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Artificial intelligence in the accounting/auditing profession

THERE has been much talk already about the use of artificial intelligence (AI) in accounting and auditing in the very near future. In fact, some say that the future is now.

Let me first introduce you to a different field of human interest, the game of chess, before I delve into AI for auditing. In chess, vloggers and tournament commentators can pinpoint with near-perfect accuracy the right move to play or determine if a certain player commits a terrible blunder. They speak as if they are better than the chess players. It is because of the analytical tool they use called Stockfish, which is a traditional engine built through a combination of human expertise and extensive computational analysis. Chess coaches and players use this chess engine to study, analyze and prepare to improve their games in tournaments.

Another popular chess engine is AlphaZero, which is a self-taught chess engine that was learned solely through reinforcement learning and self-play. While both of them are regarded as AI, the former can be viewed as a far better version of Deep Blue, while the latter uses a chess algorithm to learn on its own. Said learning is stored in its memory, and it is used as the basis for actual play or games. AlphaZero behaves like a human and introduces in-play moves of its own, while Stockfish uses chess moves that are deemed to be the best as a result of complex mathematical calculations that iterate a million times in a second. It operates and behaves within the programming lines of code it was designed to do so within. In the chess world, the introduction of the chess engine has seen a dramatic rise in chess enthusiasts, players, coaches, and even vloggers. Will this be the same story for AI in auditing?

AI in chess is far more mature than that in auditing. Leading auditing firms, however, had already set their sights on AI-enabled technologies several years ago. They had set their sights on and embraced AI-enabled technologies in the areas of data analytics, risk assessment, fraud detection, process automation in auditing, and other areas. Machine learning and natural language processing capabilities for auditing are also continuously being developed.

In the history of the accounting profession in the Philippines, there has never been a single instance where the country had a surplus of accounting professionals. Licensure examinations for certified public accountants (Lecpa) usually produce far fewer certified public accountants (CPAs) than other professions. In fact, the country is in short supply of accounting graduates and CPAs. A recent pronouncement of the CPA regulator, Professional Regulations Commission-Board of Accountancy (PRC-BOA), states that there has been a dwindling interest in the accounting profession. In fact, according to BOA, of those who had graduated in accounting and had already applied for Lecpa, more than 50 percent are withdrawing from taking the examinations. The problem has been compounded by the recent pandemic, where the profession has not produced new CPAs for more than two years due to lockdown and postponement of examinations.

Auditing firms were forced to hire non-CPAs, which resulted in costlier training. Companies have difficulty hiring accounting graduates, much less CPAs. The pandemic has also caused a sudden decline in face-to-face job seekers who prefer to work from home. The pandemic also caused a faster globalization of the workforce, where work from home is not just confined locally. Many foreign companies had learned to tap human resources beyond their geographical boundaries, which exacerbated the scarcity of accounting professionals. Auditing firms experience high resignation rates for auditors after tax season, some due to burnout, but other reasons are due to the very high competitiveness of accounting professionals.

Leading to consider AI as the next 'in'

This article sets aside discussions on the pros and cons of AI in the auditing profession, as it has been a favorite topic in news articles and public fora. The glaring facts have been laid out: audit firms have really no choice but to embrace AI as tools that can augment their lack of workforce in order to maintain or improve quality audits. On the part of big firms, they are already at the forefront of the development of AI-enabled technologies. Although I am not privy to whether these technologies are already in use here in the Philippines, in some news articles that I have read, KPMG has developed KPMG Ignite, Deloitte has Omnia, PwC has Halo, and EY has Canvas. We know that they are leading the way. These are, however, exclusive tools for their member firms. The challenge is how small firms can follow suit in the adoption of AI-enabled technologies, as they are also feeling the scarcity of accounting graduates and CPAs.

I can see that in the next five to 10 years, there will be rapid development in AI-enabled technologies in the field of auditing, as the market clamors for it. Alarmists say that AI will threaten the accounting profession. But on the contrary, CPAs and accounting graduates will always be in demand. All that needs to be done is retool. Likewise, there will be new fields of discipline in the AI world where accountants will have a competitive advantage over other professions.


Dante R. Torres is a partner of DRTorres and Company CPAs, a former regional director of Picpa Central Luzon, and a National Treasurer. A former faculty member of Dr. Yanga's Colleges Inc., Bocaue, and La Consolacion University Philippines, Malolos. The views and opinions in the article are the author's and do not represent those of these institutions.

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