Why Auditable AI Is Nonnegotiable For The Future Of Accounting

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A former accountant turned cofounder and CEO, Mike Whitmire is the leader of pre-IPO fintech company FloQast .

The accounting profession is at a crossroads. Faced with a growing talent shortage , escalating workloads and mounting pressure to deliver strategic insights with limited resources, the industry is in dire need of innovative solutions. Enter artificial intelligence (AI).

AI has the potential to revolutionize accounting by supercharging the capabilities of professionals and unlocking significant operational efficiencies. But AI also brings challenges, like bias and a lack of transparency. Another challenge is making sure the outputs AI delivers are accurate and auditable.

When AI first emerged, one of the most pressing questions I grappled with was: How will this technology be audited? If a large language model (LLM) processes vast amounts of data and then spits out financial figures for your company, who is ultimately responsible for the accuracy of those numbers? The answer is: you!

Yes, the responsibility for AI systems will fall squarely on individual organizations themselves, and ultimately, real, live human accountants and their teams. And this underscores the urgent need for AI systems designed with auditability in mind—systems that don't just enhance productivity but also uphold the integrity and trust that define the accounting profession. After all, if AI-generated outputs can't be independently verified, the entire foundation of financial reporting and decision-making will be called into question.

So, what's the best way to audit AI? One approach—arguably the most straightforward but also the least practical—is for auditors to essentially redo all the work that was done to arrive at the numbers generated by AI. In this scenario, auditors would independently verify every calculation, effectively shifting the burden of proof back onto themselves to ensure that the AI performed correctly. This approach is clearly unsustainable, especially as the accounting profession is already grappling with a significant talent shortage. Expecting auditors to take on the additional workload is just not realistic.