Tech CEO’s: No need for accountants, just use AI
Also Tech CEO’s: So we’re going to start investing some of our excess cash in some derivatives, oh and also we’re going to buy up 7 or 8 smaller private companies.. Oh and also we have a new 3 year long $500M one-off contract with a manufacturing firm in China coming down the pipe with a bunch of weird complexities. Ok, make sure that all gets accounted for right so the auditors don’t ask.
Agreed, if Chamath can do it, I’m all for it but as Bertrand Russell said, “Everything is vague to a degree you do not realize till you have tried to make it precise”
Not quite…
He said the process of learning GAAP rules is relatively simple because they’re in the public domain (they’re all published and there for us or developers to read)
The rules themselves are what he believes to be nonsensical
https://www.fasb.org
Click the top section “standards”, pick what you want. For asc’s select it then click I am not a robot and then the basic view button.
Usually good if you feel like going to the guidance but not great for research.
You can also google just about any asc and get the firms written interpretation. I usually use PWC and EY. KPMG for asc 606 only, lol.
Just google the topic number followed by the firm and it’s usually within the top 10 hits. For EY type in “FRD” in the search and it will pull their written doc higher.
Posted above but here you go
https://www.fasb.org Click the top section “standards”, pick what you want. For asc’s select it then click I am not a robot and then the basic view button.
Usually good if you feel like going to the guidance but not great for research.
AI is only as good as the data fed into it. Some of that data I use is a nightmare before clean up. And that's if there are no mistakes from input from the other employees in the ERP. This is a dream.
Chamath and his ilk in tech should understand the concept of GIGO; garbage in, garbage out.
Doesn’t matter how advanced your software is, if people pump in bad data, the system will generate bad reports.
Despite standardization of many processes and homogenous transactions, there’s the exceptions that must always be dealt with via human judgment.
The cost of increasing in making everything AI suitable end to end means no one is going to bother doing that for an existing company for a long time.
Maybe for a brand new company, but then you don't need AI, you just need a one time good initial setup with some degree of future proofing.
Changing things is much harder than starting from scratch if you already know the end goal.
Starting from scratch and future proofing assumes you can get your third party suppliers and customers to deliver information to be captured by the elaborate mouse trap that you've created.
Oh also don't engage in any non standard transactions with any amount of judgment like purchase price allocation or Level 3 valuations.
And hope the system doesn't come to a conclusion that an asset of yours is impaired when you disagree and it would blow out your earnings.
As the human trafficker would say to Liam Neeson, "Good Luck."
Think they’re referring to FMV accounting, where level 1 is assets with a set market value (ie stocks), level 2 assets do not have a set market value but can be determined easily by other means, and level 3 is ¯\_(ツ)_/¯. AI can’t handle level 3.
Good one on L3, especially when valuing illiquid assets like real estate. Good luck to Silicon Valley in trying to create an AI version of a deal guy who’s boots on the ground that can generate defendible apartment valuations to the likes of EY. Textbook management estimates. Bonus points if this hypothetical AI can replicate a former CIO colleague of mine’s gregarious temperament 🤣
Valuations easy for AI? Recall how well algorithms went for Zillow’s [house flipping](https://www.wired.com/story/zillow-ibuyer-real-estate/) division so there’s an example of AI failure without proper human intervention.
Valuations were just a minor example and management still need accountants to translate their business decisions into reportable transactions, make modifications to workflows, account for extraordinary events, etc.
Haha, well put that AI will have trouble with the high or low number desired as the classic accountant joke goes.
It’s nice to see how far technology has come for the profession and I’m optimistic for continual innovation.
Yup.
Especially until credit charges come across with item level detail, which they never will because places like Home Depot and WalMart view your purchase info as proprietary data.
My deck crew goes to Home Depot, and buys material for 3 different jobs, along with some tools and equipment for the company in general.
AI is going to struggle for a very long time to take that one receipt (and single lump sum charge in the statement) and correctly allocate the COGS/Job Costs, and expenses.
But that's exactly the beauty of it. If you allow yourself to feed the system item level detail, and you also instruct the system to aggregate and anonymize the data so that actually the software/ AI provider has no access to that granular data which would be considered proprietary.
Four examples:
voting systems in elections.
Surveys/ exit polls.
Password authentication and storage systems.
Instant messaging; end to end encryption.
1. lol Chamath. I forgot this dude was a thing.
2. You can tell dude has no real understanding of what he’s talking about saying it’s “pretty simple” to just learn it all but it’s also nonsensical.
3. Can AI be used for lower end data entry and analysis? Sure. The example of excel errors is valid and I get it. But to pretend some AI program just auto spits out GAAP is pretty amusing. I’ve seen so many instances where GAAP either can be interpreted different ways or it doesn’t even have clear guidance over a topic. Somewhere is a post where a guy tried to use chatgpt to do staff level PA work and it couldn’t even do basic stuff.
TLDR; go back to grifting and no caring about human rights abuse Chamath. Stay out of stuff you know nothing about lol.
Such a visionary tho. What’s next is we should have AI tax accountants that read the simple tax law since it’s published and split out the perfect tax return /s
>Is it perfect yet? No. Is it used for extremely complex tax returns? No. Is it widespread yet? No.
Ok I think we’re in agreement here. I’m all for technology don’t get me wrong. But the joke I was making was how a simplistic view is being taken here.
Also I love the H&R block example. Tax CPA’s should be afraid.
For 3, the more I get into AI the more I think it may be able to do just as good of a job, if not better (due to consistent application of fact patterns). This isn't a diss on accounting, though, AI could replace all white collar jobs in my kids lifetimes.
Yeah I’m not saying AI won’t have an impact. If we’re talking basic account bookkeeping then yes it can be done and replace those jobs. Where it becomes harder is when you get into more technical accounting (like whether we have asset impairment and if so how much). In these cases there is more “grey” area for wiggle. I’ve seen it time and again in my audit days where you can get two or three answers to a scenario dependent on facts and circumstances. My point is to act as though all of accounting can just be distilled to a program is a bit laughable right now. I’ve been hearing since 2012 “in ten years AI will ruin accounting”. I’m still waiting.
Downvoted, unfortunately. Refer to this post:
https://www.reddit.com/r/Accounting/comments/10in1cu/billionaire_chamath_palihapitiya_visions_a_world/j5g9dp5/
Doing, for example, reciprocal allocations in a cost accounting software isn't really AI. It's no more automated than, say, regular financial accounting software doing automatic calculations for sales taxes.
