Accounting
The evolution of accounting through agentic AI
Picture this: an accountant in 2005, sifting through mountains of invoices, ledgers and receipts, a painstakingly manual process prone to human error. Now, imagine the same task completed in seconds, not by human hands but by an AI system that doesn’t just follow instructions but learns, adapts and autonomously optimizes processes. This is not a glimpse into a distant future — it’s the reality unfolding today with agentic artificial intelligence.
Unlike traditional AI systems, which follow rigid pre-programmed instructions, agentic AI operates autonomously. It sets goals, learns continuously and adapts to ever-changing environments, unlocking possibilities that were once unimaginable. From streamlining financial operations to enhancing compliance and decision-making, agentic AI promises to reshape the accounting profession. Yet, with this potential comes the need for firms and professionals to adapt, upskill and build ethical frameworks to navigate the challenges ahead.
Agentic AI represents more than mere automation — it’s a paradigm shift that elevates the role of accountants from transactional operators to strategic advisors. This transformation is being realized through several key applications:
1. Financial reporting and reconciliation: from manual to intelligent automation
One of the most impactful areas of agentic AI is its ability to automate labor-intensive processes like financial reporting, journal entries and bank reconciliation. Tasks that once took hours can now be completed in minutes with unparalleled accuracy. AI-powered dashboards provide accountants with real-time insights into financial health, enabling them to quickly identify trends, anomalies and opportunities.
In the era of intelligent automation, the competitive edge lies not in data collection, but in its interpretation. Large language models integrated into AI systems can analyze contracts, invoices, and receipts, extracting relevant data for real-time processing. This capability extends beyond mere efficiency gains — it represents a paradigm shift in how financial professionals engage with data. While the systems process vast amounts of information, accountants can focus on higher-order analysis and strategic guidance. With agentic AI continuously learning and recalibrating strategies in response to market changes, organizations gain the agility to thrive in volatile environments.
2. Auditing: smarter, faster and more comprehensive
The era of sampling is giving way to an age of complete financial visibility. Traditional audits had relied on sampling a subset of transactions due to resource constraints, leaving room for oversight. Agentic AI changes the game by analyzing 100% of financial transactions in real time, flagging discrepancies, irregularities, or potential fraud. This level of scrutiny enhances accuracy and transforms the nature of audits into a proactive, continuous process.
Liberated from routine verification tasks, auditors now occupy a more sophisticated role as financial investigators and strategic advisors. Predictive analytics, a cornerstone of agentic AI, allows firms to foresee compliance risks and mitigate them before they escalate, marking a shift from retrospective auditing to forward-looking risk management.
3. Tax planning and compliance: simplifying complexities
Navigating the labyrinth of global tax codes and regulations has always been among the most intricate challenges for accounting professionals. Agentic AI redefines this complexity by automating tasks like tax research, return preparation and error detection. These systems can analyze massive datasets, adapt to evolving tax laws, and identify opportunities for strategic tax optimization — all while ensuring precise compliance across multiple jurisdictions..
Tax professionals, freed from routine compliance tasks, can now focus on providing strategic advice to clients, such as optimizing tax liabilities or assessing the implications of mergers and international expansions. By leveraging AI’s ability to handle intricate tax scenarios, accountants can enhance their advisory roles, helping businesses stay compliant while achieving significant cost savings. The future of tax planning lies at the intersection of artificial intelligence and human judgment.
4. Proactive compliance and fraud prevention
Compliance excellence in today’s financial landscape demands foresight, not just oversight. Agentic AI has elevated compliance management from a reactive function to a predictive discipline. AI-powered systems can now monitor regulatory changes in real time, analyze their implications and flag potential violations before they become issues. By automating the preparation of compliance documentation and regulatory reporting, these systems reduce manual errors and ensure timely submissions.
This predictive capability has become a cornerstone of modern financial governance. With AI at the helm, organizations can embed foresight into their compliance strategies, minimizing exposure to risks before they materialize. The impact extends beyond avoiding penalties — it strengthens operational integrity and builds stakeholder trust through proactive risk management.
