ChatGPT for Financial Accounting: A Practical and Comprehensive Guide
- Graziano Stefanelli
- 9 hours ago
- 14 min read
Generative AI like ChatGPT is rapidly transforming accounting work: Research suggests that roughly half of knowledge-worker tasks could be done faster by generative AI, and already about 24% of top U.S. accounting advisory firms report using AI tools.
In practice, ChatGPT can act as a “second brain” or copilot for finance teams, automating repetitive tasks and surfacing insights while the human professional provides oversight.
We explore below concrete accounting tasks and show how to craft prompts and workflows around ChatGPT to save time and add value.
Here we will treat:
Data Extraction & Transaction Categorization
Journal Entry Generation & Reconciliation
Financial Reporting & Narrative Analysis
Budgeting, Forecasting & Scenario Planning
Tax Compliance & Regulatory Research
Accounting Standards & Technical Interpretation (IFRS/GAAP)
Audit Planning & Internal Controls
Excel Formulas, Scripting & Data Tools
Communication, Memos & Stakeholder Reports
Day-to-Day Accounting Operations
Bank and Ledger Reconciliations
Accountants routinely reconcile bank statements and sub-ledgers against the general ledger to spot discrepancies. ChatGPT can streamline this by comparing lists of transactions in natural language: For example, you can paste bank statement lines and corresponding ledger entries into the prompt (or upload via ChatGPT’s Advanced Data Analysis) and ask GPT to highlight mismatches. A typical prompt might be:
“Here is the bank statement for June (date, description, amount) and the general ledger withdrawals. Identify any transactions that are missing or unmatched between the two lists.”
ChatGPT will output any discrepancies it finds (e.g. “Bank statement shows Check #123 for $500 dated June 12; this entry is not in the ledger.”).
This approach turns a tedious manual compare into a quick AI check. In practice, an accountant can iterate by refining the prompt (“only show missing amounts >$1000” or “account by categories”) to focus the analysis. After identifying differences, ChatGPT can even draft the necessary correcting journal entry (“debit Accounts Receivable $500, credit Bank $500”).
Let's say, for example, that a small-firm controller copies the prior month’s bank CSV and the general ledger trial balance into ChatGPT: She prompts it to list all transactions that don’t match; ChatGPT quickly flags two missing deposits and one extra bank fee. This lets her prepare adjusting entries 10× faster than manual matching. (Studies note that large-audit clients often supply reconciliation schedules to auditors; ChatGPT can help generate these).
Key Point: ChatGPT can compare transaction lists and highlight mismatches, dramatically speeding up reconciliation; Always set a procedure to double-check its findings, as the model may misalign if data formatting is inconsistent. You may, for example, prepare a "GPT": we explore these advanced topics in our FULL COURSE.
Journal Entry Preparation and Review
Recording journal entries (accruals, deferrals, monthly adjustments) is another time-consuming task. ChatGPT can convert plain-language descriptions into double-entry formats or verify manual entries. For example:
Example Prompt: “Record this transaction as a journal entry – ‘Purchased $5,000 of office supplies on credit (Account 560) to be paid next month’. Use account names and debit/credit amounts.”
ChatGPT will output a balanced entry (debit Office Supplies $5,000; credit Accounts Payable $5,000). Similarly, you can ask it to check if a proposed entry is balanced or suggest missing entries:
Example Prompt: “Given the following journal entries for June, identify any account that is not balanced or missing. Debit Wages Expense $10,000; Credit Cash $10,000. Debit Utilities Expense $2,500; Credit Cash $2,500.”
ChatGPT can note if an entry is missing or unbalanced. (Tip: clearly specify account names and ask for a formatted answer.)
Use in Practice: While ChatGPT can suggest account codes or entry formats, it does not inherently know your specific Chart of Accounts. In Tipalti’s tests, GPT often needed several tries to code expenses correctly without firm context. You should review its suggestions against your own accounts. One workaround is to feed it a short chart-of-accounts table as part of the prompt to improve accuracy.
Accounts Payable / Expense Coding
Processing vendor invoices involves coding each expense to the right account and paying on time. ChatGPT can help by suggesting account categories and even drafting emails or check requests. For example...
