Earmark Webinars+

Boost Efficiency in Accounting with AI—No Coding Required

laura · November 15, 2024 ·

In today’s rapidly evolving accounting landscape, artificial intelligence (AI) is becoming an indispensable tool. Yet, many professionals hesitate to embrace it, believing that coding expertise is required. AI expert and accounting professor Dr. Mfon Akpan dispels this myth, emphasizing that strategic thinking—not technical skills—is the key to unlocking AI’s potential in accounting.

In a recent Earmark webinar, Dr. Akpan addressed common misconceptions about using AI in accounting. “Success in AI doesn’t require coding skills,” he asserts. “In fact, I’m good at prompting but terrible at writing prompts.”

In other words, mastering AI is less about technical expertise and more about leveraging practical problem-solving skills that accountants already possess.

Measuring AI Success Through Efficiency

When discussing AI, many in the accounting field focus on its flaws—like making mistakes or producing imperfect outputs. Dr. Akpan encourages a shift in perspective. Instead of fixating on technical shortcomings, he suggests focusing on the efficiency and ease that AI brings to tasks.

An efficiency-first approach emphasizes finding ways to do less while saving time. “If you have 20 tasks to do in a workday and can eliminate five of them, that’s a win,” explains Dr. Akpan. “Or if something that used to take you 40 minutes now takes 20 minutes.” By simplifying tasks, accountants can become more productive and competitive.

He uses a compelling analogy: “It’s like having a Formula One race car but driving it at 15 miles per hour.” Many professionals are not utilizing AI to its full potential, often using it in basic ways rather than harnessing advanced methods that significantly enhance efficiency.

The Art of Effective Prompting

To illustrate how to unlock AI’s full potential, Dr. Akpan compares two approaches to the same task. A simple prompt like “Generate a monthly financial report comparing this month’s performance with the previous year” is straightforward but limited. The real power comes from sophisticated prompting methods like Chain-of-Thought and Tree-of-Thought prompting.

“I’m good at prompting but terrible at writing prompts,” Dr. Akpan admits. His secret? He asks the AI to write the complex prompts for him. By choosing the right prompting method and letting the AI handle the details, he achieves more comprehensive and accurate results.

Chain-of-Thought Prompting

Chain-of-Thought prompting guides the AI through a logical sequence of steps to solve a problem. This method involves breaking down a complex task into sequential steps, mirroring how accountants methodically approach financial analyses.

During the webinar, Dr. Akpan demonstrates transforming a simple prompt into a chain-of-thought prompt by asking the AI to write it:

Simple Prompt:

Generate a monthly financial report comparing this month’s performance with the previous year.

Chain-of-Thought Prompt:

1. Define key financial metrics to compare (e.g., revenue, expenses, net income).
2. Gather this month’s financial data for each metric.
3. Retrieve the same metrics from the previous year’s corresponding month.
4. Calculate the differences and percentage changes.
5. Analyze the reasons behind significant changes.
6. Visualize the data using appropriate charts and graphs.
7. Provide insights and actionable recommendations based on the analysis.

By guiding the AI through these steps, Dr. Akpan ensures a more comprehensive and accurate report. He emphasizes, “I could not sit and write all of this, but you can ask the language model to do it for you, and it’ll do it for you within seconds.”

Tree-of-Thought Prompting

Tree-of-Thought prompting aids in problem-solving by breaking down complex decisions into branches. This allows the AI to explore different options and choose the best one, much like how accountants consider various scenarios when making financial decisions.

Dr. Akpan provides an example:

Tree-of-Thought Prompt:

Root Thought: Generate a monthly financial report comparing this month’s performance with the previous year.

Branch 1: Define key metrics.
– What financial metrics should we focus on? (e.g., gross margin, net income, revenue, expenses)
– How do these impact the overall financial health of the company?

Branch 2: Gather data.
  – Obtain this month’s financial data points.
  – Retrieve the same data points from the same month in the previous year.
  – Check for any missing data or adjustments needed.

Branch 3: Calculate and compare.
– Should we focus on absolute values or relative percentage changes?
– How do both perspectives provide insights?

Branch 4: Analyze positive and negative trends.
– Are there positive changes? Negative changes?
– What factors are impacting these changes? (e.g., internal operational changes, market fluctuations)

Branch 5: Visualize and report.
– What graphs or charts would make the comparisons clear and easy to understand?
– Should the report include line graphs, bar charts, etc.?

Branch 6: Provide insights and recommendations.
– Offer specific recommendations for operational improvements or strategic decisions.