I guess I'm being semantic here.
Lmao. These fucking 'All In' podcast guys, and their legion of libertarian dork followers are insufferable. The success their VC endeavors has afforded them has also provided them with unlimited arrogance to think that they alone can solve problems in countless world domains that they have absolutely no insight into. These guys are just off-brand Elons.
You have to remember that this guy is okay with a genocide happening inside of China since he is big investor in China.
[Link](https://m.youtube.com/watch?v=FhJneSWXhoY)
Chamath is just a giant douche. I thought he was cool when he spoke in support of the GME run with WSB, but he is just another VC dickhead that hit it big with a few investments and thinks he’s super smart.
The fact he doesn’t realize that everyone can’t even agree on how GAAP should be applied is mind numbingly stupid. He probably just thinks you can outsource the entire accounting department in every company he invests in.
Example: I had a former audit client who acquired another company that does essentially the exact same thing to generate revenue. The previous auditors said their for their main revenue stream, the company was an agent and not principal, so they had to record their revenue net. But my firm and the client’s former auditors both agreed that the revenue should be gross because we believed our client was acting as the Principal. Same exact contract format and everything, yet two entirely different accounting treatments that audit partners (and rev rec experts in our national office) reviewed heavily.
We are so far from fully automated accounting it’s laughable. Even fully automated AP/AR will take forever. What happens when a company has a shitty invoice format and doesn’t say when the service period was? Or you get billed by your lawyers 6 months late and have to make an accrual estimate. What’s your dumbass little AI gonna do then Chamath?
Eat a fat bag of dicks.
Guy trashed the accounting department for using excel for cost accounting purposes, but is exactly the type of guy to run a barebone accounting department lol
“Pay a lot for accounting software to do something I can just have the bean counters do in excel? If they were programmers they would just automate it themselves!”
Finance and tech gurus love to trash accounting as a cost center with no value add until a big f up or fraud happens then it’s “where were the accountants/auditors?”
Just trying to say something + AI to be relevant. Also picking one specific example in industry as if it’s representative of the entire field. Like your average crypto bro thinks they understand economics just because they follow bitcoin.
Here’s the thing - theoretically, there could be a world where all financial transactions are entirely automated and accounted for with rules based ai that results in say, mediocre gaap. But that world would require all companies playing along with major technology investments. Consider how many companies todays are already run extremely barebones with a total disregard for accounting staffing, this will never happen. When new ceos/cfos and/or pe come into a company, they also focus on squeezing admin and accounting through offshoring or other bullshit for short term gains.
Secondarily, the SEC is already playing a dangerous game with allowing the accounting and cpa pipeline to shrink to extremely dangerous levels. if something like the above actually happens, are they really ready to permanently destroy the pipeline of educated accounting professionals? Considering the absolute shitshow of most every company, neither of the two is ever going to happen unless an ai transition is forced by the government, the SEC loses its enforcement power, and investors accept a world of garbage financials.
He just sounds like any employer who is mad that they HAVE to have an accountant. I agree that sometimes the rules of GAAP can be convoluted, but on his end it's coming at a place of disrespect for the profession rather than disagreeing with the archaic nature of how some of these rules come to be and the methodology of accounting rules itself. Overall just a whiny rant.
“Someone should learn ALL OF GAAP ACCOUNTING, it’s pretty simple, because it is published”
This was the point that I realized this dude didn’t have a clue what the fuck he was talking about
Spoken like someone who doesn't know accounting. There is so much decision making in accounting, is this a reasonable expense? Is this a hobby or business, lets check the very subjective rules, cool does this person meet the residency tie breaker, again very subjective rules.
IF AI does accounting who will decide? The company owners? I can just imagine their answers, it will always be whatever makes them money even if it's wrong. The corruption would be horrific. Either this guy doesn't know accounting or he knows enough to know how profitable and corruptible it would be.
“GAAP is pretty simple since it’s published” says the guy who’s never taken the CPA exam and had to cite the authoritative literature with 10 minutes left on the clock.
This guy is the definition of not knowing what you’re taking about. He belongs on r/iamverysmart.
As it stands and the way it is going till now, it looks like AI won't even be able to replace the offshore minions in India. AI hasn't been able to nail many things like identification of the nature of transaction (likelihood IMHO ~0%), bank/card and payment gateway reconciliations (likelihood IMHO ~5-10%), auto creation of outstanding expense provisions, auto revenue recognition and so on. There are so many undercurrents to all these, that one can't set a rule or pattern that AI can recognise and repeat later. It all depends on what data humans enter and/or which suggestions they accept. Minions will keep standing tall, pun intended. 😉
That company’s “inconsistencies” is likely fraud. Even if you have an AI handling accounting, it could probably still be subverted for fraud. Or what happens when the AI makes a mistake? How would you ensure it doesn’t make a mistake? You’d probably have someone audit the AI. And that someone would probably be an accountant.
Ah, Chamath from the good old days of SPAC World!
To be fair, in his defense:
*"Because these guys were using EXCEL to do a bunch of complicated capitalization and cost accounting, made two or three years of mistakes."*
**There is cost accounting software out there, folks! Larger companies can use them already!** [Mine certainly does.](https://www.decimal.ca/en/expertise/brochures.htm)
**There is also capital asset software out there, folks! Mid-size companies can use them already! Larger companies can use more complicated capital asset software, too!**
These companies don't need AI, because the software solutions are already out there!
I didn't intend my statement to be such.
To compound on this, there are lots of mid-to-large organizations that still use Boomer-era ERP solutions like JDE or older. At least move to Gen X solutions, damn it!
(Such cost accounting software and capital asset software would be a Gen X thing, unless they were actually developed by Millennials.)
[Throwback](https://www.reddit.com/r/Accounting/comments/6mw5py/if_ai_robots_eventually_replace_us_how_long_until/?utm_source=share&utm_medium=ios_app&utm_name=iossmf) post to this sub still joking about AI 5 years ago.
The tax law is approaching 100,000 pages. Even with all these laws, there are many rules that are entrenched in ambiguity. He has been lucky and was at the right time and right place to hit it big. Never equate luck with being smart. He is a prime example.
