Risks and Ethical Issues of AI
Because AI decision-making uses large amounts of personal and sensitive information, it creates big concerns about protecting this.
Because AI can analyze huge amounts of data much faster than humans, it increases this key benefit related to speed and workload.
Efficiency
How does AI-based financial reporting help managers and investors?
It gives them up-to-date information so they can respond more quickly to changes and make very fast decisions.
Why should all AI decisions that have to do with accounting be managed by humans?
Humans provide the knowledge, judgment, and skepticism that are required for accounting.
What routine accounting tasks can AI automate?
Data entry, invoice processing, expense classification, and transaction recording. (only needs to answer 2)
What is one simple ethical risk of using AI in accounting decisions?
AI can copy bias from its training data and end up discriminating against certain people or groups in decisions like lending or hiring.
How does AI help improve consistency in accounting records?
It standardizes processes and strengthens complaints and reconciliations.
How does AI change the timing of financial reporting?
It updates information actively, turning quarterly or annual reports into real-time financial reports.
What errors do human oversights prevent AI from doing?
Humans can review AI, catching errors mainly like misinterpretations and unusual cases. [Any one answer is fine, both as well.]
AI scans entire ledgers and flags suspicious transactions and patterns to help auditors catch this serious problem in financial statements.
Fraud
Why is AI bias considered dangerous in financial decisions?
It can unfairly impact credit evaluations, valuations, and automated decisions
What causes AI to increase accounting errors related to data quality?
Poor-quality or incomplete input data leads to incorrect entries and misclassifications
How does AI help with the financial close and ongoing reporting?
It automates data capture and consolidation, which reduces manual work, shortens reporting timelines, and also helps with active monitoring and rolling forecasts
How could AI change the daily tasks that accountants do?
AI will be able to make tasks like data entry extremely easy and much less tedious than if a human does it.
How can AI assist with tax preparation?
It extracts data from financial documents and applies tax regulations automatically to create tax returns.
What is the transparency issue with AI models?
AI often produces results without clear reasoning that humans can understand
Why does AI struggle with more complex accounting situations?
It lacks human judgement and may misinterpret context in areas like valuation or tax rules
Name two companies that are AI-automated or AI-focused.
Intuit Accountant Suite, Rillet
What risks are open when AI accesses data without context?
False positives are created, where an incorrect detection may happen.
Why does AI assist with fraud detection?
AI can analyze much, much more than humans can at a much faster rate, and pick out anomalies extremely quickly and easily.
Why is the lack of explainability a problem, specifically in auditing?
Auditing requires accountability and justification, and AI decisions may not be traceable.
How can over-reliance on AI increase long-term error risk?
Accountants may become deskilled and less able to detect or challenge AI errors.
How will these AI companies impact the future of the accounting industry?
Companies like Rillet will put AI as helpers with daily accounting tasks, automate different recommendations, and allow data to be analyzed quickly and easily.
How do mistakes from AI arise while detecting fraud? Name an example.
AI detects outliers, and that is it; with this, real-world anomalies can be detected while not actually being fraud.
Why does AI improve a company's compliance during tax preparation?
AI is programmed with tax laws and regulations, helping ensure companies remain compliant.