Q: How does artificial intelligence help with tax and audit?
A: “Let me offer one example. Our clients have thousands of contracts on the tax side. If you’re serving a partnership, they have hundreds of K-1s. Artificial intelligence involves machine-reading that can rapidly examine contracts. Traditionally, we used to audit only a sample of those contracts; now we can look at 100 percent of them in seconds. We used to manually review them and highlight them, now we can feed them into a machine and tell it what we want it to read—maturity dates, extension options, or different provisions.
“This is going to be huge in financial services when looking at derivatives and other contracts where one can find anomalies. It also allows one to assess risk in a different way than before. Our clients who are seeing this love it, and our people who don’t want to manually review and highlight things, are also excited.
“Apps on your smartphone: Instead of doing inventory counts on the audit side with manual tallies, which we were still doing six months ago, now we have an app which will download information right into the company’s SAP or ERP system and be able to do a count right there and feed it right back to corporate. It identifies whether you have a difference. It’s another enabling technology tool that takes the manual, rote tasks out of the audit.”
Q: Dow Chemical’s Andrew Liveris recently told us that the biggest impediment to business is the complexity of our tax code and the briar patch of regulations, many of which are at cross purposes. While I’m not suggesting that Deloitte supports an overtaxed, overregulated economy, one has to concede that your profession benefits from the fees it is able to command due to this situation. How can you fulfill your mission to help your clients, who would like a more simplified world, when that would go against your own self-interest?
A: “I don’t think it goes against our self-interest. The intersection of regulatory risk and strategy is where we play well. We help companies respond to regulatory risk and strategy. We look at the regulatory environment—we’re regulated as well—and not just our audit business, but across our businesses in different ways. Andrew makes a great point, but the companies that can solve that intersection that I describe, that have the right strategy moving forward, make the right investment and put the regulatory part of this in the context of managing risk and driving forward with a strategy, will come out on top. We can help them get there. I understand some may view complexity as a business opportunity for Deloitte. But in the end, we’re about helping clients solve their complex business problems.”
Q: Would Deloitte join others in trying to roll back overregulation and lobby for tax reform?
A: “We absolutely have a public interest and a public obligation to help companies drive towards what they want. We’re obviously involved in Washington and with the U.S. Chamber with public policy issues such as tax reform and another Homeland Investment Act, where companies are incentivized to invest more in U.S. manufacturing and create more U.S. jobs with the right tax environment here. I realize some may not think so but we look at public policy from the benefit of our clients.”