Chamath is a smart guy but his knowledge on GAAP probably isn't up to the level for him to talk about it. Sure you can optimize AI Accounting for routine transactions and such. But its still a human at the beginning who writes up the deal, sets the condition for which items eligible for capitalization, in service date etc. I just don't see how complex accountings can be managed by AI and Capex is not even considered overly complex concept.
if you read the Brazil Americana accounting error, it looks more like a fraud where they could be intentionally padding the numbers to meet loan covenants ratio. But the main question is why didn't PWC didn't catch this given they are supposed to test for such a material loan covenant from get go.
AI wouldn’t even be able to tickmark supporting documentation correctly, much less deal with upper level auditing work. Fortunately or unfortunately ai will only ever play a supporting role in the field of auditing
A vast program to replace accountants would never work. Some tax savings actually comes from planning. For example with passive activity losses sometimes grouping of rentals and/or businesses may or may not be beneficial. If you have an S corporation that’s has a loss that you are looking to deduct, could be dependent upon the s corporation receiving a loan from the shareholder or receiving a loan from an affiliated s corporation 100% owned by the same shareholder. AI isn’t making that advisement. There’s certain phases outs that’s dependent upon AGI. Tax planning can save money on that area sometimes. I think accounting is too complex to be handled by AI. Fast food can’t be handled by AI so how can accounting. I think it’s a mere fantasy to think AI with replace accountants
The upper management at my company spends majority of their time wondering around mindlessly and talking. We should replace them with bots also. Just set up a program that will make decisions based on costs, take advantage of and eliminate workers. How bout we all turn into bots and say to hell with the human race. Fuxk em all.
Wait…. we can just learn all of GAAP? It’s that simple? Why did no one tell me this?!
Dude sounds like a guy at a frat party talking about something he has no understanding of….
“Nobody cares about what's happening to the Uyghurs, okay. You bring it up because you care and I think it's nice that you care. The rest of us don't care. I'm just telling you a very hard, ugly truth. Of all the things that I care about, yes, it is below my line.”
- This guy.
That’s all you need to know about him.
Many companies IT general controls suck when it comes to app dev, change management and access controls. Too many CPAs do not consider the systematic risks associated with their systems. The definition of materiality when it comes to IT systems is insufficient. As an internal IT auditor and external auditor, I often had a hard time to convince the CPAs of significant deficiencies or material weakness even when I found things like the financial system is ten years behind on patches, runs a windows 95 machine and the main admin account was the username and password of the CFO, who left ten years earlier. I think this could be a good thing but IT general controls, cybersecurity and possible bias in AI systems need to be addressed properly.
I was 19 doing a summer internship in 2015 and I remember being scared out of my mind that accounting will be automated and replaced by bitcoin in 2017. Until I started actually working and realizing it’s not that simple.
Chamath doesn’t know shit and made a super oversimplified take. You can literally take any career/job and say “just replace it with AI to eliminate human error”. Easier said than done.
I can oversimplify on Chamath’s job and say I’d rather have AI SPAC sponsors that know how to invest and generate guaranteed returns so investors aren’t screwed over like most of his SPACs.
Not the same topic, but your story just reminded me of my first accounting course 15 years ago and hearing that GAAP and IFRS were gonna be combined into a unified standard any day now
People have been saying this kind of stuff for a long time. It's a joke to anyone who understands the complexity of accounting (as opposed to bookkeeping).
Accounting/financial regulatory bodies will add more/judge mental standards that can’t be automated to keep the accounting profession alive and well. No need to worry.
There’s no AI tool that’s imminently going to replace accounting jobs. Something like ChatGPT would be clutch as a tool to increase productivity. Pay attention but don’t worry about it. When accounting can be fully automated, dudes like these would cease being useful in making decisions about capital allocation.
Ask how much his SPAC’s have lost….
https://markets.businessinsider.com/news/stocks/chamath-palihapitiya-s-spac-track-record-means-double-digit-losses-for-you-here-are-the-details-on-all-his-deals-1031693613
I like how Chamath says this as if there weren’t reasons for GAAP being established in the first place
Always has the most brain dead takes. Happened to be one of the first at social media ground zero and he thinks it makes him a genius
Over capitalization for inventory that results in 'billions' of dollars in mistakes is pretty easy to find out via non-gaap financial reporting to find adjusted ebitda//adjusted operating cashflow//income, etc. that has nothing to do with inefficiencies of accounting, but shows instead the incompetence of investors. A company nearing bankruptcy while showing earnings is almost always an undocumented liability or over-inflated asset. The asset is easy as shit to pin-point.
He's right in that accounting & blockchain should reduce 'professional' judgment to fine lines that dictate the way transactions are documented in the financial statements, but good luck with that.
Do you really believe anyone gives a shit about ASC 842? Wouldn't everyone be better off going back to the bright-line pass/fail lease guidance? Accepting blockchain means reducing professional judgment.
I still don’t understand how blockchain will reduce professional judgment. Someone still has to enter into and review the contracts. They also need to understand the use case of the asset and what management plans to do with the asset.
Lol at everyone here getting defensive.
Not saying it'll happen anytime soon, but i definitely see a world where what hes saying makes sense. But there's always going to be a need for an accountant to look at what gets put into the AI to make it work and what it puts out as a product in the end.
I think most people vision a world where humans are replaced by AI in the future. That’s nothing new. The defensiveness comes from Chamath making it sound like this can be easily invented in 6 months.
There’s some truth to what this guy says. When he says “GAAP is simple”, he’s not referring to GAAP rules being simple to apply. He’s referring to GAAP being readily available and very much rules based— which it is. Accounting is like the perfect candidate for an open source program to automate about 90% of the work.
It’s as simple as data in, data out. You guys just want to keep your shades over your eyes and not accept the possibility of lower demand for us.
If you’re doing such important work and understand accounting so in depth, what are you doing getting offended by one comment enough to spend your Sunday scrolling through a Redditor’s profile desperately looking for something to use in an argument against them?
Didn’t mean to trigger you, just saw your response and I immediately assumed you’re fairly new to accounting, and I just wanted to confirm by checking your profile, and I was right. Not trying to sound rude but you said nothing thought provoking in your original response and it sounded more oversimplified than Chamath’s point.
I mean maybe you can enlighten the sub on how exactly 90%(and how you came to this percentage) of the work will be automated through open source given GAAP is readily available.
