Using AI for Accounting Firms

At Engler IT, we help accounting firms in Maryland and beyond navigate this evolving landscape with the tools, policies, and guidance they need to use AI securely and responsibly.

What’s the Risk? AI Isn’t Exempt from the Law

AI is often seen as a tech issue – but for accountants, it’s also a legal and ethical issue. These tools can make decisions or suggestions that impact client outcomes, tax filings, audits, and compliance with state and federal laws.

Here are the top legal areas that Maryland accounting firms must consider when using AI:

1. Data Privacy and Confidentiality

AI tools process enormous amounts of sensitive client data — from Social Security numbers to financial records and tax returns. Mishandling or exposing this data (even unintentionally) could violate:

  • Gramm-Leach-Bliley Act (GLBA)
  • Maryland Personal Information Protection Act (PIPA)
  • IRS regulations around taxpayer data
  • Confidentiality standards set by the AICPA

If your AI solution is cloud-based, are you sure you know where that data is stored, who can access it, and whether it’s encrypted? One mistake could trigger a breach notification, legal fines, or even loss of licensure.

2. Bias and Discrimination

AI used in financial advisory or loan evaluation may unintentionally produce biased results. For example, if your firm uses AI to assist with client credit modeling or lending advice, biased algorithms could lead to discriminatory outcomes, opening your firm up to lawsuits under:

  • The Equal Credit Opportunity Act
  • Fair Housing Act
  • Civil Rights laws

Firms must ensure that AI systems are trained on fair, transparent, and diverse datasets — and regularly audited for bias.

3. Liability for AI-Generated Error

What happens if your AI tool makes a calculation error that results in a client overpaying taxes — or worse, getting audited?

Even if the mistake originated from an AI-powered platform, your firm could be held legally and financially responsible. Courts and regulatory bodies are increasingly treating AI-generated outputs as your firm’s responsibility — not the vendor’s. The human user remains accountable, even if the machine made the call.

4. Compliance with IRS and Federal Guidelines

Firms using AI in tax preparation or fraud detection must ensure that these tools comply with IRS Publication 4557 and any relevant FTC Safeguards Rule requirements. Additionally, federal contracts — if your firm handles government entities — could trigger compliance with:

  • CMMC (Cybersecurity Maturity Model Certification)
  • NIST 800-171
  • FISMA

Failing to ensure compliance across your AI ecosystem could disqualify your firm from certain contracts — or worse, lead to penalties and reputational damage.

5. Contractual and Vendor Risk

Not all AI tools are created equal. Using third-party platforms or APIs without clear service agreements and data-handling terms could open your firm to third-party liability. Make sure your contracts:

  • Clearly define data ownership
  • Include indemnification clauses
  • Spell out vendor responsibilities in the event of a breach or error

Best Practices for Using AI Responsibly in Accounting

To safely and legally leverage AI, Maryland accounting firms should:

  • Conduct legal and compliance audits of all AI tools in use
  • Establish written AI policies that address data privacy, accountability, and risk mitigation
  • Ensure transparency in how AI outputs are used and reviewed by humans
  • Work with IT and legal professionals to vet vendors and manage third-party risk
  • Train staff on responsible AI use, privacy rules, and ethical standards

How Engler IT Can Help

At Engler IT, we support Maryland accounting firms in adopting AI securely, ethically, and legally. Our team offers:

  • AI risk assessments
  • IT compliance services tailored to GLBA, IRS, CMMC, and PIPA
  • Data protection and encryption solutions
  • Vendor vetting and cybersecurity due diligence
  • Staff training and policy development

We help firms bridge the gap between innovation and accountability — so you can stay competitive without compromising client trust or regulatory compliance.

Engler IT is here to guide you every step of the way. Contact us today to ensure your AI strategy is as smart legally as it is technically.