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Reflecting on AI’s rise in accounting, looking to what comes next
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Sponsored by Thomson Reuters
“You cannot avoid AI” — but you can and should continue to experiment with it.
That’s one key message from consultant and keynote speaker Pascal Finette, who returned to the JofA podcast to discuss how artificial intelligence (AI) adoption has grown and how the profession is dealing with rapid changes and uncertainty.
The conversation revisits topics Finette discussed in 2021 and 2022, and it looks ahead to the Digital CPA Conference, Dec. 7–10 in National Harbor, Md.
Resources
- Early 2022 JofA episode (recorded in December 2021).
- Early 2023 JofA episode (recorded in December 2022).
- CPA.com’s AI landing page.
What you’ll learn from this episode:
- The accelerated pace of AI adoption between December 2023 and December 2024.
- The role of curiosity and experimentation in embracing new technology.
- The best-of-both-worlds approach some companies are taking as it relates to hybrid work.
- An explanation of the World Uncertainty Index and how it is now higher than pandemic-era levels.
- What to expect from the Digital CPA Conference.
Play the episode below or read the edited transcript:
— To comment on this episode or to suggest an idea for another episode, contact Neil Amato at Neil.Amato@aicpa-cima.com.
Transcript
Neil Amato: It’s been nearly four years since Pascal Finette mentioned the accounting profession’s “really interesting inflection point.” What did he mean by that back then, and how has the profession changed since? You’ll find out in this episode of the Journal of Accountancy podcast coming up after a brief sponsor message.
[Sponsor message]
Amato: Welcome back to the podcast. This is Neil Amato with the JofA. As I said at the top, I’m joined by Pascal Finette. He’s an author, keynote speaker, consultant, wearer of bright and interesting athletic footwear, and I’m happy to welcome him back to the show. Pascal, thanks for being on again.
Pascal Finette: Neil, absolute honor and pleasure to be back on your show.
Amato: Great. Thank you. I mentioned that “really interesting inflection point” quote from our 2021 conversation. I want you to give me a progress report if you can on one of the things you said in 2021, which is, some people in the accounting profession are resistant to change. How do you think people are doing in that realm these days?
Finette: It’s a good question. I think there’s still might be some holdouts, but overall, I’m actually really enamored with how the profession at large is embracing technologies like AI. Very simple example, [Digital CPA Conference] in 2023, we did a generative AI session, talked about how to use it, and did a little bit of a workshopping. I posed the question to the audience: How many of you have used something like ChatGPT?
Maybe a quarter of people there said that they used it, and we literally had them use very simple prompts of like, “Hey, help me write an email to a client and such.” A year later, I asked the same question of the same room, 100% of people, all. Yes, we have used ChatGPT. Yes, we use it to write emails or improve our emails, do some research with it, etc. Now, granted there’s still a lot to do and a lot more to do, but it just shows me that the curiosity and the willingness to play with these new changes in technologies is actually pretty high. I’m in a very optimistic state on this one.
Amato: It’s really funny how quickly it all changes and how quickly we forget how quickly things change. One example of that, I went back and listened to our 2021 conversation, December 2021. You mentioned artificial intelligence as part of a group of technologies, and you said and I quote directly, I may even play a clip of this. You said:
Finette: Topics like automation, artificial intelligence, machine learning, the blockchain, yada, yada, yada.
Amato: It’s just crazy to think now with AI, it could never be dismissed with “yada, yada, yada.”
Finette: I agree. I definitely agree. It’s a good reminder to A, change happens probably faster than we anticipate. Even us who are very deep into this stuff, we still get flat-footed by it every once in a while. Very clearly, I think a lot of people across industries, not just in our profession and the accounting industry, have been caught by surprise how fast AI is moving.
At the same time, I think it’s really important to calibrate it because not everything that shines is gold. A lot of the things we see with AI, I would say maybe a year, a year and a half ago a lot of people actually thought that systems like ChatGPT will be able to do your tax return or will give you fantastic tax advice, and it will be the end of the profession or the profession will change dramatically. Now, granted we have seen that doesn’t actually quite work that way. I think there’s a lot to unpack there, and change happens very nuanced and change happens very fast, there’s no doubt.
Amato: We’ve talked about the topic of resistance to change. We’ve talked about how technology is changing. I think tied into all of that was your point about the inflection point, pun intended. How has the profession gotten used to the fact that this mass of automation is changing the way they do business?
