Accounting
How accountants can stay ahead of AI
For years, advisory services stood as a bulwark against the relentless march of automation, a place where accountants could seek refuge as software took over more and more of the routine, compliance-based processes that, until recently, defined much of their jobs. Sure, the conventional wisdom holds that computers can now easily crunch the numbers — but it still takes humans to interpret what those numbers mean and to communicate that meaning to the client. However, as artificial intelligence continues to evolve, this conventional wisdom is increasingly challenged.
The truth is that while advisory services still stand as that bulwark, AI has begun nibbling at their foundations as it moves past updating journal entries and into generating the same kinds of data-driven insights and analyses that, before, had only been offered by human advisors. For better or worse, advisory is no longer the safe haven it once was. In the face of these changes, it is no longer enough to simply shift to advisory, as certain areas are already being transformed by AI. Instead, accountants must be smart about which areas of advisory they choose.
A great example of an area where this transformation is nearly complete is financial planning and analysis, according to Joe Woodard, head of accounting and business coaching firm Woodard. While there may once have been a time when a firm could sustain itself on analytics alone, those days are long past, as even public AI models are now capable of analyzing mountains of data in mere minutes, and writing reports on their findings in mere seconds.
“AI can do FP&A, and it does it well. A lot of people were initially disillusioned with ChatGPT because it couldn’t manage attachments and would guess when it didn’t know an answer. But now, it no longer plays the guessing game — it can absorb documents and do so securely, especially in enterprise or team editions,” said Woodard.
As an example, Woodard asked ChatGPT-4o, “If I have a gross profit margin of 60% and annual revenue of $15 million, what’s the ideal headcount for accounting associates, partners and reviewers?” He said the AI broke the problem down in real time — assessing firm dynamics, considering average pay rates, benchmarking professional service models, and calculating a typical partner-to-staff ratio. It even separated associates from other billable staff, factored in administrative and support personnel (“which I didn’t even ask for,” Woodard noted), and ultimately estimated a headcount of 85 to 95. And after doing all that, it provided firm strategy recommendations — niche practice areas, geographic market considerations, outsourcing, automation, and technology investments — all in about 45 seconds.
“So yes, AI is extremely deep and powerful,” Woodard said.
Randy Johnston, executive vice president of accounting training and education firm K2 Enterprises, said that he has seen this as well. For a long time, the kind of work that FP&A advisors did required a great deal of effort and time, but technological advancements mean it’s become much easier and faster to analyze a financial situation.
“The amount of time it takes to get high-value advice for clients in an advisory capacity has been dramatically reduced. If you’re doing pure advisory work that involves strategic analysis, historically, a lot of that was done by manually researching and Googling around. Now, you can use AI to get far better summary results and reference materials. I actually think Microsoft’s Copilot 365 does a great job — it will write the summary and provide the links. Does it find everything? No. But does it generate quick insights? Yes,” he said.
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Overall, the advisory services that are most at risk of disruption are — like compliance services — those that rely on relatively mechanical, step-by-step processes, which AI excels at. This also includes those that rely primarily on financial modeling, as Johnston says professionals no longer need to spend hours building custom models in Excel when they can now run those same figures through AI “and it does a much better job.”
“You still have to check the results, but it’s far faster than starting from scratch,” he said.
In contrast, Woodard said that operational finance roles, such as controllership, are relatively safe for now. He noted that many areas of corporate finance have been effectively automated away, but actual financial leadership positions, he believes, “will endure for the foreseeable future.”
While AI agents have made stunning advances in just a short time, even these semiautonomous bots are still unable to handle the vast number of responsibilities of a competent finance leader. A controller at a $2 million company, for example, needs to juggle financial oversight, operational problem-solving, team management, compliance enforcement and more, all of which requires dynamic, big-picture thinking that AI, for now, lacks.
“Bookkeepers who report to controllers will see their roles largely automated. Reviewers who check books for controllers will also be replaced by AI-driven analytics. FP&A professionals — who primarily compile financial reports — are at high risk. But controllers and CFOs will remain essential. The controller must operate within the company’s day-to-day reality, and the CFO must engage in high-level strategy, investment negotiations, and executive decision-making. These are operational, relationship-based roles that AI cannot replicate,” said Woodard.
Staying relevant
Woodard cautioned, though, that it’s not so much about the advisory areas themselves but, rather, how accounting firms perform them.
