By Nield Montgomery
The conversations about AI and automation in accounting have been largely centered around efficiency. Accountants have long desired faster reconciliations, quicker closes, and fewer hours spent on manual consolidation. It looks like that moment has arrived.
But, a recent survey of private equity and venture capital fund accountants—one of the most data-intensive segments of the profession—suggests that more profound changes have only just begun. Something more structural seems to be underway.
In one year, the proportion of fund accountants who expect automation and AI to play a major role in their profession jumped from 61% to 78%. Skepticism has nearly evaporated, with just 1% predicting no significant reliance on AI.
The complexity of fund accounting often drives its practitioners to a faster embrace of the technology that will ultimately transform the broader industry. Here’s what this year’s survey signals for accounting’s near-term road ahead.
From Efficiency to Financial Intelligence
Fund accountants grapple with a mix of age-old and unique pain points that in many ways, serve as a stress-test for the industry’s technological evolution. Among them are investor reporting, capital calls, waterfall calculations, portfolio valuations and regulatory scrutiny that while unique to private investing, offer transferable lessons.
Data in fund accounting often fragmented across investor relations platforms, CRM systems, portfolio monitoring tools, and general ledgers. In this environment, the promise of AI is much bigger than automating tasks. A grander vision includes analyzing vast historical datasets and returning decision-ready answers in seconds, likely on the minds of the largest segment of respondents who said improved reporting and analytics was their first priority in the next year.
Fund accountants must be increasingly prepared to answer complex questions. Which investments across multiple funds are generating the highest internal rates of return and why? Where are capital commitments declining, and are patterns emerging? How would different exit timing or valuation scenarios affect carried interest, management fee structures, and overall returns? Increasingly, answers can be found through AI-powered insights.
As fund accountants—and the larger profession—becomes a greater source of financial intelligence, there will be material shift in identity. The accountant’s value will move from assembling reports to one who designs data structures and curates insights. Next-generation accountants will need skills sets that go beyond financial acumen to include data architecture and AI governance.
Security as a Strategic Imperative
This year, 82% of fund accountants rated data security as “extremely important” in software decisions, up from 78% a year ago. That increase is not surprising, given that accountants manage highly sensitive information. Every data hand-off increases operational risk.
Security, efficiency, and integration are deeply intertwined, and this was reflected by the preference among nearly 75% of respondents for all-in-one platforms over point solutions. Fewer systems mean fewer attack surfaces and fewer opportunities for error.
This concern is being echoed globally. The International Federation of Accountants (IFAC) has repeatedly emphasized that cybersecurity is a core governance issue for finance leaders and just IT. As AI systems ingest larger volumes of financial data, security, access controls and auditability are critical for maintaining professional credibility.
This year’s survey respondents sent a clear signal that when it comes to digital transformation without robust security, the cost may far outweigh the benefits.
The Manual Work Paradox
Despite the strong belief in AI’s transformational promise for the profession, the survey also surfaced an interesting paradox. A majority of fund accountants still cited manual data entry and reconciliation and time-consuming reporting as top pain points, and, even at slightly higher percentages than the prior year.
This reflects a hard truth that resonates across the accounting profession. AI cannot deliver insight without clean, integrated data. If the information upstream is fragmented, trying to automate downstream doesn’t deliver.
Nearly half (45%) of surveyed fund accountants say lack of integration across functions remains a top challenge. While that figure is down from 56% last year — suggesting there has been some progress — 65% still deem integration essential to their workflows.
The Association of Chartered Certified Accountants (ACCA) has highlighted how accounting’s pain points often pave the way for larger digital transformation. Finance professionals are often the first to see where processes bottleneck and technology can add value. Their unique mix of skills in data integrity, governance, and business impact makes them natural leaders to move organizations toward better workflow design to support technology adoption.
Without this, finance professionals—and the larger organization—are left in limbo. They remain partially automated, but still burdened by manual workarounds. For this reason, AI alone cannot eliminate busywork. It just makes inefficiencies more visible.
The manual work paradox many accountants finds themselves in today offers a key takeaway: investments in AI must be paired with data and system integration, and a smart reimagining of processes.
An AI Stress Test for the Profession
The attitudes and embrace of AI in private equity and venture capital fund accounting provides a useful stress test for the broader field. If AI can deliver measurable value in this exacting environment, its applicability across other settings is significant.
At the same time, the fact that manual pain points persist even in a technologically-engaged segment is informative. It highlights that AI adoption is not a single event. Along the maturity curve, early wins may appear, while foundational data issues take longer to resolve.
For practitioners across the profession, three takeaways from this year’s survey stand out:
- Prioritize integration before acceleration. Don’t add AI onto fragmented systems and processes.
- Treat security as a design principle. Strong security and governance is essential to maintain trust.
- Redefine professional value. Shift focus from transactions to high-value analysis.
The idea that AI and automation are about working faster is already outdated. In fund accounting and increasingly across the profession, the new promise is tied to asking better questions, delivering more insights, and elevating the accounting role.
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Nield Montgomery is managing director at Dynamo Software, where he oversees the platform’s fund accounting software and services. Access a free copy of Dynamo’s full Frontline Research Report on fund accounting trends at www.dynamosoftware.com.
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