Accounting
Study finds the more efficient the AI, the more complex its implementation
The efficient way for accounting firms to integrate generative AI into their workflow is through robotic process automation that interfaces directly with the model’s application programming interface, though this method also requires the most expertise to implement and maintain.
This is the conclusion of a recent paper published in the American Accounting Association’s
The paper specifically named four different ways firms deploy generative AI.
The most straightforward way to do so is through a user interface with visual and interactive elements–picture ChatGPT’s web interface as an example. The paper said this method is most accessible for accounting researchers and practitioners seeking to implement LLMs, as it simply requires an internet-connected computer. It is also the cheapest in terms of access cost. At the same time, it is the least scalable and customizable of all the options and the slowest as well due to token limitations. This in mind, the study’s authors said this method is best used for client engagement and consultation, basic financial analysis and reporting and basic compliance checking.
The second is through connecting to the model directly via an API, a type of software interface enabling computer programs to communicate with each other, enabling direct passage of data. Firms can leverage an API to establish connections between their local applications/systems and the LLM service, enabling data interaction between them. This API approach can be integrated into existing workflows without significantly altering their structure, is well suited for scalable processing and allows for a greater degree of parameter setting and customization. At the same time, deployment is more complex, requiring skilled personnel to pull it off. Another limitation is the potential incompatibility of the existing workflow with API connections. The authors said some accounting tasks that benefit most from the API approach include basic financial data extraction, transaction classification and verification, and basic fraud detection.
The third is using RPA to interact directly with a traditional user interface. This allows for batch querying that the user interface method alone cannot accommodate, and is easier to integrate than the API method alone as RPA can mimic human interactions and so even if the existing system does not support underlying programming-level interaction, RPA can still connect it with the model’s user interface to enable automatic querying. Additionally, the UI-RPA method can also be combined with manual efforts that require human judgment. However, the setup is even more complex than the API method alone, and the maintenance process will also require skilled personnel who can update the bots based on changes in the user interface and the working process. Further, not every system integrates with RPA, and introducing new software might create additional privacy and cybersecurity issues, especially for accounting tasks. The authors said UI-RPA is suitable for accounting tasks such as expense management and auditing, asset management and depreciation scheduling, and budgeting and forecasting that require interaction between LLM and local systems.
The fourth is using RPA to interact with the API connected to the large language model. This is the most in-depth integration a firm could have with existing workflows, and the paper said this method maximizes the efficiency of implementing LLMs in the accounting domain. It is more efficient than even the RPA to user interface method as RPA enables the process to robotically collect raw data from existing systems by recognizing graphical-level elements and inputting them into the LLM via the API to achieve efficient queries. After the LLM’s processing, the bot can automatically retrieve the output and transmit it back to the internal systems. However, this method has all the same problems of the RPA to user interface method, but is even more difficult to set up and maintain. In general, the authors said the best use for this method is systematic financial data extraction and analysis, regulatory compliance and reporting, and trail analysis and fraud detection.
The paper found this method is the most efficient in terms of the time it takes to extract 500 unstructured financial statements. The User Interface method alone took 1,800 minutes; the API method alone took 142 minutes; the combination of user interface plus RPA took 67 minutes; and the API plus RPA approach took 42 minutes.
In terms of pure access costs, processing those 500 financial statements was just 83 cents through either the user interface or user interface plus RPA method versus $18 for the API and API plus RPA methods. However, given the time it takes to perform this task, the pure user interface method wound up being most expensive, as researchers added $52 in labor costs to those 83 cents. The API method alone, when accounting for labor costs, was the second most expensive, as the $18 access cost was combined with $31.25 in labor costs.
All this in mind, the researchers concluded that the API plus RPA method was the most efficient in terms of both time and money.
“The study finds that currently, the API-RPA is the most efficient method for large-scale accounting tasks. On the other hand, the API and API-RPA approaches are the most expensive methods to apply under the current price rate of GPT4 API,” said the paper.
However, researchers warned that the discussions of each method are based on the current level of technological development and cost.
“Some limitations might be overcome in the future with the adoption of new models. Additionally, the costs associated with each approach might change based on computing costs and market demand. Further research is needed to discuss additional application methods and cost-benefit models based on future developments of LLMs,” said the paper.