Finette: I think it’s twofold. One is when you look at systems like ChatGPT or Claude or Gemini or Copilot — all of them — the sheer fact that they’re very accessible, both from an interface perspective, like you just chat with them, as well as from a price perspective. These things are $20 a month, so it’s not particularly expensive. I think this has led a lot of people to just try them out and become curious and see what you can do with these systems. Also, acknowledging the fact that these systems are built for engagement. If you’ve ever asked the question of ChatGPT or had it work on something, it very often comes back with, “Do you want me to tell you more about this?” or “Do you have any additional questions?” It engages you in a way which creates engagement for obvious reasons on their end. That’s No. 1.
I think No. 2 is that we see pretty much every vendor in the space, be it your accounting software, be it your back-end practice management software, etc., have started to embrace AI in one way or the other in their products. We see a lot of use now by simply having AI baked into the software we have already used, and/or we explore new software packages, which allow us to use AI in interesting and productive ways. I think the quintessential piece here is that it just starts to be baked into all of this stuff we’re doing and it feels very natural. Thus, the uptake is very high, because if it’s just built into your, let’s say, QuickBooks, then you’re going to use it, of course. It’s just there and making your life better.
Amato: Pascal Finette joining us. He is a keynote speaker at the Digital CPA Conference, early December, National Harbor, Md. I mentioned you’re also a podcast host. The Disrupt Disruption podcast, — I looked it up. First I will ask this. A, how’s it going? And B, five of the previous six episodes, in the title of the episode, have had “AI.” So, A, a progress report on the podcast, B on AI and how often you’re talking about it, because it doesn’t seem like anyone can escape it.
Finette: No, you truly can’t. Progress report is we have 50-plus episodes in. I stopped counting. I originally started the podcast as a way for me to explore the topic of disruption, which is the reason why it’s called Disrupt Disruption, which then led to us writing the book, or it was part of leading us to writing the book. It was really a wonderful way for me to have conversations with people to talk about this disruption topic and have those conversations “in public.” Because I did a few of those prior to the podcast and felt, “Man, this is such a great conversation. There’s so much interesting stuff in here,” not just for me but for other people. We decided to record them and put them out in the public.
You’re absolutely right, you cannot avoid AI. That’s not a choice on my end necessarily. I’m not pivoting this podcast into it needs to talk about AI. It just happens to be AI is everywhere, and there’s a lot to unpack in this broader space of AI. Very naturally, and you called me out on this, a lot of conversations are now centered around AI. What I’m trying to do is I’m trying to look at AI from very different perspective.
We talk about the impact of AI on leadership, on how do you actually manage people? How do you lead them? We’ve done a deep dive into AI in the context of e-commerce. How does AI change our shopping behaviors and the way we buy stuff, and so on? I can’t actually tell you where we’re going with this podcast because I’m very opportunistic about it. When I meet someone who I find interesting, I’m like, “Hey, do you want to be on my podcast?” And then we’ll just have a conversation.
Amato: That’s great. It was by no means calling you out. It was more just, it’s just everywhere, and here’s yet another example, so yeah.
There’s a lot of uncertainty in the world. There has been for a while; maybe it’s an old term now. But do you still follow the World Uncertainty Index, something you brought up with me a few years back?
Finette: I do. For those of you who are not initiated, the Federal Reserve Bank in St. Louis for decades now publishes an index where they look at how often do countries and companies report on uncertainty. In their country and company reports, filings, etc. Then they start indexing this. What’s really fascinating about this index is, A, it goes back literally decades, and B, it shows a very clear trend, which is if you put a floating average line in there, you can actually see that uncertainty is rising. It’s pretty sharply rising, too, over the last couple of decades.
We clearly had peaks when we had, for example, the financial crisis, we had COVID. One interesting data point is when you actually go and look at the index, it’s getting updated every quarter. We’re currently waiting for the update to the third quarter, which hasn’t been published, probably because of government shutdown at the moment. But when you look at the index, the index shot up in quarter 2 to a level which was significantly higher than the uncertainty we faced during COVID.
So, if you’re feeling this is an uncertain, crazy weird world, the data actually backs this up. I joke about this, but the one thing I can tell you with certainty is that uncertainty is rising. It means for us — as leaders, practitioners, accountants — that we actually have to operate in this world of increasing uncertainty. We better get used to it because I don’t think it will go away.
Amato: I saw it, and I just looked at it maybe five years back, 10 years back, and I don’t necessarily know what the numbers themselves mean, but it was 12,000, 14,000, 22,000. I think it was 32,000 in COVID. Then I think last quarter was like 50,000.
