As AI sweeps through practically every industry, audit and accounting are getting their due makeovers. However, not all firms are keeping pace with its adoption.
According to the 2024 Generative AI in Professional Services report from the Thomson Reuters Institute, 30% of tax and accounting firms are still weighing the decision to adopt GenAI tools, while nearly half (49%) aren't planning to use them anytime soon.
However, a few big accounting firms have led the way with AI adoption.
Ernst & Young (EY), one of the largest accounting firms globally, has introduced AI into their audit services, deploying a powerful tool that reviews and analyses contracts and documents with a speed and precision that human efforts simply can't match.
KPMG has also embraced the AI revolution with its innovative platform, KPMG Ignite. This tech doesn't just sift through data, it enhances the quality of insights delivered to clients. It also offers predictive insights, spots trends, and provides strategic guidance that pushes the boundaries of traditional accounting.
Deloitte, too, is a pioneer in the AI accounting frontier.
Working on similar lines, a Chennai-based startup, Fhero Accounting has leveraged AI in automating some of the repetitive tasks, to streamline data entry by automatically capturing and categorising financial transactions from various sources like invoices, receipts, and bank statements.
This reduces the need for manual input, minimises errors, and ensures accurate, up-to-date records.
Further, AI-driven analytics offer deeper insights into financial trends, enabling proactive decision-making for the clients. This enhances efficiency, accuracy, and client satisfaction.
The audit and accounting process has multiple stages, starting with data entry. Fhero uses an advanced optical character recognition (OCR) technology. So, when bills and documents are uploaded, the software automatically reads and processes them, seamlessly integrating the data into the client's accounting system.
Next, a proprietary tool takes over, generating MIS reports and flagging discrepancies, like missed tax deductions or incorrect rates. It ensures all statutory compliances are met, even for backdated entries, automatically highlighting issues as they arise. It's like having someone work on these tasks while you sleep.
"This efficiency means what once took six to eight hours can now be done in just five to ten minutes, depending on the client's size and transaction volume. For large clients, like those handling up to 500 crores annually, this process saves days of manual effort by completing tasks in mere minutes," said Prashant Bothra, the CEO & founder of Fhero Accounting, in an exclusive interview with AIM.
For instance, while working for the e-commerce industry, the firm ensures that the amount received from platforms like Myntra, Nykaa, and Flipkart matches the companies' books, verifying every detail in seconds.
"Our MIS reports are so comprehensive that you can drill down from a general P&L statement to the invoice level, making it easy for business owners to manage everything without diving into the complexities of accounting software," Bothra added.
Further, Fhero Accounting is also contemplating bringing LLMs into its business, aiming to enhance the value they deliver to their clients.
Globally, startups like Klarity and Tabular function similarly, offering clients finished ledger entries that users export with just one click.
Indians aged over 50 years are generally less inclined to outsource accounting services, primarily due to a combination of traditional values, a preference for personal relationships in financial matters, and a lack of familiarity with digital platforms.
Reflecting on the same, Bothra highlighted, "One of the major challenges we've observed in India, especially in the early stages of our work, is a cultural shift that is beginning to change only now."
He noted that major industrialisation in India happened in the 1990s, during the era of liberalisation, privatisation, and globalisation. This period saw Indian companies going global and the rise of many entrepreneurs who are now in their 50s or 60s.
But as the next generation steps into leadership roles, a shift in attitudes towards outsourcing is observed.
The COVID-19 pandemic has accelerated this change, as businesses now seek more value from their accountants rather than just having them on-site to handle routine tasks.
"Previously, accountants were often seen as mere agents of the government, managing tax payments on behalf of companies. Today, business leaders are looking for deeper insights into their numbers, particularly in areas like cost, to inform their decision-making," Fhero Accounting CEO said.
Going ahead, the startup plans to shift focus to building tech that customers can interact with directly so that its clients can have access to their numbers right at their fingertips, on their phones through an app.
"As we input data, it will automatically sync with theirs. The app will also allow them to ask questions and handle everything they need from an accountant in one unified platform, rather than relying on separate apps for communication and report viewing."
Working along similar lines, but exclusively for individuals, CRED has already introduced a feature called CRED Money. It leverages advanced data science to analyse spending patterns, provide personalised insights, and promote proactive personal financial management.
By making members more aware of their finances, CRED Money empowers them to take control and make informed financial decisions.
As India continues to up its AI game in finance, RBI governor Shaktikanta Das recently highlighted that the integration of AI into financial services brings significant opportunities for all stakeholders.
Speaking in Bengaluru at the Global Conference on Digital Public Infrastructure and Emerging Technologies, Das said, "Today, AI has forayed into the financial sector in the form of services like chatbots, internal data processing for intelligent alerts, fraud risk management, credit modelling, and other processes."
