By Paul Faust, Workiva
It’s no secret that artificial intelligence is making its way into nearly every industry, ushering in transformative change and disrupting the status quo. Financial management is no exception. When we think about financial management, our images often harken back to the old days, when green eyeshades, pencils and spreadsheets dominated the landscape. Those rudimentary tools have given way to more modern technologies that have enabled accountants and other financial managers to work more efficiently, reviewing, analyzing and working with increasing volumes of data in near-real-time. As we look ahead to the not-so-distant future, it’s easy to see how these evolutions are about to take a backseat to a new wave of powerful technologies driven by modern artificial intelligence (AI) and machine learning (ML) that, when fully developed, will likely revolutionize financial management reporting and transparency.
Today’s developing AI and ML technologies are enablers of change, increasing speed and capacity, reducing (if not eliminating) manual errors, automating and simplifying what have traditionally been complex processes, and improving data accuracy, among many other benefits. Imagine a world where complex financial information can be simplified, personalized and customized in a manner that is digestible by non-financial professionals. In the context of the government, think about being able to generate, in real-time, financial reports for targeted audiences – a mayor, a member of congress, or even an interested citizen who just wants to better understand how their tax dollars are being spent, at the touch of a button. By now we’ve all explored generative AI tools like Chat GPT, and in some cases maybe we’ve even applied them to our businesses, and it’s that same concept that can be used in financial reporting that stands to bring real change in the near future.
Late last year, Congress included directive language in the final version of the FY2025 National Defense Authorization Act (NDAA) that aims to take advantage of AI and ML technologies in the context of the Department of Defense annual financial audit. That language, for all intents and purposes, directs the Secretary of Defense, working with other DOD officials including the Chief Data and AI Officer (CDAO), the Office of the Inspector General, as well as the heads of the military departments to explore the use of AI and ML in the preparation of the department’s financial statements, an area where they have historically struggled. The expectation, although not explicitly stated in the legislation, is that Congress believes the use of these technologies could likely remedy at least some of the issues related to DOD’s financial audit, helping the department get closer to a clean financial audit opinion. If AI and ML are ready for prime time at DOD, the rest of the federal government should be ready to go too.
Beyond financial reporting transparency, the use of AI and ML in related areas including risk assessment, compliance, customer service and reduction of waste, fraud and abuse hold similar promise. In the risk assessment and fraud reduction space, AI and ML can help add significant capacity to what are traditionally strained organizations by using technology – rather than manual processes – to mine through volumes of data identifying risks and flagging trouble spots before fraud occurs. What used to take days and weeks, can now be done in minutes, making what was inefficient, radically efficient. Further, having these types of technologies in place, many of which can be run continuously in the background, frees up auditors and risk managers to focus on more strategic work, while improving the speed and velocity of any financial organization.
As we look ahead to the next 18 months, it’s critical that the US government lean into – rather than shy away from – AI and ML technologies, bringing innovation to areas that are traditionally more risk averse. As we do so, we can only hope that adding these emerging technologies into the government financial management toolbox find their way to the top of the priority list.
Paul Faust is a seasoned leader with over 25 years of experience in the technology and SaaS industries, specializing in serving public sector and education organizations. As Vice President of Sales at Workiva, Paul’s team focuses on delivering cutting-edge financial reporting and compliance solutions that streamline processes and ensure transparency and accountability. By partnering with Federal, State, Local, and Education institutions, as well as nonprofit healthcare organizations, Paul helps these organizations enhance trust and efficiency in their reporting, empowering them to meet their unique challenges with confidence.