Analyzing the Ethical Impact of Artificial Intelligence in Accounting

This report delves into the ethical implications of Artificial Intelligence (AI) on accounting practices within Australia. It begins by identifying the core research problems and the significance of AI's influence on accounting, particularly for small businesses. The report outlines several ethical considerations, including data integrity, privacy, and the impact on auditing processes. A comprehensive literature review explores the benefits and challenges of AI in accounting applications, examining ethical aspects of AI usage and its positive and negative impacts on accounting practices. The research aims to identify ethical issues and challenges, and to propose solutions and guidelines for the effective and ethical implementation of AI in accounting. The methodology includes various research methods to provide a comprehensive analysis of the subject.

The Ethical Impact of Artificial
Intelligence on Accounting Practices in
Australia.

Abstract
This research has been conducted to identify the ethical impact of AI on accounting
practices on Australia. The main research problems have been described including many ethics
and how it is impacting accounting practices. Also, the background is included that clarify
significance of research. Moreover, several ethical considerations have been mentioned. In
addition to it, a detailed literature review has been discussed related to the research topic. It
includes other research reviews and how they have mitigated the ethical impact. The aims and
objectives have been explained. At last the research methodology is being described that includes
various research methods.

Table of Contents
RESEARCH PROBLEM.................................................................................................................1
BACKGROUND.............................................................................................................................2
ETHICAL CONSIDERATIONS.....................................................................................................3
LITERATURE REVIEW ...............................................................................................................3
Benefits and challenges of AI in accounting applications...........................................................3
Ethical Aspects of AI usage.........................................................................................................5
Positive and Negative Ethical Impact on Accounting Practices..................................................6
AIMS AND OBJECTIVE OF RESEARCH ..................................................................................7
RESEARCH METHODOLOGY.....................................................................................................8
REFERENCES..............................................................................................................................11

RESEARCH PROBLEM
It has been stated that AI is highly involved in different business functions. It is used by
companies to improve the efficiency of operations. In Australia there has been high use of AI in
accounting. There are many types of practices which are performed by business. It includes
auditing, recording transactions, etc. (Chouldechova and Roth, 2018) Besides this, there are
several ethics followed that helps in maintaining integrity of data and information and practices.
So, due to the implementation of AI in accounting there are has been a great ethical impact. This
is affecting the performance of business and their operations. The major impact is on small
businesses that are using AI to reduce cost. Another reason is AI is useful in recording
transaction automatically and producing reports in simplified manner. AI is playing significant
role in maintaining financial data of small businesses. It has enabled in storing data in servers
and providing real time analysis based on data. The entire accounting system is integrated and all
work is centralised. With this communication between all parties involved in has become easier.
The transactions recorded are in segregated way. Expert accounting systems are used in
accounting. It consists of different applications that are used in many accounting practices.
There are several issues that occur in using AI in accounting. It is related to security and
integrity of data and information. The issues have led to impact on business financial process and
practices. It has changed the way in which audit, accounts, etc. is done. There exist some areas
where ethics related problem has arisen. It is impacting on companies accounting practices.
But in recent times, use of AI has resulted in many issues and problems. Basically, it has
impacting ethically on companies (Etzioni and Etzioni, 2016). This is because AI is developed
with to ease process and do complex task. There is no specific standard set on basis of which it
works. Also, no principles and guidelines are set or followed. However, AI is used in practices
such as taxation, auditing, management accounting, etc. In all these expert system of accounting
is used. The system consists of many applications related to it. This has benefited to maintain do
accounting.
There is also negative impact of accounting on other units as well. The ineffective
following of principles results in generating reports that contains inaccurate data. With this the
auditor image, BOD responsibility, etc. is impacted as well.
1

