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ICAEW guide: generative AI’s role in accounting

Author: ICAEW Insights

Published: 26 Sep 2023

Generative AI presents many opportunities, but also challenges for accountants. ICAEW’s Head of Tech Policy, Esther Mallowah, provides some views on how accountants should approach generative AI and why ICAEW developed its generative AI guide.

It’s been almost a year since ChatGPT was launched in November 2022, and the capabilities of generative AI were brought to the attention of the general public. ChatGPT allowed users to interact with it in an easily accessible way and it garnered much curiosity, excitement, and engagement. 

Since then, organisations have been exploring how generative AI might be used to provide competitive advantage. For accountants, that could be through improving efficiency and cutting costs by automating routine content generation tasks, such as drafting correspondence letters, or delivering a better customer service by improving the user experience. 

Big accountancy firms have already made significant investments in generative AI technology, partnering with tech companies such as Microsoft and Open AI to leverage their AI capabilities and technical expertise. PWC’s US firm announced a $1 billion investment over the next three years to scale and expand its AI capabilities, while KPMG announced a $2 billion investment in AI and cloud services. 

However, this does not mean that generative AI will be limited to big companies with deep pockets and technical knowledge. Generative AI capabilities are becoming more embedded in vendor supplied products, with common applications such as Microsoft 365 embedding these capabilities in its CoPilot products. Foundation models and cloud-based AI services also provide the opportunity for users to access generative AI capabilities without building their own models from scratch.

It is important to recognise that generative AI is not without its risk. In the months since the launch of ChatGPT, its limitations have come to the fore. The output of the technology can be biased and inaccurate, and the tools can also hallucinate making their output unreliable. Additionally, generative AI can be used to harm others. Deepfake technology can be used to create fake content and to spread misinformation. Generative AI also comes with problematic questions around intellectual property, ownership of content, and compliance with regulations - these are areas that should be investigated and acknowledged by those using it.   

In the early stages, focus was on the capabilities and features of generative AI, and particularly Large Language Models (LLMs), which had the ability to transform how users interacted with technology. However, over recent months, the media has been rife with examples of risks, shifting the focus more towards how to mitigate these challenges to safely and responsibly adopt generative AI. This renewed focus is evidenced by the UK government’s decision to hold an AI Safety Summit with likeminded countries, in early November, focused on managing AI--related risks.

In its 2023 Hype Cycle for Emerging Technologies, Gartner placed generative AI in the “Peak of Inflated Expectations”, indicating that it believes expectations around the use of generative AI are at their highest. The Hype cycle charts the progress of emerging technologies through various phases from innovation to productivity. The belief is that following this period of heightened expectation, we are going into a period of disillusionment as the realities and challenges of implementing and getting real gains from the technology are identified and navigated. This should lead to real productivity as the challenges are addressed and expectations become more aligned with reality. 

Generative AI is at a pivotal point and as accountants, we must engage with the technology to responsibly harness its benefits and to remain relevant. We need to understand what it is, how it works, the opportunities it provides and the challenges it presents. This does not necessarily mean becoming a technical expert on generative AI, but rather gaining enough knowledge and understanding to empower us to make informed decisions, and potentially to help others to do the same. One of ICAEW’s strategic objectives is for its members to master technology and data. This involves not only learning about technology but effectively governing and controlling it so that it serves us, our businesses, and the welfare of society. 

To assist its members in navigating this space, ICAEW’s Tech Faculty has created a generative AI guide, introducing key concepts, identifying use cases, and providing suggestions on how to manage risks and get started in exploring its use. Generative AI is a fast-evolving technology, and we expect to see new use cases over the next few months and years as regulatory requirements become clearer. In the meantime, it would be wise to stay on top of the technological progress, the opportunities generative AI presents for your business, and how associated risks can be managed. Failing to do so could mean getting left behind as the world moves on.    


Generative AI guide

Explore the possibilities of generative AI in accounting.

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