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A New Age for Accounting: Computer Vision, Automation and Accountability

A New Age for Accounting: Computer Vision, Automation and Accountability

Accounting

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7

min read

 

It’s tax time. Picture having your own accountancy practice, and a client walks in the door with all of their required documents – in a disorganised paper pile. The infamous “Shoebox Business People” are likely what accounting nightmares are made of.  But fortunately, it’s now looking like a dream from the past. Paper-focused systems are constantly being replaced by computer data and better operational efficiencies. So, it’s not inconceivable for accounting to become a completely digitized industry in the near future.

 

While the accounting industry might be less talked about when it comes to emerging technologies, it’s certainly gone through a significant shift with the broad application of cloud computing and automation platforms. Although trained professionals, including accountants, are concerned with newfound computer productivity spelling the replacement of human talent, this does not need to be so. Certainly, the development of technology can be used to streamline processes and eliminate manual tasks. But what’s important to focus on is that in financial applications, automation can be leveraged to reduce undesirable workflows. Meaning: you get to spend more time on higher-level cognitive decision-making.  

 

If we take sometime to examine at the major leaps that accountancy has encountered, we can then look forward to the future direction of the industry. This in turn can help us strategise how to best utilise the new opportunities technology adaptation presents.

 

Where the Accounting Industry Has Been

 

From ledgers to laptops

 

Since the popularity of personal computing, accounting (like most industries) made the steady transition from hard copy documents to digital software. When most people think of accounting software, the program QuickBooks comes to mind. Although Intuit’s QuickBooks was originally created in 1983 as a desktop software solution, the popularity of cloud computing gave birth to a newer QuickBooks Online platform (QBO). By 2014, QBO had more subscribers than other cloud accounting competitors and as of 2019, the international giant reported having about 4.5 million online customers.  

 

Cloud computing has fundamentally changed the accounting industry. Because the software lives online, it has allowed for a more collaborative and integrated environment. If looking at the development of QuickBooks, for example, the online version supports integration with over 650other third-party software applications and many financial institutions world-wide.

 

But this is only scratching the surface of the influence cloud computing has had on accountancy. As public clouds have grown in features and popularity, so have the software companies that offer subscription-based cloud offerings. For example, invoice processing software is available on web-based models allowing for cloud-hosted data capturing and document management solutions.

 

Blockchain – the accountability of accounting

 

While the concept of blockchain existed as early as in 1991, its implementation occurred in 2009 in conjunction with the introduction of bitcoin.

 

Blockchain is described as distributed ledger technology (DLT). In short, it allows sequenced transactions to be recorded with an identical ledger accessible to multiple parties at the same time. The entries are cryptographically sealed, so everyone involved would need to provide permission to change the records. This ensures records are accurate and reliable. It means fraudulent data would be incredibly difficult to create because it prevents manipulation.

 

Several years ago, many voices were touting Blockchain as a disrupting force in the accounting industry. It spawned countless Startups, especially in FinTech hoping to be at the forefront of leveraging this new technology. In theory, Blockchain would render financial data completely trustworthy and this would impact the need for most audits.  While it is yet to create as large an impact in accountancy (and other industries) as once thought, Blockchain technology continues to move forward, albeit at a much slower pace.

 

 

Where The Accounting Industry is At

 

Computers that classify documents

 

For several years there’s been significant amount of buzz regarding AI and machine learning. It’s no surprise that AI has become such a talked about topic. In April 2018, the United Kingdom government announced a £300 million investment in AI with 50leading UK businesses coming forward to set a £1 billion deal. Fast-forward several years, and AI technology has further expanded with the use of machine learning (ML) and more specifically deep learning (DL) advancements like computer vision.

 

The growth in AI popularity of course includes recent developments in the accounting industry. So much so, that the AICPA and CPA Canada put out a paper entitled “ACPA’s Introduction to AI: From Algorithms to Deep Learning, What you Need to Know”. These professional accounting associations are now teaching about AI.  Let’s have a closer look at it.

