AI is changing the world. But will it transform the future of management accounting? Absolutely. It’s only a matter of time—but to what extent?

 

Ever since the mass adoption of AI platforms launched in November 2022, they have enticed businesses with their potential to increase workplace productivity, enhance services, save money, and pave the way for improved outcomes. AI integration has become vital for companies looking to keep pace with tech disruption.

 

Platforms such as OpenAI’s ChatGPT, Anthropic’s Claude, and Google’s Gemini (formerly Bard) employ advanced generative AI and natural language processing techniques that have long powered device assistants such as Apple’s Siri and Google’s Alexa. Generative AI takes those interactive capabilities to a new level, allowing users to pose questions and receive well-structured and comprehensive answers. Of course, those answers are sometimes wrong or misguided, termed hallucinations, because, in effect, AI is still learning—gathering more intelligence to drive intuitive conversational responses from vast data sets.

 

As tech innovators continue to sharpen the capabilities of their platforms, tech giants are willing to be the money behind the machine, investing billions of dollars to develop and acquire new AI tools—many of which are helping to automate a plethora of tasks. Today’s most advanced AI tools can answer technical tax questions, draft letters and responses, propose checklists, generate contracts, and respond to common queries. These tools can even answer CPA (Certified Public Accountant) exam questions, draft articles and social media posts, and brainstorm ideas, serving as springboards for professional input. This has led to new job titles such as prompt engineer and chief artificial intelligence officer. Those in these roles create effective queries and oversee AI initiatives, integrating AI tools into organizations.

 

Although ChatGPT, Claude, and Gemini enable automation and innovation, it’s crucial to recognize that their responses are not based on inherent intelligence. Instead, they analyze a variety of data inputs and past conversations and logically string together words based on a statistical analysis, trying to mirror understanding and creativity. In short, AI can’t generate original ideas or establish novel connections between different concepts. Nevertheless, researchers are working to develop and enhance AI systems that learn and adapt creatively, sparking debates about the possibility of computers achieving true creativity.

 

The most advanced AI tools can recall previous discussions, deny inappropriate requests, challenge incorrect responses, and offer explanations and solutions to various complex inquiries. Many programs are even sensitive and functional enough to produce text that closely resembles human writing. These capabilities nudge AI closer to generating high-quality responses to diverse challenges, from solving coding problems to providing accurate exam question answers. With dialogue at the crux of interpersonal communication in many service sector jobs, AI has the potential to significantly enhance customer interactions by effectively understanding and addressing client needs, leading to increased satisfaction and productivity.

 

AI in Action

 

At the end of this article, you’ll find two AI-generated excerpts that answered the question: How do I save on my taxes?

 

The excerpts generated by AI offer a glimpse into the potential and limitations of AI’s capabilities in providing tax advice. Both recommend consulting with human tax experts and acknowledging the current limitations in delivering personalized, expert-level guidance that requires nuanced reasoning.

 

This highlights AI’s ability to gather information quickly from its training data and that AI still has room for growth when it comes to managing nuanced, personalized scenarios that demand the judgment and experience of a human expert.

 

The following is our feedback for Excerpt 1:

1.     Comprehensive coverage: The response covers a broad range of tax-saving strategies, from maximizing deductions to contributing to retirement accounts.

2.     Detail and clarity: Each point clearly states and provides straightforward steps.

3.     Get professional help: Emphasizing the importance of consulting a tax expert to discover more opportunities to save on taxes and ensure accurate tax filings is good advice.

 

The following is our feedback for Excerpt 2:

1.     Specific examples and depth: This response gives specific examples, such as tax credits for education and health savings accounts (HSAs).

      2.     Actionable advice: The concepts are divided into smaller, more manageable parts.

3.     Concepts and assumptions: Providing simplified explanations makes the suggestions more understandable.

 

Potential and Limitations

 

Although AI evokes ominous dystopian futures for some, we must acknowledge its tremendous potential and obvious limitations. It’s essential for accounting professionals to weigh both.

 

By automating conversations and diminishing the need for manual interventions, AI can improve efficiency and accuracy, and provide cost savings. As these tools continue to learn and adapt, they will have the potential to reduce manual updates, positioning themselves as attractive and cost-effective solutions for various professional needs. There’s no doubt that AI will fundamentally alter how companies serve clients, support staff, and gear up for future challenges.

