Touted as a disrupting or a frontier technology, AI has a glittering wrap around it.
While PwC estimated US$15.7 trillion of economic potential of the technology in 2030, CFOs in Singapore are implementing AI or have plans to do so in the near future for benefits including increased productivity, better decision-making capabilities, and enhanced processes.
AI is broad term but it’s essentially about data and getting a learning engine to do a better job.
According to Charting the future of accounting with AI, a report by CPA Australia and Singapore Management University School of Accountancy, machine learning—as a subfield of AI and the driver of most of AI’s recent progress—is defined as the use of techniques that enables computers to learn and continuously improve without being explicitly programmed.
“In essence, AI and ML (in their current form) consist of techniques which learn to recognise patterns in order to make predictions that facilitate decision making,” the report states.
While organizations are implementing the technology, finance functions need to know what AI can and can’t do for them to effectively allocate resources and manage their expectations before deployment.
What AI can do for the finance function
According to Adam Johnston, Country Leader and Managing Director of global consulting firm Protiviti, AI can help minimise issues associated with end of period closes by better managing the reconciliation of accounts, quickly identifying a lack of documentation, and giving more visibility to work progress and actions across the organisation.
“AI supports this process with the creation of automated checklists, step by step instructions which results in less time waste by CFOs and their teams and there is a higher level of accuracy on reporting,”he said.
The technology also leaves a positive impact on the audit process because the technology can create clear audit trails which makes it easier to meet compliance obligations, Johnston noted.
In addition to the above, there are also AI tools in the market that allows the finance function to automate the recognition of documents such as invoices and receipts and data extraction
Enabled by context-learning capabilities, these tools can extract data such as invoice numbers, bank account numbers, and the amounts payable regardless of the format of the invoices.
To make these tools more accurate in document recognition and data extraction, finance functions need to train them with many sample documents.
What AI can’t do for the finance function at present
While AI can do the above, Johnston said AI at present can’t reliably do a forecasting job such as revenue forecasting.
“The patterns needed to make accurate predictions are inconsistent and unreliable. However, because organisations, especially in APAC, are rapidly investing in AI applications this will no longer be the case in the near future,” he noted.
While Gartner agrees there is a growing interest in using AI to improve FP&A, it said that only a few organizations are currently using it successfully.
The reason behind this is that AI is not yet built into most FP&A application suites, said Christopher Iervolino, senior director analyst at Gartner.
Advice to CFOs who’re mulling about AI deployment
To CFOs who’re considering AI or in their earliest stage of implementation, Johnston has the following advice.
Look at AI as a benefit. Many CFOs are concerned about the impact that AI will have on their workforce such as fewer jobs or staff having limited experience with this technology.
However, AI should be seen as a benefit—reducing human error, the long-term decrease in costs associated with said errors, more time allowed to focus on projects/initiatives that have beneficial financial impacts.
Implement to improve productivity. According to Protiviti’s Global AI/ML study, Nearly all Asia Pacific organizations utilising AI have achieved productivity gains of 4-6% in the past year from the use of advanced AI compared with just 28% of companies globally.
AI will further enhance the cost-competitiveness of companies headquartered in the Asia-Pacific region. CFOs should recognise this impact and understand the benefits to their organisations.
Implement to augment human judgement. According to a Protiviti whitepaper "Human(e) Side of Digital", AI applications already have shown benefits in numerous fields when they are deployed to augment rather than replacing human judgement.
Machines augmented by people will drive growth, which will lead to the creation of more jobs than those that are displaced.
To finance functions that still want to wait and see, Johnston said: “Don’t wait! As the finance function becomes increasingly complex with global regulations becoming excessively stringent, CFOs need to utilize all available resources—conceived of or still in development—to reduce the possibility of failure to comply with regulations.”