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PD Pathways - Feb/Mar 2024

Artificial Intelligence in Your Tax Practice

By Tommy Stephens

The following is an excerpt from the original article published on October 16, 2023.

In this article, you will learn how tax practices can capitalize on AI to improve efficiency and accuracy.

Before considering AI in the tax practice, we must understand the difference between generative AI and artificial general intelligence. Tools such as ChatGPT and Bard fall into the generative AI realm. Generative AI tools rely on large language models (LLMs), massive data sets often containing over 100 billion parameters. These LLMs are “trained” to recognize the relationships between words, the context in which words appear, and the sentiment of the user’s request (celebratory, factual, sympathetic, etc.) Tools such as ChatGPT and Bard are leading examples of today’s class of generative AI tools.

On the other hand, artificial general intelligence is a form of AI in which computers may be able to reason, sympathize, solve problems, and generally mimic human behavior. Let’s be clear – most experts in this field believe we are many years – perhaps even decades – away from artificial general intelligence materializing if it ever materializes.

All practitioners seek to overcome challenges associated with managing a rewarding tax practice. Among these challenges are staffing, seasonal workloads, increasing complexity, client satisfaction, and competition, to name a few. Fortunately, generative AI offers tangible opportunities to help you overcome these challenges.

Automated Data Entry

Although not a new concept, automated data entry has matured in recent years to the point that it is a powerful AI-based technology. Virtually every major tax software publisher offers automated data entry options for their tax preparation software. Firms that use this form of AI realize the benefit of saving time because team members are no longer required to input data manually; they also will likely find that the error rate associated with ingesting data declines.

Error Detection

Automated data entry tools help to reduce errors associated with data entry. But AI-driven error detection shows up in other ways. AI-driven algorithms can analyze returns and identify errors or items that do not align with expectations. For example, for a taxpayer who receives multiple W-2 forms, embedded rules in the tax software can identify situations where the taxpayer overpaid FICA taxes and deserves credit. Of course, there is no substitute for human expertise and judgment; however, these rules can enable practitioners to complete tax return reviews much more quickly than if the reviews are entirely manual.

Tax Planning

Tools available today, such as Corvee, allow practitioners to analyze quickly competing alternatives for tax strategies. To illustrate, you could use Corvee to quickly and easily compare the tax implications associated with a form of entity election (S corporation vs. C corporation, for example.) Likewise, Corvee can assist with gathering all the data needed to prepare a client’s return by generating “smart” questionnaires that omit unnecessary questions and ask for additional details when necessary.

Research And Communication

You can also use today’s AI tools to perform tax research. For example, suppose you have a client who receives a CP-12 notice from the Internal Revenue Service. You could use a generative AI tool such as ChatGPT or Bard to generate a response on behalf of your client. If you have a ChatGPT or Bard account, enter the phrase “Respond to IRS CP-12” in your service, and you may be pleasantly surprised at the result!

Foundational AI Options To Improve Tax Practice And Efficiency

Indeed, other AI options exist today – and will expand in the future – to improve efficiency in businesses of all types, including tax practices. For example, tools like Grammarly are extremely useful in helping to improve the quality of writing memos, emails, blog posts, etc. Further, newer tools such as Microsoft’s Copilot and Google’s Duet are rolling out to assist with creating content and managing everyday tasks. If desired, you can have Copilot analyze the emails in your Inbox and prepare responses for you automatically. Likewise, you can instruct Copilot to prepare a PowerPoint presentation from an existing Word document for a client. Further, suppose you and a client participate in a Teams meeting, Copilot can summarize the key discussion points from the meeting.

AI is here to stay, and the benefits can be enormous for tax practitioners who use it responsibly. Improved efficiency, accuracy, and client service are all possible if you implement artificial intelligence in your tax practice.

Tommy Stephens maintains professional memberships with the American Institute of Certified Public Accountants and the Georgia Society of Certified Public Accountants. In 2003, Mr. Stephens affiliated with K2 Enterprises, and in 2007 he joined the firm as a partner. K2E Canada Inc. and its partner K2 Enterprises, offers a broad curriculum of technology-focused webinars taught by an award-winning team of instructors.

Learn more from K2E at our upcoming seminars on Artificial Intelligence for Accounting and Finance Professionals, Mastering Advanced Excel Functions, and at this summer's PD Nexus Information Technology Insights 2024 on July 23 and 24.

Upcoming Certificate Programs

Explore our Negotiating Mastery Certificate Program and Managing for High Performance Certificate Program scheduled in our Winter Program.

Negotiating Mastery Certificate Program

This seven-course program focuses on understanding the fundamental negotiation principles and nuances, as well as the ability to emulate those who consistently know how to structure mutually beneficial agreements. You can choose to attend single seminars only, but by completing all seven, you will receive the program certificate. Four of the seminars will take place in February and March, but all seminars will be repeated every few months.