By considering different branches and evaluating the best approaches, the AI produces a more detailed and insightful report. “With Tree-of-Thought prompting, you’re asking the AI to look at different options and approaches to the particular task, and then it will choose the best one,” Dr. Akpan notes.

Practical Application in Accounting Workflows

Dr. Akpan demonstrates how these prompting techniques can be applied in real-world accounting tasks.

Creating Presentations

He explains how he used AI to create a PowerPoint presentation for the webinar:

He provided the webinar description and learning objectives to ChatGPT.
Asked ChatGPT to create an outline and generate PowerPoint slides with questions.
ChatGPT produced draft slides, including a title slide and content slides with key questions.

“I didn’t have to open PowerPoint or start making the slides from scratch,” Dr. Akpan explains. “Something that might have taken me 40–50 minutes took me about 15 minutes.”

Generating QR Codes

He also demonstrated using ChatGPT to create QR codes for his LinkedIn profile and his book:

Provided his LinkedIn profile URL to ChatGPT.
Asked it to generate a QR code linking to his profile.
Within seconds, ChatGPT produced the QR code, which he added to his presentation.

Simplifying Client Communication

Dr. Akpan shares a story about a former student who uses AI to simplify complex accounting jargon for clients:

“One of my former students who recently graduated… she said, ‘Yes, we use ChatGPT to help with client meetings.’ She uses AI to explain potentially complex accounting jargon to clients, finding better ways to express or explain concepts to someone who may not be well-versed in financial information.”

These practical applications showcase how AI can save time, improve output quality, and enhance client communication without requiring coding skills.

Embracing AI Without Coding

The same methodical approach that makes great accountants can make effective AI users. By focusing on efficiency, learning how to ask the right questions, and applying systematic review processes, accountants can turn AI into a powerful tool.

Dr. Akpan emphasizes the importance of using AI to discover its capabilities: “The more you use it, the more you can see how far you can push it and what it can do. If you’re not using it, you don’t know what it can do.”

He encourages accountants to shift their perspective on AI, viewing it as a means to reduce tasks and save time rather than expecting perfection.

Key Takeaways

Efficiency is Key: Use AI to reduce tasks and save time, increasing productivity.
Master Prompting Techniques: Utilize methods like Chain-of-Thought and Tree-of-Thought prompting to enhance AI outputs.
Leverage AI in Workflows: Incorporate AI into daily tasks to automate routine work and focus on higher-level analysis.
Continuous Learning: Regular use of AI tools leads to greater understanding and more effective application.

Embracing AI doesn’t require coding but a shift in mindset. By adopting strategic prompting techniques, accountants can unlock new levels of efficiency and effectiveness in their practice. As Dr. Akpan advises, start using AI tools to explore their capabilities and find out how they can transform your workflows.

Ready to transform your accounting practice with AI? Watch the full Earmark webinar to learn more practical implementation strategies and real-world examples of AI excellence in accounting.

Why Traditional Tools Fail Under ASC 842—and What CPAs Can Do About It

Earmark Team · November 13, 2024 ·

Are your lease accounting tools holding you back? Here’s how to bridge the gap and streamline your financial close process.

CFOs, Certified Public Accountants (CPAs) and finance teams are facing unprecedented challenges in lease accounting, especially with the complexities introduced by ASC 842 and IFRS 16. Traditional tools like spreadsheets are no longer sufficient for managing the intricate details of modern leases. Imagine trying to generate a journal entry report for 2,000 leases and it takes five hours—every single month! This is not just an inconvenience; it’s a crisis that threatens the efficiency and accuracy of financial reporting.

To help CPAs navigate these complexities, Greg Kautz shared his insights on an Earmark webinar. Here is a summary of the key takeaways:

Recognizing the Limitations of Traditional Tools

Before 2019, lease accounting was straightforward—track the general ledger coding, payment amount, and vendor. However, with the implementation of ASC 842, CPAs now have to manage an expanded scope of data, transforming lease accounting into complex asset management.

“Now, you’ve got to start tracking the lease name, commencement date, date of return, classifications, and payment schedules,” says Greg. Each lease requires meticulous tracking of multiple data points to ensure compliance and maintain audit-ready documentation.

Spreadsheets and basic software can’t keep up with:

Complex Payment Structures: Leases may have multiple payment components requiring different accounting treatments.
International Operations: Multi-currency leases introduce foreign exchange complexities.
Consistent Application of Key Inputs: Inconsistent incremental borrowing rates across leases can compromise financial statement accuracy.

Navigating Modifications and Reassessments with Confidence

Modifications and reassessments under ASC 842 are particularly challenging. CPAs must maintain accurate audit trails and ensure that changes apply to the correct periods—all while meeting tight month-end deadlines.

