The emergence of artificial intelligence (AI) technologies is changing workflows for accounting teams by helping them automate otherwise tedious and time-consuming tasks.
Aaron Jacob, head of accounting solutions at TaxBit, told FOX Business in an interview that AI is a "very exciting" tool for accounting teams because it’s streamlining workflows to open up more time for more strategic financial analysis. TaxBit offers accounting and tax compliance services to a variety of companies ranging from web3 builders, including those in the decentralized finance space, to Fortune 500 companies such as PayPal, Google and Fidelity.
"From an accounting perspective, it doesn’t diminish the importance of having humans overseeing the process, people understanding how a business works, how a business reports its operations, how a business navigates the capital markets," Jacob explained.
"It’s actually a really encouraging thing where all of a sudden people who do understand that, they can be even more strategic because they don’t have to do as much as of the manual flows," he added. "They don’t have to do as much of the kind of tedious workflows that accountants have been known to lead out on for a long time now. They don’t have to do as much of that. Now, our software enables accountants, in-house teams to put themselves in a reviewer capacity moreso than a preparer capacity."
Jacob explained that AI is a "very positive story" for accountants and CPAs in terms of making work processes more efficient because it not only saves time and creates an opportunity for improved work-life balance, but also opens new capacity for focusing on strategic issues affecting a business.
"All of a sudden our clients, not only are they achieving time savings, and that’s really great – they love it when I can save an accountant 75% of their time at the busiest time of the year or the month, which is period close or tax season, they love that," because it helps them maintain reasonable work-life balance, Jacob said. "That’s a really good thing."
"But equally important to that is, now I can think more strategically, I can use that newfound capacity to propel the business forward. I can focus on the next strategy that the business wants to launch and how do I support that," he explained. "It also unleashes additional innovation in the space on almost higher value-adding things because you’ve got confidence in the system and solutions that take care of really critical workflows like accounting and tax."
In terms of its accounting solutions, TaxBit has primarily focused its incorporation of AI into creating rules-based categorization processes utilizing pattern recognition for transactions. "When it comes to AI, we have started using the technology to support streamlining of operations specifically embedded into our accounting products," Jacob said.
"So our sub-ledger accounting solution helps companies ingest information, categorize information, report on information, and then push it to a general ledger solution. So from an accounting perspective, it’s very, very focused on the accounting flow at period end," he explained. "Where we can easily embed AI into that process is on the transaction categorization side of things. You know when you think of companies, one of the pain points they deal with is on the data side."
"So if you’re in web3, most companies have a lot of different wallets, they’re using multiple exchanges, they have different custodial solutions, you’ve got data coming at you from a lot of different angles. Being able to make sense of that data is a big part of getting the end accounting results correct. So you can see how pattern recognition, how AI capabilities allow you to do that really well."
"What we’ve done so far in our product, and what we’ll launch in the days ahead is being able to pull in all that data and then as companies are saying: ‘Was this is a revenue transaction? Was this an expense transaction? Was this a unique liquidity pool transaction? What is this data?’ Being able to layer on top of that pattern recognition via AI capabilities brings a whole new level of automation and streamlining of the workflow," Jacob said.
"So rather than looking at individual transactions and saying here’s what this is, here’s what this is, and treat it at an individual transaction level, when you put pattern recognition in place and then you further turbocharge pattern recognition with future automated rules, you’re able to save companies a lot of time," he added.
Jacob noted that while AI tools like ChatGPT and Bard have had some success in passing certain academic exams, they have struggled with technical accounting rules.
"You’ve probably seen the studies where these tools took the bar exam, the SAT, the ACT… they performed reasonably well on most exams. One exam that they did not perform well on was the CPA exam," Jacob said, pointing to the need for accounting firms to be high touch in their use of AI tools to ensure they are delivering the right answers.