During exams in engineering school, our professors would sit at the front of the room and occasionally shout remember to check your work! I’m sure you’ve had a similar experience at various levels of learning.
I always knew what they meant, but it always frustrated me because I could never wait to be done with an exam. The last thing I wanted to do was take it over again to make sure I didn’t make any mistakes!
However, when I did go back and check I ALWAYS found mistakes and was glad that I did. Undoubtedly a good lesson to learn.
Why am I telling you this story?
Well, if you understand this concept then you understand why accounting firms offer audit services. They ‘check the work’ of their clients to make sure their financial transactions are free from errors and fraud. These ‘audits’ often find errors as well.
However, the way audits work today is they only choose a sample of the data to evaluate due to various limitations with the current process. For example, they may look at transactions over a few days out of an entire year to look for mistakes or troubling patterns.
I’m sure you can see one very obvious problem with this approach, what if you pick the wrong data to check? Aren’t you likely to miss errors or fraud? That answer is most definitely yes and accounting firms have come under fire for lack of performance.
Another problem with the current process is that it is very time consuming and there’s a lot of data to review for a lot of clients. As such, accounting firms can’t keep up and have never been able to review everything. It was previously thought to either be impossible or ridiculously cost-ineffective.
So what’s changed?
Get our awesome product content delivered daily-ish to your inbox
Neural networks and deep learning have enabled machine learning to think just like we do. After-all, the technology is designed around a similar process to how our brain works.
This means that the same way an accountant searches for mistakes and troubling patterns, AI or artificial intelligence can now perform the same.
But what’s the benefit?
Well, if you remember back to before, our bottleneck in checking the data was both time and subsequently cost. That’s why we couldn’t search ALL the data.
However, with artificial intelligence, in the same amount of time it takes an accountant to look at 100 transactions, AI can search through more than 100,000. Wild right?
We now have the ability to search ALL the data – not just a sample. This is a HUGE deal that is going to change everything for accounting firms.