5 years, $2 billion! KPMG signs a major deal with Microsoft, the accounting firm is going All In AI

AI continues to disrupt the auditing industry! KPMG is deeply "bound" with Microsoft, with KPMG planning to invest $2 billion in Microsoft within 5 years. The automation transformation is expected to generate $12 billion in revenue for KPMG during this period.

On July 11th, Microsoft announced on its official website that it has reached a significant milestone agreement with KPMG, one of the world's four major accounting firms. KPMG plans to invest $2 billion in Microsoft's artificial intelligence and cloud services over the next 5 years.

This deeper collaboration between the two parties will further automate KPMG's tax, auditing, and consulting services, greatly improving employee efficiency.

KPMG stated that this investment in Microsoft is expected to generate over $12 billion in revenue within five years, which is equivalent to approximately 7% of KPMG's global annual revenue. According to KPMG's latest financial report, as of September 30, 2022, KPMG's global revenue for the 2022 fiscal year was $34.64 billion.

In May of this year, Microsoft and KPMG announced their cooperation in the field of generative AI technology. KPMG will fully apply generative AI and deploy Microsoft's OpenAI capabilities on its internal platform. The cooperation mainly focuses on accelerating AI technology innovation, enhancing customer engagement, and internal operations.

This further strategic cooperation between the two parties will enable KPMG to continue integrating Microsoft's Azure cloud services and OpenAI technology into its operations.

Bill Thomas, Global Chairman and CEO of KPMG, stated in an interview that a significant portion of KPMG's current investment will be used for generative AI. Many companies are eager to apply it to finance in order to reduce costs and significantly improve efficiency.

KPMG believes that with the multifaceted development of artificial intelligence, it will bring profound changes to the financial industry. The current financial innovation driven by innovative technologies such as artificial intelligence is gradually permeating various fields of financial institutions, including products, business models, and processes.

Microsoft CEO Satya Nadella stated that combining Microsoft's cloud AI innovation with KPMG's expertise in taxation, auditing, and consulting can further support its employees and provide customers with more comprehensive insights.

Reshaping Audit Work with Artificial Intelligence

In terms of automation in audit work, Microsoft stated in its announcement that, with the integration of new technologies, KPMG's audit team will be able to directly access and analyze client data without the need for data import, "enabling auditors to conduct audits more timely."

KPMG's intelligent audit platform, KPMG Clara, will further incorporate data analytics, artificial intelligence, and Azure Cognitive Services. The company's over 85,000 auditors can focus their attention on high-risk areas and specific industries in audits, creating more value for shareholders and the capital market.

In terms of taxation, Microsoft pointed out that integrating Azure cloud services, OpenAI, and Microsoft Fabric into KPMG's Digital Gateway (KPMG's unified platform solution) allows KPMG to consolidate a large amount of tax reporting data, analyze potential ESG-related transactions, and perform data analysis for audit execution in a more timely manner, thereby strengthening work related to environmental, social, and governance issues:

It helps analyze environmental, social, and governance (ESG) data, establish data models, and draft ESG tax transparency reports at a faster pace.

In addition, KPMG will operate a "virtual assistant" driven by generative AI to create a new customer service model and help tax professionals improve efficiency. This will also help KPMG generate new revenue by enhancing product experience and managing knowledge of complex tax laws.

So, what will the future look like for employees engaged in basic audit work? Some media analysis suggests that KPMG's further collaboration with Microsoft means that AI integration may replace a large number of process-driven and data-driven work in a relatively short period of time.

Thomas stated in an interview that KPMG will not lay off employees because of AI, but rather hopes to improve employee efficiency through AI skills and will either reassign some employees to new positions or provide them with AI training:

I don't think we will lay off many people because we have been working with Microsoft for a long time. I believe KPMG will continue to evolve, and we will train employees to acquire new skills as much as possible. I think we will create various job opportunities in ways that we cannot even imagine now in the future.

Jason Juliano, Director of Digital Transformation at international business consulting firm EisnerAmper, stated that their current intelligent audit processes mainly involve natural language processing (NLP) for invoices, purchase orders, contracts, and other content:

This makes the audit work faster, avoids many human errors, and allows us to provide more valuable work to clients, as if having a junior staff member assisting you.

Juliano believes that this is also changing their hiring needs:

When we are looking for fresh graduates majoring in accounting or finance, we tend to look for those who are proficient in using AI and various technological tools, as AI will help them better complete their work.

The industry's major changes are unstoppable.

Just recently, PricewaterhouseCoopers (PwC), the world's largest accounting firm, announced its plan to invest $1 billion in the next three years to develop generative AI technology. PwC will collaborate with Microsoft and OpenAI to achieve automation in various aspects of tax, auditing, and consulting services.

PwC stated that the investment plan includes recruiting more employees with AI-related skills, training existing employees in AI, and targeting acquisitions of AI software manufacturers.

Mohamed Kande, Vice Chairman of PwC, said, "We hope to operate PwC more efficiently with the help of generative AI. Embracing this technology is crucial."

Global accounting firms such as Ernst & Young and Deloitte are also investing in generative AI. Intuit Inc., the owner of TurboTax, stated that it is developing generative AI models for financial management. The disruption of AI in financial work is still ongoing.

Currently, accounting, taxation, auditing, and other financial service jobs are gradually being "disrupted" by AI. Rowan Curran, an analyst at Forrester Research Inc., said:

Large language models like GPT-4 can help accounting firms search for and retrieve information, and it is possible to reduce the workload of audits through intelligence automation.