January 2023
As part of your AAT Level 3 Business Awareness studies, a new topic on technology is being assessed.
Karen Groves explains all about artificial intelligence, machine learning and blockchain Artificial intelligence (AI) allows computers or machines to work efficiently and solve problems. AI will simulate how we think and behave, where previously this required human intelligence. Large amounts of data can be analysed and interpreted.
Machine learning is an application that codes computers to learn from data and speeds up data entry. It uses past data to predict the probability of what will happen next. Think about your own social media platforms, and how the systems must ‘learn’ what you are interested in and adjust advertising accordingly.
There will be automatic coding of invoices, purchases and receipts, which then leads to more accurate reporting. The system can also be used to predict future events, such as price changes and customer buying trends. Large amounts of data can be reviewed quickly, and any unusual items flagged up for investigation.
How will this impact on the finance function?
Due to development and running costs, the systems are expensive. For smaller businesses, off-the-shelf cloud accounting systems are available; however, for larger businesses bespoke packages will be required. As some of the tasks that an AI accounting system can carry out will replace the need for human input, this could mean some finance staff are made redundant.
Blockchain is a system that records transactions made and shares these over several computers that are linked in a network. The records of transactions cannot be altered or destroyed, which helps protect against hacking.
One of the main advantages of blockchain is the transparency of transactions.
Blockchain is useful in accounting systems as it maintains ledgers and reduces staff costs. This works by:
• the transaction being raised.
• a block being created to digitally represent the transaction.
• the block is then shared to all computers in the network and each computer will validate the transaction.
• the authorised block is then added to the chain.
The data in the chain is protected, and any attempt to manipulate the data by unauthorised users will be rejected. When a new block is added to the blockchain it is linked to the previous block; this then encrypts the data and prevents unauthorised people accessing the data.
An example
You have probably already heard of Bitcoin, which is a digital currency (cryptocurrency).
Transactions take place over the internet and are not controlled by a single bank or government.
Bitcoin uses a peer-to-peer payment network, which is made up of users with Bitcoin accounts.
Bitcoins can be obtained by either exchanging other currencies for bitcoins, which is more common, or bitcoin mining. Bitcoin mining involves solving the complex problems in the bitcoin network. As problems are solved the bitcoin miner receives bitcoins.
Bitcoins are stored in a secure wallet that is encrypted with password protection. When a new bitcoin transaction takes place, this is updated in the network on all ledgers using block chain technology.
Bitcoin currency can only be used to purchase items from sellers accepting Bitcoin payment.
Questions
Shopping activity is collected every time you visit a store, or shop online. When you log in to your online account, certain products are advertised to you based on your previous purchases.
What is this an example of?
a. data collection
b. data gathering techniques
c. artificial intelligence
Which one of the following is a benefit of using artificial intelligence and machine learning as part of the accounting systems of the business?
a. large amounts of data can be processed accurately and quickly
b. requires a lot of manual supervision
c. high set-up costs
• Karen Groves is an AAT tutor and AAT Course Director at e-Careers
ANSWERS:
C and A