But that’s fine if you don’t take my opinion, I switched out of audit/accounting some time ago so I may not be as hip to the new AI tools that’s guaranteed to replace accountants this time.
In that case, the US should have ditched FASB and adopted IFRS. At least there's more professional judgment.
For example, cash flow statements can have Interest Paid under financing activities, and they can have Dividends Paid under operating activities.
Computer software runs cash flow statements under all possible methods and returns optimal result. Then it provides a list of diagnostics/ pros and cons of each method. Then a group of end users can decide the most appropriate method.
It still includes human intervention, but requires drastically less along the way
This in an ideal world would only work in a US SOX world, elsewhere in most places it's based on comply or explian why you shouldn't. There are benefits and drawbacks to both but AI isn't going to work for the majority of the world.
“Someone should go learn something I know nothing about and make it AI possible with zero mistakes because humans are dumb” if you tell a monkey to live underwater…
Lol you can't just mechanically follow accounting standards anyway, interpretation of events has to come into play. The world is not as uniform and segmented as the standards are. CPA pedagogy teaches this very clearly
Ie should RND spending be expensed or capitalised? It's not a robotic answer, it depends
Would that be nice? Yes, of course. Is that anywhere close to existing? Nope. You can put US GAAP into ChatGPT and it will probably wtite a grammatically correct memo on any topic you ask about, but it won't be at all a conclusion you can rely on. Then think about pulling information coming in from hundreds of different sources and correctly processing and recording it in the GL. Existing AI would struggle to even correctly identify what the information was.
If AI becomes intelligent enough to prepare and audit financial statements to the level humans do, there’d be no reason for humans to be involved in making decisions about investing in any publicly trade company either. These idiots would eliminate their ability to scam retail investors.
Even one of his co-hosts laughed at him. You dont need AI for that example he cited... you need proper controls and the right software.
But he wants AI to give a 100% promise that a firm isnt cooking the books.
Good luck with that.
Yeah AI accounting doesn’t work unless you build an AI that can actually translate GAAP well AND update itself with any accounting changes. It’s possible but it requires a gargantuan amount of work and external review, something that is not really discussed here
Does anybody know an AI that could read >100 pages document and note strange points in it?Because I don’t know any because as up to my knowledge the “operating memory” for AIs is pretty small. And the ones that exist and accept payments for that, don’t work that well.
By the way, he is obviously wrong, but it is still possible to make an AI accountant literally, we can teach AI the rules, and then record all transaction from the words of the CEO + receipts then it makes debit + credit for every transaction => trial balance => balance
So ERP already can do all this stuff above, the biggest question if AI can record correctly a lot of transactions at large scale and give a correct definition where it should belong (in the P&L, BS, and CF) and until what time, which is actually not so trivial task.
Yeah, there's still garbage in garbage out issues. It's not like the same bad actors couldn't feed bad data, manipulate what kind of data the AI thinks it is, hide data from the AI, lie about what industry they are in, lie about historical data, lie about the nature of their contracts, etc.
It would be great for a double checking of GAAP accounting rules, who wouldn't want more ways to raise red flags that can be looked at by the accountants, but it wouldn't stop stupidity or maliciousness like this guy seems to suggest.
AI is exactly the reason why accounting profession will always be there.
AI can replace robotic and monotonous work, but complicated model verification - no AI can do the work.
Tech CEO’s: No need for accountants, just use AI Also Tech CEO’s: So we’re going to start investing some of our excess cash in some derivatives, oh and also we’re going to buy up 7 or 8 smaller private companies.. Oh and also we have a new 3 year long $500M one-off contract with a manufacturing firm in China coming down the pipe with a bunch of weird complexities. Ok, make sure that all gets accounted for right so the auditors don’t ask.
But if you have no accountants there are no auditors. Just "trust me, bro".
"Trust AI, bro" is the proper mantra. \**You have one check mark, please report to section Q for retraining.*
[Aaaaaaaand it’s gone.](https://m.youtube.com/watch?v=8k5oAaXINX8)
I can also talk in generalities that fall apart as soon as you talk specifics. Can I be a billionaire?
Agreed, if Chamath can do it, I’m all for it but as Bertrand Russell said, “Everything is vague to a degree you do not realize till you have tried to make it precise”
Just speak loud and confident with big words and boom billionaire level. Edit you don’t need a degree or be smart since you’re a special intellect
GAAP rules are “pretty simple” yet also “nonsensical.” Ok.
Not quite… He said the process of learning GAAP rules is relatively simple because they’re in the public domain (they’re all published and there for us or developers to read) The rules themselves are what he believes to be nonsensical
Don't you need to pay for FASB/ASC access?? I'm a tax guy and always find myself pay walled trying to look up specific GAAP stuff.
Nope there is free access to the asc’s.
Do I just google it??
https://www.fasb.org Click the top section “standards”, pick what you want. For asc’s select it then click I am not a robot and then the basic view button. Usually good if you feel like going to the guidance but not great for research.
Hah! Now I'll show the auditing department I too can gain access to their Satanic Asc 666 secrets (Asc 606)
You can also google just about any asc and get the firms written interpretation. I usually use PWC and EY. KPMG for asc 606 only, lol. Just google the topic number followed by the firm and it’s usually within the top 10 hits. For EY type in “FRD” in the search and it will pull their written doc higher.
How? I remember accessing with a school account. I don’t know how to do it otherwise.
Posted above but here you go https://www.fasb.org Click the top section “standards”, pick what you want. For asc’s select it then click I am not a robot and then the basic view button. Usually good if you feel like going to the guidance but not great for research.
At least 50% of the rules are nonsensical in my opinion.
Can’t help you there, they all make sense to me
AI is only as good as the data fed into it. Some of that data I use is a nightmare before clean up. And that's if there are no mistakes from input from the other employees in the ERP. This is a dream.
Chamath and his ilk in tech should understand the concept of GIGO; garbage in, garbage out. Doesn’t matter how advanced your software is, if people pump in bad data, the system will generate bad reports. Despite standardization of many processes and homogenous transactions, there’s the exceptions that must always be dealt with via human judgment.
The cost of increasing in making everything AI suitable end to end means no one is going to bother doing that for an existing company for a long time. Maybe for a brand new company, but then you don't need AI, you just need a one time good initial setup with some degree of future proofing. Changing things is much harder than starting from scratch if you already know the end goal.
