CFOs are increasingly using AI to reach business goals.
That's a finding from a
Lease management is not exempt from these forward-thinking goals. AI is transforming the way businesses manage their lease portfolios. This technology brings automation, accuracy and strategic insights to lease accounting and auditing.
As ongoing compliance becomes more complicated, companies absolutely should be leaning on AI. Doing so can streamline operations, reduce errors and improve financial decision-making.
"As CFOs want to lead their companies in building efficient back office teams, it's imperative they harness the transformative power of digital technology to streamline workflows and eliminate manual processes," said Sarah Spoja, CFO of Tipalti Research.
AI's impact on audit quality
AI-driven tools are enhancing audit quality by improving accuracy and detecting anomalies. With AI, auditors can now leverage machine learning to do two specific things to enhance quality:
- Detect fraud and inconsistencies: AI-powered anomaly detection can flag unusual lease payments, misclassified assets, or deviations from historical financial patterns, thus strengthening compliance and risk mitigation.
- Ensure regulatory compliance: AI continuously monitors lease data against ASC 842 and IFRS 16 standards. It automatically generates reports that align with audit and compliance requirements.
The AICPA made its position clear when it recently approved updates to its standards. This reflects a broad industry recognition of the need for technological alignment and rigor in audit practices.
Along with new quality management resources, these updates provide clear guidelines on leveraging technology to enhance audit accuracy and financial statement quality. By reducing errors, AI is helping auditors provide more reliable financial statements, ultimately improving trust in lease accounting practices.
AI's impact on audit efficiency
Traditionally, lease audits relied on manual reviews of lease contracts, rent payments and financial reports. These processes are prone to human error and take more time than they should.
With AI, auditors will be able to analyze large datasets with greater accuracy. AI can quickly process thousands of lease contracts. It extracts important financial terms and finds mistakes faster than a human auditor.
Ndonga Sagnia, CPA, MBA, is a co-founder of TimeCredit and deeply passionate about increasing efficiency in accounting, who emphasizes that you can't hide from AI and that using it quickly and correctly will benefit any organization.
"I have run into people who say, 'I don't want to use it, I don't want my staff using it. I don't want anyone using it,'" said Sagnia in a
AI as a resource for the accounting talent shortage
The accounting talent shortage has plagued the profession and companies for years. AI is already proving to be a valuable tool to address this ongoing issue. According to a
AI tools in data entry, predictive analytics and expense management help finance professionals focus on important tasks. This lets them use their skills for strategic work and informed decision-making, rather than busy work dominating their day to day.
By implementing AI in these ways, finance teams can alleviate the strain caused by the talent shortage. They can now ensure that they maintain critical auditing functions. even as the demand for experienced professionals continues to exceed the supply.
Challenges the industry faces with AI adoption
AI offers many benefits, but using it in lease accounting has challenges. Auditors and accounting teams need to manage these issues.
- Data quality and integration issues: AI is only as good as the data it processes. Inconsistent lease data, missing records or unstructured contracts can hinder AI's effectiveness. Companies must invest in high-quality data management to fully leverage AI capabilities.
- Regulatory and ethical considerations: As AI-driven lease accounting becomes more prevalent, regulators may introduce new compliance requirements around AI decision-making and transparency. Ensuring that AI models remain auditable and explainable is critical for maintaining trust.
- Change management and workforce adaptation: The shift to AI-powered auditing requires a cultural shift within organizations. Employees must adapt to new workflows, and businesses must provide training to help teams work alongside AI tools effectively.
Despite these challenges, businesses that proactively address them will be well-positioned to benefit from AI's potential.
The human touch: Where people matter in AI-driven auditing
AI may automate many aspects of lease accounting, but human expertise remains unrivaled in several key areas:
- Complex judgment and decision-making: AI can flag inconsistencies, but auditors still need to apply professional judgment when evaluating lease modifications, renegotiations and legal interpretations.
- Strategic advisory roles: As AI handles more data-heavy tasks, auditors and accountants will shift toward advisory roles — roles that guide businesses on lease optimization, financial planning and compliance strategy.
- Ethical oversight and contextual understanding: AI lacks human intuition and ethical reasoning. Organizations need professionals to ensure AI-driven audits align with broader business goals, regulatory expectations and corporate governance.
AI is reshaping lease accounting and auditing by improving efficiency, accuracy and compliance. However, the transition to AI-driven auditing comes with challenges, including data quality issues, regulatory considerations and workforce adaptation.
AI will automate many routine tasks. Nevertheless, human expertise is still essential for making strategic decisions. People are not replaceable in ethical oversight and complex financial evaluations.
As AI continues to evolve, businesses that embrace a balanced approach — leveraging technology while maintaining the human touch — will gain the most value from this revolutionary shift in lease accounting.
