The Impacts of AI in Modern Accounting

Posted on: April 8, 2021 by Huntersure

Artificial intelligence has made its way into many aspects of our daily lives. Many industries use this technology for various applications, including the field of accounting. AI provides many solutions in this industry, but your clients still need accountant professional liability insurance to protect them from potential claims.

According to The Practice of Now 2019 report by Sage, 58% of accountants believe that AI will automate tasks in the next few years. Many accountancy firms invest in this technology, changing the way the industry functions and its inherent risks.

How Does AI Affect Accounting?

AI refers to computer systems’ ability to automate and perform tasks previously only accomplished by people. This technology involves the ability to learn from experience, decipher the meaning of data and apply reason. New AI capabilities impact accounting firms in the following ways:

• Automating mundane tasks: AI can perform repetitive responsibilities like keeping track of transactions, uploading files, auditing, and classifying spending. Accountants can then extract viable data from automated reports.
• Making projections: AI can learn from available data and create forecasts for financial planning. This technology then influences the decision-making process.
• Streamlining processes: AI can standardize procedures for managing financial information using computer algorithms to scan and organize data.
• Enforcing corporate policies: AI can support a company’s best practices and minimize fraud risks.
• Assisting in multiple areas: Fully integrated AI systems can perform bookkeeping tasks, handle invoices and automate workflows.

How Does Accountant Professional Liability Protect Your Clients From AI Risks?

AI systems can reduce the risks of mistakes, but your clients need to be aware that they are still responsible for liability issues. Accountants are in charge of managing their customers’ finances and retain responsibility when things go wrong, even if it is a computer program that makes the error.

Liability concerns and legal claims can arise in various areas, such as:

• Data protection lawsuits
• Financial loss claims
• Discrimination cases
• Intellectual property rights issues

When your clients rely on this adaptive technology to assist with financial decisions, it may lead to mistakes. Some potential issues regarding the use of AI in accountant firms include:

• Inaccurate data in the system
• Errors in the algorithms
• Insufficient information
• Lack of training for program users

Any of these possible errors could result in poor decisions for an accountancy firm’s customers. If the mistakes lead to financial loss, clients may sue the company. Accountant professional liability coverage can protect them from these potential claims.

AI is a valuable tool that gives CPAs more time to focus on analysis and financial planning. However, the technology isn’t foolproof, and your clients must prepare for possible mishaps. As accounting companies increase their use of AI in their daily operations, they must also remain mindful of the risks. Acquiring the right insurance policy is an essential component of a robust risk management strategy.

About Huntersure

Huntersure LLC is a full-service Managing General Agency that has provided insurance program administration for professional liability products to our partners across the United States since 2007. We specialize in providing insurance solutions for businesses of all sizes. Our program features can cover small firms (grossing $2.5 million annually) to large corporations (grossing $25 million annually or more). We make doing business with us easy with our breadth and depth of knowledge of E&O insurance, our proprietary underwriting system that allows for responsive quoting, binding and policy issuance and tailored products to meet the needs of your insureds. Give us a call at (855) 585-6255 to learn more.

Posted in: Accounting