Here’s How Accountants Can Evolve as AI Redefines the Profession

Though artificial intelligence hasn’t been around long, most firms recognize its potential. I’ve chatted with hundreds of accounting firms this year and have watched skepticism evolve, but trust remains the biggest barrier.

Some firms that rushed to implement AI are facing the consequences of hallucinations, including making headlines and losing professional credibility. Others have tried tools that overpromised and underdelivered.

As the market rushed to solve the accounting industry’s struggles, AI companies didn’t sit with accountants to explain the technology’s nuances, which degraded trust.

Deterministic AI, for example, is great for repetitive, rule-based tasks such as matching forms or validating entries, including ensuring someone’s birthday is entered correctly on a tax return. Generative AI, meanwhile, can analyze context and infer meaning, such as whether a client’s individual retirement account is Roth or traditional.

You need both, in combination with professional oversight, to do tax and accounting work properly. Accounting firm leaders should seriously explore AI tools on the market but be wary of lofty claims. As firms face talent shortages and clients demand faster, more strategic guidance, accountants must evolve their skills and systems to stay competitive.

AI for Operations

When exploring AI, accounting firms should start small and pick one area to focus on. I recommend testing different AI platforms with tax returns that your team has already prepared. Run the returns through the tool and compare the results with what the team’s prepared. This can help uncover any potential discrepancies and optimize before implementing anything for tax season.

Apply the same approach to other areas, including audits, bookkeeping, and consulting. Parallel testing helps identify tools that improve efficiency without compromising quality. Examine the differences between the platform’s output and your team’s output without ego.

Many accountants I’ve worked with have spotted their own errors when comparing their work with what AI has output, while others have seen AI make errors. In situations where teams have been made aware of their own errors, they understand that AI represents a form of risk mitigation.

And in situations where the opposite is true, firms tend to understand that AI represents a huge head start that otherwise may not be available with older tech.

Attracting Young Talent

On top of this technological shift, it’s no secret that the tax industry’s talent pipeline is broken. Seventy-five percent of CPAs are eyeing retirement, and the number of US students graduating with degrees in accounting continued to fall. I believe AI is going to change this trend.

How? It starts by leveraging the strengths of everyone in your organization, including today’s digital natives—Gen Z. Invite your teams into the implementation process. Give them real ownership by listing out the boring and mundane parts of the job, such as manual data entry and reporting.

Once you have a plan, test it. You’ll want to create a framework for how, when, and why to use AI and a safety net for reviewing. Start by establishing cohorts and comparing the speed and accuracy of the outputs of those using AI for their tasks and those not. Iterate, test again, and train your models to create outputs that are closer to what you need until you have a process that works for your firm.

The last piece is to not forget your more senior employees, who have established networks and specific industry knowledge that newer professionals may not have. When the younger generation uses AI to do their work faster, let them do higher-level work sooner and free up your experienced team members to mentor and make connections with these new professionals.

This serves not only those employees and their clients, but also the field at large, because it gives people the chance to do what makes the profession so great: navigate gray areas, make judgment calls, challenge themselves to think, and get to know clients.

Who Has Advantages

While the Big Four are heavily investing in proprietary AI systems, smaller firms have the AI advantage. I see small firms setting the tone for AI adoption for the overall profession, rather than the Big Four, because they can adopt off-the-shelf tools faster and experiment without the layers of bureaucracy and technical debt of a large firm.

This agility allows smaller firms to modernize operations incrementally with more participation from their teams, less friction, and no need to wait around for the legacy firms to set the standard.

Tax and accounting professionals at all levels are responsible for modernizing our approach to business. The way forward is in small, measured steps toward improvement that include people at every step.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

Ralph Carnicer is head of tax engineering at Filed.

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