AI Isn’t NeutralBy
As the use of AI increases, professionals need to be aware of algorithms’ potential biases in order to overcome ethical challenges.
A field of computer science, AI simulates human intelligence by developing technologies and algorithms that allow machines to behave, learn, reason, and self-correct like human beings. The potential magnitude of the change caused by business applications of AI has been compared to that of electricity. As mentioned in prior articles of Strategic Finance (such as “Understanding Smart Machines,” bit.ly/36kypkD), AI is expected to radically change how management accountants gather, use, and report information.
Therefore, on the one hand, to reap the benefits of a general-purpose technology such as AI, management accountants must adapt their skills to the evolving environment. On the other hand, management accountants must be aware that AI isn’t a neutral technology and that it poses challenges to their ethical professional practice based on the principles and standards of management accounting and finance.
AI AND ETHICS
Compared to other technologies and tools, AI has three characteristics that exacerbate its potentially unethical implications: the lack of controllability of the underlying decision criteria; the lack of accountability for unintended consequences; and the lack of significant explicit costs, causing some to underestimate AI’s ethical impact.
First, it’s hard to assess whether AI is used properly since it’s often described as a black box, meaning that it’s hard to explain the outcomes that AI produces through techniques of machine learning or artificial neural networks meant to replicate the functioning of the human brain (see “Machine Bias inside the Black Box,” bit.ly/2PsJD0p). Unlike AI, human beings can provide reasons supporting judgments and actions.
Second, it’s impossible to explain the causes of AI’s errors, which often aren’t easily detectable. Unlike AI, it’s always possible for human beings to discover flaws in decision-making processes through social interactions, individual evaluations, or organizational control systems.
Third, AI provides inexpensive solutions to complicated problems, which may lead some to overstate the value of its applications. Unlike AI, spending cognitive resources to formulate decisions leads human beings to pay greater attention to the assessment of their solutions. In contrast, AI’s outputs and decisions often go unquestioned.
These three characteristics challenge the ethical principles that management accountants must uphold in the practice of their profession as specified in the IMA Statement of Ethical Professional Practice, namely honesty, fairness, objectivity, and responsibility.
Honesty: Organizations often implement AI too fast and with insufficient transparency, challenging the extent to which honesty can be preserved in the dissemination of information. AI relies on Big Data analytics to perform sophisticated analyses that incorporate a wide variety of factors. It raises serious concerns, however, regarding the ownership and dissemination of the data and, therefore, the honesty with which data is analyzed.
Fairness: The size of the data set analyzed in order to extrapolate an answer to a problem or query isn’t necessarily an indicator of procedural fairness. A very large data set still may not be representative of the overall phenomenon for two main reasons. First, the use of current data may not be representative of future trends.
Hence, it’s unfair to neglect factors that aren’t heavily represented currently. Second, the most dominant factors may not be the most consequential. Thus, ignoring or undervaluing historically underrepresented factors violates fairness because it may aggravate biases and cause severe unintended consequences such as discrimination.
Objectivity: The computing capability of the tools employed by AI and the lack of flexibility to changes in parameters limit the comparability of AI solutions. Regulatory frameworks on AI technologies should define a set of agreed-upon values and rules, which could enhance the comparability of results obtained with AI. The International Ethics Standards Board for Accountants (IESBA), for instance, revised its Code of Ethics for Professional Accountants to contend with new technologies such as AI.
Responsibility: The inability to explain the outcomes of AI and related unintended consequences challenges organizations’ level of accountability because it’s more difficult to attribute responsibility for the results produced by AI to any individual. Individuals, as well as organizations, struggle to accept responsibility for processes that they can’t control fully.
The IMA Management Accounting Competency Framework provides a helpful road map to prepare management accountants for the challenges raised by the evolution of AI.
First, the Framework emphasizes competence as a key element to succeed in the rapidly changing technological environment. Competence is a key professional standard that requires management accountants to “maintain an appropriate level of professional leadership and expertise by enhancing knowledge and skills.” That’s necessary in order to be prepared to face the risks and costs of AI and to reap its benefits. Professionals who adapt their competencies to contribute to the design, implementation, and application of AI will enable their organization to enjoy the advantages of AI solutions while avoiding potential pitfalls.
Competence without integrity is ultimately ineffective and may even be detrimental. As acknowledged by the Competency Framework, it’s crucial to infuse the development of management accounting competencies with strong professional ethics and values, as well as guide and educate management accountants to exercise honesty, fairness, objectivity, and responsibility in their profession.
Management accountants must formulate ethical principles for the design of AI algorithms, recognize ethical issues implied in the development of AI-powered software, and resolve ethical mishaps caused by the implementation of AI solutions. Competence isn’t a substitute for ethics. Only a combination of advanced skills and strong ethical principles can help management accountants tackle the great ethical challenges posed by the evolution of nonneutral AI.
IMA ETHICS HELPLINE
For clarification of how the IMA Statement of Ethical Professional Practice applies to your ethical dilemma, contact the IMA Ethics Helpline.
In the U.S. or Canada, dial (800) 245-1383. In other countries, dial the AT&T USA Direct Access Number from www.usa.att.com/traveler/index.jsp, then the above number.
The IMA Helpline is designed to provide clarification of provisions in the IMA Statement of Ethical Professional Practice, which contains suggestions on how to resolve ethical conflicts. The helpline cannot be considered a hotline to report specific suspected ethical violations.