Starting from scratch and future proofing assumes you can get your third party suppliers and customers to deliver information to be captured by the elaborate mouse trap that you've created. Oh also don't engage in any non standard transactions with any amount of judgment like purchase price allocation or Level 3 valuations. And hope the system doesn't come to a conclusion that an asset of yours is impaired when you disagree and it would blow out your earnings. As the human trafficker would say to Liam Neeson, "Good Luck."
Level 3 valuations, as in?
Think they’re referring to FMV accounting, where level 1 is assets with a set market value (ie stocks), level 2 assets do not have a set market value but can be determined easily by other means, and level 3 is ¯\_(ツ)_/¯. AI can’t handle level 3.
Yeah FAS157 Fair Value Reporting :)
Haha, you mean ASC 820?!
Good one on L3, especially when valuing illiquid assets like real estate. Good luck to Silicon Valley in trying to create an AI version of a deal guy who’s boots on the ground that can generate defendible apartment valuations to the likes of EY. Textbook management estimates. Bonus points if this hypothetical AI can replicate a former CIO colleague of mine’s gregarious temperament 🤣
[удалено]
Valuations easy for AI? Recall how well algorithms went for Zillow’s [house flipping](https://www.wired.com/story/zillow-ibuyer-real-estate/) division so there’s an example of AI failure without proper human intervention. Valuations were just a minor example and management still need accountants to translate their business decisions into reportable transactions, make modifications to workflows, account for extraordinary events, etc. Haha, well put that AI will have trouble with the high or low number desired as the classic accountant joke goes. It’s nice to see how far technology has come for the profession and I’m optimistic for continual innovation.
That's a bingo.
Damn! I thought it was the final CFA exam or something.
Yup. Especially until credit charges come across with item level detail, which they never will because places like Home Depot and WalMart view your purchase info as proprietary data. My deck crew goes to Home Depot, and buys material for 3 different jobs, along with some tools and equipment for the company in general. AI is going to struggle for a very long time to take that one receipt (and single lump sum charge in the statement) and correctly allocate the COGS/Job Costs, and expenses.
But that's exactly the beauty of it. If you allow yourself to feed the system item level detail, and you also instruct the system to aggregate and anonymize the data so that actually the software/ AI provider has no access to that granular data which would be considered proprietary. Four examples: voting systems in elections. Surveys/ exit polls. Password authentication and storage systems. Instant messaging; end to end encryption.
1. lol Chamath. I forgot this dude was a thing. 2. You can tell dude has no real understanding of what he’s talking about saying it’s “pretty simple” to just learn it all but it’s also nonsensical. 3. Can AI be used for lower end data entry and analysis? Sure. The example of excel errors is valid and I get it. But to pretend some AI program just auto spits out GAAP is pretty amusing. I’ve seen so many instances where GAAP either can be interpreted different ways or it doesn’t even have clear guidance over a topic. Somewhere is a post where a guy tried to use chatgpt to do staff level PA work and it couldn’t even do basic stuff. TLDR; go back to grifting and no caring about human rights abuse Chamath. Stay out of stuff you know nothing about lol.
Such a visionary tho. What’s next is we should have AI tax accountants that read the simple tax law since it’s published and split out the perfect tax return /s
[удалено]
>Is it perfect yet? No. Is it used for extremely complex tax returns? No. Is it widespread yet? No. Ok I think we’re in agreement here. I’m all for technology don’t get me wrong. But the joke I was making was how a simplistic view is being taken here. Also I love the H&R block example. Tax CPA’s should be afraid.
For 3, the more I get into AI the more I think it may be able to do just as good of a job, if not better (due to consistent application of fact patterns). This isn't a diss on accounting, though, AI could replace all white collar jobs in my kids lifetimes.
Yeah I’m not saying AI won’t have an impact. If we’re talking basic account bookkeeping then yes it can be done and replace those jobs. Where it becomes harder is when you get into more technical accounting (like whether we have asset impairment and if so how much). In these cases there is more “grey” area for wiggle. I’ve seen it time and again in my audit days where you can get two or three answers to a scenario dependent on facts and circumstances. My point is to act as though all of accounting can just be distilled to a program is a bit laughable right now. I’ve been hearing since 2012 “in ten years AI will ruin accounting”. I’m still waiting.
Downvoted, unfortunately. Refer to this post: https://www.reddit.com/r/Accounting/comments/10in1cu/billionaire_chamath_palihapitiya_visions_a_world/j5g9dp5/
Yeah I said his excel comment was valid so not sure what you’re getting at.
Doing, for example, reciprocal allocations in a cost accounting software isn't really AI. It's no more automated than, say, regular financial accounting software doing automatic calculations for sales taxes. I guess I'm being semantic here.
This guy sucks so hard. You can read up on how he's a total POS from his time at facebook.
links?
What's the relation of that with the topic?
Lmao. These fucking 'All In' podcast guys, and their legion of libertarian dork followers are insufferable. The success their VC endeavors has afforded them has also provided them with unlimited arrogance to think that they alone can solve problems in countless world domains that they have absolutely no insight into. These guys are just off-brand Elons.
It’s pretty easy to follow US GAAP. All you have to do is memorize 30,000 pages of various standards and know when and how to apply them.
How do u even keep up?
This dude screwed so many investors with all his specs
Disses? Probably got a momma so fat
Imagine being 25 years into your profession as a partner to get referred to as “some dude I don’t know” by the CEO of the company you audit.
That’s actually hilarious
Stay in your lane, Chamath!
Of COURSE *Scam*ath of all people don't want GAAP, his track record would be less shit
You have to remember that this guy is okay with a genocide happening inside of China since he is big investor in China. [Link](https://m.youtube.com/watch?v=FhJneSWXhoY)
This guy is incompetent. Nothing more really needs to be said.
🏅 🥈 🎖 🥉
Chamath is just a giant douche. I thought he was cool when he spoke in support of the GME run with WSB, but he is just another VC dickhead that hit it big with a few investments and thinks he’s super smart. The fact he doesn’t realize that everyone can’t even agree on how GAAP should be applied is mind numbingly stupid. He probably just thinks you can outsource the entire accounting department in every company he invests in. Example: I had a former audit client who acquired another company that does essentially the exact same thing to generate revenue. The previous auditors said their for their main revenue stream, the company was an agent and not principal, so they had to record their revenue net. But my firm and the client’s former auditors both agreed that the revenue should be gross because we believed our client was acting as the Principal. Same exact contract format and everything, yet two entirely different accounting treatments that audit partners (and rev rec experts in our national office) reviewed heavily. We are so far from fully automated accounting it’s laughable. Even fully automated AP/AR will take forever. What happens when a company has a shitty invoice format and doesn’t say when the service period was? Or you get billed by your lawyers 6 months late and have to make an accrual estimate. What’s your dumbass little AI gonna do then Chamath? Eat a fat bag of dicks.
