Accounting
Gen AI will upgrade you not replace you: KPMG
As the AI revolution continues apace, data has confirmed that generative AI is making some workers more productive and some companies more profitable, though this does not mean it’s a good idea to start cutting staff.
During a virtual roundtable hosted by KPMG last week, Pär Edin, the US AI go-to-market leader for the Big Four firm, said that there is hard data showing that, for at least some workers, generative AI has been paying dividends in terms of productivity, referencing research from last year finding that, on average, the technology has introduced
He referenced KPMG’s own research on top of this, which found that—after analyzing 10,000 companies—generative AI has a EBITA impact ranging from 3 to 17%, which is calculated as time freed up multiplied by the labor cost of that time, which he felt was a highly significant impact. Effectively, he said, generative AI has created an entirely new driver for productivity.
Kitreel – stock.adobe.com
“It varies by sector and company, but those are really, really huge numbers. This is an additional lever that didn’t exist 18 months ago. Now any company can pursue single-digit or low double-digit percentage points of improvement. Not overnight, but within a 12-36 month period using existing tools,” he said.
While all this does mean companies can do more with less, Edin warned that this does not mean companies should start reducing headcount. In fact, he said, generative AI is pretty terrible at fully replacing people, at least right now. While AI is often touted for its automation capabilities, he said over the past few years companies have found this was a flawed conception. The promise of generative AI, he said, isn’t so much in replacing people but augmenting them.
“It’s not a headcount-reduction tool in the sense some may have thought about. [Instead, it’s] really a task augmentation tool. We talked about how to get those numbers–you need to break down the entire workforce. I don’t mean headcount but tasks and activities. For every one of those, there are some pretty interesting benchmarks on how much time could be freed up by using better tools. Think of it more as a power tool for the mind than an automation factory,” he said.
He understands that this might not be what certain business leaders want to hear. Edin noted that he has had many conversations with finance and accounting leaders that basically come down to ROI. This isn’t always the easiest to measure, especially when it comes to AI tools, and so sometimes it can be difficult to communicate the benefits. If it’s not reducing the cost of labor, some wonder, what’s the point? Edin, though, felt that focusing on the cost of labor was missing the point entirely.
“The most likely case we discussed was not labor cost or headcount reduction but gradual market expansion. So, think of it as companies continuing to grow at the same or greater pace on the top line while not growing labor costs and headcount at the same rate—or even keeping them steady,” he said.
Given that, by definition, this is more about supporting future growth than directly creating it, he conceded it can be difficult to quickly make back the investment. This has led to a push and pull for accounting and finance leaders between wanting to implement AI for its productivity benefits while, at the same time, wanting to spend only on that which has a direct business case.
“There is a tug-of-war between wanting to fund this as much as possible, because it does drive productivity, but at the same time not being too overblown about what it will do when explaining this to the board or an investor. This is a balancing act between wanting to do it and being fiscally responsible,” he said.
It may be easier to directly communicate the need to adopt AI in the future. Edin broke AI development down into three phases: retooling, reengineering and reimagining. The first phase, retooling, is about doing the same job with the same person and role but just more efficiently than before. He noted most companies are in this phase, rolling out pilots and training their staff. The second phase, reengineering, is where workflows themselves are changed to include AI, which he said serves to free up time and enhance efficiency by not just doing the same job but faster but doing a better job overall. Some companies, he said, are just entering this phase. Finally, reimagining is something few to no companies are doing now: thinking about AI as it applies to the entire business model.
“This is when you think about disruption. Will your entire business model be wiped out? Or will you disrupt others? You might go lower in the value stack, or even enter a different market entirely using this technology,” he said. “These phases are somewhat sequential but are happening in parallel depending on the company. Most companies sit somewhere between the first two phases.”
Agentic AI—where bots are given limited autonomy and initiative—may place companies between the second and third phase, but even then he said it will not mean the end of human involvement.
“There will be many types of tools. Even in an automated factory, you still have wrenches and screwdrivers. It will be an ecosystem. We’ll continue to use many different tools. The AIs are great because they’re flexible—they can do things they weren’t originally designed to do, and they can get better,” he said.
The Internal Revenue Service and its partners in the public and private sectors are planning to highlight the importance of cybersecurity next week.
The 9th annual National Tax Security Awareness Week is slated for Dec. 2–6 by members of the
With the holiday shopping season now underway and tax season approaching in January, the Security Summit partners are encouraging taxpayers and tax professionals to take extra steps to protect their financial and tax information. During the holiday season, consumers and tax professionals face the heightened risk of identity theft as criminals ramp up efforts to trick people into sharing sensitive personal information including through email, text message and social media scams and schemes. Identity thieves can use this information to try filing false tax returns and stealing refunds.
Andrew Harrer/Bloomberg
“We are entering into a critical period where taxpayers need to be extra careful protecting their valuable information,” said IRS Commissioner Danny Werfel in a statement. “Scams and schemes are quickly evolving. Extra caution by people during the holiday season and the upcoming filing season will be essential to avoid being a victim. By being aware of the risks, taxpayers can protect themselves, their families and their communities. Vigilant taxpayers are on the front lines of the larger efforts by the Security Summit partners to strengthen the tax system against identity theft and tax scams.”
