Name of university, school and program: Azerbaijan State University of

Economics, UNEC Business School, MBA program

Name of subject: Financial accounting (FA)

Project work name: The impact of artificial intelligence on financial accounting

Academic year: 2023/2024
Course: I
Group: E 20-23
Teacher’s name: Leman Ashirova
Names of master students: Cabbarlı Fidan, Süleymanlı Fidan, Yusubov Emin,
Adilzadə Toğrul, Həsənov Xəyal
CONTENT

1. What is Artificial Intelligence and how does it work ……………… 3

2. Impact of Artificial Intelligence on financial accounting ………….. 4
3. Unleashing AI in Modern Accounting Practice ……………………. 5
4. Summary: Inherent challenges of adopting AI in accounting.……… 6
5. Reference ………………………………………………………….. 10

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Fidan C.

What is Artificial Intelligence?

Artificial intelligence is the simulation of human intelligence processes by

machines, especially computer systems. Specific applications of AI include expert
systems, natural language processing, speech recognition and machine vision.

How does AI work?

As the hype around AI has accelerated, vendors have been scrambling to promote
how their products and services use it. Often, what they refer to as AI is simply a
component of the technology, such as machine learning. AI requires a foundation
of specialized hardware and software for writing and training machine learning
algorithms. No single programming language is synonymous with AI, but Python,
R, Java, C++ and Julia have features popular with AI developers.

In general, AI systems work by ingesting large amounts of labeled training data,

analyzing the data for correlations and patterns, and using these patterns to make
predictions about future states. In this way, a chatbot that is fed examples of text
can learn to generate lifelike exchanges with people, or an image recognition tool
can learn to identify and describe objects in images by reviewing millions of
examples. New, rapidly improving generative AI techniques can create realistic
text, images, music and other media.

What is the impact of artificial intelligence on financial accounting?

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 Accountants can leverage AI in various ways to enhance their productivity,
accuracy, and decision-making capabilities. With this emerging technology, the
applications of AI are only limited by the user’s imagination. Here are some key
ways accountants can use AI:

One of the most immediate and tangible impacts of AI in accounting is the

automation of repetitive tasks. Activities such as data entry, invoice processing,
and reconciliations, which can be time-consuming and prone to human errors, are
efficiently handled by AI-powered systems. By automating these tasks,
accountants can take some drudgery out of their day and direct their focus toward
more strategic and value-added activities requiring human judgment and expertise.
 Data Entry: Automate the tedious task of data entry by extracting relevant
information from invoices, receipts, and other financial documents with AI. This
saves time and reduces the risk of manual errors.
 Bookkeeping Tasks: AI can handle routine bookkeeping tasks, such as
categorizing transactions, reconciling accounts, and generating financial reports,
making the process faster and more efficient.
 Invoice and Payment Processing: AI-powered systems can streamline invoice
processing and payment reconciliation, making financial operations more effective
One specific example of AI-assisted data entry is how we have harnessed the
technology at LeaseQuery. Our lease entry process now allows AI to do the more
repetitive and mundane tasks for you, such as reviewing uploaded lease documents
for necessary information. AI assists by providing suggestions for input into key
records during the lease entry process. The person entering the lease reviews the
suggested options and approves the correct one or overrides it with the right
information. This approach removes the tedious task of reviewing pages of lease

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 documents searching for pieces of information, but leaves the approval with the
individual.

XƏYAL
Enhanced data analysis and decision-making

AI-powered analytics tools can process vast amounts of data in real-time,

identifying trends, patterns, and anomalies that may not be apparent through
traditional methods. AI assistance can comb through data at much higher speeds
than we can and highlight areas of interest for a person to go back and review in-
depth. Manual analysis takes more time building tables or graphs to understand
patterns, but AI does this step automatically, saving time for more detailed
analysis. This enhanced data analysis empowers accountants to make data-driven
decisions, leading to more accurate financial forecasts, better risk assessments, and
improved overall business performance.

 Data Analytics: AI tools can analyze large volumes of financial data quickly,
enabling accountants to identify trends, patterns, and insights that may not be
apparent through manual review.
 Financial Reporting: AI-powered systems can generate real-time financial
reports, allowing accountants to access up-to-date information promptly and make
informed decisions based on the latest data.
 Data Visualization: AI-driven data visualization tools can help accountants
present financial information in a visually appealing and easy-to-understand
manner, aiding stakeholders in making informed decisions.