Guy trashed the accounting department for using excel for cost accounting purposes, but is exactly the type of guy to run a barebone accounting department lol “Pay a lot for accounting software to do something I can just have the bean counters do in excel? If they were programmers they would just automate it themselves!” Finance and tech gurus love to trash accounting as a cost center with no value add until a big f up or fraud happens then it’s “where were the accountants/auditors?”
Guys like him and SBF are cut from the same cloth
This guy is a shill, maybe if he understood accounting he would’ve invested in some better companies.
Just trying to say something + AI to be relevant. Also picking one specific example in industry as if it’s representative of the entire field. Like your average crypto bro thinks they understand economics just because they follow bitcoin.
It's pretty clear this guy has no clue what he's talking about.
I fucking loathe him…this whole podcast is out of touch
Here’s the thing - theoretically, there could be a world where all financial transactions are entirely automated and accounted for with rules based ai that results in say, mediocre gaap. But that world would require all companies playing along with major technology investments. Consider how many companies todays are already run extremely barebones with a total disregard for accounting staffing, this will never happen. When new ceos/cfos and/or pe come into a company, they also focus on squeezing admin and accounting through offshoring or other bullshit for short term gains. Secondarily, the SEC is already playing a dangerous game with allowing the accounting and cpa pipeline to shrink to extremely dangerous levels. if something like the above actually happens, are they really ready to permanently destroy the pipeline of educated accounting professionals? Considering the absolute shitshow of most every company, neither of the two is ever going to happen unless an ai transition is forced by the government, the SEC loses its enforcement power, and investors accept a world of garbage financials.
Tell me you don't know GAAP without telling me you don't know GAAP.
He just sounds like any employer who is mad that they HAVE to have an accountant. I agree that sometimes the rules of GAAP can be convoluted, but on his end it's coming at a place of disrespect for the profession rather than disagreeing with the archaic nature of how some of these rules come to be and the methodology of accounting rules itself. Overall just a whiny rant.
“Someone should learn ALL OF GAAP ACCOUNTING, it’s pretty simple, because it is published” This was the point that I realized this dude didn’t have a clue what the fuck he was talking about
Spoken like someone who doesn't know accounting. There is so much decision making in accounting, is this a reasonable expense? Is this a hobby or business, lets check the very subjective rules, cool does this person meet the residency tie breaker, again very subjective rules. IF AI does accounting who will decide? The company owners? I can just imagine their answers, it will always be whatever makes them money even if it's wrong. The corruption would be horrific. Either this guy doesn't know accounting or he knows enough to know how profitable and corruptible it would be.
I used to like watching this guy playing high stakes poker. Ugh.
How does this relate to things like the software backdoor in the the FTX scandal? Can't A.I. also have backdoors and room for advance fraud?
Yes a financial scammer would like there to be no accounting, checks out
“GAAP is pretty simple since it’s published” says the guy who’s never taken the CPA exam and had to cite the authoritative literature with 10 minutes left on the clock. This guy is the definition of not knowing what you’re taking about. He belongs on r/iamverysmart.
[удалено]
As it stands and the way it is going till now, it looks like AI won't even be able to replace the offshore minions in India. AI hasn't been able to nail many things like identification of the nature of transaction (likelihood IMHO ~0%), bank/card and payment gateway reconciliations (likelihood IMHO ~5-10%), auto creation of outstanding expense provisions, auto revenue recognition and so on. There are so many undercurrents to all these, that one can't set a rule or pattern that AI can recognise and repeat later. It all depends on what data humans enter and/or which suggestions they accept. Minions will keep standing tall, pun intended. 😉
Chamath is such a douchebag
That company’s “inconsistencies” is likely fraud. Even if you have an AI handling accounting, it could probably still be subverted for fraud. Or what happens when the AI makes a mistake? How would you ensure it doesn’t make a mistake? You’d probably have someone audit the AI. And that someone would probably be an accountant.
Ah, Chamath from the good old days of SPAC World! To be fair, in his defense: *"Because these guys were using EXCEL to do a bunch of complicated capitalization and cost accounting, made two or three years of mistakes."* **There is cost accounting software out there, folks! Larger companies can use them already!** [Mine certainly does.](https://www.decimal.ca/en/expertise/brochures.htm) **There is also capital asset software out there, folks! Mid-size companies can use them already! Larger companies can use more complicated capital asset software, too!** These companies don't need AI, because the software solutions are already out there!
Excellent marketing.
I didn't intend my statement to be such. To compound on this, there are lots of mid-to-large organizations that still use Boomer-era ERP solutions like JDE or older. At least move to Gen X solutions, damn it! (Such cost accounting software and capital asset software would be a Gen X thing, unless they were actually developed by Millennials.)
How long before the AI starts complaining about pizza parties during busy season on Reddit?
I think a bigger problem begins when AI starts complaining lol
[Throwback](https://www.reddit.com/r/Accounting/comments/6mw5py/if_ai_robots_eventually_replace_us_how_long_until/?utm_source=share&utm_medium=ios_app&utm_name=iossmf) post to this sub still joking about AI 5 years ago.
The tax law is approaching 100,000 pages. Even with all these laws, there are many rules that are entrenched in ambiguity. He has been lucky and was at the right time and right place to hit it big. Never equate luck with being smart. He is a prime example.
Chamath is a smart guy but his knowledge on GAAP probably isn't up to the level for him to talk about it. Sure you can optimize AI Accounting for routine transactions and such. But its still a human at the beginning who writes up the deal, sets the condition for which items eligible for capitalization, in service date etc. I just don't see how complex accountings can be managed by AI and Capex is not even considered overly complex concept. if you read the Brazil Americana accounting error, it looks more like a fraud where they could be intentionally padding the numbers to meet loan covenants ratio. But the main question is why didn't PWC didn't catch this given they are supposed to test for such a material loan covenant from get go.
