New book from Temple faculty member Cory Ng and alumnus John Alarcon illustrates practical applications for AI in accounting and offers a look at what the future may hold
PHILADELPHIA, Jan. 13, 2021 — Just as Hollywood speculated for years, artificial intelligence (AI) has the potential to revolutionize just about every aspect of our lives.
According to Cory Ng of Temple University’s Fox School of Business, that’s true for some unconventional areas, too. Take the profession of accounting, for instance.
In his new book, “Artificial Intelligence in Accounting: Practical Applications,” Ng illustrates a foundational understanding of AI and its many accounting applications. Published by Routledge in December, the book specifically details accounting-specific applications of artificial intelligence, machine learning, robotic process automation as well as text mining. Co-authored by John Alarcon, DBA ’18, the book also features interviews with several accounting leaders from global professional services firms.
“I think AI is potentially the most impactful technology in the profession,” says Ng, an associate professor of instruction and the undergraduate program coordinator in the Department of Accounting. “The global professional services firms have already invested substantial resources in AI technologies and are already reaping the benefits. I think small and medium-sized firms need to think about how they can leverage AI to increase productivity. That’s the goal of this book. It’s really meant to be a helpful guide for practitioners and for educators preparing the next generation of accountants.”
We caught up with Ng to discuss his new book, AI and what the future may hold for accounting.
Q: When it comes to AI applications, people do not traditionally think of accounting. What sparked your interest in this topic?
A: My background is as a practitioner, working as an auditor with Deloitte, as an accountant in industry and then as a principal of my own accounting firm. I did not get involved in academia until later in life, so I am always looking for ways to positively impact the accounting profession through my research. As a long-term member of the editorial board of the Pennsylvania CPA Journal, I have co-authored several technology related topics for accounting, including data analytics, blockchain and AI. I was approached by Routledge to propose a book on a technology related topic. I decided to propose a book on AI because we are all connected to AI in our daily lives; just think about our virtual assistants such as Siri and Alexa. The more time I spent researching AI, the more convinced I became that this technology will have a transformative impact on the accounting profession. As defined in the book, artificial intelligence is a computer program or software application that can imitate or simulate human behavior. In many cases, AI-enabled technologies can enhance human decision-making or perform the same work as a human would do but in greater volume, with greater accuracy and in less time. A lot of the mundane, tedious, repetitive tasks that accountants have done for years, such as data capture, data entry, reconciliations and classification of documents, can now be done with AI.
Q: In your new book, you outline many of the ways that it’s now being used. Can you give us a quick snapshot of some of these applications?
A: Although the global professional services firms have already made substantial investments in AI, we are still in the early days of adoption. There are opportunities for small and medium-sized firms to benefit from AI.
It’s being used in a number of ways. For example, in corporate accounting, AI is used for account reconciliations, the cash application process, accounts payable processing and inventory management. In auditing, AI is being used to enhance auditor judgment around materiality assessments, internal control evaluations and going concern judgments. Natural language processing (NLP) is a form of AI. As discussed in the contemporary case studies iochapter, NLP is used by a global professional services firm to review vast quantities of legal documents, such as contracts, as part of a loan risk analysis. The result is what used to take a human analyst weeks to complete is reduced to a matter of hours.
Q: As its use becomes more widespread, do you have any concerns?
A: Yes, we talk about the challenges and ethical considerations in the book. One of the major concerns is the risk of algorithmic bias, which occurs when the algorithms reflect the bias of the human programmers. In other words, if the programmer is biased, then the technology will be biased, too.
An example of algorithmic bias would be a financial institution that uses an AI-enabled loan underwriting model that inadvertently discriminates against borrowers based on certain attributes such as race or gender. This could occur if the training data used to build the model comes from a biased dataset or biased processes.
Q: How much do you expect AI use to grow in the next several years?
A: My co-author John and I believe that within the next 5-10 years, AI technologies will become embedded in all core business applications. AI will mature from automating routine tasks to handling more complex, non-routine, and analytical tasks. As a result, AI will transform the role of accountants to provide more judgment and oversight of AI-enabled systems. Adoption of AI by medium-sized and smaller-sized firms should expand as they come to understand the benefits of AI.
That’s where this book can help. We hope it helps firms identify opportunities to use AI. Hopefully, it will spark readers’ interest in the technology, so they can research applications that might be a good fit.
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