Although robotic process automation was a precursor to AI, the implantation of AI advancement has started to close the gap between human and machine productivity. The increased use of machine learning is now allowing us to experience process improvements in leaps and bounds.  To understand the basic idea of machine learning, the CPA Journal boils it down to the following: “The goal in machine learning is to write an algorithm that can be trained using test data to look for specific patterns.”

 

Specifically, the more recent ability to leverage deep learning for computer vision can be attributed to larger datasets for training computers and increased computer processing power.

 

In order for machine learning to function in a more similar way to a human, deep learning carves the way with regards to computer vision technologies. Looking for patterns in the “real world” requires a computer to have a set of “eyes” that can classify data.

At this point, paper documents such as printed receipts or handwritten checks are no longer a barrier to productivity that requires manual intervention from a human to process. Banks are already successfully using computer vision to read written checks.

 

 

Now Going Deeper: When Optical Character Recognition meets Deep Learning

 

Early optical character recognition (OCR) was a far cry from what it is today. It had lots of imitations and often required manual intervention to correct errors. The technology dates to the 1950s and has been used by various industries for many years. However, it’s only recently that OCR has become a force for change in the accounting industry.  

Computer vision OCR has become so widespread that even Microsoft Azure has the offering Read API to provide OCR information extraction from images in several languages with the ability to read handwriting in English.

OCR tech gave birth to new automation software used for accounting. For example, both the cloud-based Scan2Invoice and mobile phone app AutoEntry claim to reduce time allocated to manual data entry.

In a 2019 research paper published by Cornell University, a Convolutional Universal Text Information Extractor (CUTIE) was tested for its ability to classify data from typical receipts or invoices. Specifically, the focus of this research was to create a model for automation in areas such as accounting, finance, and taxation. Building on OCR technology, the goal is for deep learning to employ accurate key information extraction without needing to design expert rules for each specific type of document. Using a model like CUTIE means that computer vision can read a shoebox full of receipts, pick out the key data, and organize it for accounting applications.

Manual oversight of invoices, expenses and other paper documents make up about 80% of the work done by accountants or accounting advisers. So, automating these tasks completely changes the work model of the accounting industry. It’s also interesting to note that deep learning (convolutional neural networks) can be used to search for anomalies and detect fraudulent financial transactions. If blockchain isn’t the first to overturn the auditing process, deep learning soon could.

Where the Accounting Industry is Going

 

The New Accountancy Profession

 

The adoption of AI for accounting is about automating processes. It’s expected to largely eliminate transactional tasks. In addition, using blockchain technology could change the nature of audits to become more about software implementations than hiring auditors. While the drums beating for the revolution of disruptive technology have yet to overturn accountancy as we know it – change is still coming. It might be slower than first expected, but process automation is a concept being applied across many other industries.

 

Forbes recently cited MarketWatch projecting that growth in automation will directly target the accounting and finance industries. We can already see the evidence of applying computer vision in areas such as autonomous cars or manufacturing quality assurance. So it’s reasonable that automation will also change the landscape of accountancy.

 

Moving forward, it’s important to recognise the evolving role of accountancy and stay on top of the technological advancements. Because automation is proving to be a force that won’t slow down any time soon, staying relevant and in-demand can be achieved through new job positions and a shift in career focus (yes, you’ll still have a job but a different one). In order stay in-demand, accountants can integrate more IT knowledge into their previous role and be prepared to carve out a market position that includes becoming FinTech consultancy experts. The profession can transform into a supervisory role for the IT infrastructure because computer automation removes tedious and undesirable tasks – such as having an AI assistant. It will become increasingly important for accountants to learn the language of IT in order towork collaboratively with technology teams for shared work objectives.

 

In addition, accounting industry professionals can spend more time becoming strategic advisors and develop customer relationships. Accountants who understand the applicable technology and explain results to clients can create new hybrid roles for tech-focused accountancy.

 

Since AI automation is set to create operation efficiencies that save time, it ultimately allows for accountants and accountancy firms to focus on improving their own marketing efforts in order to best compete in a changing landscape.

 

 

 

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