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Artificial Intelligence


4 THINGS TAX AND AUDIT PROFESSIONALS NEED TO KNOW ABOUT AGENTIC AI

December 10, 2024 · 7 minute read

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December 10, 2024 · 7 minute read

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How agentic AI is shaping the future of tax and audit

← Blog home 

As artificial intelligence continues to rapidly evolve, a new concept is
emerging that tax and accounting professionals need to be aware of: agentic AI.
This type of AI advances from basic automation or content generation to
developing systems capable of autonomously performing complex tasks and making
decisions.

For tax and accounting firms, agentic AI has the potential to dramatically
transform workflows, client services, and the nature of professional work
itself. Here’s what you need to know about this game-changing technology.

Jump to ↓

1. What is agentic AI?

--------------------------------------------------------------------------------

2. How is agentic AI different from other AI?

--------------------------------------------------------------------------------

3. How is agentic AI different from RPA?

--------------------------------------------------------------------------------

4. How could agentic AI impact tax and accounting professionals?

--------------------------------------------------------------------------------

The next chapter in tax and accounting technology

--------------------------------------------------------------------------------


1. WHAT IS AGENTIC AI?

Agentic AI refers to AI systems that have the capability to act independently to
accomplish goals and tasks. Unlike traditional AI that follows pre-programmed
rules, agentic AI represents a more advanced approach to artificial
intelligence.

Agentic AI can:

 * Autonomously plan and execute multi-step processes
 * Access and utilize multiple data sources and tools
 * Adapt its approach based on new information
 * Make decisions within defined parameters
 * Interact with other AI agents and systems

In essence, agentic AI combines the flexibility and language understanding of
large language models with the precision of traditional programming and the
ability to take concrete actions in the real world.

Modern agentic AI systems are often composed of multiple generative AI systems.
This structure allows agentic AI to tackle more complex tasks by breaking them
down into manageable steps. The result is a more scalable and versatile AI
system capable of addressing increasingly challenging problems.

Recent developments in large language models (LLMs) have played a crucial role
in the emergence of agentic AI. These advancements have paved the way for the
creation of sophisticated AI personas that can engage in nuanced interactions
with users.


2. HOW IS AGENTIC AI DIFFERENT FROM OTHER AI?

To understand agentic AI, it’s helpful to compare it to other forms of AI.  


PREDICTIVE AI

Predictive AI, which many firms already use, focuses on analyzing historical
data to make forecasts and inform decisions. These tools excel at identifying
patterns and trends, helping tax professionals anticipate future outcomes based
on past performance. Predictive AI can:

 * Analyze historical data to make forecasts
 * Identify patterns and trends in financial information
 * Estimate future tax liabilities based on past performance
 * Assumes potential audit risk using historical data


GENERATIVE AI

Generative AI creates human-like content based on prompts. Tools like ChatGPT
and Checkpoint Edge with CoCounsel fall into this category. In tax practice,
GenAI can:

 * Draft initial responses to client questions
 * Create drafts of tax memos
 * Generate explanation of complex tax concepts
 * Produce content based on given prompts
 * Assist in creating reports and documentation


AGENTIC AI

Agentic AI represents a significant leap forward in capabilities. Unlike its
predecessors, agentic AI can:

 * Autonomously plan and execute complex tasks: An AI agent could, for instance,
   not only identify a tax saving opportunity but also draft the necessary
   documentation and initiate the filing process.
 * Access and integrate multiple data source: Agentic AI can pull information
   from various databases, tax codes, and real-time financial data to inform its
   actions.
 * Adapt to new information: If tax laws change or new client information
   becomes available, agentic AI can adjust its approach accordingly without
   human intervention.
 * Make decisions within defined parameters: While operating under human-set
   guidelines, it can make choices about the best course of action in complex
   tax scenarios.
 * Interact with other systems: Agentic AI can communicate with other software
   tools, databases, or even other AI to accomplish its goals.
 * Perform actions in the real world: Beyond just providing information or
   content, agentic AI can take concrete steps like submitting forms, updating
   records, or initiating transactions.

The key distinction is that while predictive AI informs decisions and generative
AI creates content, agentic AI can independently carry out complex, multi-step
tasks that previously required significant human involvement. This autonomy and
capability to execute actions make agentic AI a potentially transformative force
in tax practice.

