The Accounting Reviewer Bottleneck Nobody Is Fixing

Speaker A: Many times AI implementation is this threat to headcount rather than this focus on increased utilization through the organization, increased throughput and the ability to grow. I think it's not so much the purchasing decisions. I think, you know, the tools are going to come and go. The flavors are whatever that flavor is. Almost of the week now, the first level of reviews, the first level of work is going faster, but that reviewer gait is just getting swamped. That's where we need to see AI being implemented. We're not looking at capacity or realization as the goal. So I think that's one of the items. We've got a lot of pilots that are going and so that feels like progress. The adoption of the focus on um throughput through the organization. How do we get real ROI around this rather than just general adoption? I think that's going to separate these firms.

Speaker B: This is AI reality in Firms, a series on accounting voices where a select group of senior firm leaders, tech CEOs and influencers, influencers in the accounting game answer the same 5 related questions all around AI based on what they're seeing, deciding and helping firms to do in this crazy accounting world. My name is Rob Brown. I'm um, your host and our special guest today is Bill Sorensen. Bill, great to have you with us.

Speaker A: Thanks so much Rob. It's great to be here.

Speaker B: Yeah. We'll get a quick intro from you in a moment but first I want to one of five technology companies that are going on this journey with us, supporting this series and genuinely shaping how AI is applied inside accounting firms. First we've got Field Guide, the AI native platform for audit and advisory firms. Then we've got instead the first AI tax agent for end to end research, planning, filing and Defense Carbon, the global leader in AI powered practice management software digits the AI powered financial intelligence platform for accounting firms and then filed the intelligent tax workspace for prep and review automation. Great companies, great tech, great partners for accounting firms. I'm sure you've heard of them and if you haven't, you should reach out to them. So Bill, tell us briefly who you are and what you do and then we'll hit our five questions.

Speaker A: Sure. So I'm Bill Sorensen. I've been in the accounting industry for probably 20 years. Worked many times on the technology side. So the hosting of firms environments moved over to cybersecurity about 10 years ago and spent time focused on protecting firms and now really looking at and being involved in compliance and AI implementation in firms. So been around the block, known quite a few of the players in that mid market size. And my passion is really around helping firms adopt both protective measures as well as AI as they look to implement and really move forward in the industry.

Speaker B: Goodness knows they need you with the amount of data they have to take care of and look after Bill. So thank you for that. Let's get started. Question one. We're asking people, where is AI reshaping strategic direction for the firms you work with?

Speaker A: Well, I think it's really a little bit different than uh, what the headlines talk about. So much of the headlines talk about the tools, implementation of the tools, and really where we're seeing success is how do we move more work through the firm m faster so it's less of about tool and much more around where work waits, what constraints there are, and then using AI on top of those constraints to really smooth that work through the firm. So we've seen a lot of articles around this, the original MIT article around ROI not showing up for firms. And then in June, uh, Harvard Business Review did a great article about mid managers just getting swamped with work that they can't handle. And so instead of looking at tool adoption, what my firms are looking at is really where does work Wait, where is work? Stuck in the system and then applying AI on top of that.

Speaker B: Yeah, well, thanks for that, Bill. Question two. We're asking what are firms getting wrong about AI? Ah, they're all at different stages in their journey. Some are going faster than others, but none of them are pretending that they got it perfect.

Speaker A: Yeah, I think the thing we're getting wrong is really how are we measuring adoption? You know, we're seeing it as number of licenses we've got implemented, activities that individuals are using and that, that focus on the small piece the individual is working on, although helps them maybe significantly, does it really get work through, uh, the organization? We're not looking at capacity or realization as the goal. So I think that's one of the items. We've got a lot of pilots that are going and so that feels like progress. And it may in individual small areas, but it's really not getting more work through the organization. I think probably the last thing we're getting wrong is the commitment to our staff. You know, many times AI, uh, implementation is this threat to headcount rather than this focus on increased utilization through the organization, increased throughput and the ability to grow. And so by stating that up front that we've got this commitment to staff, I think you get a lot more honesty out of users. You get a lot more focus on Their ability to use the tools that they're given, rather than this risk, risk to their jobs.

