Synonymous with a wide range of manual tasks that are notoriously complicated, such as compliance checks, audits and financial reporting, the accounting profession deals with a lot of time consuming and labor intensive processes that AI could help make more efficient.

With the increased pressure CPA firms face to provide services to their clients that are free from errors and compliant with tax regulations, many are turning to outsourcing for CPA firms along with artificial intelligence, to help them remain competitive.

But what is AI in accounting? Let’s take a closer look:

Advanced technologies that automate and optimize a series of accounting and bookkeeping functions, are gradually being incorporated into the profession. The combined technologies work in unison to help limit errors and reduce the amount of time accountants typically spend on them; making many traditional accounting processes, accurate and efficient.

Below are some of the routine accounting tasks currently being transformed by AI:

Data entry

Foundational and essential, but nonetheless tedious and time consuming, data entry is a task in which errors are frequently made. With the help of systems powered by AI, however, documents (both physical and digital) can be scanned and data extracted, such as amounts, dates and names of vendors, purchase order numbers, and invoices and receipts. Then, that data is fed automatically into accounting software (such as Drake tax software), completely removing the need for anyone to enter the information manually.

Accounts payable and receivable

Invoice approvals, collections and payment processing tasks can be streamlined with AI, as its automatic system reads invoices as they come in, and matches them up with purchase orders and receipts. Then, payments are triggered automatically based upon terms that have been agreed upon, which significantly reduces the risk of payments being missed.

AI can also be used to track any invoices that may be outstanding, send out client reminders, and manage schedules for payments.

Financial reporting

Financial reports can take up a lot of a CPAs time, but AI technology can simplify the way in which reports are generated and data is compiled, making them far more accurate. AI collects sales, payroll and expenses data from different departments automatically, to generate income statements, cash flow reports and balance sheets. It can also make corrective suggestions and identify any discrepancies that may be present.

Audits

Transaction sampling and data analysis can be automated with the help of AI, enabling auditors to analyze financial data in large volumes, at a much quicker pace. Scanning financial transactions and highlighting any anomalies or patterns that might point towards mistakes, fraud or issues with compliance, AI tools also perform continuous checks so that auditors can shift their attention to other areas that may he of a higher risk.

Risk management and fraud detection

With its incredible capacity to analyze data in vast swathes, AI can easily pick up on any transactions or unusual patterns that might indicate activity of a fraudulent nature, helping to improve the management of risks.

With its algorithms expertly scrutinizing data and identifying potential fraud, the system as a whole can learn to enhance its risk-predicting ability.

Tax compliance and filing

By keeping track of tax regulations and making sure tax calculations are accurate, AI helps to simplify what is typically a complicated process of tax compliance, and can be used to quickly and easily generate accurate tax returns.

Financial forecasting

By identifying patterns that predict expenses, revenue, and cash flow generated from the analysis of historical data, AI can help CPA firms more accurately forecast financial performances in the future.

Looking at just how helpful AI can be when applied to a wide range of accounting and bookkeeping functions, it’s easy to see why so many CPA firms choose to work with outsourced bookkeeping services who are using this kind of technology. Could AI help make your CPA firm more efficient, and ultimately, more profitable? Probably, yes.