[Accounting in the AI Era]② Will Human Accountants Disappear... Audit Conclusions Ultimately Made by Humans

Strength in Detecting False Financial Statement Reporting and Analyzing Large Data Sets
Audit Conclusions Remain the Domain of Human Accountants... Securing AI Talent is Key to Competitiveness

With the advent of ChatGPT, jobs that may disappear due to artificial intelligence (AI) are being discussed. Accountants are no exception. Will the 'human accountant' gradually disappear? Experts say this is still a distant story, at least in the accounting sector. Above all, AI cannot derive audit conclusions necessary for audit opinions. Especially legally, audit conclusions remain the exclusive domain of 'human accountants.'

Oh Ki-won, head of the audit division at Samil PwC, explained, "Under current domestic laws and domestic external audit standards, AI cannot replace the judgment unique to accountants or derive audit conclusions for audit opinions, so it cannot be said that AI performs audits."

However, expectations for the era of accounting AI are gradually forming. The industry views AI as helpful in detecting accounting fraud and embezzlement. Following a large-scale embezzlement incident last year, market vigilance has increased, and the utilization of digital audit tools, which are useful for detecting false financial information and excel at analyzing large volumes of data, is rising.

According to the '2022 Accounting Audit and Digital Audit Awareness Survey' conducted by EY Han Young targeting 598 employees engaged in accounting, finance, and audit work at domestic companies, 89% of respondents said digital audits helped detect embezzlement or fraud. By category, the top response was that digital audits are useful for detecting false reporting of financial information. This was followed by answers indicating that digital audits helped detect embezzlement through sales accounts, fictitious inventory asset recording, fictitious tangible asset transactions, and misuse of stored cash deposits. The biggest advantage of digital audits was cited as the ability to analyze and process large volumes of data, making it easier to identify accounting errors or fraud.

"If the task is highly repetitive, automation potential is high"

Opinions are divided on whether the profession of accountant will become unnecessary due to AI advancements. Accountants are cited as a major profession likely to be replaced by AI. According to the LG Economic Research Institute's report 'Job Risk Diagnosis by AI,' the probability of job replacement for accountants and tax accountants among professionals is 95.7%, ranking 19th to 20th out of 423 analyzed occupations. A representative from LG Economic Research Institute explained, "Even professions requiring high expertise, like accountants and tax accountants, have a high potential for automation if the tasks involve highly repetitive procedures based on certain manuals."

Global experts also consistently raise the view that accountants are among the professions threatened by AI. Professor Brett Caraway of the University of Toronto in Canada predicted, "I don't think AI technology will replace all knowledge-demanding professions, but certainly some lawyers and accountants will lose their jobs." This is because machine learning, which accumulates data the more it is used, can apply data more precisely than humans.

The accounting industry has rejected these claims. Lee Kwang-yeol, head of the audit division at EY Han Young, said, "Facing changes in the corporate environment such as the surge in information volume due to digitalization and the expansion of non-face-to-face work caused by COVID-19, accounting audits are shifting from traditional analog methods to a completely new digital paradigm," but emphasized, "Innovation can only be achieved if there are experts who can handle the latest audit tools that maximize technology with insight."

It is expected to take considerable time before AI can replace human accountants. Oh Ki-won said, "Under the International Financial Reporting Standards (IFRS) system, individual cases must be judged based on principles, and it will be difficult for AI to make clear decisions like human accountants," adding, "It will help in automating tasks and improving efficiency in simple repetitive work."

Han Eun-seop, head of the audit division at Samjong KPMG, also said, "Although social interest in reliability and transparency is increasing and digital accounting audit technology is advancing, it will be difficult to replace the judgment role of accountants." However, he added, "Digital technology-based accounting audits will automate existing simple repetitive tasks and increase the probability of detecting fraud or errors in high-risk transactions, realizing high-quality accounting audits."

"Accountants who know how to utilize AI will have higher survival chances"

US economic media CNBC quoted experts saying, "The professions of lawyers and accountants will remain, but lawyers and accountants who know how to use AI will inevitably replace those who do not." This aligns with the accounting industry's push to expand new IT solution businesses leveraging financial and management expertise. The 'Big 4' accounting firms (Samil PwC, Samjong KPMG, Deloitte Anjin, EY Han Young) are competitively applying the latest IT technologies to their work, and mid-sized firms are also actively adopting technology.

Samil PwC has commercialized its digital audit process for use by small and mid-sized accounting firms facing manpower shortages. Partner Lee Seung-hwan of Samil PwC explained, "The robotic platform is a cloud system that can utilize audit automation tools and is already used by more than 20 accounting firms," adding, "It is leading not only its own revenue generation but also improvements in audit quality and efficiency across the accounting industry." Jang Su-jae, head of the accounting audit division at Deloitte Anjin, said, "We are strengthening digital service capabilities that integrate the latest technologies such as AI and big data into audits and accounting advisory."