Artificial Intelligence (AI) in Private Industry
Do you ever feel like it’s all you can do to get last month’s books closed down before the next month begins? Are your bookkeepers so bogged down with data entry that they can’t focus on value-added tasks such as budgeting, forecasting, and data analysis? We learned of new software that uses AI to automate the majority of your bookkeeping data entry, which allows you to focus more on making your business better and more efficient.
How does it work? For example, let’s say you use Amazon Web Services, Inc. (AWS) for your web hosting. When the AI system is implemented, it will…
- Go through your current accounting database,
- Identify that each month there is a transaction for $150 - $175 that clears the bank statement and has “AWS” in the memo somewhere,
- And determine that this monthly transaction is always (or at least usually - humans make errors) posted to the web hosting expense account.
AI in Public Accounting
RLH is starting to implement the use of AI. We have the ability to use AI to search an auditee’s entire general ledger. The AI will pull out any transactions it feels may be posted to the wrong account or any transactions for an amount that is larger or smaller than would be expected in that account. This allows us to focus more on these types of transactions than we normally would, which allows us to perform an audit of a higher quality than was ever possible in the past.
We also see this as a useful tool for our clients where we don’t perform an audit. If you’re part of a large organization, certain mistakes (or fraud) could be hiding within your accounting system, but you may never notice if the amount is not significant in the grand scheme of your overall financial statements. If this is of concern to you, we can run your general ledger through the system. The AI system will pull out the transactions it thinks are of interest and either we can look into them for you, or you can investigate them yourself. It’s a great option for clients that don’t want or need a full audit.
Unlike the AI mentioned above, we’re still probably a few years from widespread blockchain adoption, however, it still warrants attention because the underlying technology is unlike anything we’ve ever seen before. One of the more useful features of blockchain is the concept of smart contracts, most of which are currently run on the ethereum platform. An example of this currently exists in Europe with a company that sells plane insurance. If your plane is delayed, the plane insurance company will pay you a specified amount of money. In the past, if your plane got delayed, you had to fill out a claims benefit form where you had to include your name, your flight, what time it was supposed to leave, what time it actually left, etc., most of which was already on your application when you signed up for the insurance. Then you had to mail this form to the insurance company, and then they would pay you after the claim was processed. Now, instead of doing that, the blockchain links to the public flight database, so it automatically knows if a flight has been delayed. The insurance company will pay you instantly without you having to do anything because of this link. Also, since this is all stored on a blockchain, the insurance company can’t change the terms of the contract without your authorization.
Another example of blockchain is with licensing certificates. To prevent someone from copying a certificate and photo-shopping their own name onto it, the agency issuing the licensing certificates can print a QR code on the certificate. Then, when the certificate needs to be verified, the verifier can scan the QR code with their phone, which will then link to the blockchain where the certificate is stored. The blockchain will show the identity of the person to whom that certificate belongs.
These technologies are in their infancy, and it will be interesting to see how they continue to evolve over the next decade.