An ICAEW round table at Sheffield University Management School delved into the challenges and opportunities posed by artificial intelligence (AI). 

The discussion, attended by practice leaders and academics, explored how ICAEW members could get the most from AI technology. For practices and businesses approaching AI adoption, the round table identified five areas to consider: 

1) Get your data in order 

The effectiveness of AI hinges on the quality of data. Ensuring clean, accurate and comprehensive datasets is imperative to leverage AI’s full potential. Resolving these challenges, for example concerning data availability, will help make AI use more effective. The centrality of data to AI shows the value that assurance over data quality will have. 

2) Think ahead about regulation 

The lack of clear regulations around AI use in accounting can be a significant roadblock for auditors, in particular, looking to adopt this technology. Practice leaders explained why they believe this uncertainty exists: 

Fear of non-compliance: auditors are hesitant to use AI tools because they worry about inadvertently violating existing regulations or standards. Without clear guidelines on how AI interacts with current frameworks, auditors fear they may be held accountable for issues arising from AI use, even if unintentional. 

Difficulty in demonstrating compliance: even if auditors are comfortable using AI, demonstrating compliance to regulators can be challenging. The lack of established procedures for documenting and explaining AI-driven decisions makes it difficult for auditors to show regulators how they arrived at their conclusions. 

Uncertainty hinders innovation: uncertainty discourages experimentation and innovation. Firms are less likely to invest in AI development if the regulatory landscape is unclear, potentially stifling the creation of new and valuable tools. 

Participants suggested that clear guidelines can help. They called on regulators to establish a framework for responsible use, to help define expectations for responsible AI development and deployment in accounting. This can include guidelines for data privacy, bias mitigation and audit trail transparency. 

Well-defined regulations can give auditors the confidence to embrace AI tools, knowing they have a clear roadmap for compliance. This can lead to increased adoption and exploration of AI’s potential benefits. Standardised regulations would also ensure consistency across the profession. This could allow for a more level playing field and promotes trust in AI-powered audits. 

While it may take some time before regulation adapts to the new tools, practices can help mitigate these regulatory challenges by thinking ahead about how they might impact AI use and planning what can be done to mitigate them. ICAEW has been holding round tables to examine the interaction between its Code of Ethics and AI use. Further resources will be released as they are developed. 

3) Upskill staff 

Professional staff often lack the necessary skills to leverage AI effectively. Training and development programmes are essential to bridge this gap. Vendors of these new tools often offer training in their use and ICAEW offers courses on wider AI adoption. 

Beyond training in the immediate use of the tools themselves, wider skills will help make the most of this technology and its wider implications for how work is done. Firms could sponsor training in these areas or seek them out in recruitment: 

• Data literacy
• Technical skills around AI fundamentals, including machine-learning algorithms, data analysis techniques and natural language processing 
• Adaptability and continuous learning
• Critical thinking and judgement 

ICAEW has recently launched training in improving professional judgement. Esther Mallowah, ICAEW Head of Tech Policy, mentioned that investing in training programmes to bridge the skills gap can lead to significant benefits for accounting professionals and firms. Some of these skills are necessary to begin using the technology, while the value of others may become more apparent later as the technology changes the nature of work. 

4) Be mindful of ethics, biases and accountability 

Ethical dilemmas surrounding AI implementation loom large. This may deter or delay firms from adoption. Proactive efforts are needed to properly understand and evaluate the ethical implications and how they can be addressed.

From data privacy concerns to algorithmic biases, navigating the ethical terrain requires a concerted effort from regulators and practitioners. Clear regulatory frameworks will be essential to mitigate risks and foster responsible AI deployment. While these are being developed, firms can think proactively about factors such as data collection and use.

AI algorithms rely on vast amounts of data to function effectively. Ensuring this data is collected ethically, with proper consent and clear communication about its usage, is paramount. 

Safeguarding sensitive financial data is crucial. Robust cyber-security measures must be in place to prevent data breaches and unauthorised access. 

AI algorithms are only as good as the data they are trained on. If the training data is biased, the resulting models will perpetuate those biases. This can lead to discriminatory outcomes, such as unfair or inaccurate risk assessments. Continuous monitoring and evaluation of AI algorithms are essential to identify and mitigate potential biases. Techniques such as diversifying training data and implementing fairness checks can help ensure ethical outcomes. 

In an AI-powered accounting workflow, assigning responsibility for errors or omissions can be complex. Clear lines of accountability must be established to ensure ethical and responsible use of technology. 

While AI automates tasks, human oversight remains crucial, especially for high-risk decisions. It was advised that accountants could maintain professional judgement and ensure ethical considerations are factored into all AI-driven processes.

5) Innovate with new services 

Beyond automating existing tasks, AI can open doors to a plethora of innovative new services that can revolutionise how accountants support their clients. 

Traditionally, risk management in accounting has been a reactive process. Accountants identify and address risks after they have materialised. AI could, however, empower a more proactive approach through risk forecasting. 

AI algorithms can analyse vast amounts of financial and non-financial data to identify patterns and trends that might be missed by humans. This data can include internal financial statements, market trends, industry benchmarks and even social media sentiment analysis. By anticipating potential risks, businesses can make more informed decisions about resource allocation, investment strategies, and risk mitigation plans. 

AI-powered scenario analysis could enable accountants to simulate multiple scenarios, build complex models that account for various economic factors, market fluctuations and regulatory changes. This allows businesses to explore the potential impact of different situations on their financial performance. 

Addressing the opportunities and challenges of AI adoption necessitates a collaborative approach. Academia, industry stakeholders and regulatory bodies can join forces to drive innovation, foster knowledge exchange and chart a sustainable path forward. 

While further research is often beneficial, the principles set out here could play a valuable role in project appraisal, software evaluation and business model evolution. 

ICAEW’s Charitable Trusts fund research that advances the theory and practice of accountancy.