“Some companies have deferred so many modifications they’re approaching materiality thresholds,” warns Greg. This situation is even more complicated for organizations dealing with both IFRS and US GAAP requirements.

Key challenges include:

Updating Incremental Borrowing Rates: Ensuring rates apply to the correct period without affecting past calculations.
Retroactive Adjustments: Making accurate entries for closed periods without reconstructing entire datasets.
Audit Scrutiny: Auditors are increasingly focusing on lease modification processes and documentation.

Embracing Scalable Lease Accounting Solutions

The limitations of outdated tools become glaringly apparent as organizations scale. Waiting hours for journal entries is not sustainable from legacy lease accounting systems.

“Companies recognize their systems are inadequate but hesitate to change due to perceived implementation complexity,” notes Greg. However, modern lease accounting solutions can be implemented quickly and efficiently.

Essential features of scalable solutions include:

Rapid Processing: Handle large lease portfolios without delays.
Accurate Retroactive Adjustments: Process changes affecting closed periods correctly.
Multi-Currency Support: Manage international leases seamlessly.
Robust Audit Trails: Maintain clear documentation for compliance.
Scalability: Grow with your organization’s expanding lease portfolio.

Practical Steps for CPAs to Overcome Lease Accounting Challenges

To effectively overcome these challenges and enhance your lease accounting practices, consider implementing the following strategies:

Centralize Your Lease Inventory: Maintain a centralized database accessible to all stakeholders.
Be Proactive with Modifications: Update lease changes as they occur, not just at month-end.
Leverage Automation: Utilize advanced software to reduce manual errors and save time.
Standardize Discount Rates: Ensure consistent application across all leases.
Plan for Reassessments: Regularly review leases for upcoming modifications or renewals.
Stay Audit-Ready: Keep documentation organized and accessible for auditors.
Invest in Training: Provide ongoing education for your team on lease accounting standards and tools.

Transform Your Lease Accounting Process Today

The technology gap in lease accounting is a significant risk to financial reporting accuracy and efficiency. CPAs can’t afford to rely on inadequate tools that jeopardize compliance and drain valuable time.

“There’s always a hard way and an easy way to do accounting,” says Greg. “Sometimes it’s achieved through technology, sometimes through better data, sometimes through better processes, and most times it’s a combination of all three.”

Don’t let outdated systems hold you back. By embracing modern solutions and proactive strategies, CPAs can bridge the technology gap and master the complexities of modern lease accounting.

Watch the full webinar featuring Greg Kautz’ expertise and practical demonstrations for more in-depth insights.

Is Your Expertise Holding Back Your Accounting Firm’s Growth?

Earmark Team · November 13, 2024 ·

What if the expertise that makes you a great accountant is actually what’s holding your firm back from reaching its full potential? It might seem surprising, but many owners discover that their strong technical knowledge can actually make it harder to grow their firms into successful, large-scale businesses.

In a recent webinar, Mark Ferris, Chairman and CEO of Panalitix, shared important tips on how owners can break away from being stuck in their own expertise to create more successful and scalable businesses. Drawing from his experience with many different firms, Ferris highlighted some surprising ways that being highly skilled can sometimes hold back growth.

Ferris offered simple strategies to help owners turn their practices from just a job into a valuable business. He challenged common ideas about what makes an accounting practice successful and provided a clear guide for firm owners who want to grow their businesses while also gaining more personal freedom.

The Hidden Barrier: When Expertise Limits Growth

Accountants are recognized for their strong knowledge, dedication to helping clients succeed, and commitment to doing their best work. These traits are crucial for building good relationships with clients. However, they can also create ways of working that make it harder for businesses to grow and expand.

Ferris, who has spent many years working with accountants, points out that the biggest challenge to growing an accounting firm isn’t a lack of technical skills or difficult market conditions. Instead, it’s the belief that being personally productive is the same as achieving success in business.

“The promise of professional services was that you train yourself, gain unique skills, and enjoy a long, lucrative business life deriving good fees,” says Mark. “But would we say that today to young people entering the profession?”

The main issue is that while accounting education teaches valuable technical skills, it doesn’t really help future business owners understand how to grow and manage a company. As a result, many owners find themselves trying to expand their business by simply working longer hours, taking on more clients themselves, and keeping a tight grip on every part of their service. This approach can be overwhelming and may not lead to sustainable growth.

The result is that the profits of the business are constrained by the owner’s time and energy. Even though they deliver great value to their clients, they might feel unappreciated and overworked. Instead of pushing themselves harder within the same old way of doing things, it’s time to rethink how an accounting practice can work for everyone involved.

