How can new associates move beyond understanding AI’s answers and begin developing judgement of their own?
In Brief
AI gives new associates quick access to explanations and working paper drafts. Turning that output into experience requires them to identify questions to investigate, read the source material and understand why a judgement changed during review. Teams need to assign specific work and time for that process.
The previous article explored the strength experienced accountants bring to connecting a company’s past records with the facts of a transaction. New associates are only beginning to build that experience. Recognising missing information or distinguishing between seemingly similar transactions is not yet familiar work.
Traditionally, they learned by reading contracts, preparing working papers, asking more experienced colleagues when they became stuck, and receiving review comments. With AI now performing much of that process first, we need to consider where to preserve opportunities for new associates to think through the work themselves.
1. Learning with AI
In the teams I have worked with, new associates often learned from the in-charge or the person who previously handled the account. Firm training provided the foundations, but they learned how to review their assigned accounts while doing the work.
They can now ask AI about unfamiliar terms or standards. If an explanation is unclear, they can request another approach. They can also ask whether a working paper leaves anything out. Being able to ask a question without waiting for a busy colleague is a considerable help.
It is also possible to receive a summary before reading the contract, or finish a response before understanding the review comment. A working paper can read smoothly even when its preparer cannot adequately explain the reasoning behind the conclusion.
Changing one contract term in a question can reveal how much the preparer understands. If they cannot explain whether the conclusion would still hold, they need to examine more closely how that condition affected the judgement.
2. Review objectives and source material
A new associate does not need to arrive at a complete conclusion immediately. A useful starting point is to ask them to identify the question the work must answer and the material needed to answer it.
Example
Suppose the team is assessing whether Company A must cover a shortfall in a special purpose company’s (SPC’s) debt repayment funds. The questions are whether A has an obligation under a funding shortfall agreement, when it is triggered and how much A must provide. The associate can be asked to investigate whether a separate agreement creates such an obligation, rather than stopping after reading the loan agreement.
Before using AI, the associate could record what has been established and what comes next: “I found no funding shortfall obligation for A in the loan agreement received. I need to check the prior audit working papers and contract list for a separate agreement. If one exists, I will obtain the original and check the conditions that trigger the obligation and the funding limit.”
This makes it clear what to revisit if AI says that no funding shortfall obligation exists. The associate has only established that the current contract contains no such clause; they have not established whether a separate agreement exists. Until that material is obtained, the absence of an obligation cannot be confirmed.
An associate doing this work for the first time may not even know that a separate agreement could exist. The in-charge therefore needs to explain the review objective and previous issues, and point out where to find related material. Finding and reading that material after receiving guidance becomes part of the associate’s own experience.
When AI’s analysis arrives, the associate can compare it with the original documents they have checked. Has it missed a clause, assumed something the material does not establish, or cited a standard that does not apply to this transaction? If the associate and AI reach different answers, they need to establish both which is right and why the difference arose.
3. Review feedback and changes in judgement
AI can help clear review comments quickly by drafting the responses. But if the preparer does not understand why a change was made, the same problem may recur on similar work. At the end of a review, it is useful to revisit the fact initially missed and how it changed the judgement.
Consider the earlier example. The associate read only the loan agreement and wrote that A had no funding shortfall obligation. A question from the reviewer led them to a prior working paper referring to a separate agreement. Suppose that, once obtained, the original agreement required A to cover a shortfall in the SPC’s debt repayment funds up to a specified limit.
The lesson extends beyond the additional terms to include in the working paper. The associate had treated the loan agreement received as the complete set of material to review, but the company’s obligations were also set out elsewhere. Understanding that point should lead them to ask whether all relevant agreements are included before writing a conclusion on the next transaction.
I think it helps to explain one important issue in your own words after a review: what material supported the first judgement, what else was checked and why the conclusion changed. If the conclusion remained unchanged after further work, explain what you checked that allowed you to agree with it. Any point that is difficult to explain becomes a question to take back to a more experienced colleague.
4. Practical experience and the team’s role
Under a tight deadline, it is faster for the in-charge to correct the working paper directly. The associate may also prefer to receive a finished answer and submit it. If that becomes the routine, however, the in-charge may have to make the same judgement again on the next assignment.
When assigning work, it helps to identify the material the associate will check personally and the points they will explain during review. In the example above, they could locate the triggering conditions and limit in the original funding shortfall agreement, then explain how those clauses affect the existing conclusion.
The reviewer can also ask the associate to apply that understanding to different conditions. What would need to be reconsidered if the agreement had no funding limit, or if a different party bore the obligation? Answering requires an understanding of which conditions drove the judgement.
On the next similar transaction, ask the associate to identify the relevant set of agreements first. They may initially have found documents only after being directed to them. If they can subsequently ask for the necessary material themselves, they are applying what they learned.
The task should match the person’s experience and the risks of the work. The aim is to give them experience of checking an important issue in the original material and explaining the basis for their view, even if that means focusing on one issue.
Key Takeaways
- Use AI to ask questions and learn, while first identifying the question the assignment needs to answer and the material to check.
- Explain in your own words how facts established during review affected the original judgement.
- Teams should assign checks suited to an associate’s experience and provide opportunities to apply the learning independently on later work.
- An associate’s development also shows in the questions they ask on the next assignment. Helping those questions develop takes time for the in-charge to listen and give feedback.
- Faster working paper preparation does not mean the time saved will go into training. If more work is added or the team becomes smaller, there may be even less room to learn and teach.
Why do accountants feel busier when the work has become faster?
The next article looks at the difference between the time AI saves and the workload a team actually carries.
References
- Public Company Accounting Oversight Board (PCAOB), AS 1000 — General Responsibilities of the Auditor in Conducting an Audit, paragraphs .07-.08.
- Public Company Accounting Oversight Board (PCAOB), AS 1201 — Supervision of the Audit Engagement, paragraphs .05-.06.