How large tax and accounting firms can use AI

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The tax and accounting industry is on the cusp of a new era, fueled by the integration of artificial intelligence (AI) and generative AI (GenAI).

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The tax and accounting industry is on the brink of a significant transformation, driven by the integration of artificial intelligence (AI) and generative AI (GenAI).

The 2024 Tax Firm Technology Report highlights that 93% of large tax and accounting firms are either actively using, exploring, or considering AI technologies. This forward-thinking approach is essential as the industry continues to evolve and adapt to new challenges and opportunities.

Key areas where AI enhances tax services in large firms

AI’s impact goes beyond simple automation — it’s changing how firms handle complex tax information. Where professionals once spent hours searching through various sources, AI now connects tax concepts across platforms, making guidance and primary sources instantly accessible. This is particularly evident in multi-jurisdictional work, helping professionals navigate tax information with ease.

What’s more, the latest “agentic” AI tools can not only pull information and guidance from trusted sources and firm knowledge, but also apply it to client documents at a large scale as part of a semi-independent workflow — creating a true AI assistant for tax, audit, and accounting professionals.

Let’s explore five key areas where AI enhances tax services in large firms:

1. Improving efficiency and accuracy:

    • Automation of mundane tasks: AI can automate routine tasks such as data entry, compliance checks, and routine tax calculations, allowing professionals to focus on more complex and strategic work. A tax manager from a large Canadian firm noted in the 2024 Tax Firm Technology Report, “AI will speed up the research portion and repetitive tasks within the firm for sure.”
    • Improved accuracy: GenAI can improve the accuracy and efficiency of tax return scheduling and workflow management, leading to significant cost savings and better client service. Many large firms are already exploring or using GenAI tools, and they anticipate these technologies becoming a central part of their workflow within the next three years.

2. Strategic planning and analysis:

    • Data analysis: AI can help firms identify tax optimization opportunities, predict potential compliance issues, and provide real-time insights into financial performance. By using AI to analyze large datasets, firms can identify patterns and insights that might be missed by human analysts, leading to more informed decision-making and better strategic planning.

3. Client satisfaction and business development:

    • Meeting client demands: Client satisfaction is a key driver for technology adoption. According to the 2024 Tax Firm Technology Report, 43% of clients are requesting cloud computing solutions, and 10% are specifically asking for GenAI. Large firms are well-positioned to meet these demands, with 86% of large firms already using direct tax compliance solutions and 82% using client collaboration portals.
    • Streamlined access to information: Agentic AI can not only streamline access and understanding of complex tax concepts but also quickly extract and analyze client information from bank statements, minutes, financial plans, and a host of other document types. It also quickly turns working notes into professional client-facing memo language. This can significantly reduce the time and effort required to gather and analyze tax data, leading to faster and more accurate service delivery.

4. Workforce transformation:

    • New job roles: The introduction of AI is also expected to bring about new job roles and titles. For example, 53% of large firm respondents anticipate new job roles such as chief technology officers, AI consultants, and security analysts within the next 3-5 years. Firms that invest in comprehensive technology training for their staff will be better equipped to navigate the challenges and opportunities presented by AI.

5. Budget and investment:

    • Increasing budgets: To support these technological advancements, large firms are also increasing their technology budgets. The report indicates that 79% of all respondents expect their technology budgets to increase over the next 3-5 years, with large firms leading the way. Establishing formal metrics to measure the success of AI implementations, such as employee and client satisfaction, help desk tickets, and return on investment, can help ensure that AI is integrated efficiently and effectively.

Barriers to AI adoption in large firms and overcoming them

While the benefits of AI are clear, large tax and accounting firms face several barriers to its adoption. These barriers can be categorized into several key areas:

1. Lack of skilled personnel:

    • Barrier: One of the main barriers is the lack of personnel with the necessary confidence to understand and implement AI effectively. Given the pace of change in the AI world, colleagues may have limited experience of deploying the power of dedicated professional AI tools for tax, accounting, and audit.
    • Solution: Start small. Look for champions to review, assess, and experiment with AI solutions. Understanding the most impactful use cases for your firm will pave the way for successful programs to comprehensively upskill other employees. Of course, finding appropriate individuals may also form part of your talent strategy.

2. Resistance to change:

    • Barrier: Resistance to change is a common issue in any organization, and large tax and accounting firms are no exception. Some employees may be hesitant to adopt new technologies, fearing that AI will replace their jobs.
    • Solution: Foster a culture of innovation and continuous learning. Communicate the benefits of AI to employees, emphasizing how it can enhance their roles and improve their work-life balance. Encourage a mindset of collaboration and adaptability. Most importantly, provide the opportunity to experiment in a safe and controlled way. Experiencing the ability of AI tools to make monotonous work easier is a sure way to create converts.

3. Regulatory and ethical concerns:

    • Barrier: Regulatory compliance and ethical concerns are significant barriers to AI adoption. Tax and accounting firms must ensure that their AI systems comply with relevant laws and regulations, and they must address ethical concerns related to data privacy and security.
    • Solution: Tool selection matters. Consider the options available to you in terms of professional-grade AI products designed specifically for tax, accounting, and audit professionals, which may offer greater transparency — and fewer security and privacy issues — than general-purpose, free access AI tools. Broader organizational best practices include regularly updating your data governance policies, regularly auditing the AI systems you use, and keeping up to date with compliance and ethics guidance from regulatory bodies.

4. Integration with existing systems:

    • Barrier: Integrating AI with existing systems can be challenging. Many large firms have legacy systems that may not be compatible with new AI technologies.
    • Solution: Look for AI solutions that offer integration with existing knowledge and data systems out of the box. Then, collaborate with your technology partner to phase in further integrations smoothly and with minimum disruption.

5. Client communication:

    • Barrier: Clients may be skeptical about the use of AI in tax and accounting services, fearing that it may compromise the quality of service.
    • Solution: Communicate the benefits of AI to clients. Highlight how AI can improve the accuracy and efficiency of services, leading to better outcomes and greater value. Provide transparent and clear information about how AI is used and the safeguards in place to protect client data.

Embrace AI in your large firm for a competitive edge

The future of tax and accounting is undeniably intertwined with AI. Large firms that are proactive in adopting and integrating AI will not only enhance their operational efficiency and client satisfaction but also position themselves as leaders in the industry.

As one director from a large US tax firm stated, “I’m excited about better solutions for tax return scheduling and workflow management, freeing up time for our people to dedicate to more technical aspects of the job and not tedious administrative tasks.”

The time to act is now, and those who embrace AI will be well-prepared for the technological revolution that lies ahead. By leveraging AI to streamline access to tax information, improve efficiency in tax compliance, and enhance client service and communications, large tax and accounting firms can stay competitive and thrive in the digital age.

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