• Subject Name : Accounting and Finance

Implications of Artificial Intelligence and Blockchain

Artificial Intelligence and Block Chain

Artificial intelligence also known as machine intelligence is a type of intelligence that is displayed by machines different from humans and the animals. It is also used for describing the machines or the computers that perform or mimic the functions that are “cognitive”. Cognitive functions are those that are associated with the mind of humans like learning and solving the problem (Sgantzos & Grigg, 2019). Artificial intelligence is a form of science that is interdisciplinary and has approaches that are multiple and through advancements in machine learnings, a paradigm shift has been created in every sector with respect to technology that is being used.

Block chain technology is simply a ledger that is decentralized and distributed that helps in recording the digital assets. A simple analogy of block chain technology is Google docs where the document is shared or distributed instead of being copied or being transferred (Qasim&Kharbat, 2019). This helps in accessing the document at the same time. All the changes can be seen and recorded in real time situation.

Artificial intelligence and block chain are considered as active disruptors by 98% of the CEO’s according to a report by KPMG (Bogdanov et. al., 2018).. Artificial intelligence and block chain technologies help in sharing of the information, automation of the tasks and also provides an ability for detecting a business that is potentially risky. Cloud computing is another form of artificial intelligence that is widely used and serve as storage, databases, networking with the help of internet.

Artificial technology can also be used for performing the task that are standardized like filling the forms of tax, classifying the transactions and also flagging of the issues for the business that are complex. Routine works can be done by the use of artificial technology. Block chain provides a source that is single and has immutable data that is used for making the decisions and filling the taxes and also helpful in the analytics of business. Block chain will help in providing an appropriate ledger for accounting transactions that can record daily activities.

The future of AI and block chain technology lies in the financial robots who will be capable enough of recognizing various data and also in entering the invoices and creating reports that are financial. Also, these robots can be used in place of the clerks and can be used by the managers who have zero knowledge of accounting to takes decisions that are informed concerning all the information of accounting (Arora, Chopra & Dixit, 2020). These technologies in future can be used in the financial distress and the fraud. Also they can be used in forecasting the stock market and doing the audits.

AI and Block Chain Usage in Advancing the Accounting Function

KPMG is an organization that has recently received a patent for block-chain based method that helps in the selection and improves it, curates it and also manages the data that is used to train learning of machine and the models of Artificial Intelligence. It helps in tracing the data that is used through the lifecycle of AI and includes the training, monitoring and dep­loyment (Tysiac& Drew, 2018). The block chain also helps in establishing a chain of custody that helps in verifying from where the data has been generated and used.

The method of KPMG helps in improving the shortcomings that are there in current management of data. The block chain helps the company in identifying the data that is more relevant, records about the interaction of multiple parties and manages the permission and approvals for the usage of algorithms of AI for accounting functions. This also helps in identifying the potential bias and monitor the data for training and quality and helps in tracking what models have been utilized and deployed (Barnett &Treleaven, 2018). The components that have been used in the data management process through block chain in KPMG includes smart contracts for enhancing the human procedure that is required to maintain records of data and controlling the access throughlarge organization. With that AI insights and outputs are gleaned and they can be audited easily that in turn will allow increased confidence for the results among the stakeholders. Block chain helps in providing a better trust and transparency while AI serves as a technology that is reliable and can be leveraged by the business leaders. The company is using this technology for digital transformation and getting solutions for the problems that are impetus. In this manner KPMG is using AI and block chain for advancing the work of accounting in the organization.

Critical Analysis

In the paper Brace yourself for AI & Block chain, Daniel Hood has said that even when the threat is clear but both AI and block chain contains the potential for helping the accountants to boost the revenue, the value and the relevance if the people or the accountants are ready to develop the necessary skills and also change the mindsets they have. AI serves as a software that will help in learning and adapting the daily routine activities. It means that once the machine learns something human input is not required again and again. This is beneficial as it save a lot of time for the companies. For example taxation can be considered. Millions of data is to be filled in and then accordingly tax is to be calculated. AI can help in filling the tax returns. Filling the forms requires human efforts that work can be done by AI easily saving a lot of time for the accountants (Salah et al, 2019). Also, with AI in the systems data analysis of a large amount of data can be done easily which in turn will become a tedious task for the accountant or an analyst to do. With the help of AI better recommendations can be provided. The importance of AI can be justified by the investments that are being made by the big forms like Google, IBM etc. Also, KPMG has recently purchase a patent on its block chain technology (Hood, 2018).

In the same manner block chain technology is also helpful is determining the data sets and bifurcating them. It creates a set of data and also allows people to analyze the same set of data at the same point of time. KPMG is using the technology for the purpose of creating a better environment of trust and transparency. It helps in recording the interactions of data and transactions which could not have been done before easily.

