Key Points

  • The American Institute of Certified Public Accountants (AICPA) says generative AI will boost efficiency, enhance data analysis capabilities, and mitigate the impact of staff shortages at small accounting firms, enabling them to compete with larger firms.
  • In a report co-authored with CPA.com, the AICPA said AI is "as groundbreaking as the internet or smartphones, but with faster adoption and greater ease of use." The technology "makes it possible to create newer, better business models and to more precisely align value with cost."
  • The AICPA noted that financial executives see AI as best suited for nine types of tasks, such as synthesizing content, summarizing earnings calls and Q&A sessions, and forecasting sales performance—especially for companies with annual recurring revenue of $100 billion or more.

In-Depth Analysis

Given the rapid adoption of generative AI, the AICPA recommends that accounting firms and corporate finance teams embrace and experiment with the technology.

"Generative AI can provide small firms with tools that traditionally required significant human and technical investment, thereby leveling the playing field between small and large firms," said Jennifer Wood, a partner at The Bonadio Group, in an email response on Tuesday.

"Small firms can leverage AI to deliver services of comparable quality to larger firms at lower cost and with greater efficiency," she added. "For example, using AI-driven insights, small firms can offer customized, high-value advisory services that were traditionally only available to large firms with extensive data analytics teams."

The AICPA also noted that accelerated adoption of generative AI could bring competitive advantages. The institute cited Digits CEO Jeff Seibert, who said AI helps small firms "not only because of its ease of use, but because ultimately, it is early adopters—not those with the most resources—who come out ahead."

However, the AICPA's view is not shared by the entire industry.

Thomas Fitzgerald, CFO of Earnest & Associates, said it remains unclear whether "AI technology alone can serve as an equalizer for small firms." In an email response, he wrote: "Large firms—given their scale and resources relative to small firms—will be early adopters and will have the capability to deploy and lead the frontier of such AI technologies."

Nevertheless, Fitzgerald (a CPA) believes generative AI has several appealing uses in forensic accounting, auditing, and forecasting sales, buyer behavior, future supply of production materials, and potential supply chain disruptions.

Additionally, the AICPA said accountants will find that generative AI can accelerate the review of documents, emails, and contracts, assist in gathering supplementary data, research trends, draft accounting policies, and optimize budget reallocation processes based on order data and spending trends.

The institute said AI "is significantly boosting employee productivity, especially for knowledge workers, by reducing administrative work."

The AICPA also noted: "AI can help mitigate the impact of staff shortages in the accounting profession and beyond by taking on routine, repetitive tasks, allowing people to shift to higher-value activities."

Aaron Harris, CTO of Sage, said in an email response that customers using Sage's AI-driven invoice processing features report productivity gains of up to threefold, "giving them more bandwidth to focus on strategic tasks."

However, several accountants and business advisors pointed out that using generative AI in accounting and auditing also carries risks.

"There is always a risk that firms over-rely on AI systems, which could lead to ethical issues or legal liability," Wood said. "Because using AI involves processing large amounts of sensitive data, there is a risk of data breaches or unauthorized access, which could compromise client confidentiality."

She added: "Furthermore, since AI systems are not infallible, their outputs and recommendations must be critically evaluated by the professionals using them." Finally, AI applications must comply with ethical standards and accounting regulations.