In its report Artificial Intelligence and the Future of Accountancy, the institute says that while accountants have used technology for decades to enhance the value they can deliver, the pace of change and the power of AI means more significant changes are in prospect.

Kirstin Gillon, ICAEW’s IT technical manager, said: ‘AI systems are already very powerful and they are improving quickly. They provide outputs that are extremely accurate and can replace – if not supersede – human efforts.’

However, the report does not foresee wholesale replacement of humans by machines, stating that machine learning, whilst powerful, cannot yet replicate human intelligence and has significant limitations.

Gillon said: ‘Historically, AI development focussed on trying to replicate reason, but machine-learning based on rules, however sophisticated, will ultimately be defeated by the greater complexity of the real world.

‘Recently developers have focussed on pattern-recognition instead, which allows greater flexibility. But it depends on data inputs, so it will always be limited by the data available. Volume and quality of data is critical, and there may be issues of availability or privacy.’

ICAEW says that whilst the accounting profession is already adapting to this new technology, the profession needs to anticipate a paradigm shift.

Gillion said: ‘Machines can already take over a lot of process and compliance work, for example, and they will start to offer insights, analysis and new services like fraud detection.

‘This is good news for finance professionals, who will be able to focus on more valuable tasks like decision-making, problem solving, strategy development, and leadership. But it will require new roles and skills, and there will be institutional adjustments necessarily from regulators and standards setters.’

The research suggests that in the short to medium term, AI brings opportunities for accountants to improve their efficiency, provide more insight and deliver more value to businesses. In the longer term, AI raises opportunities for much more radical change, as systems increasingly take over decision-making tasks currently done by humans.

ICAEW proposes accountants look at a three stage framework to assess how intelligent systems can enable better decisions in business, and understand how accountants can help this process. The first step is to develop a long term vision of how intelligent systems can enable better decisions in business, and understand how accountants can help this process

Secondly the profession must develop an understanding of what is new about the technology, how it can ‘turbo charge’ the capabilities of humans, and its limits. The third step is exploring real-world examples of accountants using AI systems, including the specific benefits and limitations, to help develop the longer-term vision.

ICAEW predicts some accountancy roles will continue to emphasise technical accounting expertise and human judgement to deal with difficult and novel cases, and to assess ethical challenges. There will also be new jobs, such as training or testing models, or auditing algorithms.

The institute says it is keen to work with other organisations in other disciplines, including computer scientist, machine learning experts and software providers, to support thinking about the short and longer-term impacts of AI technologies.

In January 2017, ICAEW held a joint workshop with Portsmouth University that brought together accounting academics, researchers into machine learning and practitioners from audit and forensic accounting to share different perspectives to identify relevant accounting problems and discuss the kinds of capabilities offered by machine learning techniques.

ICAEW’s report, Artificial Intelligence and the Future of Accountancy, is here.