ARTIFICIAL INTELLIGENCE AND ACCOUNTING PRACTICES IN NIGERIA
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1.1 Background of the Study
The 21st century is an age of automation where accounting practice happens to be one of the industries at the forefront of this automation. In a revolving world that is becoming more technology centric, it is most appropriate to consider the ramifications of creating various forms of life from the revolving technological advancement. Among such disruptive technology that is changing operation of the world is Artificial intelligence (AI). Artificial intelligence alters the total lifecycle of accounting, not just as part of a firm’s financial management department. This result in the whole accounting process, the recording, manipulation, and interpretation of transactional data, to be done by software, with minimized reliance on manual transactional entries by people (Francis, 2013). Accounting field has a long history with artificial intelligence (AI) applications dating back more than 25 years mainly in the areas of financial reporting and auditing (Greenman, 2017).
Artificial intelligence (AI) is gradually modifying the operations of financial institutions and it is expected to increasingly take over core functions because of cost savings and operational efficiencies (Dilek, 2015). Recently, significant improvement has been made in artificial intelligence (AI) especially as it relates to accounting profession which has changed its focus from paper and pencil entry to computer and software entry. Although the adoption of AI in accounting firms may increase the efficiency in organizations, they must be careful with monitoring the costs and updates required for intelligent systems to avoid any risk and uncertainty (Gotthardt et al., 2019). However, the current AI adoption process seems to vary across countries and even between companies in the same country (Gotthardt et al., 2019; Nickerson, 2019). This raises some doubts about the usefulness of this technology and allows companies to have concerns about whether adopting AI is worth it or not (Nickerson, 2019).
According to Financial Stability Board (FSB, 2017), artificial intelligence is simply the application of computational tools to address tasks traditionally requiring human sophistication. Artificial Intelligence is an experimental branch of computer science that pursues its goal of creating an intelligent machine that can perform diverse tasks by using its intelligence. Dilek S, Çakır H, Aydın M (2015) found out that artificial intelligence (AI) has an outstanding feature such as Computational Intelligence, Neural Networks, Intelligent Agents, Artificial Immune which has made it to become an essential part of technology industry providing the heavy lifting for many of the most challenging problems in computer science. The basic strategy of Artificial intelligence has always been to seek out progressively more complex human tasks and show how computers can do them in humanoid ways or by brute force. It was observed in a study conducted by (Lombardo, 2017), that the technological power of the computer lies in its versatility, intelligence, connectivity and complexity rather than in its energy trust.
The application of artificial intelligence have expanded the focus of accountants beyond the limited information provided by financial statements, to taking advantage of textual data from social networks, video recordings, captured imagery, sensor data example (GPS locational data, RFID data), and combines the extracted features with accounting and financial information. The various functions of artificial intelligent allows accountants to automate a number of tasks such as reviewing source documents (example bank check, deposit slip, sales invoice), processing paper work, analyzing conference calls, emails, press release, news, and extract metadata from them, all of which could be additional supporting evidence used to supplement traditional financial attributes. These functions serve financial statement analysis, which is a comprehensive task. When accountants analyze financial reports, the machine scans and identifies each account and its balance and links these numbers to the related supporting evidences automatically, thus enabling the detection of irregularities (Issa, 2016).
As computer and artificial intelligent are infusing into all other technologies and has changed the method of doing business report showed that most entities from large corporations down to small and medium scale enterprises (SMEs) are aided by technology. Financial Stability Board (FSB, 2017), report indicated that both public and private sector institutions use artificial intelligence technologies for regulatory compliance, surveillance, data quality assessment, and fraud detection. The accounting systems and operations moved out of the arena of paper journals and ledgers into computer-based formats with the advents of computers which has powered the artificial intelligence in applying the methods of self-management, self-tuning, self-configuration, self-diagnosis, and self-healing to achieve optimum result in accounting operations.
The evolution of accounting software’s and the more recent development of artificial intelligence has completely transformed the accounting systems. Studies have revealed that computers internet, software/expert system and more recently advancement in artificial intelligent has influenced positively on the performance of accounting operations. Specifically, these impacts are: increased accuracy and speed (Ballada, 2011), improved external and internal reporting, reduction of paper usage, increased flexibility and efficiency as well as improved data-based system (Francis, 2013) as another plus to the use of computer and expert system in accounting. The study conducted by Murungi and Kayimba (2010) revealed that failure to use software/expert system technology in business almost implies that financial information may not be accurate as the utilization of computer technologies allows companies to maintain a competitive advantage over their rivals.
