ChatGPT—Your Firm’s Best New Employee

By William Stromsem, CPA, J.D.

Assistant Professor, Department of Accountancy, George Washington University School of Business

 

You need to learn about ChatGPT. It is likely the greatest opportunity and greatest threat to your practice. ChatGPT is smarter and writes better than anyone in your firm and it is getting exponentially smarter by the day. Many firms and clients are probably already using it, and those CPAs who adopt and learn to use its power will outcompete those who don’t. Some firms are now adopting the technology and your practice will be radically changed in the next two years.

Some of the practice implications of the technology include:

• Clients who use AI may not need as many hours of service from your firm. There will be fewer work hours because of less client needs and because AI will do the work faster and more efficiently. We sell time and expertise, and these may become less valuable.

• With fewer hours, accounting firms may not hire as many entry-level staff members. With fewer entry-level accountants, it will be harder to develop the type of experience that can direct and review AI work. We may need fewer junior and senior accountants, but where will we get the managers and partners? Recruiting will have to be re-directed to attract those with skills in directing and reviewing AI work.

• With automated processes for serving clients, large firms may be able to easily take on smaller clients whose fees were not previously worth the overhead.

So, what is ChatGPT; how can it help you; what risks are involved; what are the implications for your practice and what are the steps to adopt it. 

What is ChatGPT?

ChatGPT is Chatbot Generative Pre-trained Transformer artificial intelligence program that consults a vast database and communicates results in human terms. It can be used in conjunction with other programs like PowerPoint, Word, Excel and various accounting software programs. From November 2022 when it was launched to the public, it attracted over 100 million users by January 2023. It allows you to direct research into a vast database and receive communications that are well-written and tailored for specific audiences. All large tech companies are developing competing or specialized versions of this Microsoft product, and this will undoubtedly result in more innovative and creative applications. It can access websites, books, articles and material that you provide to it. 

Using ChatGPT is like hiring an extremely knowledgeable robot who can help with a variety of accounting tasks such as training, research, client communications and data analysis. In competition with humans in professional endeavors, it beat law students in taking the bar exam, beat medical doctors in patient communications and although students did better on university accounting exams, it only did better where there were unique fact situations and the machine won on concept questions. The robot has better grammar and composition structure than most college-grad writers and can be set to reach audiences with varying levels of sophistication. It is available in various languages and can even produce output in various formats, including Shakespearean English to rap to poetry. The Writer’s Guild of America is striking on various issues, but one of them is to limit the use of ChatGPT in replacing writers of dialog and jokes.

How can it help CPAs?

Uses for ChatGPT are myriad, often limited only by the creativity of the person who uses it. It improves client relations through faster and better communications; performs statistical analysis including data scrubbing; it can help train your staff; and it can free you and your staff from many repetitive and time-consuming tasks to spend time on strategy and implementation of plans. It can prepare emails, memos or client newsletter items and can prepare presentations for clients, complete with scripts, PowerPoint slides and references. It can find the words to simply explain more complex issues, something that often takes a great deal of your writing time. It can clearly explain FASB or IRS rules in terms that are understood by clients. Your communications will likely be better if you use ChatGPT for drafting of almost anything. Each presentation is unique and not copyrighted. You just submit a few prompts on what you want and how you want it to be tailored and the draft comes instantaneously, like a song from a smart speaker.

It can be used to analyze financial data to identify trends and make more informed decisions. It can analyze market data to help identify industry trends and competitor moves. It can also be used to predict future results based on past performance. It can simply perform multi-step complex processes, like transfer pricing analysis. With virtually instantaneous results, real-time analysis will be more valuable for swift action.

Costs decrease and staff job satisfaction may improve as more repetitive and mundane work is performed by AI. 

Risks

In 2014, Steven Hawking, the renowned English theoretical physicist and futurist said, “The development of full artificial intelligence could spell the end of the human race.” He envisioned that, “It would take off on its own and re-design itself at an ever-increasing rate." And we all remember the murderous robot Hal in “2001: A Space Odyssey.” We may not have a Hal taking over our world yet, but there are some very practical current risks.

As we increase our reliance on AI, CPAs may lose their own analytical skills. This is common with reliance on technology—few people under age 40 can read maps or navigate without the use of GPS. At some point in the future, we may not be able to drive with improved self-driving car technology.   

