Revolutionizing Accounting: The Role of AI in Transforming the Profession

Welcome to FinTech TV.

I'm Remy Blair.

The role of artificial intelligence in accounting is evolving fast, and it is changing the profession from the ground up.

Now accountants have long relied on manual tasks, think data as well as reconciliations and basic reviews, but now.

AI especially more advanced agentic tools of taking over those functions.

So what does reimagining accounting really look like?

Well, joining me here at the New York Stock Exchange to weigh in is Mike Klitmeyer, who is CEO at Flowcast.

So Mike, great to have you here.

Yeah, thank you so much for having me.

When people think of AI, they might be thinking about LLMs or even language models and chat GPT, for example.

But when it comes to AI in accounting, what does this actually look like for professionals?

So one of the things that we really need to consider in accounting is the fact that we get audited at the end of the year.

And so auditors.

Come out and they take a look at what we've done manually but also how our technology has operated.

So when PWC comes out, Deloitte, EY, KPMG, whatever, they're going to come and look at our numbers and our systems and processes.

And one of the concerns that we see with large language models is that if they are actually doing accounting work that involves judgment, there's a lot of risk of that not passing audit.

And so when we're building AI and we're working with AI to help drive efficiency with accountants, we always have that auditability in the back of our mind.

I know it's a boring thing, but like, hey, it is what it is in accounting.

And so LLMs present an amazing opportunity to empower accountants to really automate a lot of their own work.

That's how we think about it and that's how we see the role of the accountant evolving over the next, call it 5 or 10 years is more it'll look more like a CPA with extreme knowledge around gap accounting, financial reporting, Wall Street, things like that, and then they'll have the combined skills.

It a more of a transformation like software developer where they're able to automate their own boring work that they have to do, level up, kind of become the reviewer of any judgment calls that are made by the AI, by whatever AI agent is working, and thereby pass audit, do less manual work, and get to elevate the role and focus on the more fun parts of accounting, which is like those judgment calls or business changes.

We need to understand how to do things in a new way or an acquisition happens or you go public.

There are all these big events that are a lot more fun to do that type of work on rather than a manual reconciliation.

Yes, and indeed when we're talking about accounting, accuracy is key here, and it's very important to have that human judgment, that human aspect, and considering that regulatory changes to come into play.

So when it comes to accountants thinking for accountants, tell us why you think this is integral and what does this mean for innovation?

Well, so thinking about the audit is just a necessity, you know, whether, whether we like it or not, we're going to get audited at the end of the year, and the CFO and CEO are going to have to sign off on financial statements and audit reports and the audit firm, they need to know how the technology is working and functioning so they feel comfortable with it.

That's very easy to do with software code as it exists today because we know what the code is doing with a lot of these models.

The people building the models don't really know how they work, and so to expect an audit firm to learn how to audit a very complicated model just isn't going to happen.

And so if we do head into a world where LOMs are doing all the work, that just means audit firms are going to have to replicate all of the work, which means audit fees are going to go through the roof.

And so we need to think about both of those factors is how do we drive efficiency but do it in an accurate audit friendly way.

That's where we think it's a mixture of software development plus the.

And in the loop reviewing the jugman calls.

So walk us through transaction matching and what AI looks like when combined with transaction matching, especially within accounting.

Yeah, so there are a host of transaction matching opportunities within an accounting department.

This is generally around reconciliations, but also just like any system that you have.

So for example, when I was doing accounting, I was the revenue guy.

I would look at Salesforce and NetSuite and be reconciling information across that.

So I'm sitting there manually in Excel just going back and forth doing all this stuff.

We've built a product called AI Matching where we're able to assess those transactions, start to do some matching on our own, and then we create rules behind the scenes that then automate the remainder of that work.

So there are processes where, like, gosh, I wish I had it when I was doing this work.

I think back to it and this one process was about a 30, it was a 4 day thing for me, so I was working, you know, anywhere from 40 hours.

We worked a lot back in the day and so yeah, I was working like 40 to 50 hours on just this one project, but it was really important, so we were capturing revenue.

We built that for clients who've taken that down to be a 5 minute thing at this point and all you're doing is reviewing the exceptions to it.

You're not looking at all the stuff that's kind of easier to do.

So yeah, matching is a really powerful tool and takes some really boring work off everyone's plate.

While you were walking us through that, I thought to myself how tedious that actually sounds.

So going from several days, several hours to a matter of less than an hour, that is considerable.

So finally, you've highlighted a lot of the opportunities, but what does this mean for the future of accounting?

So I'm very excited about what it means.

There's a lot of fear in accounting that, hey, is this going to automate jobs?

There's a lot of worry about that, but at Flowcast, what we've seen behind the scenes is there's a really big talent gap within accounting right now.

It's actually very hard to hire qualified accountants.

Fewer people are majoring in the profession.

There's a lot of burnout because of how many hours we're working and so people are just wholesale leaving accounting as well and going to do other things.

For example, we hire a lot of them at Flowcast.

They come and do something different at Flowcast because they're excited about accounting but don't want to do that work anymore.

So I think we can.

Help accountants be excited about the work they're doing within an accounting department by empowering them with our solution to automate that boring work and then allow them to focus on the more interesting parts like when you're going to college and learning about accounting, it's interesting.

There's rules.

It's a puzzle you're pulling together and it's problem solving.

We want to allow accounts to do the problem solving and not have to do the boring stuff.

OK, Mike, well thank you so much for joining me and sharing the story of Flowcast.

Thank you for having me.

I really appreciate it.