Speaker B: Um, question three leans into jeopardy. There's not much at stake when you dabble in, in a little bit of GPT or claude, but once you start to make it part of your infrastructure, which leadership decisions on AI, uh, do you feel, Bill, are going to matter most over the next few years? What's going to be the most jeopardy and the most at stake?

Speaker A: I think it's not so much the purchasing decisions. I think, you know, the tools are going to come and go. The flavors are whatever that flavor is almost of the week now. But, uh, but really it's focusing on getting things finished so that you're getting the value that AI gets to the firm. By focusing AI on those areas in the line of business where there's bottlenecks, where there's constraints, optimizing those, you get this chance to really push throughput through the organization faster rather than really increasing the pile. There was a great article just recently in July or in June from Harvard Business Review about the swamping of the middle managers in firms and this idea that the first level of reviews, the first level of work is going faster, but that reviewer gate is just getting swamped. That's where we need to see AI being implemented, really delivering faster reviews, reviews that focus the human on what they're good at, what their value is, and taking away some of that other four.

Speaker B: Bill, where is AI creating the greatest internal tensions inside firms? You talk to a lot of firm leaders and um, a lot of people lower down the ranks as they implement. Where are you seeing the tensions?

Speaker A: I think we see it at a couple different places. We see it at the reviewer level as work gets done up until that point of review, that amount of work that's, that pile of work that's sitting on, the reviewer is growing faster and faster. So the focus needs to be on, uh, optimizing AI for that reviewer's function. You know, getting their expertise built into the AI, using that to prep them so that reviews go faster and smoother. I think talent, also the younger staff members that are really coming into organizations are questioning is this organization going to be the growth organization or are they focused on, you know, cost cuts, those kinds of things? And so new talent, and there's a shortage of that, obviously, is really questioning where should they land. And then lastly, you know, it's, it's, uh, something you've talked about many times is the pricing changes within firms. Are we seeing. We're seeing that migration from effort, you know, hours of work to drive pricing, to really move to value pricing. And so that's going to, you know, that's going to continue, that's for sure.

Speaker B: Shout out to the Inside Public Accounting podcast that I co host with Chelsea Summers. We talked recently about value pricing and the whole death of the billable hour. It is finally happening. It's taken some time, but, uh, it's now below 50% in some firms that the revenue comes in from billable hour. So that's been a long time coming. This is AI reality. Inside Accounting Firms. Five questions. One thinker, leader, uh, practitioner, professional and expert answering those questions in 12 minutes. No script, no spin, just perspective on what's really happening inside firms. You can find the full series on our Accounting voices platform across YouTube, LinkedIn. We're syndicated on CPA trend lines and all major podcast platforms. Bill Sorensen is our guest today. And Bill, we're asking question five now, just to finish off by 2027, and that's not too far away. Now, what do you feel will separate leading firms from the rest when it comes to AI?

Speaker A: I think it's really understanding where their work waits in each of their lines of business. So when you look at tax, where does work wait in the beginning of the season and mid season? And those are two different places. When you look at audit, we're waiting for documents, you know, and then focusing AI on helping optimize that. Same with CAs, you know, we've got literally 12 accounting cycles a year. And how do we optimize AI to smooth that workflow? I think the, the adoption of the focus on throughput through the organization. How do we get real ROI around this rather than just general adoption? I think that's going to separate these firms so it's less about tools and more about operational improvements and focus. I think the, uh, staffing side will work its way out as firms show significant improvement and growth. Uh, we'll see staff migrate to those firms, and then there'll be firms that are a little behind the curve here and, you know, we'll see what 2027 really looks like for them. But, you know, it's going to be a struggle to not get AI fully implemented in their workflows.

Speaker B: Yeah, well said. Uh, thank you, Bill. Thank you. To instead carbon Field guide filed in digits for their alignment with this strategic inquiry and the perspective they bring to how AI is unfolding inside accounting firms. Bill, uh, a big thank you to you. To you for your candor and your prep and your passion for being part of this conversation. Quick final question. Are you excited for the future of accounting with AI in it?

Speaker A: I really am. Um, it's ah, dramatic impact in the world in general. In accounting specifically, we can see areas where it significantly improves firms versus just creating the commotion. And so that direction is uh, is really, really exciting to see.

Speaker B: Well, thank you for joining us. This is Rob Brown on the accounting voices talking to you about AI reality inside firms. We'll see you on the next episode.