ai & its regulatory impacts on accounting...company and assist in rendering a professional...

Slide 1

AI & Its Regulatory

Impacts on Accounting

Enrico Palmerino, Botkeeper CEO/Founder

September 5-6, 2019 | Boston, MA

Slide 2

Learning Objectives

September 5-6, 2019 | Boston, MA

• The current state of AI – or as we like to call it, Augmented Intelligence

• The different accounting softwares, systems and apps that use AI

• What kinds of regulatory issues are directly affected by AI

• The actions your firm needs to take to remain compliant when deploying AI

AI & Its Regulatory Impacts

on AccountingWhere buzz and hype meet reality

What is AI?

➔ A machine or computer’s

ability to simulate human

intelligence

● Data – used to build models and learn from

● Machine Learning (ML) – processing the data and acquiring rules for using the data

● Reasoning – using the rules to reach conclusions

● Self-correction – retraining and teaching the machine based on both the outcomes of the decisions made and additional data processed

ARTIFICIAL INTELLIGENCE

WHAT AI IS

NOT

AI is not synonymous with Automation

Things that are not AI:

➔ Robotic Process Automation

➔ Decision trees

➔ Rules or IFTTT

➔ Data Integrations

➔ OCR

➔ Voice to Text

➔ Chatbots

Examples of AI include

Botkeeper uses a combination of AI with other technologies and software

➔ AI does the thinking while other software does the doing

The State of AI in Business

Today AI

Enhances

Humans

Our

Definition

of AI

The

Botkeeper

AI

Botkeeper AI

Making Accountants Cyborgs

Human/Machine Combo

Super Accountant

Think Exoskeleton

Making 1 person do the work of multiple people

Machine alone can’t replace a person, BUT machine + person can replace MANY people

Augmented Intelligence

Making Humans Better

Making 1 person do the work of multiple

people

Autonomous AI vs.

Human Assisted AI

Autonomous AI- Replacing Human

➔ No major consequences if mistakes are made◆ Go◆ Chess◆ Universities

Human Assisted AI – Enhancing Human:

➔ Where consequences have true costs or risk of mistake is too great◆ Business Applications – like accounting &

finance

Human Assisted AI

➔ Augmented Intelligence

◆ Provides insights to Human◆ Performs action or task in staging area

for Human to approve or correct before submitting

◆ Completes components of a task with high accuracy but requires human to perform finishing touches

➔ Examples:

◆ Alexa◆ Expensify◆ Google Assistant◆ Facebook◆ Tesla◆ Botkeeper

Benefits of Botkeeper’s AI

* Available transaction history depth vs performance. ** Based on a random sample of 300 Botkeeper clients

> 30,000 82.37% 17.63% 0.00%

> 25,000 63.82% 22.92% 13.25%

> 20,000 52.32% 25.06% 22.62%

> 15,000 51.22% 25.44% 23.34%

> 10,000 46.22% 25.19% 28.59%

> 5,000 44.29% 25.60% 30.11%

> 0 39.11% 24.26% 36.64%

Trust the bot (min 98% accuracy)

Strong suggestion from the bot(min 90% accuracy)

The human will do better (no signal better than false signal)

03

Immediate

Efficiency

Boost -

Botkeeper AI

Example: Photographer Booking Agency~ 20,000 transaction history~ 250 transactions / month

Example: Non-profit Education Services~ 5,000 transaction history~ 50 transactions / month

73% can be auto-categorized

(182)

Addt’l 20% get a suggestion

(50)

7% left uncategorized (18)

54% can be auto-categorized (28)

Addt’l 23% get a suggestion (11)

23% left uncategorized (11)

In the average month:

In the average month:

Systems & IntegrationBotk MicroservicesUser Interface

Internal / Managed & Cloud Scale

External / Integrated Third Party

… and many more

High Availability & Cloud Scale

→

Reporting

Service

ML Training

Service

Connector

Service(s)

Credentials

Service

Web / API

Service

Automation

Service(s)