He said the biggest mistake he sees firms make is equating advisory with analytics, saying that if their definition of advisory is just building dashboards and explaining financial reports, then they are ripe for AI disruption. On the other hand, if their definition of advisory remains human-driven and client-centric in a way that allows the professional to understand the full context of their client’s situation, ideally based on a years-long relationship, to guide actionable financial decisions, then even FP&A can be fruitful.
“Financial analytics itself — the science of it — is easily and already being displaced by AI. For a human advisor to stay relevant, they must contextualize knowledge within a relationship with the client, understand operational complexities, and inject wisdom. AI cannot be wise; it can only be analytical … If you’re building a practice around delivering financial insights — essentially just interpreting numbers — AI will disrupt that,” he said.
Establishing such relationships and demonstrating credibility is a process that can take a long time, but Johnston said it can be helped through specializing in particular industries. For example, if a firm specializes in utilities and has its own internal data (perhaps indexed by AI) to give meaning and context to events within that sector, “that’s a real game-changer” as many models rely on public data that is not easily accessible to AIs.
“If you have expertise in any industry — utilities, for example — and you have legacy documents that can be indexed, that data is far more valuable than almost any public data available. Public data is useful, but having private data that has already undergone expert analysis is far more powerful,” said Johnston.
However, there is also the matter of educating clients as to why a human professional is still valuable. While accountants know that AI cannot do their entire job, media hype and technology misconceptions can sometimes lead people to believe that it can.
Even among those who already have an accountant, Woodard said that he has seen clients using AI as their first point of contact and only contacting their human professional for a second opinion. (See sidebar, page 8.)
“This is how AI is undercutting the value proposition of accountants. CPAs are increasingly becoming a second opinion rather than the first source of expertise,” said Woodard.
Relationships are the key to avoiding this. Accountants not only should be working on establishing and maintaining longstanding client relationships, they should be acting proactively to keep them informed of new developments that might affect them — so, rather than waiting for the client to call them, whether as the first or second opinion, the accountant should call the client.
Johnston, though, said that another somewhat unintuitive response might be to lean even further into these routine transactional services by leveraging AI to automate these tasks at a large scale, while still offering high-value advisory. However, one way or another, he said it ultimately comes down to keeping the client at the center.
“The key is staying client-centric. The accountants who remain first points of contact for clients — rather than second opinions after AI — will thrive. AI will become embedded in tools accountants already use, making it more invisible over time. But the accountants who don’t leverage AI will be replaced by those who do — especially offshore professionals using AI more aggressively,” he said.
The crypto industry is on a roll in Washington and it’s not just because of President Donald Trump.
A key ally is rising in the Democratic party and the industry just demonstrated its political might by sweeping away a long-entrenched antagonist with a flood of campaign money.
Crypto-friendly stablecoin legislation is poised to pass the Senate after years of the industry’s Capitol Hill agenda languishing. Prospects for other priorities also are improving.
Democratic Senator Kirsten Gillibrand of New York, a long-standing supporter of the crypto industry, moved up in her party’s leadership ranks to head election fundraising. She’s put her growing influence behind efforts to repeal a tax reporting rule on digital assets and pass a
Cynthia Lummis of Wyoming, Senate Republicans’ leading crypto advocate and a regular partner of Gillibrand on related legislation, said the New York Democrat’s backing is pivotal. Out-of-power Democrats can still stymie legislation in the Senate, where 60 votes are needed for most bills.
“Without her, it doesn’t happen,” Lummis said, citing credibility Gillibrand has built on financial issues while representing Wall Street’s home state and the importance of bipartisan alliances in the Senate.
Gillibrand’s cross-party relationships extend to Republican Banking Committee Chairman Tim Scott, another crypto supporter who also has been tapped by his party to head up fundraising for the coming election. The two have a personal friendship and participate together in a weekly prayer luncheon. Her partnership with Lummis on crypto even included
Gillibrand argues the country should cultivate the emerging crypto industry rather than drive it offshore through the kind of regulatory burdens others in her party like progressive Senator Elizabeth Warren seek. Still, some level of regulation is essential, she adds.
“If we do nothing, and this industry is left to its own devices, we’ll have more collapses, we’ll have more Sam Bankman-Fried frauds,” Gillibrand said in an interview in her Senate office.
Under Trump, who has
“We’re ending the last administration’s regulatory war on crypto and Bitcoin,” Trump said in a virtual address to Blockworks’ Digital Asset Summit. “You will unleash an explosion of economic growth, and with the dollar-backed stablecoins, you’ll help expand the dominance of the U.S. dollar.”
