Robotic process automation is creating opportunities and challenges in the accounting industry
Most people are now familiar with artificial intelligence (AI) tools, such as ChatGPT, a chatbot that mimics natural human language. But while ChatGPT may be the buzziest AI tool of the moment, artificial intelligence has already begun creeping into a variety of business spaces, including accounting, through robotic process animation (RPA). Nathan Waddoups, assistant professor in the Daniels College of Business’s School of Accountancy, has extensively researched the use of RPA in accounting and shared his insights with the Daniels Newsroom.
What exactly is robotic process automation and how is it being used in accounting?
RPA is the use of easy-to-use computer programs (sometimes called bots) to perform repetitive tasks. You can think of them as an Excel macro on steroids. People like them more than macros because they easily work across several different programs, as opposed to strictly within Excel.
Bots are being used to assist with bank reconciliations, accounts receivable management, work paper creation, document validation, data extraction and pattern matching. Many news outlets like to publish that these bots are coming for accountants’ jobs. That is not what I’m seeing at all. These bots are great at doing very repetitive tasks that most accountants don’t like doing anyway. We aren’t seeing them replace jobs, but we are seeing them free up some accountants in the early stages of their career to do more exciting work.
Is this a widely used tool right now or is it still considered an emerging technology?
RPA is a multibillion-dollar industry, but I’d still classify it as an emerging technology. The survey evidence I’ve seen suggests that a small percentage of companies are currently using RPA, but that the number is growing rapidly. One interesting finding within the accounting realm is that tax accountants seem to be adopting RPA at a faster rate than auditors, potentially because of all the compliance and regulation issues with audit.
What are the key benefits of RPA for auditors?
RPA can improve efficiency and effectiveness of repetitive tasks. This could lead to substantial savings for audit firms. However, I personally think the biggest benefit is that maybe those first few years for public auditors won’t be such a grind of monotonous tasks. Hopefully the bots can take some of that away.
Are there any drawbacks or ethical considerations related to RPA for accounting?
Yes. I actually helped write a paper titled, “The Dark Side of RPA,” that covers some of these drawbacks. RPA does not require significant coding expertise, which is both a blessing and a curse for a couple of reasons:
- RPA sometimes functions as a Band-Aid instead of a cure to a problem. My co-authors and I have found evidence that RPA can unintentionally cause employees to think less about actually fixing bad processes and more about how RPA can be used to hold together the existing, suboptimal process.
- It’s great that the employees closest to the business processes can whip up a bot to help with a repetitive task, even if they don’t know how to code. However, this makes it very hard for a central group of information technology experts who are familiar with proper controls to manage all the bots. This can lead to malfunctioning bots (bots that put out bad data) and unknown bots. A company we interviewed ran into trouble with its external auditors because the company had no idea how many bots it had.
Tell us more about the two research papers you’re working on related to robotic process automation.
I’ve already mentioned the first paper, “The Dark Side of RPA.” Currently, all the research out there sheds a pretty positive light on RPA. We agree that RPA is a great tool, but with this paper, we wanted to shed light on some of the problems that RPA can cause.
The second paper was developed to solve some of these issues. My co-authors and I surveyed a bunch of companies and almost none of them had any sort of framework for developing and managing RPA technology. Thus, we worked in conjunction with a Fortune 500 company to develop a framework that will hopefully help companies avoid the pitfalls of RPA. We also think the framework could help companies avoid potential issues when they are being audited.
What else do we need to know about RPA for accounting?
There is currently a lot of hype around artificial intelligence due to ChatGPT. RPA companies are also feverishly working to integrate artificial intelligence into their bot software. This might, at some point, makze it so these bots can perform much more complex tasks. However, despite the hype, I have not seen anything that will substitute for a human’s accounting judgment. While some people are afraid of the technology, so far it is still quite simple in the accounting realm and is only taking away tasks that most accountants don’t want to perform anyway.