 

Management accountants and finance professionals need to approach AI with a discerning eye, viewing these tools as facilitative rather than definitive, and using them as a supplement rather than a replacement for human insight and creativity.

 

AI heralds an opportunity for collaborative synergy, where professionals and AI tools work hand in hand. And while these tools might render some traditional roles obsolete, they’re also creating new opportunities and challenges—pushing the boundaries of what’s possible for management accountants and the greater finance realm.

 

AI Excerpts

 

How about taking an exciting challenge? Here, you will come across two extracts of accounting advice: one generated by ChatGPT 3.5 and the other by Bard (now known as Gemini). Please read both excerpts carefully and vote for the preferred AI-generated output.

 

Q: How do I save on my taxes?

 

Excerpt 1:

 

There are several ways you can save on your taxes, including:

 

1. Maximizing your deductions: Make sure to take advantage of all the deductions and credits you qualify for, such as the mortgage interest deduction or the child tax credit.

2. Contribute to a retirement account: Contributions to certain types of retirement accounts, such as 401(k)s or traditional IRAs, can reduce your taxable income.

3. Adjust your withholding: Make sure that your employer is withholding the correct amount of taxes from your paycheck. If too much is being withheld, you may get a large refund at tax time, but if too little is being withheld, you could owe taxes and penalties.

4. Invest in tax-advantaged accounts: Tax-advantaged accounts, such as health savings accounts (HSAs) and flexible spending accounts (FSAs), can help you save on taxes.

5. Keep track of your expenses: Keep records of your expenses throughout the year, so you can claim them as deductions when you file your taxes.

 

Get professional help: A tax professional can help you identify additional tax savings opportunities and ensure that your taxes are filed correctly.


Excerpt 2:

 

There are many ways to save on your taxes. Here are a few tips:

 

  • Reduce your taxable income. This can be done by contributing to retirement accounts, such as a 401(k) or IRA, or by taking advantage of tax credits and deductions.
  • Take advantage of tax credits. Tax credits can reduce your tax bill dollar for dollar. Some common tax credits include the earned income tax credit (EITC), the child tax credit, and the dependent care tax credit.
  • Itemize your deductions. If you have a lot of deductible expenses, such as medical bills, mortgage interest, or charitable donations, you may be able to save money by itemizing your deductions. However, keep in mind that you must itemize in order to deduct these expenses.
  • File your taxes on time. If you file your taxes late, you may be charged a penalty. You may also miss out on certain tax benefits.

 

Here are some specific tax-saving strategies:

 

  • Increase your retirement account contributions. Contributions to traditional 401(k) and IRA accounts are made with pre-tax dollars, which means they reduce your taxable income for the year. You won’t have to pay taxes on the money you contribute until you withdraw it in retirement.
  • Contribute to a health savings account (HSA). HSAs are available to people with high-deductible health insurance plans. Contributions to HSAs are tax-deductible, and the money grows tax-free. You can withdraw money from your HSA tax-free to pay for qualified medical expenses.
  • Take advantage of tax credits for education. If you’re paying for college, you may be eligible for tax credits such as the American opportunity tax credit and the lifetime learning credit. These tax credits can help offset the cost of tuition and other education expenses.
  • Deduct your mortgage interest and property taxes. If you own a home, you can deduct the interest you pay on your mortgage and the property taxes you pay to your local government. These deductions can save you a significant amount of money on your tax bill.
  • Make charitable donations. If you donate to qualified charities, you can deduct the value of your donation from your taxable income. This can help reduce your overall tax bill.

 

It’s important to note that everyone’s tax situation is different. What works for one person may not work for another. It’s a good idea to speak with a tax professional to learn more about the tax-saving strategies that are right for you.

 

 

About the Authors

Mfon Akpan , DBA, CGMA
Mfon Akpan, DBA, CGMA, is an assistant professor of accounting at Methodist University. He can be reached at makpan@methodist.edu.
Scott Dell , DBA, CPA

Scott Dell, DBA, CPA, is an assistant professor of accounting at Francis Marion University and founding executive director of TalentX Global. He can be reached at DrScott@TalentXGlobal.org.

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