In Part 1 of this two-part series, we looked at various AI tools that are or can be used in the CPA profession and how the technology is transforming accounting. In this article, we look at potential risks to consider when it comes to AI in the profession and strategies for addressing these risks.

• Confidentiality and security: AI tools often require access to sensitive financial data, creating a risk of data breaches, leaks or misuse. For example, cloud-based tools such as ChatGPT are often prohibited in corporate settings because data processed by these tools may be exposed to third-party access or stored in ways that aren't fully secure.

• The "Black Box" problem: AI models can sometimes make decisions without explaining how they arrived at those decisions, making it difficult to audit or understand their reasoning. This can lead to errors, biases or misunderstandings, particularly when dealing with complex financial data.

• Reliability: AI tools like ChatGPT and DeepSeek can generate inaccurate, outdated or biased information, often lacking source transparency. They may also fabricate details, making them unreliable for critical research. Since AI cannot apply true critical thinking, CPAs should verify all AI-generated insights through trusted professional sources before relying on them.

• Ethical implications: AI has the potential to perpetuate biases if not properly trained or monitored, which could affect financial decisions and strategic recommendations.

How to Overcome and Minimize These Risks

• Data encryption and security protocols: Ensure that AI tools used in accounting comply with robust data security standards and encryption protocols.

• AI trainings: Proper training on AI tools is essential to maximize their benefits, enhance accuracy and mitigate potential risks.

• Regular audits and transparency: To mitigate the "black box" problem, companies should regularly audit AI systems and ensure they are transparent in how decisions are made.

• Oversight: To minimize reliability concerns with AI tools like ChatGPT, DeepSeek and Claude, CPAs should implement strategies such as cross-checking AI-generated content with trusted sources, databases and professional guidelines. Human oversight is essential, with knowledgeable professionals reviewing AI outputs before decisions are made.

• Develop internal AI tools: Some larger companies and highly educated professionals develop proprietary AI systems to handle their specific financial operations. These in-house tools are often better tailored to a company’s needs, more secure and help ensure confidentiality by limiting external access.

Don't Fotget the Human Judgment Element

Despite AI’s impressive capabilities, human judgment remains a critical component of accounting. AI can automate many processes, but it cannot replace the nuanced decision-making and ethical considerations required in complex financial matters. CPAs bring professional expertise, ethical standards and human insight to areas, such as:

• Ethical decision-making: AI can’t evaluate the ethical implications of certain financial decisions. Human accountants ensure that financial recommendations align with both legal and moral standards.

• Personalized client services: AI tools may analyze data, but human accountants understand the unique needs of each client, offering personalized advice that an AI may miss.

• Professional oversight: Any AI-generated work must be reviewed by a qualified professional to ensure accuracy, compliance and sound judgment. The responsibility for financial decisions ultimately lies with the CPA, not the AI, reinforcing the need for human oversight.

AI should be viewed as a tool that complements, rather than replaces, human professionals in the accounting field.

Future of AI in Accounting

As AI continues to evolve, it is expected that large companies and certain highly educated individuals will develop unique AI tools tailored to their own functions. These in-house systems will likely be highly specialized and designed to address specific needs while reducing confidentiality concerns.

The rise of AI-powered automation and customization is leading to a future where accountants and auditors can focus more on higher-value advisory roles and less on routine tasks. Additionally, AI can streamline operations in real-time, offering greater transparency and enabling faster decision-making processes.

For those interested in developing their own AI tools, there are several educational programs and platforms available. Institutions like MIT and Stanford offer courses in machine learning and AI, while platforms like Coursera and edX provide certification programs for individuals looking to learn how to develop AI systems.

As AI tools continue to evolve, so to will the role of CPAs toward more advisory, value-added services, with AI handling the repetitive, data-driven aspects of the profession. However, as the benefits of AI become more pronounced, it is essential to address the accompanying risks, particularly regarding data confidentiality and the need for human oversight.

CPAs of the future will be aware of AI capabilities and the tools that best suit their needs and those of their clients while also understanding how to protect themselves from the risks arising from AI use.

By integrating AI while maintaining critical human judgment, the CPA profession will continue to thrive in the AI-powered future.