ChatGPT relies heavily on the internet and is prone to garbage-in/garbage-out errors. There are undoubtedly errors in the database being used by ChatGPT. Also, if not properly queried, it may respond to a question that is different from the one you meant to ask. ChatGPT sometimes misunderstands technical terms of the accounting profession. These problems can be corrected by a knowledgeable reviewer and ChatGPT can provide a bibliography for its work so that the reviewer can evaluate the quality of the output. If you are not satisfied with the response given, you can redirect the research—the revision results are produced immediately.

ChatGPT may not know the context or history of a particular client issue. In its present iteration, it may not understand nuisances and subtleties of human communications, and it is important to remember that ChatGPT is not a human being when you are communicating with it. For erroneous ChatGPT information passed along by a CPA firm, the firm has potential liability and must perform due diligence in communicating with clients on action items. 

ChatGPT may be inappropriate for highly personal communications, particularly with attribution to ChatGPT. In a widely distributed email, Vanderbilt University expressed sincere sympathy over a campus shooting at another school with the email signed “warmly” by the staff members. A small note at the end of the text said that ChatGPT had been used to draft the email, giving the impression of either a lack of feelings or lack of ability to express them. 

In the past, ChatGPT was not as careful as we might have wanted on issues of political correctness. This has been greatly improved, but products should be reviewed for sexism, racism and other “isms” that reflect items found in its database. Earlier versions also resulted in occasional fantasizing when presented with an ambiguous question that it was not equipped to answer.

Because of the potential for greatly increased communications as a result of ChatGPT, there is an increased risk of sending out erroneous or inappropriate communications to a wide audience, risking professional reputation for mass-distributed erroneous information.

Occasionally, ChatGPT will answer a question with dated information that more closely responds to the query than more updated information. The database is constantly developing, but currently requires careful review of sources used—this can be done in part by requesting a bibliography of sources used in preparing an article.

Practice implications

Clients who use AI may not need as many hours of service from your firm. There will be fewer work hours because of less client needs and because AI will do the work faster and more efficiently. We sell time and expertise, and these may become less valuable.

With fewer hours, accounting firms may not hire as many entry-level staff members. With fewer entry-level accountants, it will be harder to develop the type of experience that can direct and review AI work. We may need fewer junior and senior accountants, but where will we get the managers and partners?  Recruiting will have to be re-directed to attract those with skills in directing and reviewing AI work.

By automating and streamlining certain aspects of client service, large firms can serve smaller clients whose fees may not have been sufficient to cover the cost of manual service.

Other CPAs who are nimbler in adopting and using AI will outcompete you. 

Because ChatGPT products appear well-written and authoritative, it will require more critical expertise to be able to recognize its errors. “Seems reasonable” will no longer work in evaluating research—ChatGPT will almost always appear to be reasonable. Firm-developed products and items received from clients, staff and others will need to be reviewed before being relied on. Note that some staff are already using ChatGPT to complete assignments.

New skills will be needed to communicate with AI. What questions should be asked and how should ChatGPT be prompted to produce the desired results? Firms will need to learn how to communicate with ChatGPT—a badly tailored prompt can elicit an answer to the wrong question. Ambiguous questions will be answered by ChatGPT based on its understanding and that may not give you the answer to the question that you sought.

Employees will be impatient with firms that do not use AI and instead use them to perform routine, repetitive and mundane tasks. Firms must train staff and show that they are embracing AI.   

New guidelines for employees may be needed to document and control the use of AI. 

As use of AI becomes more widespread, clients will expect a higher quality product.

Accounting education will change with answers to routine questions asked on exams not needing to be learned because they are easily accessible online. Education will be more skewed to using and reviewing AI and to strategy and implementation issues.

Your value may be more strategic than compliance-oriented services as more functions are automated.

How to adopt

Many CPAs eschew the idea of using a robot to write their professional communications or analyze client data, and we all like to feel that our expertise and personal style are the hallmarks of our practices. AI is not intended to take from these, but to augment them. It can research and write better than you can, and it can analyze data more powerfully and faster than you can. You will be freer to focus on strategy and implementation and to work on more personal and rewarding services to your clients.

It is important to understand that we are already using basic forms of AI in bookkeeping and tax return programs where the computer auto-fills the other side of a journal entry or asks intuitive questions and identifies possible errors in a tax return preparation and even some more basic spell-guard and grammar-guard in word processing software. These have strengthened our practices and freed us to work on more rewarding tasks. ChatGPT just takes this to a radically higher level.   

Download the software, give it a test drive and you will want to use it more.    

To ease your way into AI, you might consider a firm ombudsman who will be charged with learning about applications, briefing others and facilitating adoption by the firm. Take cues from younger staff who are more technology-based in their approach to problems.

This article was written by ChatGPT.  (Just joking … or am I?)