ChatGPT is an indicator of the massive impact artificial intelligence is going to have a on how knowledge workers and others work. In this article I explain what it is and why I believe we all need to pay attention. It’s a bit longer than usual but please go the distance as this really is very important stuff for accountants to understand. The impact of this stuff goes way beyond knowledge workers but I’m limiting my discussion in the interests of brevity. I include links to some articles and books if you’d like to dig deeper.
A recent updated “research release” of ChatGPT has generated a rush of interest and commentary from both media and scientists alike. For example the Sunday Times in the UK had an article headed “Is Chat GPT the world’s first truly useful chatbot?” The Harvard Business Review has one called “ChatGPT and How AI disrupts industries” and another headed “ChatGPT Is a Tipping Point for AI”.
Using the free access available to Chat GPT I typed “What is ChatGPT”. Here is the answer:
GPT (Generative Pre-training Transformer) is a type of artificial intelligence (AI) model that is trained to generate human-like text. It is based on a type of machine learning called deep learning, which involves training large neural networks on large amounts of data in order to learn patterns and relationships in the data.
GPT is a type of autoregressive language model, which means that it is trained to predict the next word in a sequence based on the context provided by the previous words. This allows it to generate coherent and realistic-sounding text, which can be used for a variety of applications, including natural language processing, machine translation, and text generation.
There are several versions of GPT, including GPT, GPT-2, and GPT-3. GPT-3 is the latest and most advanced version of the model, and is capable of generating highly realistic and human-like text.
Chat GPT refers to the use of GPT in the context of chatbots or other conversational AI systems. It can be used to generate responses to user input in real-time, allowing chatbots to have more natural and human-like conversations with users.
This is not a cut and paste from the website, it was generated live before my eyes. One of the things it does not refer to is the ability of this product to write computer code at a very rapid pace.
The first version of Chat GPT was released in 2018 by an American company called OpenAI. My understanding is it was founded in 2015 by Elon Musk and Sam Altman. It’s website says:
OpenAI is an AI research and deployment company. Our mission is to ensure that artificial general intelligence benefits all of humanity.
OpenAI’s mission is to ensure that artificial general intelligence (AGI)—by which we mean highly autonomous systems that outperform humans at most economically valuable work—benefits all of humanity.
We will attempt to directly build safe and beneficial AGI, but will also consider our mission fulfilled if our work aids others to achieve this outcome.
OpenAI also has another product called Dalle-E which can convert simple text prompts into original digital images. And some of you may be aware there are some tools floating around that now allow automated generation of music – say a pop song for example.
These are all examples of the rapid progress being made with a variety of technologies that will have a far reaching effect on us all.
I asked ChatGPT to explain the impact of AI on the accounting profession and here is what it wrote:
Artificial intelligence (AI) has the potential to significantly impact the accounting profession. Here are a few ways in which AI might affect accountants:
- Automation of routine tasks: AI can automate many routine tasks in accounting, such as data entry and reconciliation. This can free up time for accountants to focus on more complex and value-adding tasks.
- Improved accuracy: AI can help reduce errors and improve accuracy in accounting by analyzing large amounts of data and identifying patterns and trends that might not be immediately apparent to humans.
- Enhanced decision-making: AI can provide accountants with real-time insights and recommendations based on data analysis, which can improve the quality of decision-making in areas such as budgeting and forecasting.
- Increased efficiency: AI can help streamline accounting processes, reducing the time and effort required to complete tasks and allowing accountants to work more efficiently.
Overall, the impact of AI on the accounting profession is likely to be positive, as it can help accountants work more efficiently and accurately, freeing up time to focus on more complex tasks. However, it is important to note that AI is not a replacement for human judgment and expertise, and accountants will still need to use their critical thinking and problem-solving skills to make informed decisions.
I also asked ChatGPT to explain the impact of RPA on the accounting profession
Robotic process automation (RPA) is a technology that allows users to automate repetitive tasks by programming software “bots” to perform them. In the accounting profession, RPA can be used to automate a variety of tasks, including data entry, reconciliation, and report generation.
The impact of RPA on the accounting profession is likely to be similar to the impact of AI, as it can help to automate routine tasks, improve accuracy, enhance decision-making, and increase efficiency. By automating routine tasks, RPA can free up time for accountants to focus on more complex and value-adding tasks, such as analyzing financial data and providing strategic guidance to clients.
However, it is important to note that RPA is not a replacement for human judgment and expertise, and accountants will still need to use their critical thinking and problem-solving skills to make informed decisions. In addition, RPA may require some initial investment in terms of time and resources to set up and maintain the software bots, and may also require ongoing training and support for users.
