AI’s Impact on CPA Firms – What Will It Be?

Artificial Intelligence (AI) has made a huge splash, to say the least, in the last twelve months. What will its ultimate impact be on CPA firms? Here’s a roundup of what we know so far… and what is yet to be determined.

What we know so far

• ChatGPT launched on Nov. 30, 2022, and rapidly grew to around 180 million users currently. For many, “AI” moved into the public consciousness in 2023.
• ChatGPT4 passed the CPA exam in May 2023 – just months after failing it. This epitomizes the rapid learning rate of AI (and possible foreshadowing of its impact in accounting).
• The Wall Street Journal reports that white-collar workers, including accountants, are now being threatened by AI. Generative AI doesn’t just speed up routine tasks or make predictions; it has the power to create content and synthesize ideas much like white-collar workers might.
• Significant concerns remain about AI, including quality of work, data accuracy, undetected bias, data security and ethical issues.
• Firms like BDO and Moss Adams are actively incorporating AI into their operations to streamline tasks and improve client service.
• In CPA firms, some of the areas where AI is being applied include internal virtual tools, client communication and automation, data analysis and anomaly detection.
• The AICPA and CPA.com are investigating this area and providing resources to educate firms and help them leverage AI.

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What we don’t yet know

• How will AI impact the following areas of CPA firms?
  • Will customers “believe” AI-generated correspondence – or be turned off by it?
  • Is AI tax research trustworthy?
  • Should AI be used to optimize every aspect of firm performance (e.g. AR, realization, budget to actual, client pricing, etc.)?
  • Will robo-advisors replace humans in wealth management?
  • Will aspiring accountants be dissuaded from learning the profession if AI is capable of doing much of the entry-level accounting work – or perhaps be encouraged by that?
  • Will the AI policies firms create sufficiently protect client data, firm data and the ethical use of AI?
• Beyond the AI hype, what will be real in the end?
  • The technology consulting firm Gartner created a framework to evaluate new technology called the Hype Cycles. Here are the stages:
    • Innovation Trigger: A technology breakthrough kicks things off. Early proof-of-concept stories and media interest trigger significant publicity. Often no usable products exist, and commercial viability is unproven.
    • Peak of Inflated Expectations: Early publicity produces a number of success stories — often accompanied by scores of failures. Some companies take action; many do not.
    • Trough of Disillusionment: Interest wanes as experiments and implementations fail to deliver. Producers of the technology shake out or fail. Investments continue only if the surviving providers improve their products to the satisfaction of early adopters.
    • Slope of Enlightenment: More instances of how the technology can benefit the enterprise start to crystallize and become more widely understood. Second- and third-generation products appear from technology providers. More enterprises fund pilots; conservative companies remain cautious.
    • Plateau of Productivity: Mainstream adoption starts to take off. Criteria for assessing provider viability are more clearly defined. The technology’s broad market applicability and relevance are clearly paying off.
• Hype cycle

Source: https://sarahtavel.medium.com/the-hype-cycle-of-features-4a534563e55b

• Gartner placed AI at the Peak of Inflated Expectations in July 2023. Whether we are still there today or headed into the Trough of Disillusionment, it seems likely that the hype around AI will dissipate somewhat as firms wrestle with the realities and ROI of integration going forward.

How is AI working at your firm? I’d love to hear your success stories or cautionary tales.