How accountants can balance technology and critical thinking

At a time when automation and artificial intelligence (AI) are rapidly transforming the accounting landscape, critical thinking remains a uniquely human skill that machines cannot replicate. Critical thinking is the cornerstone of sound judgment and decision-making, enabling accountants to navigate through uncertainties and complexities that arise in their profession.

Accountants can benefit greatly from the use of technological tools in their work. These tools can help with fraud detection, data analysis, continuous monitoring, predictive analytics, automated documentation and reporting, pattern recognition, enhanced sampling techniques, automation of routine tasks, and risk assessment.

For example, professionals have begun to adopt AI to improve efficiency in their practices by reducing the time to search for applicable tax or other regulations or analyzing large datasets. The IRS has been using AI to identify tax evasion among large partnerships, such as hedge funds and real estate investment groups. Since late 2023, these efforts have aided in increased audits and the recovery of significant tax revenue, including $482 million from high-income individuals and complex partnerships.

But failing to exercise critical thinking when working with AI could become a problem among practitioners:

• Generative AI is known to make up facts, a phenomenon known as hallucinating. These hallucinations can be easily overlooked, and flawed output can be presented in an authoritative tone or embedded in more detailed, accurate information. Generative AI users may assume the response is accurate and reliable with no need for further verification.
• Using AI-driven tools in auditing can increase efficiency, accuracy, and adaptability, but integrating legacy systems with AI technologies may require substantial investments in system upgrades, according to a global review of case studies and real-world implementations. Also, without appropriate safeguards, security, confidentiality, and privacy concerns arise. Research examining the impact of AI in auditing practices globally suggests AI needs a balance with human judgment so that ethical considerations, contextual understanding, and professional skepticism are not compromised.
• Technical and human biases pose risks with the use of AI in auditing, according to an analysis of 83 high-quality publications from 2018 to 2023. The risks include data deficiencies in the training data and training the models on a limited population (demographic homogeneity), spurious correlations, improper comparators, and skewed assumptions by the designers embedded in the system (cognitive biases). Promising remedies include causal modeling, representative algorithmic testing, human oversight, and periodic auditing of AI systems.
• AI’s complex algorithms may lack transparency and be difficult to understand, especially as the algorithms evolve over time, researchers from Rutgers Business School suggest. This raises not only ethical concerns as forecasted by accounting researchers but also practical concerns for auditors. If an auditor relies on AI’s output, this poses a trust problem if the auditor cannot explain reasons for their decisions. For example, suppose AI selected the sample for testing. Could the auditor justify the rationale for choosing that sample and process for testing? Other ethical issues to consider are whether reliance on AI over time will desensitize the auditor from their own instincts or whether less experienced users will overly rely on AI due to lack of experience to evaluate the results from AI.
• Management accountants also need to consider ethical and practical implications when using AI to diagnose why something happened, predict what is likely to happen, figure out what an organization should do, or determine how to execute decisions. According to Lorenzo Patelli, Ph.D., if the data is biased and does not adequately represent the population, predictions may lead to suboptimal performance. Moreover, machine-learning algorithms can autonomously learn how to lie, which may lead to fatally flawed financial decisions.

WHY CRITICAL THINKING IS CRITICAL

Employers seeking to hire accountants consider critical thinking as one of the most desirable skills, according to research led by Tom Hood, CPA/CITP, CGMA, executive vice president—Business Growth & Engagement at AICPA & CIMA. Critical thinking serves as the basis for a digital mindset that involves adapting to digital disruptions, identifying organizational and client needs, and assessing the best systems and tools to meet those needs.

But what exactly is critical thinking? According to the AICPA Critical Thinking Model, authored by independent scholar Susan K. Wolcott, CPA, Ph.D., critical thinking skills are a set of cognitive abilities that can develop over time with educational approaches that assist thinkers in progressing from little to no critical thinking (Stage 1) to expert critical thinking (Stage 5). Earlier stages are fraught with key beliefs about knowledge that hinder higher-level critical thinking. Likewise, we suggest faulty beliefs about technology, such as the belief that “this technology will solve the problem correctly” limit the effective use of technology. Thus, it is imperative, in our view, to develop and apply higher-level critical thinking skills when using technology to solve problems.

