What are the key challenges of GenAI in accounting

The rapid adoption of AI technologies, including generative AI (GenAI), has brought both excitement and concern to the accounting profession. While AI offers the ability to transform workflows, increase productivity, and unlock new opportunities for revenue generation, it also brings challenges requiring a thoughtful and strategic approach.

While many fear AI will ultimately replace human accountants, the reality is that AI, when leveraged effectively, has the potential to significantly enhance the work accountants do rather than render it obsolete. But, to take full advantage of AI's opportunities, it’s important to understand its challenges also.

Roadblocks to AI integration at accounting firms

The integration of AI in accounting firms presents both unprecedented opportunities and notable challenges. While AI can enhance productivity and streamline workflows, it is crucial to address the hurdles that come with its adoption to fully realize its potential benefits.

Let’s look at a few of the top challenges or roadblocks to integrating AI in accounting firms.

1. The idea that AI will replace human accountants

One of the most significant barriers to adopting AI is the fear it will ultimately replace human accountants. Many tax and accounting professionals worry that the increased automation AI offers reduces the need for their expertise.

This misconception stems from a misunderstanding of AI’s capabilities. While AI can automate repetitive and data-heavy tasks, it does not possess nuanced judgment, ethical considerations, complex problem-solving abilities, or the personal relationships human accountants bring to the table.

That said, the accounting industry’s attitude toward AI is evolving. Early concerns about job displacement are giving way to a broader understanding of AI as a complement to human skills. While some accountants remain cautious, many are now open to the idea that AI can streamline repetitive tasks and provide more bandwidth for higher-value, strategic work.

According to the 2024 Generative AI in Professional Services Report from the Thomson Reuters Institute, about one-quarter of professionals say their organizations have already begun updating how they work by incorporating GenAI. The key is to view AI not as a disruptive force but as an enabler. When leveraged correctly, AI and GenAI can boost operational efficiency, enhance client service, and engage staff.

Accounting firms should lean into using AI for time-consuming tasks such as data entry, reconciliation, and basic financial analysis so you can free up your team to focus on more complex, strategic, and high-value tasks. With deeper insights from AI-powered tax research, you can build stronger client relationships and focus on more personalized advisory services, which are increasingly in demand.

2. Ethical, accuracy, and security concerns

Despite its clear advantages, AI adoption raises accuracy, security, and ethical concerns — as well as the need for standards to ensure responsible use.

According to the GenAI report, more than half of respondents identified the following primary concerns for adopting GenAI:

• Inaccurate responses — 70%
• Data security — 68%
• Privacy and confidentiality of data — 62%
• Complying with laws and regulations — 60%
• Ethical and responsible usage — 57%

While 44% of respondents said they were hopeful or excited about GenAI, 35% said they were hesitant, and 18% said they were concerned or fearful.

Of the portion that said they were hesitant, 20% said they felt that way due to accuracy concerns, 18% said they were skeptical GenAI could deliver promised results, and 16% were concerned about over-reliance.

This reluctance is warranted. While traditional AI analyzes data and tells you what it sees, Gen AI uses that same data to create something entirely new. To accomplish this, Gen AI uses large-language models (LLM), which refers to the size of the dataset it’s trained on. LLMs are typically trained on datasets large enough to include nearly everything written on the internet over a large span of time.

Publicly available LLMs don’t typically disclose the data they used for training. This data could have been confidential or proprietary — or inaccurate. Given the vast data used, it’s also very difficult for the models to pinpoint the sources of responses. This lack of transparency and traceability ushers in concerns about accuracy, security, and privacy, as users cannot verify the origins or reliability of the information provided.

Additionally, any question you ask can become part of the model training data. Therefore, accountants must be careful when inputting information into a publicly available LLM — including any proprietary or client data, which should be off limits.

Addressing these concerns with a professional-grade solution

To address these concerns, proactive accountants opt for AI-driven tax research solutions grounded in data from trusted experts and reliable sources, steering clear of public options that draw information from the vast expanse of the internet. A professional-grade, industry-specific AI-powered tax research platform enables firms to use AI responsibly, addressing concerns over accuracy, ethical use, and data security.

Take, for example, CoCounsel, the generative and agentic AI assistant designed specifically for the complex demands of tax, audit, and accounting professionals. Built on a foundation of verified content and expertly written guidance from Checkpoint, CoCounsel draws from thousands of primary sources, regulatory frameworks, and firm-approved documents to quickly surface relevant, easy-to-understand answers. Because it searches only vetted and reliable materials, professionals at every level can independently access accurate, plain-language insights — without second-guessing the results.