Improved frauddetection and security

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 Financial fraud poses a significant threat to businesses, but AI is proving to be a
formidable defense. AI algorithms can quickly detect irregularities in financial
transactions and identify potential fraudulent activities. Moreover, AI continuously
learns from new data, enabling it to adapt and evolve to detect increasingly
sophisticated fraud attempts. By minimizing financial fraud, AI enhances the trust
and credibility of the accounting profession, safeguarding both businesses and their
stakeholders.
 Fraud Detection: Suspicious transactions and anomalies can be swiftly identified
as potential threats to the organization and flagged for additional review or human
intervention with AI algorithms and other analytical tools.
 Security: As AI continues to evolve and learn from new data, it will be one of the
best resources to detect increasingly sophisticated fraud attempts.


Optimized resource allocation

AI-driven forecasting and budgeting tools help businesses optimize their resource
allocation. By analyzing historical data and identifying patterns, AI can predict
future financial and cash flow needs to allocate resources accordingly. This
optimization leads to cost savings, increased efficiency, and a competitive
advantage in the market.
 Financial Budgeting: AI algorithms can assist in budget planning by considering
historical data, market trends, and other relevant factors.
 Predictive Analytics: By using AI, accountants can perform financial forecasting
with higher accuracy, taking various market variables and historical data into
account.
 Cash Flow Management: AI can assist in monitoring and optimizing cash flow,
helping businesses maintain healthy financial liquidity.

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 Compliance and regulation adherence
Staying compliant with ever-changing financial regulations is a complex challenge
for businesses. AI can assist by constantly monitoring regulatory updates and
ensuring financial operations adhere to the latest standards. This minimizes the risk
of non-compliance, avoiding potential fines and legal repercussions.

TOGHRUL
 Compliance and Regulations: AI can assist accountants in staying compliant with
frequently updated financial regulations by monitoring transactions and
highlighting any discrepancies.
 Regulatory Reporting: Ensure accurate and compliant reports for governing
authorities are generated by using AI-powered tools to draft financial statements
and other required reporting.
 Tax Planning and Reporting: AI can aid accountants in identifying potential tax-
saving opportunities and calculating tax liabilities more efficiently.
Continuous professional development
As with any emerging technology, concerns surrounding AI are plentiful.
However, addressing these concerns head-on is essential for embracing the full
potential of AI. AI does not replace human accountants but empowers them by
augmenting their capabilities and removing repetitive tasks.
As AI becomes an integral part of the accounting function, accountants must adapt
and develop skills to remain relevant and competitive. Embracing AI requires
accountants to use AI-powered tools efficiently and understand AI-generated
insights. Additionally, accountants should focus on honing their analytical and
strategic thinking abilities, as these skills will complement AI technology and
enable accountants to provide unique value to their organizations and clients.

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Summary
The rise of AI in accounting is nothing short of a revolution – at a time when it is
most needed. From automating manual tasks and streamlining processes to
providing invaluable insights and enhancing security, AI elevates the role of
accountants, empowering them to add significant value to their organizations.
The change inspired by AI can feel threatening, but AI is a powerful tool that
complements accountants’ expertise and enhances their ability to deliver
exceptional financial services. Embracing AI in accounting isn’t about replacing
human expertise; it’s about unlocking the full potential of financial professionals
and paving the way for a more efficient and prosperous financial future.

How to leverage AI in finance and accounting

Enterprises that jump on the digital transformation train by adopting AI have the
advantage as they can leverage AI to all aspects of accounting, including improved
operational efficiency, reduced costs, and more significant ROI. For instance:

Payables/ Receivables Processing

Invoice processing is considered one of the more time-consuming and labor-

intensive parts of the enterprise. AI-based invoice management systems help by
increasing the volume, performing zero-error processing, and improving vendor
relationships.

Supplier Onboarding

The AI-based approach helps expand customers' reach, increase revenue, and
evaluate the suppliers with minimal human intervention.

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Procurement Processes

Purchasing and procurement processes mean a lot of paperwork - sometimes in

different systems that are seemingly unconnected! With AI-driven workflows,
finance teams can process unstructured data while automatically mitigating
governance/compliance/risks.

Auditability

Data analytics establishes the scope of the audit, and risk assessment as RPA and
analytics facilitate tracking of routine transactions. Cognitive computing,
predictive analytics, and AI enable tracking more complex transactions that go
with estimates and judgments.

