Decisions 2024: The Opportunities for Accounting Firms Have Never Been Greater

New or updated products use AI to solve traditional problems in innovative ways. We track the top products in every category and discuss them in our weekly podcasts in The Accounting Technology Lab. Our podcasts cover most of the products listed below, and we plan to cover them all.

Besides product changes, we have continued to watch mergers and acquisitions between successful firms, private equity, and the creation of new small firms by talented professionals who do not fit in with the larger organizations. I believe now is not the time to sell your firm for the bargain basement price of 1x revenue. For example, 1040 tax prep will likely soon be worth more than ever. Why? Automation and AI are reducing the labor needed!

The Future Of Individual Tax Prep Is Brighter Than Ever

While AI has been everywhere in the last few years, practical AI built into traditional platforms is being augmented by platforms to help with productivity. There is a lot of buzz about AI and the profession. Sifting through what is in the market and coming to market, it is clear that tax preparation will be more profitable than ever. The trend: tech (both AI and non-AI) is taking the pain out of tax prep. We see various portals like Liscio, SafeSend One, StanfordTax, TaxCaddy (Thomson Reuters), and Truss automating the gathering and delivery processes. GruntWorx, SurePrep, and CCH Scan & Autoflow increasingly manage data entry. Outsourcing firms are doing a better job at reasonable costs. AI 1040 automation, such as Black Ore Tax Autopilot, is known for creating a reviewable 1040 from 1040 workpapers without using outsourced labor or preparation effort, while Additive.ai handles K1s beautifully. Using portals to feed automation and AI is a real trend. Whether your firm is in it for the long or the short haul, 1040 tax prep will be a cash cow, and the days of firms selling for 1X revenue will likely be long gone.

We are seeing price points for some of these solutions reach the masses. For example, Liscio only charges $5 per Smart organizer and offers “rollover protection” if the client does not engage with their organizer. Charging only for the organizers used means that firms can send organizers to every client without financial risk and stand to save hours per return for a no-risk investment. Portal software solutions are affordably priced by the user or by the engagement. To our surprise, we are now tracking over 80 portal options.

The Future Of AI For Productivity In Public Practice Is Brighter Than Ever

Our K2 Enterprises team continues to teach practical AI courses for public practice professionals and industry CPAs. We have concluded that we’ll rebuild our accounting tool recommendations to include more AI-based financial reporting like Digits, data extraction like MakersHub.ai, and KPI advisory products like 4ImpactData, Aider.ai, or SOBI Analytics. In the coming months, my K2 organization and this column will continue to cover useful AI tools for Client Accounting Services (CAS), tax, and audit. We have been maintaining lists of valuable products that are leveraging AI wisely. Remember that productivity gains in other tax tools are also AI-powered.

• Wolters Kluwer AnswerConnect: This research tool has been augmented with AI.
  • Thomson Reuters Checkpoint Edge CoCounsel: Checkpoint Edge AI extends this traditional research tool with AI.
  • Blue J: Provides verifiable answers to your tax questions.
  • Tax GPT: Cuts down tax research time by 90% and generates replies to client emails and IRS CP2000 notices.
  • Batch Extensions from HubSync: Helps CPA firms prepare extensions in bulk.

Beyond that, there are other audit tools to consider:

