Accounting practice management solutions provider Karbon, recently surveyed the role of Artificial Intelligence in Accounting Relationships. Although AI seems to be taking over the world one megabyte at a time, it isn’t making much headway in the relationships that Accountants have with their clients.
The results from the survey include…
In crisis management situations, 58% said they only wanted a human, 36% wanted a human assisted by AI, and only 22% stated that they would rely on AI only. Similar disparities existed in
– Strategic and Financial planning
– Tax planning and Filing
– Operational HR and Advisory
– Compliance and Tax Calculations
– Payroll Processing and
– Technology Advisory and Anomaly Detection.
While much is made of accounting’s rapid technological development, the survey found that a firm’s tech stack is much less important than its trust, integrity, and value. The top reason cited by clients for choosing their accountant at 39%, was “trust and perceived integrity”.
The very bottom reason at 12%, was “technology and client portals.”
Karbon did note that priorities change depending on a company’s age, but tech was still low overall on the priority scale.
They found that startups, which are likely to be tech-forward and bootstrapped, are more interested in technology when shopping for services, citing it at 16%. But by the time a business reaches maturity, technology had fallen to 8%, and trust had climbed from 29% to 50%.
Survey respondents were asked to name things about their accountant that AI could never replace. Karbon noted that they didn’t name technical skills, accuracy, tax knowledge or regulatory compliance but, instead, the relationship.
According to survey respondents, the relationship is informed by the accountant’s deep knowledge of the client’s history, goals and specific circumstances which is discovered over years of conversations and questions. Clients also say their human accountants are much better suited for handling ambiguous situations because they have actual professional experience versus a dataset that only simulates it.
Finally the survey found that respondents felt that their accountant had an actual incentive to ensure their success, unlike an AI that has no stake at all.
Let me leave you with this…
I had a twenty-eight-year-old man walk into my office with a federal audit notice. He was basically jumping up and down, shaking a bony fist at God, and yelling about how unfair the situation was.
The business being audited was an online retail business. He simply didn’t understand why there was a problem because he had used all of the best AI and Technology to complete the income tax returns.
He had downloaded his bank statements into QuickBooks and then transferred the result into TurboTax and pushed the send button. He honestly believed that he was being picked on because he wasn’t a member of a minority group.
Can you imagine me in this meeting with this kid? So I looked at the return that was filed and the other forms he’d brought in.
He had a 1099 from Amazon showing $600K in sales, but the return only showed a gross income of $350K. It turned out that he had changed banks mid-year and only included one of the bank accounts in his financials.
Of course he was being audited. The IRS assumed based on the 1099 alone, that he was evading income tax.
When I looked further at the return there were other glaring mistakes that only a dumb machine could possibly make, but he wasn’t convinced. He said, “But I used QuickBooks and TurboTax. How can it possibly be wrong?”
I showed him the door before I started laughing. Clients like that don’t belong here.
Most of the practitioners in my industry are scared to death of AI. I don’t know why.
To understand why AI will probably never take over small and mid-sized business accounting, let’s look at the following scenario. Joanne B. Owner has an S Corp, and she does something that we do all the time.
She writes herself a check for $100.
How does the computer code the check? Is it payroll, a reimbursement, a loan repayment, or a distribution?
If the computer was originally told that checks to Joanne are payroll, it will code all of her checks as payroll. And if she filed a return based on that poor bookkeeping, then she’d probably get audited. Why?
Because the IRS already has a copy of her W-2. If her Officer Compensation is overstated they’d probably audit her because the additional tax, interest, and penalty that the examination would create is a slam dunk.
Ultimately, how we handle Joanne’s checks for payroll, reimbursements, loan repayments, and disbursements is the crux of any small or mid sized business accounting scenario.
If handled correctly, she’ll pay less in tax and not get audited. If handled incorrectly, the opposite will probably apply.
It’s just nice to know that, given the survey results, most clients understand this as well.
If you’re having problems with your accounting and tax work, I’m waiting for your fall.
We’re all going to get through this. Let’s get through it together..
Accounting Solutions Ltd. stands ready to complete our mission and purpose of protecting you, your family, and your business. Whether you need Payroll Services, Accounting and Tax Work, Tax Planning, or Tax Representation, you have but to ask. I’m here and I remain,
Sincerely yours,
Chris Amundson
President
Accounting Solutions Ltd.
773-267-7500
888-310-0300
www.AccountingSolutionsLtd.com
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