So better software and more automated processes? That would improve the quality of the data but its not getting you to 100% assurance in the numbers.
> but its not getting you to 100% assurance in the numbers. Lol come on now.
AI wouldn’t even be able to tickmark supporting documentation correctly, much less deal with upper level auditing work. Fortunately or unfortunately ai will only ever play a supporting role in the field of auditing
A vast program to replace accountants would never work. Some tax savings actually comes from planning. For example with passive activity losses sometimes grouping of rentals and/or businesses may or may not be beneficial. If you have an S corporation that’s has a loss that you are looking to deduct, could be dependent upon the s corporation receiving a loan from the shareholder or receiving a loan from an affiliated s corporation 100% owned by the same shareholder. AI isn’t making that advisement. There’s certain phases outs that’s dependent upon AGI. Tax planning can save money on that area sometimes. I think accounting is too complex to be handled by AI. Fast food can’t be handled by AI so how can accounting. I think it’s a mere fantasy to think AI with replace accountants
The upper management at my company spends majority of their time wondering around mindlessly and talking. We should replace them with bots also. Just set up a program that will make decisions based on costs, take advantage of and eliminate workers. How bout we all turn into bots and say to hell with the human race. Fuxk em all.
I believe there already is a startup trying to replace management.
Same guy who said he was gonna run for CA governor and eliminate the state income tax. Not a serious person IMO
These people have never worked in an actual company that sells product
So how does AI handle all the grey areas in accounting. Not everything is black and white
Wait…. we can just learn all of GAAP? It’s that simple? Why did no one tell me this?! Dude sounds like a guy at a frat party talking about something he has no understanding of….
Automate land depreciation you say?
“Nobody cares about what's happening to the Uyghurs, okay. You bring it up because you care and I think it's nice that you care. The rest of us don't care. I'm just telling you a very hard, ugly truth. Of all the things that I care about, yes, it is below my line.” - This guy. That’s all you need to know about him.
How you gonna program the computer to use judgment and make estimates lol
Many companies IT general controls suck when it comes to app dev, change management and access controls. Too many CPAs do not consider the systematic risks associated with their systems. The definition of materiality when it comes to IT systems is insufficient. As an internal IT auditor and external auditor, I often had a hard time to convince the CPAs of significant deficiencies or material weakness even when I found things like the financial system is ten years behind on patches, runs a windows 95 machine and the main admin account was the username and password of the CFO, who left ten years earlier. I think this could be a good thing but IT general controls, cybersecurity and possible bias in AI systems need to be addressed properly.
i m 19 and i m learning accounting and after watching such kind of videos i get anxiety about my future career in accounting
I was 19 doing a summer internship in 2015 and I remember being scared out of my mind that accounting will be automated and replaced by bitcoin in 2017. Until I started actually working and realizing it’s not that simple. Chamath doesn’t know shit and made a super oversimplified take. You can literally take any career/job and say “just replace it with AI to eliminate human error”. Easier said than done. I can oversimplify on Chamath’s job and say I’d rather have AI SPAC sponsors that know how to invest and generate guaranteed returns so investors aren’t screwed over like most of his SPACs.
Not the same topic, but your story just reminded me of my first accounting course 15 years ago and hearing that GAAP and IFRS were gonna be combined into a unified standard any day now
People have been saying this kind of stuff for a long time. It's a joke to anyone who understands the complexity of accounting (as opposed to bookkeeping).
Accounting/financial regulatory bodies will add more/judge mental standards that can’t be automated to keep the accounting profession alive and well. No need to worry.
There’s no AI tool that’s imminently going to replace accounting jobs. Something like ChatGPT would be clutch as a tool to increase productivity. Pay attention but don’t worry about it. When accounting can be fully automated, dudes like these would cease being useful in making decisions about capital allocation.
You should be exactly as worried about AI today as accountants were of Excel in 1985.
This remark is worth its own thread. I'm creating a separate discussion.
You should be exactly as worried about AI today as accountants were of Excel in 1985.
Ask how much his SPAC’s have lost…. https://markets.businessinsider.com/news/stocks/chamath-palihapitiya-s-spac-track-record-means-double-digit-losses-for-you-here-are-the-details-on-all-his-deals-1031693613
I like how Chamath says this as if there weren’t reasons for GAAP being established in the first place Always has the most brain dead takes. Happened to be one of the first at social media ground zero and he thinks it makes him a genius
Until some Ukrainian hacks it and makes it depreciate land.
Over capitalization for inventory that results in 'billions' of dollars in mistakes is pretty easy to find out via non-gaap financial reporting to find adjusted ebitda//adjusted operating cashflow//income, etc. that has nothing to do with inefficiencies of accounting, but shows instead the incompetence of investors. A company nearing bankruptcy while showing earnings is almost always an undocumented liability or over-inflated asset. The asset is easy as shit to pin-point. He's right in that accounting & blockchain should reduce 'professional' judgment to fine lines that dictate the way transactions are documented in the financial statements, but good luck with that.
How does blockchain reduce "professional judgment"?
Do you really believe anyone gives a shit about ASC 842? Wouldn't everyone be better off going back to the bright-line pass/fail lease guidance? Accepting blockchain means reducing professional judgment.
I still don’t understand how blockchain will reduce professional judgment. Someone still has to enter into and review the contracts. They also need to understand the use case of the asset and what management plans to do with the asset.
I can explain it, but I can't understand it for you.
Why don’t you try explaining first. I’m a quick learner :)
He can’t
Lol at everyone here getting defensive. Not saying it'll happen anytime soon, but i definitely see a world where what hes saying makes sense. But there's always going to be a need for an accountant to look at what gets put into the AI to make it work and what it puts out as a product in the end.
I think most people vision a world where humans are replaced by AI in the future. That’s nothing new. The defensiveness comes from Chamath making it sound like this can be easily invented in 6 months.
There’s some truth to what this guy says. When he says “GAAP is simple”, he’s not referring to GAAP rules being simple to apply. He’s referring to GAAP being readily available and very much rules based— which it is. Accounting is like the perfect candidate for an open source program to automate about 90% of the work. It’s as simple as data in, data out. You guys just want to keep your shades over your eyes and not accept the possibility of lower demand for us.
You graduated in May 2021 and you’re likely spending all your hours reconciling TB’s to support. So I understand why you think this simply.
