Executive Summary:
- The Capacity Crisis: An influx of CPA retirements paired with fewer industry newcomers has forced overworked accountants into a detached, digital “assembly-line mentality”—leaving little time for the personalized face-to-face advisory services that clients value most.
- Streamlining Operations: Paradoxically, AI can restore human connection by automating repetitive administrative work. CPAs can leverage specialized tools to draft emails, summarize physical mail, automate data entry, streamline audits, and generate baseline financial analyses.
- Managing Risks: AI carries major risks of “hallucination”—demonstrated when a Big Four firm accidentally submitted fake citations to a government entity. To mitigate this, CPAs must rigorously vet vendor cybersecurity, design highly specific prompts, and choose specialized accounting tools.
- The Human Element: Ultimately, AI is not a replacement for professional experience. By utilizing technology to absorb back-office burdens, CPAs reclaim the crucial time needed to cultivate deep, trusted client relationships.
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The accounting profession is built on people and relationships, but it can be easy to lose sight of that, especially in the midst of a busy tax season. Churning through work often leaves little time for personal interaction with clients.
Paradoxically, technological solutions including AI tools can help bring the focus back onto personal interactions. How can AI help make the modern CPA practice more human?
What is assembly line mentality?
With more CPAs retiring and fewer CPAs joining the profession, mid-career CPAs are having to take up the slack. Being overloaded with work can lead to an assembly-line mentality: “Send out an electronic request for data. Get an electronic response. Prepare, review, and submit the returns electronically.” For a profession built on people, there can be surprisingly little face-to-face communication.
Yet that is what clients want most. Advisory services are the fastest growing sector of the accounting profession because they provide exactly what clients want most: personalized guidance tailored to their individual situation.
Shift to advisory services
With the widespread availability of bookkeeping and tax software programs, clients recognize they can do a lot of their own financial work. They choose to work with accountants, however, because they value the expertise their professional can provide. They want more than just numbers on a form.
How then does a busy CPA make time to provide that personalized service? By turning to technology.
How AI can help
Accounting professionals can use AI in several ways to free up time for client interaction:
- Writing emails – AI can read incoming emails and create first-draft responses which can be approved before being sent.
- Scanning and summarizing “snail mail” – Physical mail can be scanned and summarized, with the system generating workflow tickets and assigning follow-up tasks to appropriate team members.
- Automating input of financial data – AI can scan a client’s existing financial statements and past tax returns, providing a baseline snapshot of their company’s position, reducing the need for time-consuming data entry.
- Assisting with financial analysis – AI can quickly review a client’s financial picture and generate initial recommendations which can then be adopted, revised, or put aside as the CPA deems appropriate.
- Drafting technical accounting memos – AI-powered tools can search tax codes to find relevant cases to provide informed answers to complicated tax questions. If trained on the practice’s own memos, the AI system can also draft memos in the style and format preferred by that firm.
- Streamlining audits – AI can quickly search for specific items in a large volume of client data. It can also seek out discrepancies, missing data, and evidence of potential fraud.
Using AI the right way
Everyone has heard horror stories about AI hallucinating and providing responses that aren’t based in reality. That can happen in accounting, as it did when Deloitte provided the Australian government with a welfare report that was “riddled with fake citations, phantom footnotes, and even a made-up quote from a Federal Court judgment.” If it can happen to a Big Four firm, it can certainly happen to smaller accountancy practices.
To use AI appropriately, CPAs need to:
- Choose the right AI tools – Different practices will benefit from different types of AI. Spend time researching what the practice’s needs are, then look for packages designed for those purposes. There are a plethora of CPA-focused AI tools on the market.
- Compare vendors – Read reviews, talk to colleagues, and use good business sense to evaluate different vendors of similar products.
- Pay attention to cybersecurity – As part of vetting vendors, examine their cybersecurity bona fides. Third-party software providers are one of the fastest-growing sources of cyberattack vulnerabilities. To minimize the risks, thoroughly check the cybersecurity measures of any AI vendors under consideration.
- Invest time in creating prompts – In many ways, talking with AI is like talking with a child. The user needs to be very specific in their instructions. For example, in asking for a summary of a piece of tax legislation, it’s important to specify that only the final, signed version of the bill should be summarized. Otherwise, AI may return a confusing mishmash of material that includes multiple amendments and inclusions that never made it to the final version.
- Always review responses with a critical eye – Never assume what AI produces is correct. It’s crucial for a CPA to use their professional experience and judgment to determine if what AI has produced makes sense and is applicable to the situation.
Getting back to the client
Chosen well and used appropriately, AI can be an enormous time saver for a busy accounting practice. It can speed up repetitive and time-consuming tasks, providing time for CPAs to do those things that truly build a practice: calling and meeting clients and providing personalized service.
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Rick Dennen is founder and CEO of Indianapolis-based Oak Street Funding, a First Financial Bank company, with customized loan products and services for specialty lines of business including certified public accountants, registered investment advisors and insurance agents nationwide.
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