Crypto can only lock in durable changes in law with Congress’s approval. In the Senate, that will require significant support from both parties to overcome procedural obstacles.
Crypto’s new clout was on full display last week, when five Senate Democrats on the Banking Committee defied apocalyptic warnings from Warren, the panel’s top Democrat, and supported industry-backed legislation regulating privately issued stablecoins pegged to the U.S. dollar.
It was an abrupt turnaround from previous years, when crypto skeptic Sherrod Brown, then the Banking Committee’s Democratic chairman, blocked action on industry-friendly bills Gillibrand sponsored. Brown also stood in the way of earlier efforts Bankman-Fried boosted with massive campaign contributions.
In the meantime, crypto titans pumped money into the best-funded alliance of corporate political action committees in U.S. history —
As the new Congress got underway, crypto’s financial power in next year’s midterm election was clear. In January, Fairshake announced that the PAC and its affiliates already had amassed a warchest of $116 million, a stunning amount so far in advance of election day.
Moreno and Gallego are now on the Banking Committee and helped send the stablecoin bill to the Senate floor, where it’s likely to get the 60 votes needed with Gillibrand’s support.
Consumer advocates warn that the industry’s financial power is overwhelming the need to protect users of digital assets from scams and the broader financial system from cascading failures.
“Money is talking very loudly,” said Jeff Hauser, executive director of the progressive watchdog group Revolving Door Project, which has been sharply critical of Gillibrand’s support for crypto. Democrats have been “freaked out” since crypto flooded money into campaigns last year. he added.
But Gillibrand dismisses the idea that crypto advocates’ election giving influences senators’ votes.
“No one should care, you know, which industries are for or against them because of their political giving,” Gillibrand said in an interview in her U.S. Senate office. “I don’t think senators respond well to being threatened.”
Warren and other critics have pressed for a stronger backstop to protect consumers and the financial system from the failure of a major stablecoin.
Gillibrand, on the other hand, said her legislation seeks to assure stablecoins are truly stable, with requirements for one-to-one reserves with oversight at the state or federal level, and the Federal Reserve having a role as well. Reserves must be in highly liquid assets like short-term government debt or similar instruments, in an effort to prevent a run on a stablecoin.
Mainstream players such as Visa, PayPal Holdings Inc., Stripe Inc. and others are making investments in projects involving stablecoins.
Gillibrand, who spent 15 years as a securities lawyer, pitches stablecoins to her Senate colleagues as akin to the traveler’s checks tourists used to carry abroad or department store gift cards.
“It’s not meant to be a bank account. It’s not meant to have FDIC insurance,” she said. “It’s a payment system.”
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The royal treatment; tit for tat; false certifications; and other highlights of recent tax cases.
Belle Vernon, Pennsylvania: Businessowner Andy Ha has pleaded guilty to harboring illegal aliens for financial gain and to failing to pay employment taxes.
From September 2022 to April 2024, Ha owned a temporary staffing agency, Prosperity Services, that provided workers to area companies. Ha paid for more than 25 workers who were not legally authorized to be in the U.S. to stay in a former hotel, and his business paid for vans to transport those workers to and from work.
He also provided Prosperity’s tax preparer with spreadsheets listing only workers who were legally authorized to be and work in the U.S. That information was reflected on the company’s quarterly employment returns, representing less than 10% of the actual total number of workers employed by Prosperity. Ha then also signed those returns, knowing them to be false and causing a tax loss of at least $3.1 million.
Sentencing is July 22. Ha faces up to 15 years in prison and fines totaling up to $500,000 or twice the gain from the offense, or both.
Delray Beach, Florida: Financial professional Stephen T. Mellinger III has pleaded guilty to orchestrating a nearly decade-long scheme to promote an illegal tax shelter and commit wire fraud. He also pleaded guilty to assisting in the preparation of false returns for tax shelter clients.
Mellinger was a financial advisor, insurance salesman and securities broker operating in Florida, Michigan, Mississippi and other locations. Beginning in late 2013, he conspired to promote a tax shelter whereby clients would claim false tax deductions for “royalty payments” to reduce their taxes.
As Mellinger knew, the payments were merely a circular flow of money to give the appearance of business expenses. Typically, a client would send money to bank accounts controlled by Mellinger and other conspirators, who then sent the money, minus a fee, to a different account that the client controlled.