Coding Assist: Provide a vendor invoice description and ask ChatGPT to classify it: “Which expense account should Uber Business Trip 9/10/24 – $150 go to? Explain briefly.”
Invoice Drafting: “Generate a professional invoice for Client ACME, charging $1,000 for consulting services performed, with payment due in 30 days.” (ChatGPT can output an invoice format with line items and totals, which you can copy into your accounting system)
Payment Reminders: “Write a polite payment reminder email to Customer XYZ for overdue invoice #1234 of $500, due 15 days ago.”
Even though ChatGPT can format invoices and emails beautifully, actual transmission usually happens through your AP/AR software or ERP. The AI’s role is to save you time writing and to standardize wording. (In Tipalti’s AP software, built‑in GPT features auto-code supplier invoices and handle payables matching)
Tip: You can paste a vendor bill into ChatGPT (removing any confidential info) and say “Suggest the most likely expense GL account from this chart of accounts for each item.” ChatGPT will propose accounts; always verify these against your own policies.
To show a scenario, we can think of a bookkeeper that receives an unusual utility bill and isn’t sure where to code it. She inputs the line item descriptions into ChatGPT and asks for an account recommendation. GPT identifies it as a utilities expense and even notes the correct account code from a chart provided in the prompt. The bookkeeper confirms the suggestion, saving time digging through an unfamiliar CoA. Them, if she creates a GPT to automate it all, she will have a more consolidated process for the future.
Accounts Receivable and Customer Communications
Likewise, ChatGPT can assist in Accounts Receivable by analyzing sales or invoice data and drafting client communications. We can think of the following examples...
Aging Summaries: “Given these invoice dates and amounts for Customer ABC, summarize their current aging status.”
Collection Letters: “Write a courteous reminder email to Vendor Bob’s Bakery about an invoice for $2,000 that is 45 days past due.”
Payment Plans: “Propose a short payment plan email for a client asking to split a $10,000 bill into two payments.”
ChatGPT can even generate formatted statements or talking points for sales reps: For example, you could paste a simple AR aging report and ask for “a brief explanation of any high overdue balances.” This turns raw data into narrative.
Data Cleansing and Formatting
Accounting data often needs cleanup. ChatGPT can clean or transform data by recognizing patterns. For instance, if you have messy customer names or inconsistent text, try a prompt like:
“Clean up the following customer list by removing extra spaces and standardizing names: ‘ACME Inc. ’, ‘Acme Incorporated’, ‘acme-inc.’.”
GPT will return a standardized list (e.g. “ACME Inc.”) by deleting duplicates/typos. Similarly, it can strip unwanted characters from data pasted in the prompt.
It can also reformat reports. If your ERP exports a CSV with poor formatting, ask ChatGPT to reformat or summarize:
“Here is a CSV table of last month’s expenses by department. Reformat this into a nice markdown table and highlight any department that spent more than $10,000.”
GPT will output a clean table in Markdown or text, which you can copy into documentation.
Financial Report Generation and Commentary
... And, of course, ChatGPT can help prepare and explain financial reports.
For example, you can instruct it to produce draft narrative for a P&L or balance sheet. Typical prompts are:
“Summarize the key drivers behind the 15% increase in net income from Q1 to Q2.”
“Generate bullet-point highlights for a board report based on this income statement.”
By pasting or describing the relevant numbers (revenues, expenses, variances), ChatGPT will identify trends (“Sales rose due to a one-time contract; COGS was stable, improving gross margin by X%”). It can also suggest improvement ideas: “Suggestion: Explore cost savings in R&D, which spiked last quarter.”
Because ChatGPT is good with language, it can reword or format financial data. For example, after running a standard report, you might ask: “Reformat this sales report into a summarized bulleted list.” It will produce prose or bullet points suitable for management narratives.
Example Output (Mock):“Compared to last quarter, total revenue increased by 10%, driven by new client contracts. Operating expenses grew only 2%, due to staffing efficiencies. As a result, net income rose from $50K to $57K. The largest variance was in marketing (up $5K for a trade show), suggesting we monitor ROI on campaigns.”