… and many more

User Administration • •

Dashboards / Reporting • •

File Sharing • • •

Scanbot Automation • • •

Group Notes • •

Discussion Boards • •

Event Calendar • •

Task Management • • •

Bank Feed Automation • • •

Classification Automation FY19 FY19 •

Mobile Support TBD TBD

… and more to come

Collaboration, Efficiency & Scale

World class machine learning architecture

AI/ML Technologies (Our Tech Stack)

▸ Roger.ai

▸ Bill.com

▸ MindBridge

▸ Expensify

▸ ReceiptBank

▸ Datamorphix.ai

▸ Chata.ai

▸ AppZen

▸ YayPay

▸ Siyea

ACCOUNTING

TOOLS WITH AI

Datamorphix.ai Roger.ai

MindBridge

Expensify

ReceiptBank

Bill.comChata.ai

AppZen

YayPay

Siyea.ai

AI Automating

Categorization &

Classification

AI Automating

AP Processing

Surveillance & Accounting

➔ A Client Contracts you for Surveillance:

● 150yrs ago you would have had to go for a long hike and take photos with a large bulky camera

● 100yrs ago you would purchase a plane with cameras (Rumpler Taube) (an upfront investment but huge time savings and better results)

● Today you license an AI powered Drone which costs a fraction of buying a plane, delivers HD photos and video, and none of your time to deliver best results

Surveillance & Accounting

➔ A Client Contracts you for Surveillance:

● 40yrs ago, you purchased and installed Peachtree and then manually entered and categorized transactions from bank statements and receipts

● 5yrs ago you licensed QBO and bank and credit card transactions automatically imported, though you still needed to manually categorize them or create some rules (which later break)

● Today you can license an AI Platform, Botkeeper, to categorize, classify, reconcile, and generate monthly financials for you in QBO (no time or manual effort on your end)

Drones, AI and Accounting Regulations

➔ Previously:◆ Tool + You = Service◆ Tool expedited or enhanced YOUR

DOING

➔ Today:◆ Tool + AI = Service◆ AI DOES the DOING◆ Drone + AI = Surveillance◆ QBO + Botkeeper = Bookkeeping

➔ Why does this matter?

2005 Ethics Ruling No.112 & No.1

➔ 112:◆ Disclosure, (preferably in writing) prior to

sharing confidential information, that a 3rd Party Service Provider may be used in rendering professional services to the client.

➔ 1:◆ The definition of professional services was

extended beyond tax services to include “related clerical and data entry functions”

03

Interpretation of Rulings for AI

▸ AI Powered Tools▹ Usually assist with or perform data

entry functions (which is now considered a professional service)

▹ Perform Data Entry using Human-Assisted AI

■ Humans are employed by AI company and assist in rendering a professional service, making the AI Company not just a tool but rather a3rd Party Service Provider

Conclusion & next steps

➔ Add the below clause to your Client Services Agreement:The firm may from time to time, and depending on the circumstances, use third-party service providers in serving your account. We may share confidential information about you with these service providers, but remain committed to maintaining the confidentiality and security of your information. Accordingly, we maintain internal policies, procedures and safeguards to protect the confidentiality of your personal information. In addition, we will secure confidentiality agreements with all service providers to maintain the confidentiality of your information and we will take reasonable precautions to determine that they have appropriate procedures in place to prevent the unauthorized release of your confidential information to others. In the event that we are unable to secure an appropriate confidentiality agreement, you will be asked to provide your consent prior to the sharing of your confidential information with the third-party service provider. Furthermore, the firm will remain responsible for the work provided by any such third-party service providers. (Taken from AICPA.org) Enter into contractual agreement with AI company to maintain confidentiality of the client’s information.Receive reasonable assurances of appropriate procedures in place to prevent unauthorized release of client information.

➔ Enter into contractual agreement with AI company to maintain confidentiality of the client’s information.

➔ Receive reasonable assurances of appropriate procedures in place to prevent unauthorized release of client information.

Questions?

Slide 23

Contact Information (include Name, Email, Phone)

September 5-6, 2019 | Boston, MA

Enrico Palmerino

CEO/Founder

enrico@botkeeper.com

800.338.3323