How can ChatGPT be used by accounting firms?

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How can ChatGPT be used by accounting firms?

Is ChatGPT the future of the accounting profession? How could we use artificial intelligence in accounting practices? Are AI and ChatGPT going to replace human accountants in the future?

Accountants 7min

Posted 31/03/2023

That last question was a trick! The idea that artificial intelligence, such as ChatGPT could replace accountants in 2023 is far-fetched. However, there are a handful of ways that ChatGPT could support accounting business efficiencies and informed decisions, in conjunction with accounting practice management software.

In this article, we will explore the application of ChatGPT in accounting practice in more detail, why artificial intelligence is not quite as scary for human beings in various industries as tabloid journalism would have you believe, and how it can support practice management software for accountants.

What is ChatGPT?

ChatGPT is a powerful artificial intelligence (AI) chatbot that was released on 30th November 2022 by the US based company OpenAI. The GPT in its name stands for Generative Pre-trained Transformer.

The generative AI software took the world by storm after its release to the public, with a record-breaking 1 million users within one week of launching alone, and the New York Times declaring it the best artificial intelligence chatbot ever released to the public. In its wake, ChatGPT has also generated many conversations around the ethical implications of artificial intelligence usage.

Here is some data showing the unprecedented reach and progress of ChatGPT since November 2022:

In the first month of its launch, ChatGPT had more than 57 million monthly users;
By January 2023, it crossed over 100 million users, making it the fastest-growing consumer application in a short period of time;
$200 million in revenue is expected by OpenAI by the end of 2023, and $1 billion is projected by end of 2024;
In early 2023, the GPT-4 version was released, speaking up to 26 languages and accepting outputs in the form of both images and text.
In November 2023, OpenAI announced ChatGPT Turbo, which will have knowledge of world events up to April 2023, and will enable new ways for used to create customisable GPT's for various purposes.

ChatGPT is a deep-learning model trained on a large collection of text data, such as books, articles and web pages, which allows users to receive human-like responses to a wide range of queries, meaning it is essentially a very smart chatbot, which uses natural language processing to interpret and generate text based on logic and unsupervised machine learning.

While some accounting professionals could view ChatGPT as a threat, it could be seen as a massive time saver. ChatGPT could be used to support a wide variety of bookkeeping and accounting automation, research and education tasks in our industry, as long as it is used in a responsible and ethical way.

Can ChatGPT be used in accounting?

There is no doubt that ChatGPT can be utilised by busy accountants, however it does come with potential risks as it does not yet have the capabilities to understand the nuances of complex financial data or regulations that require human intervention.

As reported by Accountants Daily, a study by KPMG found that almost 60 per cent of Australians are distrusting the use of artificial intelligence at work through tools such as ChatGPT. However, accountants and bookkeepers need not worry, ChatGPT is not coming for your jobs!

ChatGPT in accounting can in fact be used to augment work and assist accounting businesses with smaller micro tasks, as an extension of accounting practice management software. With a tool like ChatGPT, an accounting business can increase their efficiency, and free up their time to focus on more strategic or value-adding work.

For more information on how accountants can use their time more efficiently, check out our blog: Time saving tips for busy accountants.

Find out additional ways to apply generative AI in your accounting business by reading our blog: generative AI for accounting firms.

What are ChatGPT accounting applications?

ChatGPT in accounting can assist accountants in their day-to-day operations, and lead to increased efficiency of their practice when applied in conjunction with accounting practice management software.

Here are a few uses of ChatGPT in accounting businesses:

Creating working papers from ASX announcements.
Writing time-saving emails or newsletters to communicate with clients.
Conduct research on valuable data insights to better understand the current state of the market.
Assist with basic manual data entry tasks.

Example ChatGPT prompts for accountants

ChatGPT in accounting might seem an overwhelming prospect at first glance, but if you know exactly what you are asking for and can translate this into a very clear prompt, it could be a valuable tool for your practice.

It certainly cannot hurt to see how to use ChatGPT in accounting to support lower-level accounting tasks within your business.

Some example ChatGPT accounting prompts that practices could use include:

“Write an informative monthly newsletter explaining the benefits of using an Australian Tax Agent.”
“Please respond politely to this email I have received from a frustrated client” (then paste in the email copy).
“Explain the history of tax legislation in Australia in simple terms.”

During the writing of this article, we used the first of these example prompts: “Write an informative monthly newsletter explaining the benefits of using an Australian Tax Agent” and typed it into ChatGPT to see what kind of answer we would get. This was the response:

Dear Readers,

As the end of the financial year approaches, it's essential to start planning your tax return. While you may feel like you can manage it on your own, hiring an Australian Tax Agent can be a smart move. In this newsletter, we will explain the benefits of using an Australian Tax Agent.

Knowledge and Expertise: Australian Tax Agents are qualified professionals who have a thorough understanding of tax laws and regulations. They keep up-to-date with the latest accounting profession changes, ensuring that their clients receive accurate and timely advice about their financial data. By hiring a tax agent, you can be confident that your tax return is in good hands.

