Is AI Driving the Need for Bookkeeping Standardization?

While AI may improve data entry, it still lacks the judgment required for tax code decisions, loan splits, fixed assets, and meaningful financial analysis.

In this Season 8 opener, our resident Bookkeeping Mensch, Paul Rosenblum, explores how artificial intelligence is beginning to influence the bookkeeping profession. But the bigger issue is structural. Pricing for bookkeeping services varies wildly, certifications are inconsistent, and banks feed transaction data into accounting systems without standardized formatting. As AI becomes more integrated into tools like QuickBooks, these inconsistencies are becoming harder to ignore.

If the role of the bookkeeper is shifting from data entry to review, explanation, and advisory work, then standards, accreditation, and clearer industry expectations may need to evolve alongside it. Do you agree or disagree? Let Paul know. Contact details are below. 

The last episode on bookkeeping industry regulations:

https://pod.link/1688000860/episode/QnV6enNwcm91dC0xODcxMTY0Ng

Transcript

Season 8 Episode 1

Welcome to a new season of the pod!  (I know, in the middle of the current tax season) but just wanted to keep all of us bookkeepers on our toes).  Keep sending in your questions for the next Q&A season. Business owners: You have questions too!  Not hearing from enough of you!  So, send in your questions (that maybe your bookkeeper can’t answer) -- and I’ll tackle them for you here.  It’s almost time to turn the clocks forward, so this episode keeps with that theme.   I’m Paul Rosenblum. 

We’re going into the future today.  Not too far into the future, but we are taking a short leap. A.I. Artificial intelligence. When I’m working with QuickBooks Online, I have another word for it. Sometimes when QBO comes up with some completely illogical category for a vendor that my cat could determine, I look at the computer screen and say out loud “Artificial Idiocy”.  And shake my head and then change the category myself. I ran into one the other day-- Avis Rent a Car is NOT a restaurant!  QBO thought it was.

 This is the infancy of A.I. It’s going to take a while for it to get better and better for certain industries, and bookkeeping is definitely one of them. I think A.I. could be used for robots who take care of people in assisted living situations, for one example, or to be a server in a restaurant, but in my opinion, bookkeeping will always have that human quality attached to it. However, A.I. is coming to bookkeeping. Eventually, even if the data entry would/could/should be done 100% by A.I., and it was actually pretty accurate, there will always be that human judgement that would be based on the IRS code with things like fixed assets vs expenses, verses section 179 and where certain transactions ought to be posted to what account on the chart of accounts. So, even if A.I. took over the data entry, in my opinion, a bookkeeper would still be needed to go over every line that A.I. has input into the company’s books. A.I. is not going to take the bookkeeper’s job away, it’s only going to change it. 

Rather than the bookkeeper doing the data entry, the bookkeeper would be responsible for going over that data entered by A.I. and adjusting it as need be. Maybe not to the level of professional tax preparers, but to the level of moving some expenses to fixed assets, moving some subcontracted expenses to ‘advertising and promotion’ if the subcontracted service is social media, for an example. And since A.I. probably isn’t going to know the split between paying the principal of a loan vs the interest just from the bank download, the bookkeeper would make those adjustments too.  

But the most important change to a bookkeeping service (which, as you know, I do now, for any client who wants it), would be that the standard duty of a bookkeeping service would be to go over the books and explain them to the small business owner. So, somewhat less ‘bookkeeping’ for the bookkeeper, but more explanation and teaching would be involved. It’s not just ‘data entry’ anymore (it never was, as you know). Some bookkeeping would be involved, but working closely with the client analyzing and making suggestions to help grow the company would be our job in the future. And that leads to the common thread to last week’s episode.  Levels of bookkeeping certifications based on knowledge, experience, and education.  

It makes sense. As the bookkeeping field slowly changes, NOW is the time to create certifications. There have been QuickBooks certifications for years (I have two of them for the middle 2010’s), but it’s a combination of accounting software and bookkeeping.  Not real bookkeeping certifications. There should be a certificate that gives the bookkeeper the right to make suggestions about how to invest money for tax purposes from the business (top certification), and a certificate to explain the books to the small business owner, (which would be a lower certification) for two examples. 

My producer, Steph, (her information is in the show notes, so if you need a podcast guru, please contact her) asked me after the last episode --- “How did this idea come up and why did caller “Paul” want to know this?  