So, how does it work

CoCounsel uses a technique called retrieval-augmented generation (RAG) to ensure every response is grounded in trusted content. When a user inputs a query, the system initiates a discovery phase, searching across your firm’s internal documents and approved third-party sources.

During this phase, CoCounsel identifies the most relevant materials — whether it’s tax code, firm policies, or expert commentary — and selects only the contextually appropriate and up-to-date passages. Outdated or non-authoritative content is filtered out automatically, and the system then instructs the LLM on how to craft its response.

This process significantly reduces the risk of AI hallucinations — those moments when a model might generate plausible but incorrect or illogical answers. By grounding every output in real, verifiable information, CoCounsel ensures that what you see is not only helpful but accurate, explainable, and defensible.

Even better, CoCounsel includes inline citations and plain-language explanations. That way, users know exactly where the information came from and how it was applied — empowering tax professionals to move forward with confidence.

3. Reshaping responsibilities and upskilling staff

AI adoption presents a learning curve for many accounting professionals. AI technologies, especially those based on machine learning and automation, require a certain level of technical understanding.

Integrating AI into accounting workflows also means accounting firms must rethink traditional processes. With new efficiencies disrupting established ways of working, firms must redesign their workflows to ensure they use AI tools in the most effective way. For example, AI can automate much of the data gathering and processing accountants traditionally handle manually, freeing up time for high-value work.

A key challenge here is to ensure AI-powered automation doesn’t lead to over-reliance on technology. While AI can handle many tasks, human oversight is still critical. Firms must strike a balance between automation and human input, determining where AI takes on repetitive tasks and staff provide value through deeper analysis, judgment, and client relationship building.

Another essential aspect of training is ensuring accountants can interpret AI-generated insights. AI can process massive amounts of data and identify patterns that might not be immediately obvious to humans, but interpreting and applying these insights requires human expertise. For example, AI might flag a potential anomaly in a financial statement, but it’s up to the accountant to determine the significance of that anomaly and how it affects the overall financial health of the client.

Another aspect of reshaping workflows is the need for increased collaboration between accountants and software providers. That’s why it's important to choose a provider that provides support through implementation and beyond to ensure you are making the most of your investment.

Turning AI hesitancy into opportunity

While the integration of AI in accounting may pose several challenges, these very challenges can be reframed as unique opportunities for growth and innovation within the industry. By embracing these obstacles, firms can transform their workflows, enhance their services, and ultimately drive greater value for their clients and stakeholders.

So, how can AI unlock opportunities for accounting firms, even amidst the challenges it presents?

1. Unlocking operational efficiencies

Perhaps the most transformative change AI brings to the tax and accounting profession is unlocking unprecedented operational efficiencies. According to the Future of Professionals Report, respondents anticipate AI could save up to four hours per week over the next year — equivalent to an extra 200 hours annually.

AI’s ability to process large volumes of data, enhance response times, and minimize human error plays a key role in freeing up this valuable time. By integrating AI into your firm’s daily operations, AI-enabled tax software can analyze extensive financial data far faster than human accountants, effortlessly spotting patterns, anomalies, and trends.

Moreover, AI-powered tax research helps staff find precise results more efficiently. It delivers professionally summarized answers, complete with citation links to relevant editorial and source materials, allowing even junior team members to confidently tackle complex client questions in less time.

Here’s a look at just some of the ways AI can unlock operational efficiencies for accounting firms:

• Data entry automation. Gen-AI systems can automate data entry tasks by extracting information from various documents, such as invoices and receipts. This automation can reduce the manual effort required for data input while minimizing errors.
• Document generation and summarization. GenAI models have the potential to automatically generate financial reports, invoices, or other accounting documents. They could also assist in summarizing lengthy financial statements or reports for quick insights.
• Fraud detection. AI, including generative models, can be used to identify patterns and anomalies in financial data that may indicate fraudulent activities. By analyzing large datasets, AI systems can help auditors and accountants detect irregularities.
• Forecasting and predictive analytics. GenAI models can be applied for predictive analysis by analyzing historical financial data. This capability can help accountants forecast future trends and make more informed decisions.
• Natural-language processing (NLP) for client communication. NLP, a subset of AI, can be integrated into communication tools to enhance interactions with clients, create automated responses to common queries, or even assist in drafting emails and reports.
• Tax research and compliance. GenAI can assist in keeping track of evolving regulatory requirements and ensuring financial practices comply with the latest standards, helping reduce the risk of non-compliance.

2. Supporting recruitment and retention of staff

As evidenced in the 2024 State of Tax Professionals Report, recruiting and retaining new professionals is a top priority, given the shortage of tax and accounting talent and a shrinking labor pool. That's why many accounting firms are now directing more of their energies toward hiring, training, and engaging high-performing staff, as well as cultivating an AI-savvy work culture.

