Ep. 7: Mark Nickerson - Risks and Rewards of AI

Mark's
Article: https://sfmagazine.com/post-entry/april-2019-ai-new-risks-and-rewards/


FULL EPISODE TRANSCRIPT


Music: (00:00)


Adam: (00:00)


Welcome to count me in IMA's podcast about all things affecting
the accounting and finance world. I'm Adam Larsen and with me is
my co-host Mitch Roshong. Our topic for this week's episode is
actually based on an article written about artificial
intelligence. Mitch, can you tell us a little bit about our
speaker and what the article says? 


 


Mitch: (00:18)


Yes, absolutely. So I recently came across an article titled AI
new risks and rewards written by Mark Nickerson. Mark is a CMA,
CPA and MBA and is a lecturer for the state university of New
York at Fredonia. I was interested in learning more about where
the idea for the article came from and if Mark had any other
insight into what kind of risks accounting and finance
professionals should be aware of. He was nice enough to answer a
couple questions for us. So let's listen to how AI could
potentially increase finance fraud in the future.


 


Mitch: (00:52)


Can you tell us what led you to researching and writing the
article, AI new risks and rewards? 


 


Mark: (00:58)


Yes. Thanks so much for having me. I wrote the article in
response to a number of stories that I had seen recently, all of
which seem to focus on the positives of utilizing AI, artificial
intelligence or RPA, robotic process automation in both the
finance and accounting industries. However, there was very
little, if any credence given to what the potential negatives or
drawbacks of instituting these technologies would be. Now,i'm not
adverse to new technologies. I'm not adverse to being on the
cutting edge of utilizing or implementing new technologies. Quite
the opposite. However, I always want to make sure to play devil's
advocate as well as take a realistic look at what the potential
negative impacts are. I think it's always important in our
industry to be proactive to what could go wrong instead of being
reactive as we've been in the past now in these articles that
speaks quite often about how corporations and businesses will use
and implement and have already implemented AI in their respective
finance departments or their internal audit departments and I
believe wholeheartedly that those companies are seeing a large
benefit. I cited in my article a recent MIT Sloan management
review report where they surveyed 3000 executives and over 85%
that they felt AI would give them a competitive advantage over
those companies that were not using AI. And of those individuals,
79% felt it would increase productivity. I believe that they're
correct. I also believe though that it opens up a brand new world
for potential fraudulent transactions, potential accounting and
fraud scandals that could go undetected for years or never be
detected based upon the reliance of AI to find these things. And
what I mean, there circles back to what AI really is in
artificial intelligence. While I'm not a technology expert, I can
break it down and have had it explained to me many times in a
simple format of artificial intelligence does learn, but it
doesn't learn on its own. It learns from you and I, it learns
from millions and millions of data points that it is fed through
in analyzing information. Those data points come from situations
and occurrences that have taken place where humans have been
interacting in some facet of the data that we are then feeding
through the artificial intelligence because humans have
interacted or touched some portion of that data point or that
transaction. Human bias is inherently being fed into these
technologies, into the artificial intelligence, into these quote
unquote robots. And I cite a couple of studies in my article, one
of which took place in the university of Virginia where a
professor down there was utilizing AI and determined that it
began exhibiting sexist views of women. simply again, based upon
the data points containing human bias and human bias.
Unfortunately, still today being skewed towards towards sexist
views towards a female gender. Another study this time at the
University of Massachusetts showed that a AI was able to put
learn in quotes again because it does take it's lessons or it's
education from human interactions. But AI was able to learn from
these data points to essentially exclude African American
individuals from data sets that were used for important items
such as polling information, based upon their vernacular. So it
was able to learn and essentially pull those data points out of
the data sets. My concern then is the human bias that led to the
large accounting and financial frauds in the late nineties and
early two thousands such as greed and power and seeking to meet
quarterly goals and sales records. Those issues will still be
contained within data points, those biases that have been
exhibited by humans for hundreds of thousands of years will
essentially be contained in the AI and how are we as auditors, as
accountants, as financial professionals, ready to combat that? I
think that anybody who sees the articles that have come out on
how AI has taken on these previously unprogrammed racist and
sexist and biased views and does not think that items such as
greed are essentially inherently contained in these transactions
as well are not focused on the potential impacts. What if AI does
identify that greed or that meeting quarterly reports, meeting
quarterly goals increasing market share, taking home more money?
What if AI learns that those are all things that certain humans
that are involved in data points see as beneficial and therefore
AI derives the fact that it should do more of that. If it does,
we could be an appoint where essentially AI begins committing
accounting and financial frauds on its own if not even more
concerning committing these frauds in a complicit manner with
executives or individuals that have to programming those
technologies. So I think the main result is we need to make sure
that we're not losing the critical eye of the auditor or the
critical eye of the financial professional. The executives that
was an are inherent in Sarbanes-Oxley just to be on the cutting
edge of technology or increase efficiencies to cut cost. That in
my opinion, is the real danger. 


 


Mitch: (09:30)


What do you think accounting and finance professionals should do
moving forward? 


 


Mark: (09:34)


Yeah, great question. So I think the issue becomes, again, that I
am in no way, shape or form against utilizing AI or RPA or data
analytics to increase efficiency. But we need to realize that
those technologies are limited and we is the so called
gatekeepers of our profession need to ensure that our reliance is
still on our professional judgment and our interactions and our
decision making because another point needs to be made that AI
isn't as flexible as some articles and individuals make it out to
be. Again, these data points need to be repetitive in nature and
very numerous for AI to be able to make good quality decisions
and process information accurately. So if there are situations in
audit, in business, in finance that are not repetitive in nature
or independent, we need to make sure that we as CPAs, and
professionals are looking at all transactions to determine, Hey,
that needs to be pulled out and that needs to be something that
we make the decision on because it's not a frequent transaction
or it's a little bit skewed from the norm, so we might not get a
good result from the technolog...