But recently, small companies in Australia are facing issues related to ethics. They are
not able to follow principles. There is lack of responsibility of auditor due to which system
failure is occurring. It has led to affecting overall procedure of maintaining accounts. Other than
this, there is huge amount data loss due to system failure. No values and ethics are followed
while performing practices. The code of conduct mentioned by regulatory bodies and
organisations are not properly implemented in AI. With this consumer data is not protected and
secured in systems. There are many other issues occurred in it.
On contrary ethics of company has improved by using AI (Yu and Kohane, 2019). It has
enforced small companies to follow particular standard and guidelines. They are default installed
in AI system. So, there is only need to monitor those. Beside this, each system is made on basis
of accounting principles. This makes it easy for party to regulate that system and find out
whether they are working on set principles or not. Thus, there is positive ethical impact on
accounting practices. It has benefited in improving efficiency of firms.
BACKGROUND
It is being analysed that due to use of AI in accounting practices there is great ethical impact
on accounting practices. Due to this the operations are highly affected. Also, there are many new
laws and regulation been formed? These all are applied to monitor and regulate use of AI in
accounting. As accounting is based on certain principles and there are many guidelines that are
followed. Apart from it, there are many parties that are involved in performing practices. So,
they are defined with roles and responsibilities towards government, regulatory bodies, public,
etc. they have to maintain transparency within accounts, liable for loss of data, etc. these all are
the negative ethical impact of AI in accounting.
The accounting operations involved very sensitive data which can influence the business
growth and privacy (Luo, Meng and Cai, 2018). Thus, the privacy and security concerns are the
necessary considerations which need the ethical attention. The customers as well as service
providers must have the detailed knowledge that how the AI using accounting information in
processing and exchanging. However, they are also liable for certain ethics which is to be
followed. Furthermore, for each practice ethics are different.
Therefore, it is essential to identify and minimise negative impact so that practices are not
affected. It will give help in giving insight about what laws should be formed so that AI is used
effectively. Also, what changes must be made by Australian government in accounting practices.
2

This research will help in providing solutions of how human welfare and development can be
sustained. It will be done by determining ethical issues and challenges. Also, study will show
what ethics can be formed and how they must be applied to mitigate negative impact.
ETHICAL CONSIDERATIONS
There are some ethical things which need to be kept in mind while conducting research
this will be protecting the dignity of participant and securing the data as well (Benthall and et.al.,
2017). Ethics in research is very important for researchers need to follow which will be
considering about chose and actions. Informed consent is one among the major ethical issue
which is conducting research which includes not disclosing name of participants who are
included within research.
LITERATURE REVIEW
Benefits and challenges of AI in accounting applications
As per view of Canelas Martin and Rodriguez, (2015) in present time artificial
intelligence is one of the latest technology of computer science and other technologies. This
system is knowledge and information based self-learning machine. By learning the data on the
regular basis artificial intelligence can help different companies to maintain their finance
department. In the utilization of Artificial Intelligence in finance department can be good or bad
for an organization. In Australia the purpose of government is to improve the financial condition
by reducing the errors that are intentional and can be prevented by Artificial Intelligence.
Artificial intelligence is very good for financial purpose. This can provide stability to the finance
department by reducing their work with high level of efficiency. This system can reduce the
complexity of the data and financial and can present the financial data in the simple format. The
artificial intelligence system is adopted by many companies and countries to make their system
efficient. This system is consists of different abilities to manage the data. Main function of the
artificial intelligence is the vast range of data handling. This kind of data handling provide more
efficiency to the AI system. It can be said that there are many positive impact of AI in the
financial data managing.
As per Kokina and Davenport, (2017) in the artificial intelligence different functions and
programs are provided to analyse any kind of financial data with high level of productivity. Wide
range of operation can help the organization to maintain the financial data for better
management. This can be used in different financial aspect in the accounting and auditing
3

process. Artificial intelligence works with present data analysis and experience. This both thing
can help different organizations in future forecasting of data and conditions. With the result of
previous data and information and their pattern and sequences it is easy to predict future
conditions. This is how Artificial Intelligence can help the organization to maintain their
operation and working to keep their economic stability maintained. It can be stated that AI can
help organizations in economic data managing. There is different operation in the accounting
sector of an organization. For each operation there is a specific method is explained in system of
Artificial Intelligence Machine So, it can perform high level difficult calculation if information
and data. This can minimize the complexity of economic data. This is AI can be utilized in
accounting department of an organization.
In Australia there are different standards for economic data handling which are essential
and need to be followed. These standards of Australian government are constant and the rules
and regulation explained in the standards are good to reduce the complexity of process and
improve the transparency. This transparency is important for both organization and government
to reduce the corruption level in economy. When the economic data is handled by human there is
high creativity is available but this high creativity comes with different kinds of error in the
financial system of organization. Use of Artificial intelligence can reduce this kind of human
errors. As per view of West and Bhattacharya, (2016) artificial intelligence comes with higher
efficiency with less time consuming. Cause the whole data is handled and maintained by the
computer system so the chances of error are minimum. The error occurred in the AI can be a
result of technical malfunction in the processing of data. Meaning of ethics in the economics is
the better transparent operation with lower cost of transaction. This both things can be done by
implementation of Artificial intelligence in the financial department.
It is said by Ivanov and Webster, (2017) the auditing process is consists of different steps.
These steps are usually done by team of employees by following particular steps of auditing.
Steps which are followed by employees are financial data collection, preparing audit plan, plan
open meeting, conducting On-site field work, report drafting and finally the setting up meeting.
By following this process people need to manage different difficult things like work and time
management during the auditing work. Whole inconvenience can be reduced or minimize by
implementation of AI. The data collection is a simplest operation of the Artificial Intelligence.
This can be done with in short time and with data collection it can perform data scanning in
4

