AI in Accounting: The Fine Line Between Innovation and Risk
AI tools are becoming a go-to resource for many accountants. They promise faster processes, fewer errors, and time saved on repetitive tasks. But with all this potential, there’s a growing conversation around the ethical and compliance risks these tools bring.
How do you adopt AI in a way that aligns with professional standards, protects your clients, and keeps your practice out of trouble?
Let’s dive into what accountants should know and do to navigate AI in today’s fast-moving technology environment.
Where Ethics Meets Efficiency
AI can transform how you work. Tools like ChatGPT can generate reports, draft client emails, and even analyse financial data. But here’s the catch: not all AI is built to handle sensitive data like client financials.
Take this example: A finance broker uploaded client financials into an AI tool to prepare a report. Sounds efficient, right? But questions immediately came up. Was it a secure account? Did the broker read the terms on how the data would be stored? Could it have exposed private information?
This kind of situation underscores a key point, being fast isn’t enough—being secure and ethical matters just as much. Before using any AI tool, check its privacy policies and whether it meets Australian privacy laws like the Privacy Act 1988.
Keeping Human Oversight Front and Center
AI can handle a lot, but it can’t replace human judgment. You still need to oversee what these tools produce and ensure the output aligns with professional standards.
“You need to overlay your professional judgment on how you use AI. It’s a time-saver, not an oracle.” - Inbal Rodnay, CEO of inbal.com.au
For instance, let’s say an AI assistant drafts a client letter. It might get the numbers right, but did it consider all the nuances? Can it explain the reasoning behind its decisions? Probably not. That’s where your expertise comes in.
The key is balance. Let AI take care of repetitive tasks, like data entry or initial calculations, but always review its work. This ensures that any advice or reports you deliver to clients are accurate and compliant.
Regulations Are Catching Up—Slowly
Regulations often lag behind technology, and AI is no exception. In Australia, accounting firms already operate under strict privacy and tax laws. But there’s no comprehensive AI-specific legislation yet.
“There will be change to AI regulation for sure. The question isn’t whether we need new AI regulation, but how existing laws should be interpreted in light of new technologies.” - Kendra Vant from Europa Labs
So, what can you do? Start by familiarising yourself with frameworks like the Australian Government’s Voluntary AI Ethics Framework. It’s designed to help businesses use AI responsibly and covers principles like transparency and accountability.
In addition, keep an eye on case law. As more firms test AI’s limits, legal precedents will emerge, offering guidance on what’s acceptable and what’s not.
Building an AI-Savvy Team
Your team is your first line of defence when it comes to ethical AI use. But how do you ensure they’re using these tools wisely?
- Set Clear Guidelines: Develop an AI policy (or guiding principles document) that covers what tools are approved, what data can be shared, and how outputs should be reviewed.
- Invest in Training: Make sure your staff know how to use AI effectively without cutting corners on compliance.
- Foster Collaboration: Create a culture where team members share insights and best practices for using AI.
The goal is to build a workforce that’s comfortable with AI but always keeps professional standards top of mind.
“If you don't let your people use AI, they're going to use it secretly. Create a culture where team members share insights and best practices for using AI.” - Inbal Rodnay
AI Is a Tool, Not a Shortcut
AI has immense potential to help accounting firms streamline their processes, but it’s crucial to remember that it’s a tool, not a replacement for human judgment. The key is understanding how to use it wisely—leveraging automation to save time on repetitive tasks while keeping professionals in control of critical decisions.
This balance is where solutions like XBert shine. XBert combines AI-powered insights with practical tools to help accountants and bookkeepers identify risks, ensure compliance, and maintain accuracy in their work. Its AI-driven audit and workflow management features flag potential issues, such as missed invoices or GST discrepancies, before they become problems.
With the right tools, AI can enhance your practice’s efficiency and client service while keeping your team accountable for the quality of their work. Using platforms like XBert allows you to strike the right balance between automation and oversight, ensuring compliance and building trust with your clients.
