FASB studies AI use in financial data analysis
March 3, 2023
- The Financial Accounting Standards Board is studying the use of artificial intelligence in capital allocation decisions as part of a broad effort to understand how investors process data, FASB Chair Richard Jones told trustees of the Financial Accounting Foundation.
- “It is important — that’s part of our continuous outreach with investors is understanding their ability to process data, how they’re processing data, how do they get the most important data information for making their investment capital allocation decisions,” Jones said Tuesday, referring to AI.
- Jones’s comment was in reply to a question from FAF Board of Trustees Vice Chair Mary Barth, who noted that AI tools such as ChatGPT are “getting a lot of press” and attention from academia.
Generative artificial intelligence has gained widespread attention in recent months amid the rapid spread among companies and consumers of OpenAI’s ChatGPT chatbot technology.
So-called conversational AI expands public access to sophisticated technology that mines mountains of data and provides insights in an easy-to-understand format.
After its release late last year, ChatGPT reached 1 million users in a week, exceeding the record adoption rate of Instagram.
“We see strong interest from enterprises to integrate conversational AI into their existing ecosystem,” UBS analysts said in a report.
CFOs and their C-suite colleagues can use conversational AI when making financial and strategic decisions. The technology can also be used for translating languages, completing sentences, generating reports and anticipating customer needs.
The market for conversational AI will likely grow to between $18 billion and $20 billion by 2025, or to 20% of the total AI market, UBS said.
The attention to ChatGPT “makes me wonder the extent to which the FASB thinks about how investors ingest financial reporting information these days with the use of technology and, if so, what are you doing about it?” Barth asked Jones during the meeting of FAF trustees.
“That’s a key part of our investor outreach, which is really understanding which data is the most important, how is it processed and when does it actually influence those capital allocation decisions,” Jones said. “Obviously we work with the SEC on that certain XBLR tagging of information that is widely used in processing information.”
Referring to AI, Jones elicited laughter from the trustees saying, “No, we’re not going to use it to write our standards.”