1.2 Statement of the problem
The most recent development of artificial intelligent has led to the advent of accounting software robots and more improved expert system. This phenomenon of new technology therefore has led to a lot of changes in business environment and has affected the way business operates. Based on reports, these change in technology had the tendency to disrupt one work of qualified accountants. Yudkowsky (2008), observed that the greatest danger of artificial intelligence is that people conclude too early that they understand it. Today, artificial intelligence (AI) is applicable in virtually all aspects of accounting operations which has generated fear and concern among professionals on the possible continual relevance human accountants in organization’s scheme of affairs in the nearest future. According to research done by the University of Oxford in 2015, accountants have a 95 percent change of losing their jobs as machines take over the role of data analytics and number crunching (Griffin, 2016). However, (Greenman, 2017) observed that this same report found that as technology progresses, some jobs are eliminated while others are created. More specifically the Association of Chartered Certified Accountant (ACCA 2013) shows that smart systems, bots and artificial intelligent tools have the challenges of progressively de-skilling of the Accountant.
More researches in artificial intelligent has emphasized that technological changes may result in new skills being valued and may also lead to a rethinking of the concept of “work” and if we aren’t careful increased income inequality and mass unemployment may result and increase social unrest particularly, had projected in their study that by 2025 more and more automation and technological advancement would displace human in their work (Dai & Vasarhelyi, 2016). It is from the above stated experience that, this research work attempts to investigate artificial intelligence and accounting practice in Nigeria.
1.3 Objective of the study
The objective of the study is to examine artificial intelligence an accounting practices in Nigeria. The specific objectives are;
- To ascertain the effect of artificial intelligence system on the performance of accounting function in institute of internal auditors.
- To identify the impact of Artificial Intelligence on the accounting industry.
- To determine the relationship between artificial intelligence and accounting practice in institute of internal auditors.
- To evaluate the automation process of the accounting system in Nigeria.
1.4 Research question
This study will be guided by the following research questions
- Is there any effect of artificial intelligence on the performance of accounting function in institute of internal auditors?
- Is there any relationship between artificial intelligence and accounting practice in institute of internal auditors?
- Does the automation process of the accounting system displaced accountants from their job in Nigeria?
- Is there any significant impact of artificial Intelligent on the performance of auditors in institute of internal auditors?
1.5 Research Hypotheses
For the successful completion of the study, the following research hypotheses were formulated by the researcher;
H0: there is no significant effect of expert system on the performance of accounting function in institute of internal auditors.
H1: there is a significant effect of expert system on the performance of accounting function in institute of internal auditors.
H02: there is no significant relationship between artificial intelligence and accounting practice in institute of internal auditors
H2: there is a significant relationship between artificial intelligence and accounting practice in institute of internal auditors
H03: the automation process of the accounting system has displaced accountants from their job in Nigeria.
H3: the automation process of the accounting system has not displaced accountants from their job in Nigeria.
1.6 Significance of the Study
The study will be very significant to accounting students, accounting firms and policy makers. The study will give a clear insight on the artificial intelligence and accounting practices in Nigeria. The study will enlighten us in advantages and disadvantages of artificial intelligence in Nigeria. The topical nature of this study has not been thoroughly explored in previous research studies, so the present study intends to fill in this gap. This study would also pave way for future studies on AI and accounting practices in Nigeria that would see to the safe and ethical deployment and regulation of AI in Nigeria.
1.7 Scope and Limitation of the study
The scope of the study covers artificial intelligence and accounting practices in Nigeria. The study will be limited to institute of internal auditors in Lagos state.
Limitation of the study
There were some constraint that tends to hinder the flow of this study, such limitations include:
Financial constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
Time constraint: The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work
Availability of research material: The research material available to the researcher is insufficient, thereby limiting the study
Covid-19 Pandemic: the sudden outbreak of the deadly virus also posed a major challenge to this study. The researcher finds it difficult to move around to places within the study area to gather factual data that would have contributed immensely to the success of this research work.
1.8 Definition of Terms
Artificial intelligence: Artificial intelligence is intelligence demonstrated by machines, unlike the natural intelligence displayed by humans and animals, which involves consciousness and emotionality. The distinction between the former and the latter categories is often revealed by the acronym chosen
Accounting practice: A Practice Accountant provides professional financial advice to fee-paying clients who could be private individuals, small businesses through to international or public sector organisations. Practice Accountants are often now being seen as more holistic business advisers than traditional number crunchers.
Accounting Record: Accounting records are key sources of information and evidence used to prepare, verify and/or audit the financial statements. They also include documentation to prove asset ownership for creation of liabilities and proof of monetary and non-monetary transactions.
Operational accounting: is the practice of minding the financial aspects of running a business, whether small or large. … They often plan a business’s financial operations, as well as mind a company’s ledger while working with executive management to create and control budgets.
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