As an accounting professional, are you being instructed by your firm to use ChatGPT in accounting? If so, what percentage of daily work involves ChatGPT or other AI tools? This discussion is not limited to ChatGPT alone. From the moment you open your emails in the morning, you have Google Gemini; Copilot when you reply on Microsoft Teams. And Claude for all your data security and system updates.
The presence of AI is hard to ignore in the accounting industry, which is generally not known for quickly adopting new technology. For independent accountants, ChatGPT serves as a helpful assistant in daily operations. For CPA firms, it offers a cost-effective solution for entry-level accountants, saving not only costs but also valuable time and resources required to train them. At the same time, this efficiency raises concerns about over-reliance on automation and long-term workforce implications.
However, ChatGPT is not without its flaws. CPA firms face the risk passing off incorrect information. A well-known example is the Deloitte report submitted to the Australian government, which contained AI-generated errors and fictitious citations. This Incident resulted in a partial refund of $440,000 (Australian) to the government and highlighted the real-world consequences of unchecked AI use.
This leads to an important question. Where is the actual role of ChatGPT and AI heading in financial operations? Is it contributing to greater efficiency making everyday operations easier for accountants, or is it creating risks that put data safety and accuracy in jeopardy?
This blog helps finance teams answer those questions by explaining how ChatGPT and AI are being integrated in different levels of financial operations, along with their current strengths and limitations.
Understanding ChatGPT in Accounting
Before exploring how ChatGPT in accounting functions in financial operations, it’s important to understand what it actually does. ChatGPT is a Large Language Model (LLM). It can interact with users in a human-like manner and process large amounts of data based on given commands.
For example, accountants commonly create reports using clients’ transactional data. ChatGPT can take that data and streamline the process by handling raw transactional data (often input as text from a bank statement or a CSV file) along with a specific prompt to organize, analyze, and format the data however required. This saves time spent on manual data entry and allows accountants to focus on review and interpretation.
The areas where ChatGPT in accounting struggles with is in providing definitive answers and guaranteeing 100% accuracy without human oversight. While it excels at organizing data and generating narratives, it does not validate correctness of the underlying information or make final strategic decisions. That means it’s functioning based on the large data sets available to it, but not actually fact-checking that data.
How is ChatGPT/AI being used in financial operations?
Let’s look at how ChatGPT is being used in financial operations at different hierarchical levels.
Entry-Level
Data Entry and Validation:
ChatGPT in accounting canextract key pieces of data from invoices, receipts, and other financial documents automatically. By using AI, finance professionals can provide a more accurate and reliable set of financial records. Companies that have adopted this technology can work more efficiently and deliver more precise financial reporting results, while also preserving greater detail in terms of records of their financial activity.
Customer Service:
AI-enabled technologies such as Chatbots and VAs assist accountants with clients’ inquiries. They can respond to repetitive questions related to account balances, transactional histories, reconciliations, and other financial information with ease. With 24X7 availability, accountants can provide timely assistance to clients and internal departments, improve the satisfaction level of clients with accountants, and lessen some of the workload of accountants.
Expense Management:
AI-driven solutions such as ChatGPT can help to simplify the expense management process by providing technology that utilizes advanced receipt processing capabilities. These solutions allow expense categorization (travel, meals, office supplies, etc.) and produce expense reports quickly. Additionally, AI-driven solutions can assist with enforcing compliance by flagging non-compliant receipts prior to submission of the expense report. By utilizing ChatGPT in accounting, the level of accuracy, efficiency, and compliance with regulations concerning expense accountability can be substantially improved.
Basic Reporting:
The initial outline or summary of a set of financial statements can be created using ChatGPT. ChatGPT finds the fastest way to locate the information needed for Internal Audit Reports and Minutes of Meetings (MoMs) saving considerable amount of time for an Accounting Professional by organizing and formatting large amounts of financial data efficiently.
Coding Assistance:
ChatGPT helps accountants by creating or troubleshooting basic Excel Formulas and simple Scripts related to accounting. This reduces the time spent on the spreadsheet management and eliminates the need to spend hours troubleshooting incorrect formulas. While basic programming and automation in the Accounting System can be assisted using ChatGPT, Specialized Skills are still required for advanced-level programming and automation.
