According to new research from KPMG, 72% of financial firms are piloting the use of AI in financial and tax reporting and auditing. That number is expected to increase to 99% within the next three years.
Despite these numbers, it’s worth noting that just 10% of those companies have widely adopted AI. The data suggests that companies are still figuring out the best use of the technology.
Here are some of the ways in which AI is transforming careers in tax and auditing.
4 ways AI is transforming auditing and taxation
1. Providing rapid insights into large datasets
The tax industry has access to more data than ever before but handling and processing such large volumes is proving a challenge.
“As our volume of returns is increasing, the volume of data is increasing,” says Brian Armstrong, a graduate of the Master of Business Taxation with Data Analytics (MBT) program at Villanova School of Business.
“The amount of information to process can be overwhelming, so we need to sort through the noise and make sure we’re eliminating some of the extraneous information.”
A report from KPMG has revealed that companies are increasingly turning to AI to handle these huge amounts of data. More than half (57%) of the surveyed companies identified increased data accuracy as the top benefit of AI.
2. Predicting trends and future impact
Rather than just being able to analyze the here and now, one of the biggest benefits of AI in auditing has been its ability to forecast the future.
In the same KPMG report, 65% of financial business leaders cited the ability to predict trends and future impact as the biggest benefit of AI. That aligns nicely with the thoughts of the companies they’re auditing—more than half want their auditors to prioritize predictive analysis in their work.
It’s one of those all-too-rare times when a client and customer are on the same page. As AI models continue to be refined, expect its ability to forecast future trends to improve.
3. Automating repetitive and mundane tasks
Another report, this time from EY, cites an example of how AI can perform simple tax-related tasks in a fraction of the time of humans.
When asked to categorize thousands of transactions as part of a monthly compliance exercise, it was found that humans had an accuracy rate of 95-97% over 33 hours of work. On the other hand, an AI model did the same task in a matter of minutes, with an accuracy rate of 97%.
Ed Liva, faculty director of the MBT program at Villanova, says this is allowing graduates of the master’s in taxation to do more value-adding work for their employers.
“The advancements in robotics and AI in the taxation sphere frees up professionals to do a higher level of advising for their client. We’re seeing an uplift in the skill sets of professionals as much of this technology eliminates the need for mundane processes and frees up time for more value-added services to their clients,” he explains.
The STEM-designated MBT program at Villanova teaches students a range of methods and skills necessary for data collection. The course in Data: Models, Analysis and Visualization guides students on how to use models such as SQL and Alteryx for data analysis.
4. Better tax planning and strategy
The EY report also cites an example of how an AI model could help tax professionals stay on top of an increased number of tax regulations. AI could, for instance, analyze changes to regulations in different countries and then provide recommendations on how to manage them.
It’s a prescient point for Villanova MBT students, who examine the tax policy, economic impact, and political considerations underlying tax legislation throughout their master’s in taxation and data analytics program curriculum.
“We’re seeing an increasing trend in tax legislation, so we have to be extremely vigilant to make sure we’re applying the law correctly, understanding the changes as they occur, and taking appropriate action that’s not going to expose our clients to risk,” adds MBT alumni Brian.
The Villanova MBT program is kept continually up-to-date under the guidance of VSB’s Accounting and Tax Advisory Councils. These groups are formed of professionals from public accounting, consulting, and industry.
Humans will always form part of auditing and taxation practices
It’s worth highlighting that despite these AI-powered transformations, many of the reports highlighted in this article reaffirm the importance of humans in both auditing and taxation.
AI models may be able to rapidly process huge amounts of data, but humans are still needed to verify the accuracy and—perhaps more importantly—train AI to do a better job in future.
To do that, anyone considering a career in auditing or taxation must have some degree of knowledge about AI. It’s why teaching those AI skills is an increasingly important part of the Master of Accounting with Data Analytics (MAC) and MBT programs at Villanova.
So while the predictions of AI supremacy may not have come true just yet, there’s little doubting its impact on the financial sector. As more and more companies ramp up their focus on AI, you can expect that trend to continue at pace.
Student Reviews
Villanova School of Business
