In the realm of modern accounting, Artificial Intelligence (AI) emerges as a disruptive force, promising transformative opportunities while presenting significant challenges. This article delves into the multifaceted landscape of AI in accounting, exploring its global trajectory, Indian implications, regulatory frameworks, and the proactive initiatives undertaken by the Institute of Chartered Accountants of India (ICAI).
Institute of Chartered Accountants of India
President’s Message – May 2024
Dear Professional Colleagues,
Amidst the dynamic landscape of technological advancements, Artificial Intelligence emerges as a radiant constellation, charting the course towards a future where innovation and technology intersect to redefine human potential.
In an era marked by technological disruption, Artificial Intelligence (AI) emerges as a transformative force reshaping industries, economies, and societies worldwide. For professional accountants, embracing AI entails not only understanding its mechanics but also harnessing its potential to drive efficiency and innovation. However, the rapid proliferation of AI also raises concerns about data privacy, security, and ethical implications.
As guardians of financial integrity, professional accountants bear the responsibility of navigating these complexities, ensuring that AI is leveraged responsibly to foster economic development while safeguarding against its misuse. By striking a balance between innovation and ethical considerations, accountants pave the way for a future where AI augments productivity without compromising integrity or trust.
Global AI Playbook
Being a Chartered Accountant, I am fascinated to witness the rise of Artificial Intelligence and its impact on global economy and its major ramifications for the society. The Bank of America & IDC reports indicates a remarkable growth trajectory, with global AI revenue expected to surge at an annual rate of 19%, reaching $900 billion by 2026 from $318 billion in 2020. Also as per Goldman Sachs report Generative AI could raise global GDP by 7% (or almost $7 trillion) and lift productivity growth by 1.5 percentage points over a 10-year period, positioning AI as the cornerstone of the largest commercial opportunity in today’s dynamic economic landscape.
However, alongside these transformative promises, the advent of AI also raises significant questions, particularly regarding its impact on employment markets. With the potential to automate the equivalent of 300 million full-time jobs as per research by Goldman Sachs, the forthcoming wave of AI promises unparalleled innovation but also profound shifts in the global workforce. AI’s revolutionizing effect on work gradually reshapes our workspace into a more streamlined and automated environment.
Roughly half of exposed jobs stand to benefit from AI integration, leading to enhanced productivity. The evolving workforce demands a shift in core skills, with creative thinking, analytical thinking, technological literacy, curiosity, lifelong learning, resilience, flexibility, agility, AI, big data, and systems thinking emerging as top requisites. The World Economic Forum (WEF) predicts that AI will generate 12 million more jobs than it displaces by 2025.
Every coin has two faces, the brighter side of Artificial Intelligence has a promising tomorrow that shall be a catalyst in boosting the global economy. In fact, as per a survey report most Global Tech companies are still unprepared for AI as aspects like computing infrastructure and corporate policies on ethical use are not yet “AI-ready” and AI investments will need time to pay off over next two years.
Beyond the specter of job displacement, as outlined in the WEF Global Risk Report, AI and its affiliated technologies present a spectrum of risks encompassing misinformation, biased content dissemination, privacy infringements, cybersecurity breaches, ethical quandaries and deepfake manipulations leading to erosion of trust. Such matters warrants thorough examination and prompt resolution.
AI – India
As per India AI 2023 Exert Group Report, AI is expected to add USD 967 billion to the Indian economy by 2035 and USD 450–500 billion to India’s GDP by 2025, accounting for 10% of the country’s USD 5 trillion GDP target. As per a report by IIM Ahmedabad & BCG in India alone, successful adoption of AI could add up to 1.4 percentage points annually to real GDP growth. In the vibrant landscape of India’s technological advancement, the integration of Artificial Intelligence has emerged as a transformative force towards the mission of Viksit Bharat, heralding a new era of innovation and economic growth.
The India AI Program, with its substantial budget allocation of 10300 Crore, stands as a testament to the nation’s commitment to nurturing a robust AI ecosystem. With a focus on building indigenous language models, fostering talent, and driving application development across critical sectors like Governance, Healthcare, and Agriculture, India is poised to leverage AI as a catalyst for socioeconomic development. Spearheaded by initiatives like the National Educational Policy 2020, which has embedded AI in the educational curriculum, India is working towards cultivating a future-ready workforce.
India’s AI prowess is underscored by its remarkable achievements on the global stage. Garnering top rankings in AI skill penetration, AI talent concentration and Peak AI’s Decision Intelligence Maturity Scale, India demonstrates its readiness to lead the AI revolution. The exponential growth in AI expenditure, coupled with the burgeoning AI talent pool, paints a promising picture of India’s AI trajectory.
However, amidst the remarkable progress, challenges such as market dominance, data privacy concerns, and ethical dilemmas necessitate a strategic approach towards responsible AI governance. As India prepares to enact comprehensive AI regulations, it embarks on a journey to harness the boundless potential of AI while safeguarding the interests of its citizens and fostering inclusive growth.
Regulating AI – Globally and India
To regulate accountability, ethics, fairness, privacy, and societal impact, countries around the globe are making and implementing laws on Artificial Intelligence. The European Union has released the world’s first set of rules for the use of AI, which include transparency obligations to ensure that humans are informed when necessary. Countries including the USA, China, and the UK have set of rules for the technology and working consistently with time and bringing constant amendments. India is also running parallel and is in the process of formulating laws to regulate AI and technological advancements.