In mid-level tasks
Financial Analysis & Modelling:
Using ChatGPT in accounting to calculate financial ratios quickly and accurately streamlines the review process. ChatGPT can also assist in creating initial financial models and cash flow projections, offering valuable insights that support decision-making and reporting. By incorporating AI in these areas, accountants can increase their efficiency and focus on more complex financial analysis and strategic planning.
Risk Assessment & Fraud Detection:
Using ChatGPT to calculate Financial Ratios saves a lot of time in reviewing Financial Ratios. ChatGPT in accounting can also help create an initial financial model or Cash Flow Projections which provide valuable insights to help support managers in their daily operations of Accounting Reports. Incorporating Artificial Intelligence in these two areas will allow Accountants to spend more time on strategic planning and perform complex financial analyses.
Budgeting and Forecasting:
Historical financial data and market conditions can be analyzed to generate baseline assumptions and cash flow forecasts. ChatGPT enables organizations to analyze varying dollar amounts and variables input. The results provide organizations with an insight into their future cash flow based on their projections.
Process Improvement:
Integrating ChatGPT into an accounting system provides an opportunity for organizations to review their checklists and Standard Operating Procedures (SOPs). By utilizing ChatGPT’s recommendations, organizations can streamline their processes, improving the accuracy and volume of data entered into their systems, thus allowing organizations to perform at a greater level of efficiency while reducing the error rate.
Market Research:
ChatGPT allows rapid and focused research to be conducted regarding competition and trends within industries, as well as potential merger and acquisition (M&A) targets. It does this through the ability to process large amounts of unstructured data collected from various websites, news articles, and publications. The key insights generated will enable informed decision-making and ongoing monitoring of current market conditions.
In CPA level tasks
Compliance and Regulatory Research:
To use ChatGPT in accounting within Regulatory and Compliance Research, Accountants rely on tools to review and summarize complex tax histories, Tax Laws (such as the GAAP or IFRS). This helps CPAs maintain regulatory awareness, identifying possible compliance risk in financial reporting, and access implications for future business operations.
Audit Support:
CPAs and Auditors use ChatGPT to do Analytical Reviews and identify Auditing Anomalies and highlight high risk areas. This allows Auditors to effectively maximize their expertise on the critical issues that require professional judgement, improving the efficiency and effectiveness of the audit.
Strategic Decision Support:
To support better strategic decision-making in Business Development, CPAs use data-driven insights generated by ChatGPT to assist with business evaluation and the development of merger and acquisition strategies. These insights also help guide investment decisions, competitively price products and services, and enable more informed decision-making aligned with current business needs.
Executive Communication:
When communicating with company stakeholders, CPAs use ChatGPT to develop executive communications, such as investors relations communications, board-level talking points and, Detailed Reports developed from raw data, ensuring that complex information can be easily understood and consistent when delivering the information to different types of stakeholders.
Scenario Planning:
Scenario Planning with ChatGPT in accounting involves conducting real-time “what-if” simulations to assess how different economic conditions or strategic options might impact financial performance. This proactive analysis helps businesses anticipate potential outcomes and better prepare for future uncertainties.
Beyond ChatGPT: Agentic AI for Accountants
While ChatGPT has significantly influenced financial operations, it isn’t quite what can be called a “smart AI.” Being an LLM, it functions as a “reactive tool”. Its abilities are limited to its training data and prompt-based interactions. A more advanced version of the latest technological progress in AI systems is Agentic AI. To gain an in-depth understanding of Agentic AI and its role in the accounting industry, you can read our blog Agentic AI: Redefining Tax and Accounting for CPA Firms and Accountants.
Conclusion
ChatGPT in accounting, along with other AI models, is similar to previous revolutionary technologies, such as the internet or mobile computing. These tools offer significant potential for disruption as well as for creating new opportunities. Embracing these innovations requires a balanced approach. Staying vigilant to understand their implications, actively adapting to integrating them effectively, and maintaining a strong ethical framework. By doing so, we can ensure these tools augment human capabilities, fostering progress and innovation while safeguarding our values and responsibilities.