parallel. This reduces the time of operation. Within few minutes the result of financial data is
concluded by AI. In the further steps of open meeting, on site field work and drafting report is
done by Artificial Intelligence system. This reduce work load on auditing team and this reduced
work can help them to perform remaining operation with high efficiency and performance. This
how the advantages of Artificial Intelligence make the economic system ethical.
Ethical Aspects of AI usage
As per Parkes and Wellman, (2015) the ASIC act 2000, the government has decided to
design a frame work for the economic data of the public and private sector. This frame work can
affect the business practices of Private Sector Company. The processes followed by the private
companies are more complex than the government sector. These laws designed by Australian
government are complex for private organization. Because government wants to improve the
transparency in the financial process implementation can help the organization to improve the
transparency in the financial functions. As per Vargas, De Lima and Evsukoff, (2017) the
financial data of the company is confidential information and it can't be remain open for other.
This can cause higher damage to the policy of organization. Different acts of ASIC 2001 is
consists of many regulation and rules that can cause different positive and negative impact on the
financial process of organization. Guide lines provided by the legal body in Australia can affect
the implementation of artificial intelligence in organization.
As stated by Weng, Ahmed and Megahed, (2017) the implementation of Artificial
intelligence is good for the organization but sometimes cause of small errors Artificial
intelligence system can affect the financial body of company. For example due to any financial
problem in the AI system some transaction of organization are mismanaged and causing legal
trouble to the company. In case of problem generated by system technical error in company who
will be responsible for this. For this kind of problem the authority has decided regulation to sort
out this kind of troubles. In this case the responsible entity is the AI system. So the process of
problem solving is suggested in the regulatory work. In the private, public and voluntary
organisation the rules and procedures are different and for the AI system it is easy to manage the
different kind of procedures. The AI is learning based machines so it can perform the frame work
by following the guide lines of government regulatory body.
As Vargas, De Lima and Evsukoff, (2017) the implementation of AI in the financial there
are some limitation. The ethicalness of the AI need to be evaluated before implementation. The
5

limitation of the AI can be used misused by the organization for purpose of fraud. The loop holes
in the AI need to be treated well to minimize the economic crisis situation. This miss use and
influenced use of Artificial intelligence need to be prevented. The frame work of this in the legal
consideration is most important for the government. By making specific rules and regulation in
the implementation of AI can help the government to reduce the degree of use AI in financial
purpose. Different act of ASIC are designed to put limitation on the operation of Artificial
intelligence. The regulation is the framework which is defined by the government bodies and
they have authority to interrupt and influence the decision of company related to AI. The purpose
behind this is to keep use of this technology under the limitations.
According to Inthachot, Boonjing and Intakosum, (2016) use of artificial intelligence id
not always in ethical manner. There are also some threats in operation of AI for the financial
body of any organization. Hacking is the process which can cause lot damage to an organisation
in financial terms or structural terms. This can cause data leak of important confidential
information. The regulatory acts are designed to minimize this kind of problems. This regulation
reduces the threats to the organization by defining specific limitations in the implementation of
technology. The data security acts of government supports the companies to keep their data safe
and private. In the taxation process the AI is the best technology and ethically it is good for
organization and government. The flow of data and information is clear and transparent in AI
process.
Positive and Negative Ethical Impact on Accounting Practices
In the taxation process the role of AI is also important. In the opinion of O'Halloran and
Nowaczyk, (2019) technical system are good for the both organization and government under
some limitations. The handling of data and transfer of the data need to be clear and transparent;.
This transparency in the process can help to government to keep the process smooth and ethical.
The economic issues in the taxation and auditing with some government regulation process can
be made ethical for all.
As elucidated by McQuillan, (2018), for using AI in accounting it is necessary to follow
certain ethics. This is because it helps in proceeding through defined guidelines of fundamental
accountings. Also, it gives responsibility to all parties involved in practices. The ethics is useful
in maintaining discipline and following of responsibilities properly. Furthermore, AI enables in
6