The Framework of Negotiating Mastery

In this interactive session, you’ll confront questions about the negotiating process you’ve never thought about before. Yet they’re the ones that every accomplished negotiator knows how to answer. If you aspire to negotiating mastery, this was designed with YOU in mind.

Live Virtual (Feb 13)

Power, Creativity and Timing

Some regard these three elements as the most important in the master negotiator’s arsenal of skills. In this session, learn the pros and cons of compromise and understand and manage the power equation.

Live Virtual (Feb 28)

Read more on Power, Creativity and Timing

Human Behaviour and Cultural Differences

It’s people who negotiate – this session explains the predictability of human nature at the bargaining table and the skill of applying psychological influence for advantage.

Live Virtual (Mar 6)

Team Bargaining and Mediation

This session explains how the principles of negotiation previously examined apply to team bargaining and high-performance mediation – how to use your acquired skills in getting what you want to helping others get what they want.

Live Virtual (Mar 13)

Read more on Team Bargaining and Mediation

Managing for High Performance Certificate Program

This seven-course program focuses on the benchmarks of high performance, including robust customer acquisition and retention, significant revenue growth and profitability, low turnover, and an adaptive, resilient culture. You can choose to attend single seminars only, but by completing all seven, you will receive the program certificate. Three of the seminars will take place in February and March, but all seminars will be repeated every few months.

Building High Performance Teams

Learn how to diagnose and remedy your team’s capability to work smarter and accomplish more in less time, how to encourage genuine two-way feedback, become stress and dispute free, and “turn on” the new generation of knowledge workers who will ultimately determine your fate.

Live Virtual (Mar 25-27)

Managing a Multicultural Workforce

As globalization transforms the way business is done, whether you manage in a single building or across an ocean, this timely and engaging webinar explains the do’s and don’ts of handling the consequences of misunderstanding ethnic differences within high-performance teams.

Live Virtual (Mar 19)

Understanding the Human Condition

This course is about the role biases, beliefs and thinking traps play in our lives – how they complicate it, influence our decisions, drive irrational thinking, and get us into trouble. This course will give you the antidotes. When you’re able to apply them, you’ll discover how to live a fuller, freer and richer existence – for yourself as well as others.

Live Virtual (Feb 15)

Upcoming Winter Programs

If you are looking to update your knowledge or enhance your skills in the next couple of months, here are just some of our titles scheduled for February and March. For our full schedule to the end of March, check our website.

Income Tax - Principal Residences

This seminar examines all aspects of principal residences from a federal tax perspective, including unusual situations and the unexpected issues or outcomes that can arise in such cases.

Live Virtual (Feb 21)

Probate Fee Avoidance Planning

The seminar will review the fundamentals of when and why probate is required and what property is subject to the process. The seminar will also examine the various strategies that can be employed to avoid probate fees.

Live Virtual (Feb 23)

Read more on Probate Fee Avoidance Planning.

Corporate Tax – Section 55: How Safe Are Your Dividends?

Section 55 of the Income Tax Act (ITA) contains rules that can convert a tax-free intercorporate dividend to a capital gain. The broad manner in which these rules are written, along with CRA’s evolving interpretation of the rules, creates difficulty in understanding the application of such rules in both theory and practice. This seminar provides participants with an understanding of these rules and their application.

Live Virtual (Feb 27)

Powerful Financial Analysis

This seminar will cover the key facets of a financial analyst’s role within an accounting department and help analysts further their career by providing meaningful information to those around them.

Live Virtual (Mar 11)

Read more on Powerful Financial Analysis.

Corporate Tax - Review of Tax Planning

This two-day seminar in corporate tax is designed for those who desire to update and refresh their knowledge in both technical and review of concepts in tax planning, not specific strategies or commoditized “tax plans” for corporations. The primary focus is on the taxation of private companies.

Live Virtual (Mar 14-15)

ChatGPT and Generative Artificial Intelligence for Accountants

This is a comprehensive course designed to equip you with the skills to leverage the power of AI in the field of accounting. You will learn how to use state-of-the-art language models such as ChatGPT to improve data analysis and interpretation, technical proficiency, communication, and collaboration, and creative problem-solving. Embrace the future of accounting and join this exciting course today!

Live Virtual (Mar 22-25)

Business Valuations – Fundamentals

This seminar provides participants with practical insight into business valuation. Participants will learn about and apply various valuation tools such as the capitalized cash flow (CCF) approach and the discounted cash flow (DCF) approach to business case studies. The seminar also focuses on business valuation interpretation and the mechanics of the valuation process under an asset approach, income approach, and market approach.

