The application of data science, with its range of automation and prediction techniques, is shaking the accountancy world. Accountants and auditors are increasingly looking at the likes of artificial intelligence (AI) and machine learning (ML) as game changers for their industry.
So, what areas of accountancy are we seeing data science make an impact to?
Automation
A large component of accountancy involves the application of a set of rigid rules and logic steps, often in repetitive ways and at the expense of many work hours. These tasks are perfect for automation and the application of data science.
Automation can include operations such as reading of text and figures, the recognition of invoices and the identification of unusual and potentially fraudulent transactions. Tasks such as tax code assignments can be automated to reduce the chances of manual error. This is especially valuable for companies that work across multiple regions with different taxation laws.
Real-time automated alerts are another benefit of automation – allowing key information to get in front of the right people sooner. This is becoming easier with software applications, such as Microsoft Dynamics 365, that come packaged with multiple automation tools.
Another benefit of automation is its potential to completely eliminate the need for sampling during auditing. Because it is very time consuming, auditing has traditionally relied on sampling of transactions, thus reducing the probability of detecting irregularities such as fraud. Automation opens up the possibility of doing a full analysis of records rather than just a small sample.
The freeing up of time by automating tasks has the ability to lower fees of advisors, rapidly speed up audits and reduce job completion time therefore providing a competitive advantage for those who implement such processes.
Virtual Assistants
The increasing use of tools such as virtual assistants has the ability to change the way in which accountants interact with information systems. Interactive chat bots tuned specifically to the accountancy practice can enable quicker, more efficient and more human friendly extraction of information.
Using platforms such as PowerBI, queries and reports can be generated using natural language – this is as simple as asking the platform questions such as “How much did customer X spend on their payroll?”. The benefits of these tools also extend beyond accountants, as they enable non-finance professionals to gain the information or figures they require without having to reach out to their internal or external accountant.
In addition, voice recognition systems (think of Siri, Alexa and Microsoft’s Cortana) can make these interactions even easier and quicker by querying data using speech.
Blockchain
Blockchain is a ledger system that was initially developed for the bitcoin cryptocurrency. It is an encrypted and decentralised system that uses a massive peer-to-peer network to store transactions. The large number of distributed copies of the ledger make it nearly impossible for transactions to be corrupted or falsified. Transactions recorded using blockchain eliminate the need for trusted third parties such as banks to create validity, as all transaction information is transparently presented to all parties.
The capabilities of blockchain forms the basis of a completely new accounting system – one that essentially notarises itself. This adds the potential of a replacement for the double-entry accounting system by a process where ledgers are maintained simultaneously in multiple computers at different locations and are self-checking every few minutes.
A combination of ML and blockchain can enable features like continuous real-time auditing, with results being automatically reported to all relevant parties involved.
Blockchain in accountancy is still in its infancy, but with its great potential and promises, adoption is almost inevitable.
Prediction
Data science techniques are increasingly used to make predictions in the accountancy world. Models that predict the value of customer portfolios, the likelihood of timely payment, volume of sales and cash flow can be easily developed and introduced into the practice.
Outputs can be generated and displayed in almost real-time, enabling quick insight and data-driven decisions to be made. Finance and accountancy rely heavily on vast volumes of numbers and data – all of which can be used to train ML algorithms, making the sector ripe for opportunities.
Data science is already freeing up accountants time from churning out data to instead spending time on the value-added stage of interpretation and decision making. It has the potential to only continue to do this.
The Future is Here
We are already seeing large accountancy firms making huge investments in the world of data science as they correctly view it as a long-term operational investment. Ultimately, transformation will help firms save money through the reduction of time spent carrying out manual and repetitive tasks and also reduce human errors. This will allow them to focus and allocate more resource to value-add activities.
The disrupting impact of data science in all aspect of business is no longer a tiny dot in the horizon. The time to embrace these changes and start making use of these new technologies is now. Watch our webinar Data Science 101 for Professional Services to discover the other impacts we are seeing data science make to the industry.