In parallel, fraud prevention has reached new levels of sophistication. Agentic AI detects suspicious activities early by identifying anomalies in financial data and transaction patterns. In some cases, AI agents can autonomously halt suspicious activities or escalate them for further investigation. This proactive approach not only mitigates risks but also reinforces trust and transparency within financial operations.
Trust in financial systems is no longer built on human oversight alone, but on the synergy between AI vigilance and human judgment. This new approach to compliance and fraud prevention creates multiple layers of protection, where AI’s tireless monitoring combines with strategic human intervention. The result is a more robust financial ecosystem where transparency isn’t just maintained — it’s continuously reinforced through predictive intelligence and automated safeguards.
What this means for accounting professionals
As AI takes over routine tasks, the roles of accounting professionals are evolving:
- Accountants: Shift from transactional tasks to strategic advisory, focusing on interpreting AI insights and delivering tailored recommendations.
- Auditors: Use AI for comprehensive risk assessments and deeper investigations, enhancing the value of their audits.
- Tax professionals: Rely on AI for compliance and optimization while focusing on complex tax scenarios that require human judgment.
- CFOs and financial analysts: Leverage AI for predictive analytics, enabling more informed, forward-looking decisions.
- Compliance officers: Collaborate with AI to proactively manage regulatory risks and ensure ethical AI use in financial processes.
Professionals must adapt by developing skills in AI interpretation, data analysis and strategic decision-making to remain relevant in this AI-driven era.
The challenges ahead
While agentic AI offers immense opportunities, it also brings challenges that accounting firms must address:
- Data privacy and security: Protecting sensitive financial data from breaches remains critical.
- Ethical considerations: AI decision-making must be transparent and unbiased, requiring robust governance frameworks.
- Workforce adaptation: Upskilling professionals to collaborate with AI systems is essential for long-term success.
Firms must also invest in the infrastructure needed to integrate agentic AI effectively, ensuring smooth transitions from legacy systems.
A future redefined by agentic AI
Accounting’s evolution through agentic AI represents more than just technological advancement; it marks a fundamental shift in how financial services are conceived and delivered. As these systems continue to evolve and improve, they will enable accounting professionals to focus increasingly on high-value activities that require human judgment, creativity and strategic thinking. The future of accounting lies not in replacing human expertise, but in augmenting it with intelligent systems that learn and adapt. The distinction between good and great accounting firms will increasingly lie in how they harness AI’s potential while maintaining human judgment.
The International Auditing and Assurance Standards Board is proposing to tailor some of its standards to align with recent additions to the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants when it comes to using the work of an external expert.
The
- ISA 620, Using the Work of an Auditor’s Expert;
- ISRE 2400 (Revised), Engagements to Review Historical Financial Statements;
- ISAE 3000 (Revised), Assurance Engagements Other than Audits or Reviews of Historical Financial Information;
- ISRS 4400 (Revised), Agreed-upon Procedures Engagements.
The IAASB is asking for comments via a digital response template that can be found on the
In December 2023, the IESBA approved an exposure draft for proposed revisions to the IESBA’s Code of Ethics related to using the work of an external expert. The proposals included three new sections to the Code of Ethics, including provisions for professional accountants in public practice; professional accountants in business and sustainability assurance practitioners. The IESBA approved the provisions on using the work of an external expert at its December 2024 meeting, establishing an ethical framework to guide accountants and sustainability assurance practitioners in evaluating whether an external expert has the necessary competence, capabilities and objectivity to use their work, as well as provisions on applying the Ethics Code’s conceptual framework when using the work of an outside expert.
President Donald Trump’s tariffs would effectively cause a tax increase for low-income families that is more than three times higher than what wealthier Americans would pay, according to an
The report from the progressive think tank outlined the outcomes for Americans of all backgrounds if the tariffs currently in effect remain in place next year. Those making $28,600 or less would have to spend 6.2% more of their income due to higher prices, while the richest Americans with income of at least $914,900 are expected to spend 1.7% more. Middle-income families making between $55,100 and $94,100 would pay 5% more of their earnings.
