In addition to accounting, audit, and tax services, many accounting professionals are involved in business advisory activities ranging from strategic finance consulting to internal audit and compliance services. Accountants may also use the various Al systems or kinds of Al tools mentioned earlier in their business advisory activities. There is also a plethora of Al tools that accountants may use as part of their IT audit engagements (e.g., IT risk and cybersecurity) and industry-specific consulting activities (e.g., anti-money laundering and other banking regulatory compliance).
As an illustration of the use of Al in advisory activities by accountants, KPMG’s Advisory practice, in cooperation with IBM, uses a Contract Abstraction Tool (K.CAT) to help clients comply with the IFRS 16 lease accounting standards. KCAT uses IBM Watson to assist with automating the contract data extraction process from any document (KPMG & IBM, 2017).
The challenge for clients of KPMG is ensuring that all leases are properly recognized on the balance sheet. Complicating factors include the sheer volume of leasing contracts, differences based on country of origin (different languages and currencies), and lack of a centralized department that handles leases (e.g., finance, IT, real estate, etc.) (KPMG & IBM, 2017). Leases that were previously not included on the balance sheet must now be capitalized according to the requirements of IFRS 16.
KCAT works by first converting PDF documents and image files into a machine-readable format. Next, the contracts are classified by type (e.g., real estate, IT, vehicles) and manually reviewed by KPMG staff. The last step ensures that certain attributes are extracted and transformed into a structured format and then imported into a lease accounting tool. The value-added here comes in the form of efficient and effective extraction of leasing contract data, classification and prioritization of contracts, and a significant reduction in the amount of staff involvement; moreover, all contract attributes are centrally available and linked to the original contract.
As the use cases in this chapter demonstrate, the accounting profession is beginning to use Al and ML to solve a variety of business problems. Computing power will continue to advance, more data will continue to be generated, and the cost of storing and analyzing data will likely continue to drop. The opportunities to use Al to solve new problems will only continue to rise, and adoption will become more widespread as time progresses.
і As used throughout this book, “PwC” refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/ structure for further details.
32 Applications of Al in Accounting