Live Virtual (Mar 27)

Upcoming Executive Programs

Our 2024 Executive Programs are now open for registrations. Save on registration fees by enrolling before the early bird deadlines. Upcoming in May and June are the Controller's Management Program, Controller's Operational Skills Program, and the CFO's Leadership Program. Visit the Executive Programs page for all our 2024 offerings.

CFO’s Leadership Program

Gain critical insights into leading practices in management and leadership, and have the opportunity to apply tools and skills to your work context, share experiences with your peers and take away actionable goals.

Online | May 15-16, 22-23

Register by March 15, 2024, and save $100

Controller's Operational Skills Program

This program is designed to enhance your role on the management team by sharpening your skills in risk management and controls, ethical leadership, planning, budgeting and forecasting, performance measurement approaches and financial reporting.

Online | May 22-25

Register by March 22, 2024, and save $100

Controller's Management Program

This highly interactive program will provide you with a unique experience and opportunities for you to network and learn from your peers. Through case studies, group discussions, exercises and role-plays representative of situations faced by controllers and financial managers, you will gain skills and confidence to increase both your personal and interpersonal effectiveness.

Vancouver | June 5-8

Register by April 5, 2024, and save $300

CFO’s Operational Skills Program

The role of the CFO has evolved constantly, never more so than during the pandemic. This program will reinforce your operational skills and provide fresh ideas as you guide your organization and yourself through the recovery.

Vancouver | June 17-20

Register by April 17, 2024, and save $300

Navigating the Future: Essential Personal Development Skills for Accountants and Finance Professionals in 2024

In the fast-evolving landscape of accounting and finance, staying ahead requires a proactive approach to personal development. As technology reshapes industries, accountants and finance professionals in 2024 must cultivate a diverse skill set to remain relevant and effective.

AI Integration in Finance

The integration of Artificial Intelligence (AI) is revolutionizing financial processes. Accountants and finance professionals need to stay abreast of AI tools and technologies, understanding how to incorporate them seamlessly into their workflows. This involves not only learning the intricacies of these technologies but also strategizing on how they can enhance efficiency and decision-making within financial operations.

Mastery of Data Analytics

Data analytics has become the cornerstone of informed decision-making in the financial realm. Professionals must focus on honing their analytical skills, utilizing data to derive meaningful insights. From trend analysis to predictive modeling, the ability to harness the power of data is indispensable. Developing proficiency in data analytics ensures that finance professionals can contribute substantively to strategic decision-making processes.

Coaching for Professional Growth

Recognizing the importance of coaching is paramount for personal and professional development. Accountants and finance professionals can benefit significantly from coaching relationships, whether as mentees seeking guidance or as mentors imparting wisdom. The cultivation of coaching skills is equally crucial, allowing finance professionals to foster growth and development within their teams, thereby creating a culture of continuous improvement.

Communication and Negotiation Skills

In an environment characterized by complexity and constant change, effective communication is non-negotiable. Accountants and finance professionals must master the art of clear and concise communication to convey complex financial information comprehensibly. Moreover, negotiation skills are essential for navigating deals and agreements. The ability to articulate financial insights persuasively enhances collaboration and ensures successful negotiations.

Adapting to Industry Changes

The only constant in the financial world is change. Accountants and finance professionals must actively seek out resources to stay informed about industry trends, regulatory updates, and emerging technologies. A proactive attitude towards skill development ensures not only personal growth but also positions professionals as valuable contributors to their organizations.

In conclusion, the landscape of accounting and finance in 2024 demands a multifaceted approach to personal development. From embracing AI integration and mastering data analytics to cultivating coaching and communication skills, staying ahead necessitates a commitment to continuous learning. By proactively adapting to industry changes, finance professionals can confidently navigate the future, contributing meaningfully to their organizations' success.

Achieve AI readiness through the understanding and adoption of emerging technologies.

Generative AI tools like ChatGPT have the potential to transform your business. Meet John Higgins, CPA.CITP, founder and CEO of Higgins Advisory, LLC.

John established his company with the mission of helping CPAs, CFOs and other financial professionals to successfully guide their firms and business organizations through a successful digital transformation that leverages the power of emerging technologies such as artificial intelligence, blockchain technology, data analytics, workflow automation and more.

John is a seasoned entrepreneur with experience as the founder of two separate accounting technology advisory firms that were acquired by larger organizations. In addition, he has experience with a local CPA firm and as a technology advisory practice leader partner in a national CPA firm. John shares his expertise as a nationally recognized thought leader, strategic advisor, and speaker on accounting technology through coaching and speaking engagements.

Learn more from John as he guides you through the process of accessing ChatGPT and applying it to a variety of practical accounting, finance and tax scenarios you at his live virtual session on ChatGPT Hands-on Bootcamp on March 7. You can also catch him as he provides CPAs with a practical framework for addressing the various ethical issues that can arise with the application of AI in their work at his session on Ethics of AI: A CPAs Guide on March 13.