Finette: That’s exactly right. It is a very sharp increase in the Trump tariff quarter and for good reason. If you’re an accounting firm and you work with any client who is affected by tariffs, for example, if you work in manufacturing, in retail, anyone who’s importing stuff. I have a lot of clients in this industry, in these sectors, and man, it is messy out there.
Amato: Well said. One other point of uncertainty we discussed, and this was in late 2022, Austin, Texas, was the uncertainty over where people will work. You said, “I think 2023 will be a year of experimentation” as it relates to hybrid work. Where do you think things stand with businesses now on that front?
Finette: It’s really interesting. I think when we talked about this in Austin — I very well remember our conversation there — one of the interesting insights from the global experiment into work from home, which was called COVID, was that in many cases what we saw is that productivity actually went up on average, because people [had] less water cooler talk and all that good stuff. On the flip side of that, creativity went down because we don’t have the water cooler. We don’t have this, I’m bumping randomly into someone, and it had all these interesting challenges, for example, for younger people in our organizations. They couldn’t build their network. They couldn’t create these bonds, these social bonds where humans need to be together physically.
When we talked about this, I think the experimentation I alluded back in the day to was really around, how can we get the best of both worlds? I think what you see by and large now is that yes, some companies, some organizations, some very publicly, have mandated a back to the office, if you don’t come into the office, you’re going to get fired. I don’t think that works very well. We see a lot of grumblings, employees leaving, etc.
On the flip side of that, I think what we see is the best companies have established norms and behaviors around a hybrid model where you spend a few days in the office to get the water cooler, but you also have those days where you’re at home, heads down, maybe put your headphones on and just get work done.
I think we’re hopefully seeing the best of both worlds. And the organizations which lean into this, I think, are still the ones which have highest employee satisfaction, which have loyalty from their employees, lower turnover, all the stuff we actually want. Again, if you’re a leader in an organization thinking about your work-from-the-office policy, I would heavily encourage you to keep it light and keep it flexible and really think about your employees and what’s best for them and how they best work instead of just a blank, everybody has to be back in the office five days a week, 9 to 5.
Amato: Getting back to Digital CPA in December, what are some “hard truths and creative provocations” you may deliver to that audience, you think?
Finette: We’re super excited to be back. First of all, I’m insanely grateful to CPA.com to invite me back to be on stage. We have something very special in store for the participants at DCPA, and we’re very excited about this. As part of our work on AI, together with CPA.com, we have created an AI working group, and that group comprises a whole bunch of leaders in the vendor space, so people who are building these tools as well as a whole bunch of people from firms, people using those tools.
The idea for the working group is we want to get these people together. We wanted to create a space for them to talk and also inform CPA.com and the broader community on where do they actually think this world is going? What we’re going to do at DCPA is have Zack, who’s a former OpenAI business development leader.
Amato: Zack Kass, is that his name?
Finette: Correct. That’s exactly. Zack is incredibly good at showing you and talking about the further distant future, the big picture, where is this all going? He’s going to speak on Day 1. Then what we’re going to do on Day 2 is, we’re going to take that and bring it down to what does this actually mean for us? The profession doesn’t need to see me anymore on stage. They have seen plenty of me. What we’re going to do is we’re going to actually invite a whole bunch of leaders from vendors and firms to show little vignettes on what is actually going on in the real world in accounting, using AI. What is important? What is not important? What is the hype? Cutting through the hype a little bit, and then we’ll have a conversation about this.
The big one for me is, and you will see us do this, actually this is a little sneak preview. We just wrote a report for CPA.com which will come out on the differences between when we talk about AI, we mash this all together, and it’s all large language models and machine learning and statistical methods, and it’s all one thing, when in reality it isn’t.
It’s important to understand as a consumer of these services, which method, which tool to use for which use case and [what are] the pros and the cons, so that you can have a conversation. A, you know which tool to use. But also, even when you talk to your vendor, to have an informed conversation with your vendor about how do you use this in the back end? What is important here?
We’ll unpack this on stage a little bit more as well as in the report. It’s going to be super practical. I really want people to walk away from this session not with yet another, oh my God, AI is coming, but much more a man, I took five things out of here, which are questions I need to ask my vendor, things I want to do in my practice the next day. Things I need to talk to my people about. Things I want to talk to my client about. That’s what we’re going to do at DCPA.
Amato: I think that’s a fantastic preview of the event. Again, we’ll have a link to the event in the show notes for this episode. Pascal Finette, thank you very much.
Finette: Neil, thank you so much for being such a gracious host, and I do hope to see you in person at DCPA.
Amato: You will. I will be there.