As accounting firms race to adopt AI strategies, there’s one glaring issue that often gets overlooked: the quality of your data. It’s a hard truth that many accounting firms—whether in audit, financial due diligence (FDD), or client accounting services (CAS)—are sitting on "dumb" data. Data that’s disorganized, inconsistent, and difficult to leverage. And yet, many firms want to jump headfirst into AI implementation. The truth is, no matter how cutting-edge your AI tools are, they’re only as good as the data you feed them. Without standardizing and optimizing your data first, any attempt at leveraging AI will be a waste of time, resources, and client goodwill.
The State of Data in Accounting
Many firms struggle with siloed data across various departments, inconsistent naming conventions, and fragmented systems. This is often the result of legacy systems or simply a lack of standardized processes. According to a report by PwC, over 70% of organizations cited “data quality issues” as the biggest hurdle in implementing AI and advanced analytics . If your firm’s data is a mess, then your AI strategy is doomed before it even starts.
In audit, where precision is crucial, inconsistent data across different client records means AI tools cannot make accurate predictions or identify trends. In FDD, unstandardized financial statements lead to delays and misinterpretations, as the AI cannot process disparate inputs efficiently. Even in CAS, where speed and efficiency are key, “dumb” data means your firm is left scrambling to clean up financial records before any automation can take place.
Why Standardizing Data is Non-Negotiable
For AI to work, you need standardized data that’s easily accessible, consistent, and properly structured. When we say "your data is dumb," we’re talking about how raw data alone is not useful without context, structure, or consistency. AI systems rely on this context to generate accurate insights and automate processes. But when your data lacks standardization, AI can’t identify patterns or deliver meaningful insights, leaving your firm frustrated with its tech investments.
The solution is clear: Firms need to start with data governance and process documentation. By focusing on this foundational step, your firm will avoid the costly pitfalls of implementing AI on top of messy data. Firms that get this right will experience smoother audits, faster FDD workflows, and more efficient CAS processes.
Steps to Fixing "Dumb" Data
Fixing data at its source involves a systematic approach to standardization and process documentation. Here's how your firm can tackle this:
Perform a Data Audit: Start by identifying what data you have, where it lives, and who owns it. This is especially critical for firms that operate in multiple jurisdictions or handle numerous clients across different industries.
Establish a Data Governance Framework: Your firm needs to establish policies around how data is collected, stored, and maintained. Consistent naming conventions, uniform data formats, and clear access controls are essential. EY’s report on the "Data-Driven Audit" outlines how better data governance leads to more effective audits and improved client outcomes .
Leverage Technology for Standardization: While AI is the end goal, other tools like data extraction and normalization software should be part of your firm's strategy. Tools like Finagraph's Strongbox can help streamline data extraction and mapping, ensuring consistent inputs into your AI systems.
Document Processes Across the Firm: Standardized data is just one part of the equation. Consistent processes for how data is collected and used are equally important. Documenting workflows ensures that everyone—from the audit team to the CAS department—follows the same protocols, leading to cleaner data and more accurate AI-driven insights.
Invest in Training: AI tools are only as effective as the people using them. Ensure your team understands the importance of maintaining standardized data and how it will impact their workflows. Ongoing training on data management best practices can prevent bad habits from creeping back in.
The Long-Term ROI of Standardizing Data
Standardizing data is not just about implementing AI; it’s about setting your firm up for long-term success. Firms that invest in data quality today will see immediate benefits in their current processes, from faster audits to more accurate financial reporting in FDD. Beyond that, they will be in a prime position to adopt AI, automate complex workflows, and deliver superior client experiences. Deloitte’s "AI in Finance" study found that companies that standardized their data before AI implementation saw a 60% higher ROI on their AI investments compared to those that did not .
Firms that ignore this imperative risk falling behind. They’ll waste time and money on failed AI implementations, while competitors who got their data right will experience faster, smarter, and more profitable operations.
Standardizing Before Scaling
To make AI work in the accounting industry, firms need to understand that the path to successful AI adoption begins with a solid foundation of clean, standardized data. Without this foundation, your firm will spend more time fixing data-related issues than reaping the rewards of advanced analytics or AI-driven insights. As the accounting landscape becomes increasingly data-driven, those who prioritize this foundational work will emerge as leaders in audit efficiency, FDD execution, and CAS innovation.
Final Thoughts: Standardized Data for AI in Accounting
The push to adopt AI in accounting firms is understandable, but it’s important not to get ahead of yourself. If your data is "dumb," AI won’t save you. Your first step must be to standardize your data and document your processes, ensuring that any AI implementation is built on a firm foundation. The firms that take this crucial step today will be the ones who dominate tomorrow's accounting landscape, offering faster, more accurate, and more efficient services.
By ensuring your data is no longer "dumb," your firm will not only implement AI more effectively but will also elevate its core services across audit, FDD, and CAS.