Audit and Risk Analytics
ChatGPT can serve as an audit assistant by flagging anomalies and helping formulate audit plans. In audit tasks like analytical review, you can ask:
“Analyze this trial balance for unusual spikes. Are there any accounts whose balances changed by >50% since last year?”
ChatGPT will scan the numbers and point out any large jumps or atypical patterns. It can also brainstorm audit questions: e.g., “What audit procedures would you perform for significant variances in inventory?” will yield a checklist of steps. These capabilities make it a “de facto senior audit partner” for junior auditors.
For internal audit or SOX compliance, you might prompt: “Identify potential control weaknesses when a single employee handles both payments and bank reconciliations.” ChatGPT will list standard control risks (separation of duties, etc.) and recommended mitigations.
Audit Workpapers: Some auditors feed excerpts of financial data or even portions of source documents into ChatGPT (with all client-sensitive info removed) to get quick risk assessments. For example, given vendor payment history, GPT can highlight trends (e.g. duplicate vendors, round-dollar payments) that merit testing.
Tax and Regulatory Research
Staying on top of tax codes and accounting standards is tedious. ChatGPT can summarize regulations and provide compliance guidance. For instance:
“Summarize the key points of the new lease accounting standard (IFRS 16) and how it differs from current practice.”
ChatGPT will list major changes and implications in plain language. If you have a PDF of new legislation or tax rulings, you can use ChatGPT’s file-upload (via plugins or the Advanced Data Analysis mode) to parse it. For example, with ChatGPT Plus and a PDF tool, accountants have imported IRS instructions to get quick summaries.
Even without file upload, you can paste relevant passages and say “Explain this in simpler terms.” For example: “Here’s the text of Section 179 for tax deductions – summarize which expenses qualify.” ChatGPT will highlight the deduction limits and qualification rules.
Note: ChatGPT is excellent at summarization, but it has a knowledge cutoff (it does not “know” changes after 2021 unless provided). Always verify regulatory answers with up-to-date sources and consider this a research aid, not a final authority.
Strategic and Advisory Use Cases
Financial Analysis and Decision Support
Beyond routine reports, ChatGPT can act as a financial analyst assistant. For example, given a set of financial ratios or KPIs, you can ask GPT to interpret them.
Ratio Analysis: “Given current and quick ratios of 1.2 and 0.8, what liquidity concerns does this suggest?”
Break-even Analysis: “If fixed costs are $100K and each unit yields $25 margin, how many units to break even? Explain.” ChatGPT can do the math and show reasoning.
Profit Drivers: “We report $50K profit on $200K sales. Calculate the net profit margin and comment on whether it’s healthy for our industry.”
If you provide historical data (e.g. past 5 years of revenue), ChatGPT can describe trends or even suggest benchmarking ideas. Its strength is in turning quantitative inputs into qualitative insights.
Example Table: You might present GPT with a small table in text form:
Year | Revenue | Net Income |
2021 | 100 | 5 |
2022 | 150 | 10 |
2023 | 180 | 12 |
and ask, “Based on this, describe our growth and profitability trends.” GPT might reply that revenue grew 80% over 3 years while net profit grew 140%, indicating improving margins, etc.
Integrated Chat Interfaces: Modern platforms embed ChatGPT-style assistants directly. For example, some systems let a CFO ask natural-language questions of the ERP data. The screenshot below illustrates such an integration: the CFO asks, “What is our currency risk in the next 3 months based on outstanding payables?”, and the AI assistant pulls live data to give a breakdown
This shows how ChatGPT can be connected to accounting databases to answer strategic queries in real time.
Forecasting and Budgeting
ChatGPT can aid budgeting and forecasting by running scenarios in plain language. For example:
“Forecast next year’s sales under two scenarios: (A) sales grow 5% annually vs (B) a new competitor enters and we expect sales to decline 10%. Use last year’s $1M sales as a starting point.”
GPT will perform basic calculations and present the projections in a narrative or tabular form. It can also suggest what assumptions drive each scenario. While it won’t replace a full financial model, it helps articulate scenarios quickly.
You can also use ChatGPT to generate a budget template or checklist. Ask it to list the main expense categories to include for a department or to draft an approach (e.g. “Outline a process to create a 3-year capital budget forecast”).