Mellinger and a co-conspirator, a relative, collectively earned some $3 million in fees from the scheme. In total, he and his co-conspirators helped clients prepare returns that claimed more than $106 million in false deductions, which caused a tax loss to the IRS of some $37 million.
In January 2016, Mellinger learned that several of his clients were being investigated and that the federal government had started seizing their funds. Mellinger and a relative subsequently stole more than $2.1 million of funds from some of those clients.
Sentencing is Sept. 16. Mellinger faces up to five years in prison for conspiring to defraud the IRS and commit wire fraud, and three years for aiding in the preparation of false returns.
Los Angeles: Tattoo artist Daniel Joseph Winter, once called “Hollywood’s Go-To Tattoo Artist” in the media, has pleaded guilty to filing false returns through which he evaded more than $641,000 in federal income tax.
Winter, who pleaded guilty to one count of subscription to a false return, operated his tattoo business in the Los Angeles area, New York and Vancouver, Canada, specializing in single-needle, fine-line tattoos and catering to high-end clients. He accepted payment almost exclusively in cash and earned at least $1.7 million from his business from 2021 to 2023. He declared no wages, salaries or tip income on federal returns, reducing his taxes by more than $641,000.
At his hearing, Winter presented a cashier’s check for $641,959 to pay the taxes he owed due to the underreporting. He also admitted that he knew he was required to report all his income.
Sentencing is Aug. 11, when Winter will face a maximum of three years in prison.
Shelbyville, Tennessee: Daycare operator Rebekah Proctor has pleaded guilty to one count of willful failure to collect, account for and pay over a tax and to one count of wire fraud.
Proctor operated Franklin Springs Academy, and though she withheld income taxes and FICA from employees’ paychecks and owed the employer’s portion of the taxes, she failed to account for and pay the taxes to the IRS for the first quarter of 2022.
She also fraudulently applied for and received an undeserved Paycheck Protection Program loan. She made several false certifications on her April 2020 application for more $100,000 in PPP funds, including that she was current on her federal tax obligations and that the loan funds would be used to retain workers and for other business expenses. Proctor used the funds for personal expenses.
She agreed that the restitution owed to the IRS for her employment taxes alone is $893,232.26, which includes unpaid taxes plus penalties and interest. She further agreed that restitution owed to the SBA is $223,800, comprised of two sets of PPP money.
Sentencing is July 11. She faces up to five years in prison on the tax offense and up to 30 years for wire fraud.
Charlotte, North Carolina: Two businessmen have been sentenced for failing to account for and pay over to the IRS more than $150,000 in trust fund taxes over five quarters in 2016 and 2017.
Richard Brasser and Gregory Gentner were each sentenced to a year and a day in prison to be followed by a year of supervised release.
Their company, rFactr, sold software that leveraged social media for sales platforms; Brasser was CEO and Gentner the COO. From 2015 through 2017, they caused rFactr to collect more than $600,000 in trust fund taxes from the wages of employees but did not account for the taxes by filing 941s and did not pay over the withheld taxes to the IRS. Brasser and Gentner also had a history of non-compliance with rFactr’s employment tax obligations from 2013 to 2017.
In total, between 2015 and 2017 the two caused rFactr to owe more than $1.1 million in employment taxes.
Red Bank, New Jersey: Business owner Francis Esposito has admitted to filing a false return and causing more than $200,000 in tax losses for 2018.
Esposito was the sole or majority owner of numerous entities. For tax years 2015 through 2018, he derived certain income through these entities that he failed to report on his 1040. For those years, he had almost $3 million in unreported income, resulting in a total tax loss of some $1,149,372.
The charge of filing a false return carries a maximum three years in prison and a maximum fine of $250,000 or twice the gain or loss from the offense.
New Bedford, Massachusetts: Valentina Martinez, 50, who previously worked for a national tax prep service, has been sentenced to a year of supervised release under home confinement for stealing federal funds by filing false returns to obtain fraudulent federal refunds.
After preparing returns for clients and providing them copies of their returns, Martinez added fraudulent claims for business deductions without clients’ knowledge and e-filed the false returns.
She caused the refunds to be deposited onto debit cards that she used to make ATM withdrawals, including paying for a Florida vacation and other personal purchases. Her scheme was discovered and her employment terminated when a taxpayer client complained to the tax prep service about a missing refund. By then, she had filed at least 12 false returns.
Martinez, who pleaded guilty in December, was also ordered to pay $41,823 in restitution to the IRS.
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