What impact will generative AI have on tax and accounting?

No matter your industry, Generative AI (GenAI) is transforming the professional landscape and opening up new possibilities for innovation and efficiency. But it isn’t without its challenges.

The 2024 Generative AI in Professional Services Report from the Thomson Reuters Institute offers insight on GenAI perceptions and usage based on responses from nearly 1,200 professionals from across various industries, including the tax and accounting profession.

From faster and more accurate tax preparation to vastly improved tax research and data-driven insights, GenAI offers tax and accounting professionals some significant advantages which will no doubt impact the industry, and in turn, your firm.

Let’s take a look at how tax and accounting professionals perceive the use of generative AI in their workplaces, the extent to which they are integrating it into their processes, and how it will transform the future of work.

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Perceptions of GenAI among tax and accounting professionals

While GenAI usage is not yet widespread among professional services, about one-quarter of professionals say their organizations have already begun to update how they work by incorporating GenAI.

This could be one-off usage of public platforms such as ChatGPT, but increasingly, this also includes tools built specifically for industry use cases — such as spotting accounting irregularities, boosting tax return preparation, or harnessing risk assessment and reporting platforms.

From a tax and accounting perspective, the report shows an overall positive outlook towards GenAI, with 49% of respondents from tax departments indicating positive sentiments. However, about half of respondents said that they believe GenAI is either a major threat or somewhat of a threat to jobs across both the legal and tax industries.

That said, a shift in mindset can change this perceived threat into an opportunity for growth. GenAI enables tax and accounting professionals at all levels to streamline workflow processes, boost efficiency, and derive meaningful insight from client data. Let’s take a look.

Potential use cases and adoption of GenAI in tax and accounting

Regardless of sentiment, the majority of survey respondents acknowledged that GenAI is here to stay.

When asked two related, but different, opinions around GenAI usage in their professions — whether GenAI can be applied to their work, and then should it —respondents stated a number of use cases for the technology, regardless of industry. Not surprisingly, more than three-quarters of respondents in every single industry — said they believe GenAI can be applied to their work. Respondents who said they believe GenAI should be applied to their work had a number of different reasons why, but many focused particularly on the business impact of the technology.

Tax industry respondents specifically pointed to increasing efficiency and productivity, streamlining work processes, and improving quality and accuracy of work. Corporate risk & fraud professionals also pointed to GenAI’s ability to provide industry insights and to assist with decision-making.

For tax and accounting professionals, GenAI offers significant advantages in terms of:

• Data entry automation
• Tax research and compliance
• Document generation and summarization
• Fraud detection
• Risk assessments and assisted decision-making
• Forecasting and predictive analytics

Interestingly, more respondents seem to be using GenAI for their own work compared to what they said their organization was doing.

When asked whether they specifically used GenAI tools for their own work, almost half of all respondents (47%) said they already are using or plan to use public-facing GenAI tools such as ChatGPT. Among certain professionals, such as those in the tax and risk sectors, the personal usage was even higher, with 54% and 61%, respectively, citing their use of open-source GenAI tools for work within the next three years.

GenAI integration and training

While the benefits of GenAI are significant, there are concerns regarding the security and privacy of sensitive information, as well as the training and integration practices for tax and accounting professionals.

More than half of respondents identified such worries as inaccurate responses (70%); data security (68%); privacy and confidentiality of data (62%); complying with laws and regulations (60%); and ethical and responsible usage (57%) as primary concerns for GenAI.

To circumvent these concerns, many forward-looking accounting firms are adopting CoCounsel, the GenAI assistant available on Checkpoint Edge, that is built by tax professionals and grounded in expert data from reliable sources. This is in contrast to platforms like ChatGPT which pull unvetted answers from across the internet.

When it comes to training, respondents from corporate risk departments (38%) and corporate legal departments (25%) reported the highest proportion of GenAI training for staff, while less than 20% of law firm and tax firm respondents said they had received GenAI training.

In response, more and more accounting firms are opting for AI-powered tax software, such as Checkpoint Edge, UltraTax CS, and Cloud Audit Suite, backed by organizations that provide comprehensive training and implementation programs alongside continuous support.

See firsthand how Thomson Reuters tax and accounting solutions can help increase efficiency, mitigate risk, and provide premium client services with enhanced AI capabilities and expert insights.

The impact of generative AI on the tax and accounting profession

While the integration of GenAI into the tax and accounting industry will include some growing pains, there is no doubt of its transformative advantages. For accounting firms looking for that competitive edge, AI-powered tax solutions offer the ability to increase efficiency, mitigate risk, and provide premium client advisory services.

Rather than replacing human professionals, GenAI can unlock capabilities and shift time away from mundane tasks. This enables a focus on higher-value activities such as predictive analytics and strategic insights which support the profitable transition to client advisory services.

While it’s not without its challenges, GenAI can become an indispensable tool for tax and accounting professionals to gain a leg up in an increasingly competitive landscape.

To learn more, download our 2024 Generative AI in Professional Services Report and explore our AI-powered tax and accounting solutions.