Countless tales have been written about the anticipated demise of Excel. Yet despite these prophecies, Excel remains the go-to tool to for accountants. Spreadsheets are used for budgeting, forecasting, financial reporting, determining tax computations and much more. With the addition of artificial intelligence capabilities to Excel, this wicked tool has new life. For some this is welcome news. For others … let the nightmares begin!
Microsoft has been steadily rolling out new Office 365 AI capabilities. Most notable is Insights in Excel, which automatically detects and highlights patterns. This new capability analyzes large, complex data within Excel, and does so significantly faster than a mere mortal could. The efficiencies gained by minimizing the time accountants spend on complex tasks such as audits, forecasting and planning stand to be very impressive. And because it is powered by machine learning, Insights in Excel will provide increasingly advanced analysis as usage of the feature grows over time. In doing so it will help to elevate an accountant’s role to more of a business partner (or help cement their existing role as a business partner).
When you consider the possibilities, it’s hard not to fall under AI’s spell. However, it’s important that users proceed with caution. After all, if spreadsheets are wrong, so too is the analysis and the value of AI is lost. Furthermore, there are transparency issues associated with AI and machine learning that make compliance difficult, if not impossible, to demonstrate.
The dark side of AI
When dealing with business-critical data such as financial information, numbers must be accurate. This is especially true when working with data related to Securities and Exchange Commission filings, M&A activity, forecasting and planning, and financial close. Complex calculations where data is continually changing and those that require the use of cell functions are typically coordinated in Excel. However, Excel alone provides little to no protection against data corruption, and no way to validate numbers or identify risks. Therefore, any efficiencies gained using AI are lost and accountants are left scrambling to identify errors that originated in the spreadsheets in which AI data was based.
If that doesn’t scare accountants, consider this: Terror strikes in the dark – and when using AI and machine learning to build financial models, there is plenty of "darkness." Users know what numbers go in and what numbers come out, but what happens to those numbers once inside the “black box” remains a mystery. For accountants and finance professionals working in highly regulated industries, the true terror is not being able to validate models or explain them to regulators because of this “darkness.”
Proceed with caution
While all sounds like doom and gloom, it is not. There are many great benefits that stand to be gained through AI and machine learning. Yet it’s important for accountants to take the time to understand the risks and put steps in place to minimize them before jumping in full force.
AI is not replacing Excel. It brings new life to this amazing, time-tested technology. Therefore, accountants must remember that the issues inherent with Excel will not go away simply because AI capabilities are added. Firms must put controls in place to ensure that the Excel data from which they are basing their analysis is accurate and complete. Spreadsheet management technology will play a crucial role in ensuring the accuracy of Excel data that AI is leveraging. These solutions fill a very real void by providing insight into potential risk and errors that may be hiding in spreadsheets.
With AI and machine learning change is a constant. Numbers are always moving and shifting and calculations are fluid. It’s easy to get lost in the process and forget that transparency is no longer there. Look for additional controls that you can put in place to minimize potential issues. Understanding what the auditors will require from you and the firm is a good place to start. This is also an opportune time to review your spreadsheet policies to determine whether or not they need to be updated to account for the new AI features within Excel. Otherwise, those that jump into AI blindly will likely find themselves in a wicked situation.
