It May Be Artificial, But Is it Really Intelligence?

Last month, an outfit modestly calling itself “The Future of Life Institute” released an open letter calling for all artificial intelligence labs to pause the development of new AI systems more powerful than OpenAI’s GPT-4, the current gold standard. The group argues that if labs won’t do this voluntarily, “governments should step in and issue a moratorium.” Thousands have signed that letter, including Apple founder Elon Musk, Steve Wozniak, and Rachel Bronson, who heads the Union of Concerned Scientists that sets the Doomsday Clock. (I bet they didn’t think Skynet would be a threat when they created it in 1947!)

Technically, GPT-4 is a “multimodal large language model” that uses the contents of the entire internet to respond to text and graphic inputs. Think of it as autofill on all the steroids. GPT-4 can build websites, write novels, and teach languages. It scored 1510 on the SAT, passed a Wharton MBA class on Operations Management, and scored in the 90th percentile on the Uniform Bar Exam. It even passed the Court of Master Sommeliers’ Advanced Sommelier exam, with a score of 77%. (Skynet recommends a substantial Tuscan red, like a Chianti Classico Reserva, to pair with your steak salad.)

But there’s one thing AI hasn’t passed yet, and that’s accounting class. Last month, a group of researchers working with Brigham Young University fed a collection of over 27,000 questions to ChatGPT, the previous version of GPT-4. The chatbot scored 47.4%, far less than the student average of 76.7%. Skynet scored better on true/false questions than multiple choice and short-answer questions. It scored highest on information systems and auditing topics, and worst on math-heavy topics like managerial assessments.

Does that mean accounting and tax preparation are safe from the coming AI overlords? Well, not quite. “Lower level finance jobs, like identifying credit risks across a customer base or protecting against expense fraud, or embezzlement or money laundering, these are all automated tasks that something like ChatGPT can significantly impact and free up resources,” said Greg Selker, managing director of a New York-based executive search firm.

What about taxes? When most people hear “accountant” or “CPA,” they assume that means someone who knows taxes. In fact, while accounting programs typically include tax content, you can sit for the CPA program after just one class in tax. And tax topics make up about 60% of the “Federal Regulations” section of the CPA exam, which is just one of four sections.

When OpenAI, the developer of GPT-4, rolled out the new system last month, they capped off the demo by preparing a tax return, live, for a million viewers. It wasn’t an especially complicated return. But it’s not hard to read the writing on the wall. Preparing taxes is an expensive process, and you can be sure that any firm that incurs those costs on behalf of clients will look for ways to do it cheaper and faster.

It’s ironic that people are freaking out over artificial intelligence, considering how many of us are still looking for signs of natural intelligence here on earth. And just imagine what happens when we all have chips embedded in our brains and we can read minds! Politics surely won’t be the same anymore. And IRS audits will be a lot easier when examiners can just peer into our brains for evidence of willful misbehavior.

Artificial intelligence is here, and it’s only going to get more powerful. Our challenge, as tax professionals and humans, is to harness that power for good, not evil. We’ll be here to help you use AI wherever possible to pay less. Hopefully that will still matter in the AI-powered future!