maintaining that principle in specified manner. With this transactions are recorded in defined
way. The mistakes are removed automatically. Another benefit of using AI in accounting is once
principles are set the professional cannot make changes in it. An example can be taken is expert
accounting system which is developed for performing many applications. Beside this, it can be
integrated with other accounting practices as well. It is important to analyze requirement of AI so
that accordingly ethics can be set. Australian government have set a proper accounting
framework that is followed by companies. There are some agencies that regulate overall financial
transactions. Furthermore, as stated by Santoni de Sio and Van den Hoven, (2018), there are
many ways AI is used. The taxation department develop tax report by analyzing data. In auditing
each unit data and info is entered. By this reports are generated and errors are identified. AI has
transformed the accounting. It has created a great impact in ethical way. In order to promote use
of AI several ethics are been set. This has allowed small firms to use AI in many accounting
practices.
On contrary Luo, Meng and Cai, (2018) said that with use of AI in accounting the
transparency in process is dissolved. It has allowed companies to make changes in AI systems.
By this they are able to produce report and fulfil responsibility in their own way.
AIMS AND OBJECTIVE OF RESEARCH
The main aim is to evaluate the ethical impact of artificial intelligence on accounting practices in
Australia
Objective
There are many objectives of study that is described below:-
 To evaluate the benefits and challenges of AI in accounting applications
 To analyse the ethical aspects of AI usage
 To analyse positive and negative ethical impact on accounting practices
Research questions
 What is the impact of AI on accounting profession?
 How ethics affects the increasing role of AI
7

RESEARCH METHODOLOGY
In order to conduct research, there are various methods that are used. It depends on
researcher willingness that what method he or she is likely to use. The methodology gives an
overview about framework of study. The user can easily describe what methods are being used.
Research philosophy
It shows how overall study has been investigated and information is gathered and
evaluated. It deals with nature of study and how data will be gathered and analyzed. The
philosophies consist of realism, positivism, interpretivism, etc.
In interpretivism small study is done and qualitative data is collected. In this human
interest is considered as it is assumed that reality only exists.
Positivism tests the hypothesis and defines relationship between variables. In realism
scientific approach is used and is of two types that are direct and critical.
The researcher will use positivism philosophy to test the hypothesis (Radziwill and
Benton, 2017). It will be easy to define relationship between ethical impact and accounting
practices.
Research type
It is a process of analyzing information and deriving results. The technique helps in
deriving analysis of collected information which is the basis for making discussion and outlining
result. There are various types of research that is, qualitative, quantitative, observation, etc.
In qualitative theoretical data is gathered as and evaluated. There are no facts and figured
included in it. The themes are formed on basis of data gathered. Basically, it is used with
secondary research method.
Quantitative is completely related to facts and figures. The data is interpreted and analyzed
by scholar to get an understanding of outcomes. This helps in obtaining better research outcomes
and attaining aims and objectives.
The current study is based on qualitative type as by getting theoretical data it will be easy
to identify impact on accounting.
Research design
It is defined as set of various procedures and methods which are used by researcher in
collection of data and helps in analyzing the measures of variables that are specified within a
problem. It is the framework of various techniques and methods that are chosen by researcher in
8

order to combine the various components of research (Dietrich and Weisswange, 2019). There
are three types of design that is casual, exploratory and descriptive. In exploratory specific issue
is identified and on that study is conducted. The descriptive refers to describing characteristics of
population.
Exploratory design will be used in present study as it in this the ethical impact of AI on
accounting practices is determined and study is conducted on it.
Research approach
A research approach includes procedure which enables in maintaining effectiveness in
study. It contains entire plan of data is collected, analyzed and results are obtained. This helps
scholar to conduct study in efficient manner. Usually, there are two approaches available.
In deductive hypothesis is developed and then data is gathered on the basis of theories. It
is easy to test hypothesis based on data.
In inductive there is no hypothesis and data is collected logically. Hence, outcomes are
obtained through observation (Sobowale, 2016)
The present research will use deductive approach. The data will be gathered on basis of
ethical impact on accounting practices.
Data collection
This is an important element in research as it is related to gathering of data and
information from relevant sources. Usually, there are two methods of data collection that is
primary and secondary. Primary is known for gathering fresh and original data whereas in
secondary past data is analysed and evaluated of different authors. There are many techniques of
gathering primary data that is through questionnaire, interview, survey, etc. the secondary data is
collected from articles, journals, etc. In this study the secondary sources are used. So, it will be
easy to how AI is impacting accounting practices.
Data analysis
It is also an important element that is related to interpretation of data. It is necessary to
analyze data in such a way so that useful information is obtained (Dentchev, Haezendonck and
van Balen, 2017). The data must be interpreted effectively so that relevant and precise data is
generated. However, scholar should critically analyze data so that viable results are developed.
He or she must have knowledge about various data analysis tool that which one is suitable. It
also depends on researcher willingness as well. There are many methods of data analysis and is
9