Press release






Thomson Reuters acquires Materia — a specialist in agentic AI for the tax, audit
and accounting profession.






Read full press release →

 


3. HOW IS AGENTIC AI DIFFERENT FROM RPA?

Agentic AI and Robotic Process Automation (RPA) are both crucial in automation
but serve different purposes due to their unique capabilities.

 * Agentic AI: Autonomous and adaptable for complex problem solving: Agentic AI
   simulates human cognitive abilities, making it highly adaptive and
   autonomous. It uses advanced technologies to analyze data, recognize
   patterns, and make decisions based on real-time information. This makes it
   ideal for dynamic environments and complex problem-solving tasks.
 * RPA: Streamlining repetitive tasks with rule-based automation: RPA excels in
   performing repetitive tasks by mimicking human interactions with digital
   systems following predefined rules. It executes tasks exactly as programmed,
   making it perfect for stable, repetitive processes where requirements remain
   constant.


THE CORE DISTINCTION: COGNITIVE FLEXIBILITY VS. RULE-BASED EFFICIENCY

The fundamental difference between agentic AI and RPA lies in their adaptability
and complexity.

Agentic AI systems are capable of learning and adapting to new scenarios and
data, suited for tasks that require cognitive abilities and decision-making.
RPA, however, is best utilized for tasks that are rule-based and repetitive,
where high-speed, efficient automation of consistent processes is needed.


4. HOW COULD AGENTIC AI IMPACT TAX AND ACCOUNTING PROFESSIONALS?

For tax and accounting professionals, agentic AI has the potential to automate
and enhance a wide range of tasks and processes:

 * Automated research and analysis: AI agents could autonomously research
   complex tax issues, analyze financial data, and prepare summary reports.
 * Enhanced client interactions: Agentic AI could handle routine client
   communications, schedule meetings, and even conduct initial consultations.
 * Streamlined compliance: AI agents could monitor regulatory changes, flag
   potential compliance issues, and even assist in preparing and filing tax
   returns.
 * Audit assistance: Agentic AI could autonomously review financial records,
   identify anomalies, and prepare initial audit reports.
 * Strategic planning: AI agents could analyze market trends, financial data,
   and tax implications to assist in long-term business and tax planning.
 * Workflow optimization: Agentic AI could manage project timelines, allocate
   resources, and coordinate between team members and AI agents.


WILL AGENTIC AI REPLACE TAX PROFESSIONALS?

The short answer: no. As agentic AI takes over routine tasks, tax professionals
will have more time to focus on providing strategic advice, building client
relationships, and navigating complex ethical decisions.

After all, the integration of AI also brings new challenges that require human
oversight. Ensuring AI operations align with ethical standards and regulatory
requirements is a job that only humans can do. And personal connection remains
crucial. Understanding client needs, managing expectations, and building trust
are uniquely human skills that AI cannot replicate, regardless of its
sophistication.

The integration of agentic AI in the tax industry opens up exciting
possibilities for pioneering new service models. As AI handles routine tasks,
tax professionals can explore innovative ways to add value, such as developing
predictive tax strategies or creating customized financial ecosystems for
clients. This shift may also spur the creation of new specializations, blending
tax expertise with AI management.


THE NEXT CHAPTER IN TAX AND ACCOUNTING TECHNOLOGY

As agentic AI continues to evolve, it promises to revolutionize the tax and
accounting landscape. This technology will likely introduce new efficiencies,
enable more sophisticated analysis, and open up innovative approaches to complex
tax issues. 

To thrive in this AI-enhanced future, professionals will need to develop new
skills, embracing continuous learning and adaptability. The ability to
effectively collaborate with AI systems, interpret their outputs, and leverage
their capabilities will become increasingly valuable. 

Ready to dive deeper and strengthen your understanding of AI’s role in taxation?
Download our white paper, AI and taxation: What professionals need to know.  

White paper


Learn more about AI’s impact on tax, including current use cases, benefits, and
challenges.

Access white paper ↗

 

AI news and insights


Insights, updates, and all things AI

 

See what’s new ↗




 

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impacting your firm. Understanding the implications of these shifts is crucial
for every tax professional as we navigate through these transformative times.

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