Well, here’s the answer, Steph, and everyone. I have a client who has done their own bookkeeping for the past 7 years and I have been consulting twice a year with her to clean up some mistakes that she made and to teach her new things and to change the way she was handling the POS system, just to name one. I introduced the ‘cash on hand’ account to her.  We had a zoom last week, and she told me that she now has an investor and she now has enough money to hire a bookkeeper.  It’s above average complicated bookkeeping (2 POS systems, wholesale tax, retail tax, and other things), and since I haven’t cut out every stressful client yet, I told her that I don’t have the bandwidth as of right now. But maybe in the late spring or summer, I could take her on.  She wanted someone now, because a lot of good things are happening in her business.  So, she started making some calls to bookkeeping services, one of which was recommended to her.  After her first zoom meeting, she called me and told me that the price quoted was $3,000.00 monthly. I was speechless.  Either I’m not charging enough, or this was outrageous pricing. And I immediately realized that pricing for bookkeeping had no rhyme or reason. “Regulation” popped into my mind. Bookkeeping Regulations NOW. (That should be a sign for a rally) She had another zoom call with another bookkeeper working at an accounting office, and they quoted $500.00 a month.  That’s more reasonable, I told her.  But if she goes with a tax preparer who is not in the firm where a bookkeeper works, then it might be awkward.  And I don’t believe in having a bookkeeper and the accountant working in the same office.  In most cases, what happens is that the bookkeeper creates a set of books for the accountant, not the client, and that kind of bookkeeping is called ‘creating workpapers, not books that you can discuss with the client to help them grow.  That’s counterproductive for the client. 

She was close to hiring them, and I think I might have scared her into not.  Then she had a phone call with another bookkeeper who told her that she was going on vacation next week, and they could have a zoom meeting when they got back.  A bookkeeper going on vacation during tax season?  They don’t have enough clients!  I told my client that I was concerned, and now she’s back to the drawing board.  So, that’s where the last episode came from. 

Since bookkeeping is a very structured and organized profession, there needs to be an organized price structure, accreditation, and an organized, logical way of getting the most out of A.I. possible. I’m not against A.I.  However, I am using it carefully and only for certain specific things.  And yes, this episode is written by me, typed into a word processor by me, and recorded into a microphone by me, as every episode of this pod is and will continue to be. 

So, the role of the bookkeeper will slowly change over the next 10 years, but I don’t think that bookkeepers will go away.  We’ll just change our job duties and responsibilities. 

Until all the banks code the downloads going into accounting systems banking features the same way, A.I. will be very difficult to rely on. I have one company downloading the banking into QuickBooks that the memo in every transaction starts with the name of their company.  So, rules don’t work.  A.I. never works in this case.  It reads the first words in the memo field that the bank ‘feeds’ into the software’s banking feature. A.I. would work much better if… oh, yeah… REGULATIONS were developed -- for how the banks upload their information to accounting systems. 

As I said, the last episode and this episode are inter-related for sure. Every time an industry changes, the workers, the job duties, certifications, and regulations have to change.  The United States isn’t great at being pro-active with these kinds of things – most of the time the administration reacts to things that have already happened.  Let’s break the mold here!  

What if:  

• We had a standard for A.I. and how would it attempt to help each industry?  
• We had a national or at least regional price regulations for bookkeepers and tax preparers?
• We had a standard of how the all the banks feed the bank transactions to the accounting software using the same standard of memos and coding. 
• The paper statement from banks and credit cards matches the online statements beginning and ending balances? 

These rules or regulations would just standardize things in the bookkeeping field. And then there would be minimal manual entries, and much more time to spend with the clients to discuss their books and help them grow their businesses. 

Hasn’t anyone else thought of these things?  I am not planning on going into politics, and organizing rally’s – any volunteers here?  I will only hold a sign and march during the late spring months to October 15th, when the heat is turned on in my building where I live.  After that, it’s too cold for me. 

Tax season still isn’t over -- I have work to do! Entering transactions, year end adjustments, and making an extra cup of coffee or tea during the day to keep me going.   

Business owners -- don’t forget -- especially this time of the year --- be nice to your bookkeeper!  We are under a good deal of stress to get everything done and get it done properly.  I’m Paul Rosenblum