Empowering accounting professionals: The transformative role of Generative AI in accounting and financial reporting

Talking points

• Generative AI (GenAI) technology has the power to transform accounting and financial reporting.
• GenAI can help professionals be more effective in executing tasks such as planning, research, and product development.
• GenAI does not replace human judgment and experience, but it can enable professionals to improve quality and provide strategic insights.

Exploring the possibilities of Generative AI in accounting and finance

Seasoned accounting professionals will easily recall the type of work we did early in our careers: data collection, research, and writing, as well as presentation and summary. Now, it’s possible for GenAI to create faster, more comprehensive ways of performing these tasks, so junior analysts can be more effective, focus on gaining relevant professional experience, and generate more value-additive insights from their work.

Large language model (LLM) technology has led to rapid advances in GenAI—a software that can write coherent text and create images and code at sophisticated, near-conversational levels. The potential implications for accounting and financial reporting are nothing short of remarkable. GenAI can accelerate the way accountants prepare and process documents and complete tasks. Despite emerging regulation and risk considerations, one thing is clear: GenAI is moving full speed ahead. Well-prepared accounting functions can harness its financial reporting capabilities to improve their accounting research, competitor analysis processes, and documentation.

A day in the life of a GenAI user

Let’s consider a potential use case—how GenAI might help a junior analyst (Lee) in the financial research and accounting department of a multinational company, during a typical workday.

First thing in the morning, Lee checks her phone’s GenAI-aggregated news feed to catch up on overnight markets and industry news.

Accounting research

When Lee gets into the office, her manager reminds her that she owes a draft accounting position paper to support the company’s proposed accounting treatment for research and development (R&D) costs associated with new products under development. Luckily, the company recently launched an internal GenAI tool to assist professionals with research. Lee uses the tool to research and summarize the company’s previous R&D position papers and generate a draft. While evaluating the cited accounting guidance, she notices that certain SEC guidance was omitted. Lee instructs the tool to add considerations for relevant SEC guidance. While GenAI helps Lee perform these tasks in a day rather than potentially weeks, she still must verify accuracy and completeness of facts, confirm the relevance of cited guidance, and evaluate judgments before submitting it.

Competitor analysis

Later, Lee’s manager asks her to research competitors to analyze their sentiment toward future earnings. Lee uploads the certain sections of MD&A from the latest 10-Q or 10-K for the company and an expanded number of competitors, selected based on Lee’s judgment, into the tool and asks it to analyze information regarding future financial performance. She then prompts the tool to conduct an analysis of sentiment and common themes to determine which company feels more positively about its earnings outlook. The tool evaluates transcript statements based on terms from Lee’s prompt including “CAGR,” “growth strategies,” and “investment strategies,” and then summarizes each company’s outlook.

With an expanded number of companies and a dynamic analysis, Lee can formulate more holistic observations and recommendations based on deeper data analysis than under the previous process.

Business impact

GenAI can be a powerful tool for professionals to more efficiently prepare effective analysis or documentation and enhance their judgments in a variety of areas, including financial planning and research. However, while GenAI can jump-start accounting and financial reporting processes, it still requires a driver at the wheel. Since GenAI can be inaccurate and miss nuance, experienced professionals must oversee and evaluate outcomes. Professionals may also require training to formulate effective GenAI prompts and guide it to perform a task.

Deloitte is exploring these GenAI capabilities through labs with our clients. Reach out if you’re interested in learning more. Read our recently published report, Demystifying algorithms and artificial intelligence, to explore how algorithms are affecting the finance and accounting world. Look out for our upcoming perspective on the “Impact of AI in financial reporting and internal controls,” and read about how your company can keep up in this rapidly growing field.

Blog images generated using Adobe Firefly.

The services described herein are illustrative in nature and are intended to demonstrate our experience and capabilities in these areas; however, due to independence restrictions that may apply to audit clients (including affiliates) of Deloitte & Touche LLP, we may be unable to provide certain services based on individual facts and circumstances.

This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte shall not be responsible for any loss sustained by any person who relies on this publication.