Industry Trends

Robot Accountants Are Fine with Scope Creep

Caleb Newquist Editor-at-Large, Gusto 
remote work

March 11, 2021

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Accountants vs. Robots

A key part of the issue over whether robots will replace accountants goes like this:

  • The robots do boring, repetitive tasks and make fewer mistakes than humans.
  • The robots do boring, repetitive tasks faster than humans.
  • The robots do these boring, repetitive tasks at a fraction of the cost, don’t need breaks, and don’t complain, among other advantages.
  • This is fine because it frees up human accountants to do less boring things at their jobs that require them to exercise judgment and discretion, something robots can’t do.

Or so we thought. From a New York Times essay by Kevin Roose:

“A lot of professional work combines some element of routine information processing with an element of judgment and discretion,” said David Autor, an economist at M.I.T. who studies the labor effects of automation. “That’s where software has always fallen short. But with A.I., that type of work is much more in the kill path.”

In many professional service contexts, when someone starts doing work outside their assigned duties—whether intentional or not; whether directed to or not—it is commonly known as “scope creep,” and that seems to be what’s happening here. Robots are slowly starting to do work that many people either didn’t expect them to do, or didn’t think they could do. And yet, here they are, “processing with an element of judgment and discretion.” And while scope creep can be an affront to humans, robots couldn’t care less. You can imagine how that might play out:

Manager: Hey, so I know this is a bit out of scope for you, but we had something a little complex come up that will need someone’s ongoing attention.

Accountant: [Cringing] Yeah, I don’t know if I can take anything else on. Pretty busy right now, and, you know, that sounds like it could be a lot of work. Plus, you know, pretty busy right now.

Robot: I can perform this function.

Accountant: Wait, you can do that?!

Manager: Wait, you can do that?

Robot: I can perform this function.

Manager: I had no idea. This is great. What else can you do?

Accountant: …

The other interesting thing is, as we’ve talked about, that while some of this AI technology is a ways off, some of the more banal stuff is not. A couple of researchers cited in the Times article have coined the latter stuff as “so-so automation”:

technology that is just barely good enough to replace human workers, but not good enough to create new jobs or make companies significantly more productive.

It isn’t hard to find this in an accounting scenario. Technology that can run payroll or manage billing probably feels pretty so-so compared to, say, Controller Bot 3000 that can run all the numbers, make all the projections, manage the team, deal with the auditors, and suck up to the CFO without even thinking about a cup of coffee.

As for the accountants who advise businesses, I wonder if the next awkward phase of this is accountants making recommendations to clients on which robots they should use to replace human accountants. I guess that isn’t much different from them recommending the so-called so-so automation that some platforms offer now. (Full disclosure: I work at a company whose technology does things that humans used to do and that accountants sometimes recommend.)

Which is all to say that in this evolving conflict between accountants and robots, it seems that if the robots do take over, it will be very slow and very boring. A slow scope creep, if you will. And for accounting, that seems about right.

What is income?

As you tax folks out there know, this is not always a straightforward answer. This week in elaborate clever schemes that someone (mostly) got away with: Konstantin Anikeev, an experimental physicist, who used a circulation of credit-card rewards, gift cards, and money orders to generate $310,000 in… income? Something?

His American Express card offered unlimited 5% rewards at grocery stores and pharmacies after he had spent $6,500. So Mr. Anikeev used his AmEx card to buy prepaid Visa gift cards at grocery stores, routinely stopping during his commute and purchasing the maximum allowed per day at a store. He often used the gift cards to buy money orders, then used the money orders to make deposits in his bank account, then used that money to pay his credit-card bill.

In a $500 transaction, the 5% rewards would yield $25—more than enough to cover gift-card fees of about $5 and the $1 fee on the money order.

The IRS said the $310K was income, and Anikeev argued, “Nope, they’re rebates, just like you guys say right here,” quoting—in my imagination—IRS regulations and US Treasury guidance, including the citations.

The judge issued a split ruling but mostly went with Anikeev, saying that the scheme was fine because the gift cards were products, and thus the rewards earned are not subject to tax. Which, okay, sure, but doesn’t quite feel right? It’s just hard to get your head around how a person could:

  • Buy over $6 million in gift cards with credit cards;
  • Then convert those gift cards into money orders to pay off the credit card balances;
  • And then come out ahead 5% (minus some fees) in credit card rewards on the original purchases.

The underlying question of this case was whether this cycle of financial acrobatics was an “accession of wealth.” It seems pretty clear that it is, but given the facts and what the law says, it isn’t! It’s hard not to be impressed. Truly a thing of beauty.

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Caleb Newquist Caleb is Editor-at-Large at Gusto. In 2009, he became the founding editor of Going Concern, the one-of-a-kind voice on the accounting profession, serving in the role for 9 years. Prior to Going Concern, Caleb worked as a CPA for nearly 6 years in New York and Denver. He lives in Denver with his wife, two daughters, and two cats.
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