Shifting Mindsets: From Doing the Work to Building the Business

The main difference between a traditional accountant and a business builder is how they view their work. While traditional accountants focus mainly on managing numbers and financial records, business builders see their role as helping to grow and improve a business. A traditional accountant might say, “I work to complete tax returns,” whereas a business builder says, “I work to build a business that completes tax returns.” This small change has a big impact on business value and personal freedom.

Think about celebrity chef Gordon Ramsay. He began his career as a talented chef, but he found true success when he shifted his focus to creating restaurants and systems that ensure top-notch service, even when he wasn’t personally in charge. This kind of change can also happen in the field of accounting.

Business builders take a unique approach when it comes to planning and making decisions. Rather than just looking at short-term earnings and financial reports for the next year, they focus on creating long-term plans that span three to five years. This allows them to build valuable and successful companies that can thrive over time.

This involves creating systems, processes, and teams that reliably provide great service, whether or not the owner is directly involved.

“Successful businesses do not depend on the owners for much if anything,” Mark notes.

It’s not about choosing between being a great accountant or being a great business owner; it’s about gradually transitioning from handling all the tasks yourself to establishing a business that can operate effectively on its own. One CPA’s experience shows how this change can take place over time.

Case Study: A $550K Practice Transforms into a $10M Enterprise

Transitioning from a technical specialist to a business leader is possible with the right change in perspective. Take, for example, a certified public accountant (CPA) from Tampa. Over the span of ten years, he grew his small practice, which started at $550,000 in 2011, into a thriving business worth $10 million.

At first, he stuck to a conventional approach, putting in long hours and managing everything on his own. By 2015, he was working over 2,500 hours a year, taking care of all parts of the business while also trying to keep up with a growing number of clients. The big change happened in 2016 when he took a surprising step: he decided to spend $155,000 to hire a chief operating officer, even though it would hurt his profits in the short run.

“That was arguably a very bad decision if you’re focused on the short term and on the P&L,” Mark explains. “But he decided to invest in that and get a lot more things off his plate.”

The owner of the business made a choice to delegate responsibilities, which started a major change for the company. He slowly moved away from handling daily operations, production tasks, and finding new clients. Now, he acts as the chairman, concentrating only on providing valuable advice to six chosen clients, while the business continues to do well on its own.

The transformation wasn’t instant or easy—he “messed it up a couple of times”—but the result is what the business builder mindset promises: a valuable business that generates wealth without the owner’s constant involvement.

Your Path to Transformation

Transitioning from being a technical expert to becoming a business architect can be challenging, but the benefits of creating value for a business and gaining personal freedom make it a journey worth taking. The process starts with a change in how you think about your role. Instead of just viewing yourself as a talented accountant, start seeing yourself as someone who designs a system for the business. This system should be capable of achieving great results even when you’re not constantly overseeing everything.

The story of the Tampa CPA shows that it’s possible to change and improve how an accounting business operates. This change involves rethinking traditional ideas about what leads to success in this field. The outcome is a more valuable business, happier clients, a more satisfied team, and a sustainable work style that doesn’t rely on the owner being involved all the time.

Ready to Transform Your Practice?

Are you interested in turning your practice from a job into a valuable business? Check out the full webinar recording to learn about the changes in thinking and practical actions you can take to create a more sustainable accounting practice. Plus, by participating, you’ll earn free continuing education credits while discovering how to make your work better suit your life.

Automating Success: Why Strong Financial Controls Are Essential for Business Growth

Earmark Team · October 22, 2024 ·

Imagine a growing company where invoices pile up, approval processes lag, and financial oversight can’t keep up. Now, picture the same company with streamlined workflows, automated fraud detection, and visibility into finances that help the business. The difference? Strong financial controls.

Financial controls are the guardrails of good decision-making in any business. They include the procedures, policies, and methods for monitoring and controlling economic resources. In today’s digital age, these controls have evolved beyond traditional manual processes.

In the webinar “Mastering Internal Financial Controls for Sustainable Success,” ApprovalMax experts Jonathan Kyritsis and Angela Bierman shared a critical truth for Certified Public Accountants (CPAs) and their clients: modernizing financial controls is vital to sustainable business growth.

But how can CPAs use these evolving controls to deliver tangible value? Let’s explore three key areas:

The evolution of financial controls in the digital era
Using automation for efficiency and fraud prevention
Building scalable controls for long-term success

Whether you’re a CPA looking to enhance your services or a business leader aiming to strengthen your financial processes, these insights will provide tips on where to focus your attention and how to get started in modern financial management.