The House unanimously passed four bipartisan bills Tuesday concerning taxes and the Internal Revenue Service that were all
- H.R. 1152, the Electronic Filing and Payment Fairness Act, sponsored by Rep. Darin LaHood, R-Illinois, Suzan Delbene, D-Washington, Randy Feenstra, R-Iowa, Brad Schneider, D-Illinois, Brian Fitzpatrick, R-Pennsylvania and Jimmy Panetta, D-California. The bill would apply the “mailbox rule” to electronically submitted tax returns and payments to allow the IRS to record payments and documents submitted to the IRS electronically on the day the payments or documents are submitted instead of when they are received or reviewed at a later date. The AICPA believes this would offer clarity and simplification to the payment and document submission process while protecting taxpayers from undue penalties.
- H.R. 998, the Internal Revenue Service Math and Taxpayer Help Act, sponsored by Rep. Randy Feenstra, R-Iowa, and Brad Schneider, D-Illinois, which would require notices describing a mathematical or clerical error to be made in plain language, and require the Treasury to provide additional procedures for requesting an abatement of a math or clerical error adjustment, including by telephone or in person, among other provisions.
- H.R. 517, the Filing Relief for Natural Disasters Act, sponsored by Rep. David Kustoff, R-Tennessee, and Judy Chu, D-California. The process of receiving tax relief from the IRS following a natural disaster typically must follow a federal disaster declaration, which can often come weeks after a state disaster declaration. The bill would provide the IRS with authority to grant tax relief once the governor of a state declares either a disaster or a state of emergency and expand the mandatory federal filing extension under Section 7508(d) of the Tax Code from 60 days to 120 days, providing taxpayers with more time to file tax returns after a disaster.
- H.R. 1491, the Disaster related Extension of Deadlines Act, sponsored by Rep. Gregory Murphy, R-North Carolina, and Jimmy Panetta, D-California, would extend the amount of time disaster victims would have to file for a tax refund or credit (i.e., the lookback period) by the amount of time afforded pursuant to a disaster relief postponement period for taxpayers affected by major disasters. This legislative solution would place taxpayers on equal footing as taxpayers not impacted by major disasters and would afford greater clarity and certainty to taxpayers and tax practitioners regarding this lookback period.
“The AICPA has long supported these proposals and will continue to work to advance comprehensive legislation that enhances IRS operations and improves the taxpayer experience,” said Melanie Lauridsen, vice president of tax policy and advocacy for the AICPA, in a statement Tuesday. “We are pleased to work closely with each of these Representatives on common-sense reforms that will benefit taxpayers, tax practitioners and tax administration and we’re encouraged by their passage in the House. We look forward to continuing to work with Congress to improve the taxpayer experience.”
The bills were also included in a recent Senate
The House also passed two other tax-related bills Tuesday that weren’t endorsed in the recent AICPA letter.
- H.R. 1155, Recovery of Stolen Checks Act, sponsored by Rep. Nicole Malliotakis, R-New York, would require the IRS to create a process for taxpayers to request a replacement via direct deposit for a stolen paper check. If a check is determined to be stolen or lost, and not cashed, a taxpayer will receive a replacement check once the original check is cancelled, but many taxpayers are having their replacement checks stolen as well. Taxpayers who have a check stolen are then unable to request that the replacement check be sent via direct deposit. The bill would require the Treasury to establish processes and procedures under which taxpayers, who are otherwise eligible to receive an amount by paper check in replacement of a lost or stolen paper check, may elect to receive such amount by direct deposit.
- H.R. 997, National Taxpayer Advocate Enhancement Act, sponsored by Rep. Randy Feenstra, R-Iowa, would prevent IRS interference with National Taxpayer Advocate personnel by granting the NTA responsibility for its attorneys. In advocating for taxpayer rights, the National Taxpayer Advocate often requires independent legal advice. But currently, the staff members hired by the National Taxpayer Advocate are accountable to internal IRS counsel, not the Taxpayer Advocate, creating a potential conflict of interest to the detriment of taxpayers. The bill would authorize the National Taxpayer Advocate to hire attorneys who report directly to her, helping establish independence from the IRS.
House Ways and Means Committee Chairman Jason Smith, R-Missouri, applauded the bipartisan House passage of the various bills, which had been unanimously passed by the committee.
“President Trump was elected on the promise of finally making the government work better for working people,” Smith said in a statement Tuesday. “This bipartisan legislation helps fulfill that mandate and makes improvements to tax administration that will make it easier for the American people to file their taxes. Those who are rebuilding after a natural disaster particularly need help filing taxes, which is why this set of bills lightens the load for taxpayers in communities struck by a hurricane, tornado or some other disaster. With Tax Day just a few days away, we must look for common-sense, bipartisan ways to make filing taxes less of a hassle.”
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