Caution: The forecasts from ChatGPT are illustrative and depend entirely on input assumptions. The Tipalti blog notes that ChatGPT’s budget predictions should be treated as preliminary – they require human adjustment. In practice, accountants use GPT’s output as a starting point and then refine with their own financial models.
Scenario: A startup CFO needs a quick sanity check on a hiring plan’s impact on cash flow. He feeds headcount growth rates into ChatGPT and asks for a simple cash burn projection. ChatGPT outputs two scenarios (e.g. “With 10% headcount growth, monthly burn rises from $20K to $25K”). The CFO then uses this as input to build a detailed Excel forecast, saving time on initial scenario-writing.
Compliance Insights and Risk Advisory
At a higher level, ChatGPT can help identify regulatory or compliance risks. For instance, auditors and controllers use it to review control processes or regulatory changes:
Risk Assessment: “We are a U.S. subsidiary of a foreign parent. What foreign currency accounting issues should we be aware of?” GPT can list relevant topics (e.g. “You may need to consider currency translation under ASC 830 or IFRS, and the impact of exchange rates on consolidation”).
Compliance Checklists: “What are key SOX controls for procurement cycle?”
Advisory Reports: Given company facts, “Assess the financial risk of a new leasing contract, considering interest rates.”
Such prompts leverage GPT’s broad knowledge to flag areas that may require further expert analysis.
Integration with Accounting Software and Tools
ChatGPT’s usefulness is amplified when integrated with familiar tools like Excel or accounting systems. Below we show some examples.
Excel and Spreadsheets
You can use ChatGPT to write formulas or macros for Excel, or analyze spreadsheet data. For instance:
Formula Generation: “Write an Excel formula to calculate the depreciation expense in C2 using straight-line method: cost in A2, salvage in B2, life in years in D2.”
Macro/VBA: “Generate a VBA macro that formats column headers in bold and filters the table by date.”
Data Analysis Script: “Write a Python script that reads this CSV of sales and plots monthly revenue.”
ChatGPT can output code or formulas that you can copy into Excel or an editor. (As noted, GPT can create code in languages you specify: Python, R, VBA, etc..) This is especially useful when you need custom reports or calculations that go beyond built-in functions.
Tip: When asking for formulas or code, include sample data or format in your prompt. For example:“Given columns: Date (col A), Category (col B), Amount (col C), write a VBA code to insert a pivot table summarizing sum of Amount by Category.”
Some accountants use the new Office “Copilot” feature (which is based on GPT-4) to ask natural language questions in Excel. For example, you might type “Show me total sales per region” and Copilot generates a pivot chart. While not pure ChatGPT, the underlying concept is the same.
Accounting Systems (QuickBooks, Xero, ERP)
ChatGPT can be paired with accounting software via APIs or report exports. For example:
API Assistance: If your ERP (like QuickBooks Online, Xero, Sage Intacct) has an API, you can ask ChatGPT to help write API calls. As one CTO noted, “ChatGPT is really good at writing API calls against the Sage Intacct API”. Similarly, you can prompt GPT to produce a Python/JavaScript snippet:
Example Prompt: “Write a Python script using the QuickBooks Online API to fetch all unpaid invoices and output their due dates.”
GPT will output sample code that you can refine. This can jump-start integrations or custom queries that would otherwise take much longer to code from scratch.
Report Interpretation: Alternatively, export data from your accounting system (e.g. a CSV trial balance, or a PDF report) and feed it into ChatGPT. For instance, paste your month-end Profit & Loss statement and ask, “Identify three top variances.” GPT will parse the numbers and answer in context.
ChatOps Integration: Some firms integrate ChatGPT into team chats or dashboards. For example, embedding a Slack bot that queries your ERP: users could type “@FinBot what was our total AP aging last week?” and ChatGPT (with the right data access) could reply. This makes the finance system conversational. (While building such a system requires development, ChatGPT reduces the effort by handling the language parsing.)