As the IRS and its Security Summit partners have strengthened their systems, identity thieves have turned their attention to stealing underlying tax and financial information from taxpayers, businesses and tax professionals in hopes of slipping authentic-looking tax returns through the defenses.
To counter this threat to individuals and businesses, National Tax Security Awareness Week features a week-long series of educational efforts by the Summit partners to educate and inform taxpayers and tax professionals. The week will focus on how to defend against identity theft and other scams, including inaccurate social media information. This year’s campaign includes:
- Daily press releases and Tax Tips during the week of Dec. 2 highlighting specific issues that can protect taxpayers and tax professionals from identity theft and tax schemes;
- Social media awareness on X, Facebook, Instagram and YouTube. Follow
@IRSTaxSecurity ,@IRSnews and #TaxSecurity on X for the latest information; - Special educational materials, including e-posters and IRS publications, will also be available to share information not just during the special week but the upcoming filing season; and,
- Dozens of information-sharing sessions by IRS Stakeholder Liaisons with local tax professional groups and community events.
The IRS and its partners noted that identity thieves often impersonate the IRS and others in the tax community using fake emails, texts and online scams. They may exploit recent tragedies or imitate charitable groups to coax people into sharing sensitive financial data, which can lead to tax-related identity theft.
There has been an increase of these activities on social media, including inaccurate tax advice that continues to mislead taxpayers. To help counter this, many of the Security Summit partners have joined together to form the Coalition Against Scam and Scheme Threats, which will be increasingly active during the upcoming tax season.
“This special security week highlights ongoing threats against taxpayers and their information,” said Sharonne Bonardi, executive director of the Federation of Tax Administrators, in a statement. “State tax agencies are deeply committed to proactive fraud detection and prevention, and ensuring taxpayers and the revenue system are protected is a top priority for us and our Security Summit Partners. The National Tax Security Awareness Week provides important information to help in the ongoing battle against identity theft that we encourage you to read and share with others.”
The Internal Revenue Service is extending the transition period for revising claims for the research and development tax credit, which gives taxpayers 45 days to “perfect” a research credit claim for refund prior to the IRS’s final determination on the claim, through Jan. 10, 2026.
In October 2021, in an effort to reduce dubious claims for the R&D credit, the
This past June, amid complaints about the more stringent rules, the
- Identify all the business components to which the Section 41 research credit claim relates for that year;
- Identify all research activities performed for each business component; and,
- Provide the total qualified employee wage expenses, total qualified supply expenses and total qualified contract research expenses for the claim year. This can be done using
Form 6765 , Credit for Increasing Research Activities.
The transition period for perfecting the claims has now been extended through Jan. 10, 2026. The IRS has
For more information, visit
The Governmental Accounting Standards Board issued an exposure draft Monday of a
One of the main goals of the subsequent events standard is to reexamine the existing requirements in
The proposed statement defines subsequent events as transactions or other events that occur after the date of the financial reporting statements but before the date the financial statements are available to be issued. The exposure draft describes the date the financial statements are available to be issued as the date at which (1) the financial statements are complete in a form and format that complies with GAAP and (2) all approvals necessary for issuance have been obtained. The proposed statement would clarify the subsequent events that constitute recognized and nonrecognized events and establish specific note disclosure requirements for nonrecognized events.
Courtesy of GASB
Implementation guidance
As for the implementation guide, the
GASB periodically issues new and updated guidance to help state and local governments apply GAAP to specific facts and circumstances they encounter.
GASB is asking for comments on the subsequent events standard by Feb. 21, 2025, and the implementation guidance by Jan. 24, 2025.
Kohl’s to bring aboard veteran of Michael’s and Walmart as new CEO. Shares are falling.
How S&P 500 tends to perform during Thanksgiving week and into New Year’s Eve
Stocks making the biggest moves after hours: ZM, KSS, SMTC
Are American progressives making themselves sad?
New 2023 K-1 instructions stir the CAMT pot for partnerships and corporations
U.S. Beneficial Ownership Information Registry Now Accepting Reports
-
Accounting1 week agoHow to Create an Effective Invoice Process for Small Businesses
-
Accounting2 days agoHow to Mastering Accounts Receivable Management to Maximize Cash Flow
-
Technology2 days agoHow to Protect Your Business From a Cybersecurity Breach
-
Stock News1 week agoWhen clients show signs of dementia, what should financial advisers do?
-
Economics1 week agoHoward Lutnick, Donald Trump’s resilient transition chief
-
Accounting1 week agoPCAOB calls off NOCLAR standard for this year
-
Personal Finance1 week agoWhy many young adults in the U.S. are still living with their parents
-
Economics1 week agoChecks and Balance newsletter: Readers’ hopes and fears for a Trump presidency