The Digital Evolution of Financial Controls

“Financial controls are the guardrails of good decision-making in any business,” Angela said. These controls protect against fraud, prevent costly mistakes, and provide the foundation for sound financial stewardship. The digital era has changed how these controls operate and their role in business growth.

Consider the traditional invoice approval process. Angela described the old way:

“If it’s paper, you take the stack of invoices to the various people who need to approve them, and they sign it. They may have a comment or a question, or they come back with post-its, and you’re like, whose signature is this? And what’s the status?”

This manual process is inefficient and prone to errors.

Modern, digitized financial controls automate this process. Invoices are automatically routed to the right approvers, reminders are sent systematically, and every action is logged with a clear audit trail. This removes the chaos of paper trails and reduces the risk of lost or mishandled documents.

Beyond digitizing paperwork, modern financial controls use technologies like optical character recognition (OCR) and machine learning (ML) to extract data from invoices, detect anomalies, and predict potential issues before they arise.

This evolution allows CPAs to offer more strategic, value-added services. Instead of spending hours on manual data entry and chasing approvals, CPAs can focus on analyzing financial data, identifying trends, and sharing insights that help business growth. Jonathan says it’s about understanding “how we can impact your business” through tailored, modern financial control systems.

Using Automation for Efficiency and Fraud Prevention

Automation underpins modern financial controls’ evolution, boosting efficiency and security. For CPAs, becoming familiar with these systems can be important for offering innovative services that support client success.

There are big efficiency gains from automation. Angela candidly said: “Chasing invoices is such a time suck. We all have better things to do.”

Automated systems handle tasks like routing invoices, sending reminders, and tracking approvals. Technologies like OCR automatically extract data from invoices to reduce manual data entry and errors.

These improvements allow finance professionals to shift focus from routine tasks to strategic analysis and decision-making. For CPAs, this means spending less time on data processing and more on consulting clients.

Automation also enhances fraud prevention. Automated systems constantly monitor for suspicious patterns and anomalies. They can flag payments just below approval limits—a common tactic in fraud schemes. Angela noted: “When you have a threshold of $10,000, $50,000, whatever it is, and you start to see bills coming in just under that threshold, that should be a flag.”

Automation fortifies vulnerable points in financial systems, such as vendor information changes. Angela highlighted this risk: “Where they get you, and where the areas of higher risk are, is the changes. Someone says, ‘Oh, I have new banking information. Can you update my account?'”

Automated systems enforce strict protocols for such changes, requiring multiple approvals and flagging suspicious updates.

However, automation complements rather than replaces human judgment. Jonathan said: “Logic sometimes might fly out the window because this is something quick that your boss’s boss is getting you to do. So again, it’s about having the processes in place.”

Automation provides the framework and flags potential issues, but human oversight is still key.

Building Scalable Financial Controls for Sustainable Growth

As companies expand, their financial control needs become more complex. Scalability becomes essential. Angela advised: “With every decision you make regarding processes, policies, and technology, ask yourself: Does this scale? Can this work with more people, more departments?”

A manual approval process suitable for a team of 10 can become a nightmare for a company of 100. Scalable, automated controls adapt effortlessly—moving from a single-tier approval system to a multi-tiered one that accounts for different departments and spending thresholds.

Establishing scalable controls empowers CPAs to transition from traditional number crunchers to vital strategic partners in growth. By anticipating future client needs and creating adaptable processes, CPAs can deliver exceptional value that enhances their role and influence.

Flexibility is important, Jonathan said: “Every client is not the same from client to client. We have to be flexible in this day and age, especially with the world changing as quickly as it is.”

Customization plus scalability ensure that financial controls remain effective and efficient regardless of a company’s size or complexity.

Scalable controls also democratize the oversight process. Angela noted: “What I think is so important is to empower every single person involved in the accounts payable process with the ability to press pause and say, ‘I’m not comfortable with that.'”

This approach maintains robust oversight even as organizations grow.

Setting up scalable controls early saves businesses from growing pains later. Angela pointed out: “It’s so much easier as an employee, as a project manager, as a relationship manager, to say to somebody, ‘Hey, these are our policies. This is what we’ve got in place.'”

It’s more efficient to grow into robust controls than to build them retroactively.

Watch the Full Webinar and Earn Free CPE

Digital, automated, and scalable financial controls form a powerful triad for sustainable business growth. They provide efficiency for daily operations, security against fraud, and flexibility for long-term expansion. For CPAs, mastering these controls is critical to delivering extra value in today’s business landscape.

To fully grasp the role of strong financial controls, watch the webinar “Mastering Internal Financial Controls for Sustainable Success.” Jonathan and Angela offer practical insights and real-world examples to enhance your service offerings.