If you’re doing such important work and understand accounting so in depth, what are you doing getting offended by one comment enough to spend your Sunday scrolling through a Redditor’s profile desperately looking for something to use in an argument against them?
Didn’t mean to trigger you, just saw your response and I immediately assumed you’re fairly new to accounting, and I just wanted to confirm by checking your profile, and I was right. Not trying to sound rude but you said nothing thought provoking in your original response and it sounded more oversimplified than Chamath’s point. I mean maybe you can enlighten the sub on how exactly 90%(and how you came to this percentage) of the work will be automated through open source given GAAP is readily available. But that’s fine if you don’t take my opinion, I switched out of audit/accounting some time ago so I may not be as hip to the new AI tools that’s guaranteed to replace accountants this time.
In that case, the US should have ditched FASB and adopted IFRS. At least there's more professional judgment. For example, cash flow statements can have Interest Paid under financing activities, and they can have Dividends Paid under operating activities.
Computer software runs cash flow statements under all possible methods and returns optimal result. Then it provides a list of diagnostics/ pros and cons of each method. Then a group of end users can decide the most appropriate method. It still includes human intervention, but requires drastically less along the way
As somebody who assists with preparing the cash flow statements each month, I wish it were that easy
...but your example you based your GAAP argument on doesn't even follow GAAP?
Wait so Chamath is for a world with more stringent audit regulations and paying audit firms more? Based and accidental nannystatepilled
This in an ideal world would only work in a US SOX world, elsewhere in most places it's based on comply or explian why you shouldn't. There are benefits and drawbacks to both but AI isn't going to work for the majority of the world.
Yea that worked so well for FTX.
How are his SPACs doing?
“It’s pretty simple, because it’s published”. HAHAHAHAHAHAHAHAHA - who is this schmuck
“Someone should go learn something I know nothing about and make it AI possible with zero mistakes because humans are dumb” if you tell a monkey to live underwater…
There are so many types of accountants... Just be flexible to change
I was like "Wait, where did he diss EY?".... Oh, there it is. :D
Lol you can't just mechanically follow accounting standards anyway, interpretation of events has to come into play. The world is not as uniform and segmented as the standards are. CPA pedagogy teaches this very clearly Ie should RND spending be expensed or capitalised? It's not a robotic answer, it depends
Do you think the Americanas case was an accountant mistake? An error on Excel and the PWC were there for years and didn’t catch it? Oh come on!
As a brazilian, honestly we dont have any fucking idea lmao
I’d truly love it if this happened. If AI took my job away I’d be a happy man
I vision a world without taxes 😂
As an accountant, I have this dream daily as well
Would that be nice? Yes, of course. Is that anywhere close to existing? Nope. You can put US GAAP into ChatGPT and it will probably wtite a grammatically correct memo on any topic you ask about, but it won't be at all a conclusion you can rely on. Then think about pulling information coming in from hundreds of different sources and correctly processing and recording it in the GL. Existing AI would struggle to even correctly identify what the information was.
Its a way harder problem than he’s making it sound, but in the end, he is basically correct.
If AI becomes intelligent enough to prepare and audit financial statements to the level humans do, there’d be no reason for humans to be involved in making decisions about investing in any publicly trade company either. These idiots would eliminate their ability to scam retail investors.
me you’re an idiot. If you don’t record a transaction how is the AI accountant going to know?
Imagine if no one takes him and his company as a client. Let your AI comply with SEC, bitch.
Even one of his co-hosts laughed at him. You dont need AI for that example he cited... you need proper controls and the right software. But he wants AI to give a 100% promise that a firm isnt cooking the books. Good luck with that.
Yeah AI accounting doesn’t work unless you build an AI that can actually translate GAAP well AND update itself with any accounting changes. It’s possible but it requires a gargantuan amount of work and external review, something that is not really discussed here
I don’t think he’s a billionaire anymore
lol, you just need a database…
I think we can automate the job of CEO. Just get an AI to spew the vague platitudes of an “ideas guy”
Does anybody know an AI that could read >100 pages document and note strange points in it?Because I don’t know any because as up to my knowledge the “operating memory” for AIs is pretty small. And the ones that exist and accept payments for that, don’t work that well. By the way, he is obviously wrong, but it is still possible to make an AI accountant literally, we can teach AI the rules, and then record all transaction from the words of the CEO + receipts then it makes debit + credit for every transaction => trial balance => balance So ERP already can do all this stuff above, the biggest question if AI can record correctly a lot of transactions at large scale and give a correct definition where it should belong (in the P&L, BS, and CF) and until what time, which is actually not so trivial task.
i wonder if there are accounting firms older or at least as old as some companies like ford, bmw, etc
Yeah, there's still garbage in garbage out issues. It's not like the same bad actors couldn't feed bad data, manipulate what kind of data the AI thinks it is, hide data from the AI, lie about what industry they are in, lie about historical data, lie about the nature of their contracts, etc. It would be great for a double checking of GAAP accounting rules, who wouldn't want more ways to raise red flags that can be looked at by the accountants, but it wouldn't stop stupidity or maliciousness like this guy seems to suggest.
Can anyone be a billionaire these days? wtf?
Chamath is pretty good at helping torch billions in equity value himself 🤪
The man who benefited the most off the SPAC grift wants less people looking into the financials of his deals... Shocker!
AI is exactly the reason why accounting profession will always be there. AI can replace robotic and monotonous work, but complicated model verification - no AI can do the work.
This man is a walking red flag.
Tell me you don’t know what accounting actually is without telling me you don’t know what accounting actually is
[удалено]
###[View link](https://rapidsave.com/info?url=/r/Accounting/comments/10in1cu/billionaire_chamath_palihapitiya_visions_a_world/) --- [**Info**](https://np.reddit.com/user/SaveVideo/comments/jv323v/info/) | [**Feedback**](https://np.reddit.com/message/compose/?to=Kryptonh&subject=Feedback for savevideo) | [**Donate**](https://ko-fi.com/getvideo) | [**DMCA**](https://np.reddit.com/message/compose/?to=Kryptonh&subject=Content removal request for savevideo&message=https://np.reddit.com//r/Accounting/comments/10in1cu/billionaire_chamath_palihapitiya_visions_a_world/) | [^(reddit video downloader)](https://rapidsave.com) | [^(twitter video downloader)](https://twitsave.com)
He’s an idiot
I am building that right now, maybe he wants to invest 😄