Example Integration Table: The table below shows sample prompts for various integrated tasks:
Use Case | Example ChatGPT Prompt |
Bank Reconciliation | “Compare these bank transactions vs. ledger entries and list any mismatches.” |
Financial Narrative | “Explain the main reasons net income changed between these two financial reports.” |
Excel Automation | “Write an Excel formula to compute monthly depreciation using straight-line method.” |
QuickBooks API Query | “Generate a Python code snippet to retrieve all customers with unpaid invoices via QuickBooks API.” |
Forecasting Scenario | “Using $100K baseline, forecast Q4 revenue under 5% growth vs 5% decline scenarios.” |
(These are illustrative prompts – actual data should be appended when you use ChatGPT.)
Emerging Tools and Plugins
Beyond Excel and core accounting packages, new tools are leveraging ChatGPT:
PDF and Document Parsing: With plugins or specialized interfaces, you can upload financial documents (like contracts, invoices, tax returns) and ask GPT to extract or summarize data. For instance, feed it scanned receipts or a lease agreement PDF and query key terms.
Business Intelligence (BI) Tools: Some BI platforms now offer natural-language Q&A powered by GPT – for example, Microsoft’s Power BI has a “natural language query” where you type a question and it builds a visual. This effectively uses GPT-like tech to interpret your finance data.
Automation Platforms: Tools like Power Automate or Zapier can incorporate ChatGPT. For example, a Zapier “Zap” could trigger when a new invoice arrives, send its details to ChatGPT for categorization, and then automatically record the entry in QuickBooks.
These integrations are still maturing, but they point to a future where ChatGPT augments every step of the accounting workflow.
Example Case Study
Scenario: The controller of a mid-sized manufacturing firm is closing the books for June. She uses ChatGPT throughout the process.
Data Prep: She extracts June’s bank statement, a raw P&L, and a trial balance into text (CSV or pasted tables).
Reconciliation Check: She prompts ChatGPT to compare the bank statement against the cash ledger (copying the lists into the prompt). ChatGPT immediately flags two missing receipts and one outstanding check.
Journal Drafting: Using the list of fixed asset purchases, she asks ChatGPT to draft the depreciation entries (“Straight-line, 5-year life”). It returns a set of debits/credits, which she reviews and imports into the ERP.
Variance Analysis: She gives ChatGPT the P&L and says, “Explain any changes >10% from May.” GPT points out that sales jumped due to a large order, while raw material costs fell. It even suggests adding a note to the report about the one-time order.
Audit Prep: For an upcoming audit, she asks GPT, “What supporting documents should accompany these significant account balances?” It lists invoices, contracts, reconciliations, etc., which she then gathers.
Board Report: Finally, she asks ChatGPT: “Draft a two-paragraph summary of June’s financial highlights for the board.” GPT writes polished prose highlighting key results. The controller edits it slightly and includes it in the presentation.
Throughout, she treats ChatGPT’s output as a draft – she verifies figures and refines wording. The result is a closed month delivered in hours rather than days.
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Best Practices and Considerations
Human Oversight: Always treat ChatGPT as an assistant, not an oracle. Verify all numeric results and account suggestions. ChatGPT’s outputs depend on the prompt and it can “hallucinate” plausible-sounding but incorrect data if the prompt is unclear.
Data Privacy: Never feed ChatGPT real sensitive data (client PII, confidential leads) into the public interface. Use anonymized or dummy data where possible. (If using a secure on-premise or API integration, ensure compliance.)
Prompt Quality: Spend effort on crafting precise prompts. Include context (e.g. date ranges, company details), specify the output format (bullet list, journal entry table, markdown), and give examples if needed. Iteratively refine: if the output is off, adjust the prompt and retry.
Version Awareness: Note that standard ChatGPT may not know events past its training cutoff. For real-time data (e.g. currency rates, stock prices), integrate with APIs or give it the latest info. For example, the ChatGPT plugin approach (seen in the Tipalti screenshot) pulls live payable balances and exchange rates to answer the CFO’s question.
Regulatory Compliance: When using GPT for tax or legal summaries, cross-check with official sources. GPT is a great starting point to digest lengthy documents, but final compliance judgment should involve a qualified accountant or lawyer.
Save and Audit GPT Queries: Document significant prompts and GPT outputs as part of your audit trail. For example, keep a log that ChatGPT was used to generate the draft closing narrative, so it’s clear that the AI provided the initial text.
