Artificial Intelligence in Accounting: Benefits, Implementation Challenges, and Ethical Considerations for Financial Management

Artificial Intelligence refers to developed computer systems that that can perform duties that require human intelligence such as decision-making or language translation(Hasan, 2022). Hence in Accounting, Artificial Intelligence performs accounting tasks that require human intelligence. The first challenge of implementing Artificial intelligence in Accounting for a company, say Target Corporation, concerns issues of privacy and security of data. The process of Accounting often involves dealing with highly sensitive financial data hence the implementation of AI in the accounting of such data brings about the challenge of protecting such data from breaches, infringement of data, and unauthorized access. To ensure the safety and protection of such data, organizations need to employ advanced data protection measures such as having secure storage of such data, encryption, and access controls ensuring that the financial information is secured.

This also often calls up the Chief Financial Officers to regularly update the AI systems and put in place robust data security measures to prevent data breaches to comply with guidelines of regulations that protect data protection such as the Financial Privacy Rule, The Gramm-Leach-Bliley Act and California Consumer Privacy act, a state law in California that protects the privacy and data rights of the residents. This often calls up the Chief Financial Officers to regularly update the AI systems and put in place robust data security measures to prevent data breaches (Heller, 2022).

Ethical concerns also arise with the use of AI in accounting. This is because AI systems make decisions based on patterns that learn from the data and algorithms and hence AI decisions may not be ethical at all. AI algorithms often come from Historical data and if such data contained biases, these biases may be carried through all decisions made by the AI. This could lead to discriminatory outcomes such as in granting customers loans. Another ethical dimension is that biased AI systems can lead to inaccurate and false financial reporting hence presenting distorted financial information. For instance, such information is relied upon by investors to make investment decisions which could lead to bad investment decisions among the public. Biased AI systems when it comes to functions such as auditing can also fail to detect fraud leading to the violations of regulations related to such (Hasan, 2022).

AI systems also replace humans leading to job displacement and ethical concerns that come with this. This often renders the technical skills of accountants obsolete forcing them to seek seeks related to AI operation and those that don’t may find themselves jobless. In addition, there also might be a gap in the skills available with few people on both AI and accounting expertise and this will call for the upskilling of the workers. This is challenging as companies will often need to upskill their accountants via more training as well as challenges in transitioning the displaced workforce for instance by offering severance packages. This process can be financially draining to companies. AI systems might also face resistance from workers fearing displacement or those who are skeptical about over-reliance e on machines leading to unwillingness to adopt and learn how to use them hence intergartion challenges and errors.

The use of AI in accounting calls for rich technology as AI tools and techniques call for highly advanced computational resources needed to process large amounts of data to come up with AI systems and use deep learning techniques. The financial implication for this advanced computing level is often colossal and often unaffordable for most companies especially start-ups and small companies. In addition, the integration of the AI system in already existing systems can be challenging as the old systems might not have been designed to facilitate integration with AI systems calling for a significant effort to ensure data synchronization and compatibility with the old system hence the need for solutions that inter grate easily with ERPs.

Small businesses can leverage AI for growth. The first way is in marketing. Small businesses can use AI to design marketing campaigns that are personalized as well as in the collection and analysis of data on their customers including their preferences and behavior. For instance, AI algorithms can offer personalized suggestions based on their viewer history. They can also use AI to send customers messages, email campaigns, adverts that are personalized and any other content that refers to their specific needs and preferences (Harvard Business Review, 2023)

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Small businesses can also leverage AI to enhance their customer service. Chatbots have now become popular thanks to their ability to mimic human beings. Chatbots can enable small businesses to offer customers prompt, fast customer service reducing the time that they wait to be served by agents as well as cutting costs related to hiring staff. Chat-bots can also learn from their previous interactions with customers making them more accurate and efficient with time. AI automation of customer service can also increase the efficiency of processes such as sending order confirmations and ensuring seamless communication with customers. Cost-effective AI tools such as ChatGPT can also be used to provide customers with accurate responses.

In conclusion, the accounting functions in many organizations are still being carried out by humans (Hasan, 2022). In accounting, AI can be used in different functions such as analyzing historical data coming up with forecasts and predictions that are accurate, automating the audit process ensuring that a company complies with the particular tax regulations of a country, or identifying opportunities where a company can save on tax. However, the process of implementation of AI in accounting does not come without challenges and despite these challenges, the future is AI as the benefits of AI outweigh the challenges that come with it, calling for the leadership in companies to find ways to deal with these challenges to employ AI in accounting operations.

References

Harvard Business Review (2023). 3 Ways Small Businesses Can Use AI to Drive Growth. Retrieved from https://hbr.org/sponsored/2023/03/3-ways-small-businesses-can-use-ai-todrivegrowth#:~:text=Small%20businesses%20have%20a%20lot,customers%20and%20increase%20brand%20loyalty.

Hasan, A. (2022) Artificial Intelligence (AI) in Accounting & Auditing: A Literature Review. Open Journal of Business and Management, 10, 440-465. doi: 10.4236/ojbm.2022.101026.

Heller, C (2020). AI in Accounting: The Benefits & Challenges. Retrieved from https://trullion.com/blog/aiaccountingbenefitschallenges/#:~:text=Data%20security%20and%20privacy%20concerns,threats%20becomes%20a%20critical%20challenge.