Monthly and Quarterly Cash Flows

AI-based tools empower enterprises to reconcile financial activities quickly,

understand historical cash flows, and predict future cash requirements. AI
applications also ensure that all financial processes are secure by collecting data
from many sources and integrating the data.

Expenses Management

When manually done, managing expenses-related processes is not only filled with
complex paperwork - but also prone to fraud and data breaches. Expenses
management automation ensures almost zero errors and alerts the team to a breach
if it occurs.

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Inherent challenges of adopting AI in accounting:No doubt, the stakeholders of an
enterprise have recognized the value of adopting AI-powered systems and
applications. However, it also requires a shift in the mindset of more than the
CFOs. The finance and accounting professionals need to make the shift and equip
themselves with the necessary skills and knowledge.

The finance teams must appreciate that they are now free to contribute to new
business relationships, improve existing partnerships, and work from a position of
strength, thanks largely to AI and the resulting critical insights.

Enterprises must not only invest in technology but also the workforce required to
handle said technology. It means that they must also provide proper training and
support for the teams to use AI to optimize productivity efficiently.

As advanced technology evolves, it will only become more sophisticated, with

more tools and systems becoming available to finance and accounting. The rapid
expansion into digital transformation with AI and automation sets the pace for
quick learning and the adoption of new ways of time and cost-cutting.

Finally, finance and accounting teams adopting AI to their practice will be better
able to analyze a tremendous amount of data, identify patterns and trends. Even
better, they will be able to use the latest technology and tools to support various
working modes and geographies by taking over routine tasks that are better suited
to machines.

FİDAN SÜLEYMANLI

Which country use the artificial intelligence on financial accounting?

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 Several countries are using artificial intelligence (AI) for taxes and audits. AI
technologies are being employed to streamline tax processes, enhance efficiency,
and improve accuracy in tax assessment and auditing procedures. Here are a few
examples:

1. United States: The Internal Revenue Service (IRS) in the United States has
been exploring the use of AI for tax enforcement and compliance. They use AI
algorithms to analyze tax returns, identify patterns, and detect potential fraud
or errors.
2. United Kingdom: Her Majesty's Revenue and Customs (HMRC) in the UK has
been utilizing AI to improve tax compliance. They employ AI tools to analyze
tax data, detect irregularities, and identify high-risk cases for further
investigation.
3. Australia: The Australian Taxation Office (ATO) has implemented AI
technologies for tax compliance and auditing purposes. They employ AI
algorithms to analyze tax data, identify potential tax evasion or fraud, and
prioritize audits based on risk assessment.
4. Estonia: Estonia is known for its advanced digital governance, and they have
integrated AI into their tax administration system. Their AI-powered tax
system, called "e-Tax Board," automates tax processes, facilitates tax filing,
and performs risk assessments to ensure compliance.
5. China: The Chinese tax authorities have been using AI for tax administration
and enforcement. They leverage AI algorithms to analyze large volumes of tax
data, identify inconsistencies, and detect potential tax evasion cases.

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EMİN

Accounts Payable (AP):

Company A orders raw materials from Supplier X. The materials are delivered
on January 1, but Company A has until the end of the month to make the
payment. During this period, the cost of the materials is recorded as an
accounts payable.

Accounts Receivable (AR):

Company B provides consulting services to Client Y during the month of

February. The services are delivered, and the agreed-upon payment terms are
net 30 days. As of the end of February, Company B recognizes accounts
receivable for the services provided but not yet paid by Client Y.

In both cases, the financial transactions involve a time delay between the
delivery of goods or services and the actual payment, leading to entries in
accounts payable or accounts receivable.

The world is developing every day. Due to development, there are changes in
many areas. In our time, the role of artificial intelligence is increasing.
Financial accounting is one of the areas where the role of artificial intelligence
is played. Financial statements consist of many small aspects. Considering that
financial reports should be disclosed to the public, and in this case, the

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information presented in the report should be understandable for everyone. In
this case, artificial intelligence is very important, because artificial intelligence
can identify and analyze patterns and trends that are invisible to humans. In
short, artificial intelligence helps accounting professionals a lot and makes
their work easier in decision making. Artificial intelligence develops every day
and becomes a part of our life. We think it will be very important in financial
accounting and other fields in the future.

References list

https://www.techtarget.com/searchenterpriseai/definition/AI-Artificial-
Intelligence

https://www.aspiresys.com/artificial-intelligence-in-finance-and-accounting/

https://leasequery.com/blog/ai-accounting-impact-embracing-the-future-of-
finance

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