Trump has
Economists have warned that costs from tariff increases would ultimately be passed on to U.S. consumers. And while prices will rise for everyone, lower-income families are expected to lose a larger portion of their budgets because they tend to spend more of their earnings on goods, including food and other necessities, compared to wealthier individuals.
Food prices could rise by 2.6% in the short run due to tariffs, according to an
The Yale Budget Lab projected that the tariffs would result in a loss of $4,700 a year on average for American households.
Artificial intelligence is just getting started in the accounting world, but it is already helping firms like technology specialist
Schellman CEO Avani Desai said there have definitely been some shifts in headcount at the Top 100 Firm, though she stressed it was nothing dramatic, as it mostly reflects natural attrition combined with being more selective with hiring. She said the firm has already made an internal decision to not reduce headcount in force, as that just indicates they didn’t hire properly the first time.
“It hasn’t been about reducing roles but evolving how we do work, so there wasn’t one specific date where we ‘started’ the reduction. It’s been more case by case. We’ve held back on refilling certain roles when we saw opportunities to streamline, especially with the use of new technologies like AI,” she said.
One area where the firm has found such opportunities has been in the testing of certain cybersecurity controls, particularly within the SOC framework. The firm examined all the controls it tests on the service side and asked which ones require human judgment or deep expertise. The answer was a lot of them. But for the ones that don’t, AI algorithms have been able to significantly lighten the load.
“[If] we don’t refill a role, it’s because the need actually has changed, or the process has improved so significantly [that] the workload is lighter or shared across the smarter system. So that’s what’s happening,” said Desai.
Outside of client services like SOC control testing and reporting, the firm has found efficiencies in administrative functions as well as certain internal operational processes. On the latter point, Desai noted that Schellman’s engineers, including the chief information officer, have been using AI to help develop code, which means they’re not relying as much on outside expertise on the internal service delivery side of things. There are still people in the development process, but their roles are changing: They’re writing less code, and doing more reviewing of code before it gets pushed into production, saving time and creating efficiencies.
“The best way for me to say this is, to us, this has been intentional. We paused hiring in a few areas where we saw overlaps, where technology was really working,” said Desai.
However, even in an age awash with AI, Schellman acknowledges there are certain jobs that need a human, at least for now. For example, the firm does assessments for the FedRAMP program, which is needed for cloud service providers to contract with certain government agencies. These assessments, even in the most stable of times, can be long and complex engagements, to say nothing of the less predictable nature of the current government. As such, it does not make as much sense to reduce human staff in this area.
“The way it is right now for us to do FedRAMP engagements, it’s a very manual process. There’s a lot of back and forth between us and a third party, the government, and we don’t see a lot of overall application or technology help… We’re in the federal space and you can imagine, [with] what’s going on right now, there’s a big changing market condition for clients and their pricing pressure,” said Desai.
As Schellman reduces staff levels in some places, it is increasing them in others. Desai said the firm is actively hiring in certain areas. In particular, it’s adding staff in technical cybersecurity (e.g., penetration testers), the aforementioned FedRAMP engagements, AI assessment (in line with recently becoming an ISO 42001 certification body) and in some client-facing roles like marketing and sales.
“So, to me, this isn’t about doing more with less … It’s about doing more of the right things with the right people,” said Desai.
While these moves have resulted in savings, she said that was never really the point, so whatever the firm has saved from staffing efficiencies it has reinvested in its tech stack to build its service line further. When asked for an example, she said the firm would like to focus more on penetration testing by building a SaaS tool for it. While Schellman has a proof of concept developed, she noted it would take a lot of money and time to deploy a full solution — both of which the firm now has more of because of its efficiency moves.
“What is the ‘why’ behind these decisions? The ‘why’ for us isn’t what I think you traditionally see, which is ‘We need to get profitability high. We need to have less people do more things.’ That’s not what it is like,” said Desai. “I want to be able to focus on quality. And the only way I think I can focus on quality is if my people are not focusing on things that don’t matter … I feel like I’m in a much better place because the smart people that I’ve hired are working on the riskiest and most complicated things.”
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