• Audit Intelligence Analyze: Thomson Reuters is creating an Audit Intelligence Suite, and this is the first product delivered in conjunction with Synergy 2024. Audit Intelligence Analyze is an AI for risk analysis that automates transaction analysis and enhances audit quality by focusing on high-risk areas while saving 30-120 minutes documenting sample selections.
  • Materia: Analyzes client documents and understands the guidance.
  • Time Credit: Instant contract testing with automated footnote disclosures.
  • Trullion: Data extraction, validation, and reconciliation; can pre-read an audit; manages lease accounting and revenue recognition. Trullion could be a replacement for DataSnipper.
  • Mangodoc.ai: Accountant ai streamlines complex accounting inquiries with US GAAP & IFRS expertise with AI precision for audits, contracts, tax, forensics, and estate planning.
  • Workiva: Comprehensive ESG and GRC reporting and compliance solutions.
  • AuditBoard: Offers robust risk management and audit automation features.
  • DataSnipper: The Intelligence Automation Platform and Advanced Extraction Suite have provided functional automation to auditors for some time. With the new UpLink AI-powered PBC (Prepared by Client) client document requests, this platform illustrates the trend of directly dropping documents from a portal or PBC request into the processing platform.
  • Diligent One Platform: Integrates GRC and board management while anticipating risks to stay ahead of evolving regulations.
  • TeamMate: Provides a suite of audit management and analytics tools. TeamMate could be a replacement for DataSnipper.
  • Validis: With notable improvements in financial statement ingestion, the ability to read financials from all accounting systems, and a preliminary partnership with Suralink, this audit support product may be the most improved year over year.
  • Valid8: “Verified Financial Intelligence is Courtroom-Ready Evidence” makes VFI more than a slogan. The platform’s speed and accuracy are well beyond the benefits of OCR data extraction.
  • DebtBook: Offers debt, cash, lease, and subscription management tools explicitly made for government and nonprofit organizations, consolidating treasury and debt accounting with automated financial reporting.

While we are pretty happy with our productivity gains using the Large Language Model (LLM) platforms of ChatGPT, Copilot 365, Claude, Perplexity, & Gemini, and specialized LLMs for the profession are making an impact, too.

Speaking of specialized LLMs, I like that the Mangodoc.ai  platform is multilingual and a complete application for the accounting, tax, and audit professions. APIs make it easy to mold Mangodoc into an intelligent data lake for client-confidential and private large data repositories, allowing user-based, usage-based, or on-demand paywalls. Mangodoc.ai can be leveraged to work with documents and complex databases such as ERPs.

There are built-in features such as:

• Mangodoc AI provides the reference for each analysis, whether for the Analyze or Converse function. There is complete transparency, audibility, and ease of access to source documents for further analysis.
• The platform can upload and work in multiple languages. The source can be in one language, and prompt engineering responses can be delivered in another language. Many believe it is easier to understand complex documents in their native language.
• There are templates for prompt engineering. You could say these are Canva for the Gen AI model. The templates allow an analyst to hit the ground running and enable professional services firms to provide compliance, standardization, and governance across their accounting teams.
• Multi-agents minimize hallucination and maximize contextual understanding and usage of large data sets.
• Features like tag, annotate, and collaborate, common to PDF applications and preferred for accounting and audit while working on large complex documents, are leveraged.
• Feedback-enabled chatbots provide an opportunity to learn and improve. Your firm can connect all types of standard and non-standard data sources!

The products listed above are just the tip of the spear for AI innovation in the accounting profession. Many more products under development are in beta and will become known next year.

So, What Are We To Do?

Prepare yourself and your team for the future. Start exploring AI capabilities in your firm now. We have been explicit in the initial steps for firms:

• Establish policies (email me for examples!)
• Choose the platform that fits your firm best
• Have a pilot team build prompt engineering for your firm
• Educate all who will use AI about your firm’s
  • Policies
  • Prompts

You can expect continued and rapid change in the future:

• General LLMs (Copilot 365, ChatGPT) will help with productivity – email, documents
• AI will be built into products that we use daily
• Models will improve rapidly
• Models will run in data centers, on desktops/laptops, and phones
• It would be best if you bought neural processors with your new computers and phones, watching for the evolution of AI on quantum computers.

Consider what you want your team’s experience to be. What can our team provide to benefit our clients? The ease of use of modern interaction through an easy-to-use portal is table stakes. Internally, automatically feeding AI products from portals will improve the economics of services while helping to solve for the accountant labor shortage.

The profession is moving from automation to AI-based services. While commoditization of transactional services is possible and likely, clients value a continued transition to real Advisory Services. We prefer portals that support all your service lines. If you provide tax, audit, and Client Accounting Services (CAS), your portal should support all these areas. Likewise, you should review new-generation AI-based tools in all these practice areas after defining the services your team can provide. Indeed, the outlook couldn’t be brighter!