Indeed, critical thinking skills are included in the AICPA Foundational Competencies Framework for Aspiring CPAs and are necessary foundational steps, in our view, to effectively incorporate and apply technology.

4 WAYS TO DEVELOP CRITICAL THINKING SKILLS WITH TECHNOLOGY

By integrating technology and critical thinking, accountants can enhance their efficiency, accuracy, and strategic decision-making capabilities — paving the way to success in this digital age.

But to get there, they have to:

Develop the right mindset

Understand that while technology offers ways to work faster and more accurately, it still relies on human thinking to interpret information, analyze it, and make informed decisions. This involves questioning assumptions, evaluating evidence, identifying potential biases, and considering alternative perspectives.

Use technology and a critical thinking framework to improve critical thinking skills

Take advantage of various technological tools to enhance your critical thinking skills in accounting tasks. Use the tools to help streamline processes and tasks, thus giving you more time and mental space for strategic thought processes.

Accounting software like QuickBooks or Xero can automate repetitive tasks, giving you more time for strategic decision-making. Data analytics tools such as Power BI or Tableau enable you to quickly analyze large amounts of data, leading to deeper insights and better decisions.

Devote time to solving complex problems that lack a clear solution using technology. Practice applying the steps in a critical thinking framework and then reflect on your outcome.

Immerse in real-time scenarios

Develop familiarity with real-time financial applications that can provide case scenarios that test and enhance your critical thinking abilities. They simulate real-world situations where you are required to analyze and make decisions based on the available financial data.

Incorporate visualization techniques

Practice designing your process to obtain reliable and verifiable results. There’s a wealth of financial information at your fingertips, but it won’t mean much without the ability to analyze and visualize it effectively. Incorporating data analysis and visualization techniques into your work process should be regular practice.

CRITICAL THINKING CONSIDERATIONS

The accounting world is changing rapidly due to technological advances. Accountants are at the forefront of this change. Combining critical thinking and technology doesn’t just improve your work, it completely transforms how financial information is examined, understood, and shared. You can achieve this if you:

• Embrace technology: By using tools like online solutions, data analysis, and AI, you can improve your ability to analyze and ensure accuracy in your tasks. Remember that growth in accounting is a continual process. Stay curious and dedicated to learning; staying updated on technological developments and understanding how they affect accounting methods is crucial.
• Develop your critical thinking abilities: They are priceless when handling complex financial information and making important decisions that impact business results. Accountants who skillfully combine critical thinking with state-of-the-art technology will not only succeed but also lead the way in shaping the profession’s future.

Your capacity to adjust and create is vital in this technology-driven environment. The practical advice provided in this article is a starting point for unlocking your potential as a forward-thinking accountant in an increasingly digital world. Use this knowledge to propel yourself toward greater expertise and success in your career.

About the authors

Kelly L. Williams, CPA, Ph.D., is an associate professor of accounting, and Sandra S. Benson, J.D., is the interim chair of the department of accounting and professor of business law, both at Middle Tennessee State University in Murfreesboro, Tenn. To comment on this article or to suggest an idea for another article, contact Jeff Drew at Jeff.Drew@aicpa-cima.com.

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AICPA & CIMA MEMBER RESOURCES

Articles

“Key Skills for CPAs in Business and Industry,” JofA, Oct. 1, 2024

“AI and Fraud: What CPAs Should Know,” JofA, May 1, 2024

“Generative AI and Risks to CPA Firms,” JofA, Oct. 1, 2023

Podcast episodes

“Future Leaders, Be Advised: ‘What Got You Here … Won’t Get You There,’“ JofA, Nov. 14, 2024

“Tech Adoption at Light Speed: Balancing Euphoria With Cynicism,” JofA, July 25, 2024

“How Accountants Can Appropriately Rely on AI,” JofA, April 25, 2024