So, AI and block chain might have certain threats but the benefits that are derived from them are very useful Daniel hood has depicted clearly certain benefits that will be derived from these two technologies. Every company these days is opting for AI and block chain (Makridakis, polemitis & Giaglis, 2018). Thus the statements made by the author in the paper are appropriate. There might be threats of people losing the jobs or AI taking decisions but the benefits are more if accountants are ready to learn and keep an open mind.

Change in Financial Reporting

Financial reporting regulation will change in the future as the technology advance in the times to come. Every facet of life is digitizing and so s financial reporting. People have also started to expect that financial reports will be delivered to them swiftly, effectively and efficiently in real time. The very first change that the technology will bring in is automated reporting and analysis. This is a very positive change as technology will reduce the chances of error in a significant manner. Automated reporting will help in tracking data and make better informed decisions. Through advancement in technology daily operations can be reported and recorded and KPI’s will show the insights of how the business is performing (Smith, 2020).

Another change that will be brought in by the automation is streamlining of the process for providing a better engagement. Everyone in today’s time is expecting more and applications are used that will provide an instant results. Financial management software helps in streamlining the activities and also creates invoices that are automated after the payments done electronically. Creating an invoice for reporting has changed (Smith, 2018).

Another benefit attached is that no matter how small or large the firm is with the right AI they can compete with even the big giants prevailing in the market. The basic formula for doing so is taking the informed decision. AI and block chain helps in streamlining the data and with that analyses a huge sum of data and then provides appropriate recommendations. These recommendations can be used and then accordingly an informed decision can be made. Thus, financial reporting will become much better and the chances of errors will reduce significantly letting them to make appropriate decisions.

Conclusion on Financial Accounting Theory and Practice

Artificial technology and Block chain are useful tools in every field and also in the field of accounting. There are certain threats that come with the usage of technology that includes losing jobs or AI based decisions but if used properly these technologies can be very beneficial and can provide better solutions for decision making. Also, financial reporting techniques will be changed with digitization and automated reporting can be brought in through them. Thus, these two technologies will help in growth of the industry.

References for Financial Accounting Theory and Practice

Arora, M., Chopra, A. B., & Dixit, V. S. (2020). An Approach to Secure Collaborative Recommender System Using Artificial Intelligence, Deep Learning, and Blockchain. In Intelligent Communication, Control and Devices (pp. 483-495).

Barnett, J., &Treleaven, P. (2018). Algorithmic Dispute Resolution—The Automation of Professional Dispute Resolution Using AI and Blockchain Technologies. The Computer Journal61(3), 399-408.

Bogdanov, A., Degtyarev, A., Korkhov, V. V., Kamande, M., Iakushkin, O. O., & Khvatov, V. (2018). About Some Of The Blockchain Problems. Advisory committee, 81.

Hood, D. 2018. Brace yourself for AI & block chain: There’s less threat and more opportunity in emerging technologies than many think Accounting Today. Vol. 32 No. 1, p1- 31.3 

Makridakis, S., Polemitis, A., &Giaglis, G. (2018). Implications of Artificial Intelligence (AI) and Blockchain as Drivers of the Fourth Human Revolution. SF J Artificial Intel1(2), 2.

Qasim, A., &Kharbat, F. F. (2019). Blockchain Technology, Business Data Analytics, and Artificial Intelligence: Use in the Accounting Profession and Ideas for Inclusion into the Accounting Curriculum. Journal of Emerging Technologies in Accounting, 0000-0000.

Salah, K., Rehman, M. H. U., Nizamuddin, N., & Al-Fuqaha, A. (2019). Blockchain for AI: Review and open research challenges. IEEE Access7, 10127-10149.

Sgantzos, K., &Grigg, I. (2019). Artificial intelligence implementations on the blockchain. Use cases and future applications. Future Internet11(8), 170.

Smith, S. S. (2018). Digitization and financial reporting–how technology innovation may drive the shift toward continuous accounting. Accounting and Finance Research7(3), 240-250.

Smith, S. S. (2020). Audit Implications of AI &Blockchain. In Blockchain, Artificial Intelligence and Financial Services (pp. 165-173).

Tysiac, K., & Drew, J. (2018). Accounting Firms: The Next Generation; Command of Data Will Take Precedence as Advanced Technologies Push CPAs to Seek New Skills, Explore Different Services, and Enter into New Practice Structures. Journal of Accountancy225(5), 26.

Remember, at the center of any academic work, lies clarity and evidence. Should you need further assistance, do look up to our Accounting and Finance Assignment Help

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