Save Time and Effort: Preparing your tax return can be a time-consuming process, and with human error it can be easy to miss deductions or make mistakes. An experienced tax agent can save you time and effort by taking care of your tax return for you. They can also help you identify potential deductions you may have missed, reducing your tax liability and maximising your refund.

Reduce Risk of Audit: The Australian Taxation Office (ATO) regularly audits tax returns to ensure they are accurate and comply with tax laws. A tax agent can reduce the risk of an audit as they are well-versed in tax law and will ensure your return is completed accurately and complies with all relevant legislation.

Maximise Your Refund: Tax agents have the expertise to identify deductions you may not have considered. They can also provide advice on tax-effective strategies, such as salary sacrificing or investing in superannuation, that can help you to maximise your refund.

Peace of Mind: Hiring a tax agent provides peace of mind, knowing that your tax affairs are in order. It also means that you have someone to turn to for advice and support should any issues arise.

In conclusion, hiring an Australian Tax Agent can provide many benefits, including saving time and effort, reducing the risk of audit, and maximising your refund. If you need assistance with your tax return this year, consider reaching out to a qualified tax agent to guide you through accounting processes.

Best regards, ChatGPT

This is an impressive starting point. However, as you can see from this copy, some proofreading and editing would need to take place, so that it is less generic.

You could try to inject some emotional nuances so that this copy is more persuasive. You should also consider personalisation, so that it looks like the newsletter was written by a person and effectively speaks about your accounting business.

What are the limitations of ChatGPT for accounting professionals?

It is important that we also identify potential risks with extensive usage of ChatGPT in accounting work, and why this is not be advised.

Inaccurate responses from the technology

ChatGPT has been known to provide information to users that is factually inaccurate, with some users reporting biased answers, and excessive use of some phrases. ChatGPT allows users to provide follow-up corrections for their chat responses but has also been known to respond with humour to the user for some corrections.

Out of date accounting information

OpenAI used data available at the time ChatGPT was developed in 2021 to train it, so when asked for information about world events post-2021, GPT has been known to reply “as my training only goes up until 2021.”

It would, therefore, not be advised to rely too heavily on ChatGPT for up-to-date information about the accounting field, as there is a high probability that the response you will receive is based on data that is at least two years out of date.

Context can be misinterpreted

As English language speakers, we have an entire lexicon of words and phrases with multiple meanings. An accounting professional is a human being who can interpret the context of phrasing or words within conversations, whereas with ChatGPT, an AI chatbot, it may be challenging to interpret prompts, and therefore an inaccurate response may be provided.

It cannot develop depth of accounting industry knowledge

Trained accountants have years of professional experience and training, as well as an understanding of ethics, regulations and laws in their region, which they apply every day to clients.

In addition to these years of experience, they also apply sound ethics and judgement in their day-to-day accounting tasks. Accountants must use their analytical skills to interpret income statements, balance sheets, and provide real time insights to their clients. ChatGPT cannot replace emotionally intelligent responses to client queries, expert data analysis, or the exercising of many soft skills that accountants apply every day, from creative thinking to communication skills.

Therefore, it is unlikely that AI and machine learning will ever develop the level of sophistication to replace the critical tasks of an accountant’s job, as they cannot develop the ability to function autonomously from the input of human beings.

How is AI broadly being used in accounting?

Artificial intelligence in accounting has already come a long way and is mostly used in best-in-class accounting practice management software.

Whether it’s to automate data analysis, create financial reports or invoices, or extract value from customer information to improve accounting processes, it is more likely than not that accounting firms are already using AI, whether they were aware of it or not.

There’s no getting away from the fact that the use of AI is helping the industry to move forward and reduce the risk of human error. Far from being technology that replaces accountants (something that has been debated for decades), AI in accounting or AI bookkeeping frees up the modern accounting firm to complete tasks considered time-consuming or repetitive.

Tips for accounting professionals on how artificial intelligence can be used can be found in our guide: how can accountants harness artificial intelligence?

Accounting firms with an auditing function or division may also see a more comprehensive and efficient audit process with AI in the mix. Learn more about AI in auditing in our article: How AI is transforming auditing.

You can also download our eBook: The final frontier of accounting, to find out how the rise of AI in accounting is revolutionising the automation of repetitive tasks.

In summary

As we have uncovered in this article, there is no denying that generative AI chatbots. such as ChatGPT are fast-evolving technology that can free up time for accounting businesses. With ChatGPT, accountants can focus on more complex tasks within their accounting business, such as client-facing services, and working on their strategic and operational processes that require the application of years of experience, training, and knowledge-building.

Time-strapped staff can use ChatGPT as an extension of their accounting practice management software, which already harnesses the power of automation to help boost productivity and efficiency within accounting work. ChatGPT excels when its used to automate data entry or client emails or engagement letters, which would be the most appropriate usage for accountants who are curious about harnessing this revolutionary technology.