The Indian government will regulate Artificial Intelligence and data privacy so that it is only used for constructive purposes, and has created Data Privacy DPDP Act-2023 (Digital Personal Data Protection Act- 2023) and the Digital India Act, sets guidelines for emerging tech, emphasizing the responsible use of technology. Further the Indian regulator Competition Commission of India is also exploring the Competition law from the perspective to promote true and fair competition and protect abuse of dominance by large firms by exploiting AI. Similarly, the Comptroller and Auditor General of India is focussing on AI to uncover fake claims and conduct performance audits. The overarching aim is to use AI ethically and responsibly for the development of society.
Rethinking and Reimaging Profession in the Age of AI
The field of Chartered Accountancy is undergoing a metamorphosis, poised to further evolve with the integration of AI. Evidently, traditional tasks such as accounting, bookkeeping, payroll management, clerical duties, and administrative functions are on a rapid trajectory toward obsolescence. The rise of technology is call to action for the profession to move up the value chain and focus more on specialization as well as shift towards strategic roles in the industry and support stakeholders in driving the innovation and value creation.
Artificial Intelligence stands poised to revolutionize three key areas to transform the audit. Routine and Repetitive Audit Tasks, Fraud Detection, and Risk Assessment. These domains hold the potential to significantly enhance audit quality and bolster investor protection, marking a pivotal shift in audit methodologies. While the integration of AI and machine learning offers promising prospects, it’s important to acknowledge that AI-based audit tools are still in nascent stages. Recent efforts primarily focus on automating routine tasks, data collection processes, and backend operations.
Despite these advancements, the WEF Future of Work Report 2023 foresees a continued evolution in the accounting profession. As AI assumes a more prominent role, tasks reliant on critical thinking, judgment, and cognitive abilities are anticipated to remain challenging for AI to execute effectively, underscoring the enduring importance of human expertise in audit practices. Various studies emphasize that the cornerstone of future success lies in honing skills such as critical thinking, professional judgment, and human engagement.
To prepare for the impending changes, the profession must reimagine and reinvent itself and adapt proactively. Positioned at the intersection of technology and finance, our profession possesses the requisite expertise to navigate the AI landscape and facilitate stakeholders’ integration into the AI revolution. With our inherent capabilities, the profession stands poised to spearhead growth and value creation by pioneering AI-driven business models.
Essential to this journey is the profession’s commitment to continuous learning and adaptation, embracing the tenets of AI to shape the future of firms characterized by data, technology, connectivity, and talent. Furthermore, as trust remains the bedrock of successful endeavors, the profession bears the responsibility of championing the development of Responsible AI, addressing ethical quandaries, data risks, privacy concerns, and misinformation. The profession is poised to play a pivotal role in driving AI adoption and shaping the AI landscape in the country.
AI in ICAI
ICAI is aligning its efforts synergistically with the nation to attain the shared objective of fostering a resilient economy. The Institute has established a specialized Committee on Artificial Intelligence, paving the path for the strategic transformation. Another endeavour involves incorporating AI and technological advancements into the New CA Curriculum, aligning it with the National Education Policy (NEP) of 2020.
ICAI is actively engaged in nurturing talent and fostering skill development by spearheading the establishment of AI Labs within its framework. Collaborative efforts with AI startups, leading tech companies, governmental bodies, and prominent accounting firms are underway to seamlessly integrate AI into the CA profession and fortify the ecosystem. Furthermore, ICAI is diligently curating a comprehensive repository of educational content to enrich knowledge and enhance understanding in the domain of AI.
All educational material can be accessed using AI for gaining valuable insights and customized lessons. Similarly, the AI will empower professionals in doing multidimensional reporting for better decision making. Sampling in Audit may not remain relevant in times to come due to use of AI. The Reporting by auditors will be accessible in interactive mode in various vernacular languages.
By identifying emerging areas within the profession, guided by the evolving landscape of AI, ICAI is steadfastly working towards shaping the firms of the future, poised to thrive in an AI-driven era.
Competing in the Age of AI
Success in the age of AI is not about competing against machines, but about collaborating with them to amplify human potential.
As a profession our vision for the emerging AI paradigm, will be to redefine the future of audit with a steadfast focus on professional skepticism and discernment, to bolster the integrity and trustworthiness of our financial systems, while harnessing the transformative power of AI to drive value creation, promote inclusivity, and propel societal advancement. Further our profession will have the onerous task of safeguarding the interests of clients, the nation, and society at large by ensuring the ethical deployment of AI technologies to mitigate risks arising from AI.
Let’s work together to forge a future for India in the era of artificial intelligence that is not just prosperous, but sustainable, equitable, and filled with boundless opportunities for growth and advancement.
Important Developments
Envisioning New India with Stakeholders
In India’s journey to a $30 trillion economy and digital prowess, ICAI strives to shape the future by engaging stakeholders, envisioning emerging landscapes, and make meaningful contribution.
- Interaction with Chairperson, NFRA
Recently, we had the privilege to have an interaction with Dr. Ajay Bhushan Prasad Pandey, Chairperson, NFRA during the 431st Council Meeting, wherein he succinctly presented the India’s economic rise and emergence as digital economy and highlighted the important role and relevance of profession in navigating the economy amidst the technological advances. - Meeting with Secretary, MEITY
Similarly, we had the opportunity to meet and interact with Shri S. Krishnan, Secretary, MEITY to understand the India’s AI Strategy and collaborate with the Government in realising the AI potential for economic development through various initiatives like skill enrichment programs. - Past Council Members Meet
In our endeavour to be future ready, we recently held the Past Council Members meet on 27th April, 2024 to strategise and build the blue print for profession’s development in the age of AI. - Forthcoming Examination
I extend my heartfelt wishes to all 436,246 students gearing up for examinations across 591 centers spread in 298 cities across India and abroad. May your commitment, perseverance, and resilience pave the way for your success in your examinations.
CA. Ranjeet Kumar Agarwal
President, ICAI
New Delhi, 30th April, 2024