I’d encourage you to read these two articles:
ChatGPT and How AI Disrupts Industries (hbr.org) by
Ajay Agrawal is the Geoffrey Taber Chair in Entrepreneurship and Innovation at the University of Toronto’s Rotman School of Management. He is the founder of the Creative Destruction Lab, founder of Metaverse Mind Lab, co-founder of NEXT Canada, and co-founder of Sanctuary. He is also a co-author of Power and Prediction: The Disruptive Economics of Artificial Intelligence (Harvard Business Review Press, 2022).
Joshua Gans is the Jeffrey S. Skoll Chair in Technical Innovation and Entrepreneurship at the Rotman School of Management, University of Toronto, and the chief economist at the Creative Destruction Lab. He is a co-author of Power and Prediction: The Disruptive Economics of Artificial Intelligence (Harvard Business Review Press, 2022).
Avi Goldfarb is the Rotman Chair in Artificial Intelligence and Healthcare at the Rotman School of Management, University of Toronto. He is also the chief data scientist at the Creative Destruction Lab and a co-author of Power and Prediction: The Disruptive Economics of Artificial Intelligence (Harvard Business Review Press, 2022).
ChatGPT Is a Tipping Point for AI (hbr.org) by Ethan Mollick – an associate professor of management at The Wharton School of the University of Pennsylvania.
The overall message from these articles is that AI and related technologies are going to allow many tasks to be automated and this is going to potentially change how we work in big ways. The future it would seem is a hybrid of people and AI working together. As accountants we need to be on top of this and make sure we are:
- Taking advantage of the many benefits these tools are bringing
- Adapting our business models to leverage those benefits and add value to our clients to remain relevant
Ethan Mollick strongly recommends we all sign up to get access to ChatGPT and play with it to understand it more. You can do that here https://chat.openai.com/auth/login , just as I did as part of writing this article. Mollick also notes that:
This is why the world has suddenly changed. The traditional boundaries of jobs have suddenly shifted. Machines can now do tasks that could only be done by highly trained humans. Some valuable skills are no longer useful, and new skills will take their place. And no one really knows what any of this means yet. And keep in mind: This is just one of many models like this that are in the works, from both companies you know, like Google, and others you may not.
As accountants I believe we need to be staying close to these developments.
Here are a couple of questions and answers from me playing with ChatGPT.
Question: In Australia are there good strategies to minimise income tax?
In Australia, there are several strategies that individuals can use to minimize their income tax. Some strategies include:
- Making the most of tax deductions: There are many tax deductions available to individuals in Australia, including deductions for work-related expenses, charitable donations, and interest on investment loans. By claiming all eligible deductions, individuals can reduce their taxable income and pay less tax.
- Contributing to superannuation: Contributions to an individual’s superannuation account may be tax-deductible, depending on the individual’s circumstances. Contributions to super can also help to reduce an individual’s taxable income.
- Investing in tax-effective assets: Some investments, such as property and shares, may be taxed at a lower rate than other income. By investing in these types of assets, individuals may be able to minimize their tax liability.
- Salary sacrificing: Some individuals may be able to negotiate with their employer to salary sacrifice a portion of their salary in exchange for benefits such as additional superannuation contributions or a company car. Salary sacrificing can help to reduce an individual’s taxable income.
It is important to note that individuals should seek professional tax advice to ensure that any strategies they use to minimize their tax are legal and appropriate for their specific circumstances.
Question: My taxable income is $150,000 in Australia. How much income tax will I pay?
In Australia, the amount of income tax that an individual pays is based on their taxable income and their marginal tax rate. For the 2021-2022 financial year, the marginal tax rates for individuals are as follows:
- Taxable income up to $45,000: tax rate of 19%
- Taxable income between $45,001 and $120,000: tax rate of 32.5%
- Taxable income between $120,001 and $180,000: tax rate of 37%
- Taxable income over $180,000: tax rate of 45%
Based on these marginal tax rates, if your taxable income is $150,000, you would pay a total of $33,850 in income tax. This is calculated as follows:
- Taxable income up to $45,000: $45,000 x 19% = $8,550
- Taxable income between $45,001 and $120,000: ($120,000 – $45,000) x 32.5% = $30,375
- Taxable income between $120,001 and $150,000: ($150,000 – $120,000) x 37% = $5,025
Total income tax: $8,550 + $30,375 + $5,025 = $33,850
It is important to note that this is just a rough estimate, and the actual amount of tax that you would pay may be different depending on your specific circumstances and any tax credits or offsets that you are eligible for. It is always a good idea to seek professional tax advice to ensure that you are paying the correct amount of tax.
Rob Pillans | Planet Consulting | www.planetconsulting.com.au
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