In theory, few industries are set up for the disruptive powers of AI as perfectly as accounting. The work of most modern accountants involves retrieving, presenting, and analyzing data from a range of transactions, which are essentially repeated over and over. All the while, they’ve got to ensure that they’ve compiled with the relevant accounting standards. Their work is, with respect to all of the fine accountants out there, the bread and butter of artificial intelligence.
However, until recently, disruption in accounting was impeded by the depth and complexity of paperwork involved in some areas. Take leasing, as an example. It involves a contract, usually running to several pages, being shared between the lessor and the leasee. Somewhere in that contract are the numbers that need to be exported into accounting journal entries. And until recently, this data exporting was largely a manual task fulfilled by accountants and auditors.
Enter Trullion, a US- and Israeli-based startup that can extract and translate the relevant accounting data, whether they happen to be in a wordy pdf-based contract or an Excel spreadsheet running to several thousand rows. In the process, it empowers accounting teams – who face an ever-increasing set of compliance demands – with the ability to make faster decision making based on verifiably accurate data.
The extent of these compliance demands needs to be understood to properly grasp Trullion’s impact. A modern lease contract can take over two hours for accountants to interpret, extract data, and ensure compliance with the new leasing standards, IFRS 16, ASC 842, and GASB 87. Assuming some companies could have thousands of these contracts running concurrently, the workload created becomes completely unwieldy without a solution like Trullion.
Extracting Financial Data from Leases and Contracts
Trullion’s software uses OCR (optical character recognition) and machine learning to analyze the contract in its pdf format and extract the relevant information. It then provides the user with visibility of what data has been extracted and from where in the document. Once all lease agreements have been exported, whether they’re pdf or Excel-based, Trullion’s reporting function applies the individual terms of each lease contract to the relevant accounting period.
The AI capability of Trullion plays an important role here, interpreting the data rather than just copying and pasting. For example, if users want to see a disclosure, all they have to do is select the relevant reporting period, filter by the relevant contract, and see their disclosure broken down into its finance and operating components, in compliance with ASC 842, such as weighted averages, maturity analysis, and more.
This represents a significant shift not just for internal stakeholders such as accountants but also for external ones such as auditors. Auditors can export the data which Trullion has provided to Excel, and review it for accuracy. And nothing is hard-coded: by clicking on any cell within the Excel spreadsheet, auditors can see the cell’s formula, giving them full visibility into the company’s audit trail – and adding a whole new level of efficiency to their work in the process.
Enhanced Transparency Through Continuous Tracking
Trullion also possesses a back-and-forth function that serves to enhance transparency in lease accounting. Any of the cells within the Excel spreadsheet generated by the software can be clicked on to bring the user back to the original pdf or Excel-based agreement. In the case of Excel-based agreements, it can even detect modifications in the original spreadsheet and make necessary adjustments to journal entries in real time.
To maintain transparency, everything is tracked. All historical changes made to each document can be viewed in a side panel, allowing the user to revert to previous versions if necessary. Likewise, when a review is completed, it can be locked for edits and converted to a read-only financial record. When modifications to the document are required – for example, in the case of a post-accounting period entry – the document is easily reopened by its user.
The Promise of AI for Accounting
The example of Trullion and other software providers like it may just be the beginning of where artificial intelligence takes the auditing industry. Lease accounting may just be the beginning. How can accounting scandals go unnoticed once AI is being leveraged to its full capability? Document heavy due diligence processes may also soon be consigned to the past. In accounting, the example of Trullion in lease accounting may well be the tip of the iceberg.
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