AI's role in automating routine tasks can make the accounting profession more attractive to potential recruits. Today's workforce — especially younger generations — seeks roles offering meaningful work, personal growth, and opportunities to make an impact. By leveraging AI to eliminate mundane, repetitive tasks, firms can provide employees with more fulfilling, high-value work, such as financial advising, strategic planning, and client consulting.

This shift in job focus can also improve retention rates. Employees who feel their work is meaningful and that they are making a significant contribution are more likely to stay with the firm. Additionally, in a competitive labor market where talent is in high demand, AI can be a tool to attract and retain top talent by offering a more engaging and intellectually stimulating work environment.

As AI automates more technical tasks, there will be a growing need for accountants with strong communication skills, business acumen, and expertise in areas such as data analysis and strategic advisory services. Firms that invest in training their staff to develop these skills can position themselves as leaders in the industry, offering more comprehensive and sophisticated services to clients.

While the benefits of AI are clear, putting these technologies into practice requires a holistic approach. Fostering a workplace environment that embraces continuous learning and integration of new technologies ensures your staff are prepared to leverage AI tools effectively. It's equally important to invest time and resources into upskilling your staff with AI-related training programs, webinars, and workshops to improve their understanding of AI tools and their applications.

Not only is culture important, but AI must align with your accounting firm's business goals. AI should not be adopted for its own sake but with clear objectives like improving efficiency, enhancing client service, and driving growth. All these goals contribute to making your firm an attractive place to work and grow professionally.

3. Offering a significantly elevated client experience

Contrary to fears that AI might replace accountants, it actually presents a significant opportunity for professionals to enhance their value and expand their services. By embracing AI, accountants can elevate their roles and lean into high-value advisory services.

AI excels at automating repetitive tasks and processing large volumes of data, but it cannot replicate the nuanced judgment, ethical considerations, and complex problem-solving abilities human accountants bring to the table. Instead of replacing accountants, AI serves as a powerful tool complementing and enhancing human expertise.

One of the most significant opportunities AI presents to accounting firms is the ability to expand into advisory services. As AI takes over the more mechanical aspects of accounting work, accountants can leverage their freed-up time and AI-generated insights to shift their focus to providing higher-value services that are in growing demand. These include:

• Strategic financial planning
• Business consulting
• Risk management advisory services

By utilizing AI for time-consuming tasks such as data entry, reconciliation, and basic financial analysis, accountants can dedicate more time to developing and delivering these advisory services. This shift makes the work more engaging for professionals and adds significant value for clients.

Advisory services tend to command higher fees than traditional accounting work, which can help firms increase their overall revenue. By positioning your firm as trusted advisors rather than simply number crunchers, you can differentiate yourself in a competitive market and attract clients willing to pay a premium for expert guidance.

AI can also enhance the quality and depth of advisory services by providing accountants with advanced data analysis capabilities. Accountants can harness AI tools to sift through vast amounts of financial data to identify trends, forecast future performance, and provide actionable insights to help clients make informed decisions. This level of analysis would be impossible to achieve manually, and it gives firms a competitive edge in delivering more sophisticated services.

Furthermore, AI’s ability to continuously learn and improve means firms can offer ongoing advisory services that evolve with the needs of their clients. For example, professionals can use AI to monitor changes in tax regulations, market conditions, or business performance and provide real-time updates and recommendations to clients. This proactive approach not only increases the value of the services offered but also strengthens client relationships and loyalty.

By embracing AI as a tool for enhancement rather than replacement, accounting professionals can seize the opportunity to evolve their roles, develop new skills, and provide more valuable advisory services to clients. This approach fortifies careers against industry changes and positions firms at the forefront of the industry’s transformation.

Embracing AI for a brighter future

As the accounting industry continues to evolve, it’s clear that AI is a tool that can empower accountants. Understanding the common roadblocks of AI adoption reveals that the long-term benefits often outweigh the initial challenges.

AI and GenAI will not replace humans. Rather, they will enhance the work you do by taking over routine tasks and providing powerful analytical capabilities. The real value lies in how your firm leverages these technologies to unlock new opportunities for growth and build stronger relationships with clients.

By adjusting your strategy and mindset, your firm will not only keep pace with technological change but will lead it. Firms that adopt a forward-thinking approach to AI can offer their employees more fulfilling and higher-value work, improve employee engagement and well-being, and provide clients with personalized services.

Ultimately, the future of AI in accounting is about collaboration between humans and machines. With the right mindset and tools, your firm will thrive in this new era of innovation.

Now is the time for your firm to take full advantage of AI technologies and incorporate them into your practice.

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