addressed to ensure that it is responsibly and ethically used. Who should regulate and what should be regulated?

Will AI applications be able to ensure that all data inputs entered in the system are secured and not shared to third parties? Are the processing of data inputs and outputs generated by AI applications compliant with the relevant regulatory requirements? Is the database used as reference in generating output or responses complete, up to date and correct? Can accountants completely rely on the accuracy of insights and outputs generated by AI?

These are only some of the many questions raised on the potential risks in the use of AI. It is only imperative that these be addressed in order to safeguard against potential risks of using AI and to promote trust in AI applications. Organizations must take action to ensure that AI-based practices are transparent and ethical to ensure that these are utilized responsibly. Moreover, accountants must upskill in order to use AI effectively and continue to exercise professional diligence when utilizing AI-generated outputs and reports.

As AI continues to expand its presence in the field, the topic on whether AI will replace accountants has been the subject of debate for many. Various experts and professionals have different takes and positions on this issue as the future is still uncertain and the full potential of AI is yet to be unlocked. In the future, what are the capabilities of humans that AI might still not be able to do? As we are yet to unwrap the answers to such questions, one thing is certain — AI will continue to become a useful tool for accountants and it will further support the role of accountants in becoming decision-makers and advisers in organizations.

It is inevitable that AI will continue to play a larger role in the field of finance and accounting. It will empower accountants in their respective roles and support the organizations in our constantly changing environment. It is essential that accountants embrace AI and understand its risks in order to thrive, adapt and grow along with its technological advancements.

Niel Anthony V. Fernandez is a certified public accountant and an Accounting Manager at Yu Villar Tadeja & Co.-Mazars in the Philippines. The views and opinions in this article are those of the author and do not represent those of these institutions.