AI automatically scans financial statements for risks and non-compliance with regulations.
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Murray Love wants to get to the heart of why artificial intelligence is necessary in today’s world. With his experience and background in analyzing financial reports, he’s convinced there are too many people wasting their talents doing the same.
“There is a significant amount of time and resources being wasted on very manual tasks,” he says. “I was watching very, very intelligent people wasting their time on tedious work.”
Two years ago, Love started developing software that would form the basis of Ark Paradigm, his Kitchener, Ont.-based startup, and that could indeed relieve humans of the need to pore over corporate financial documents.
His goal was twofold – to save people from the mind-numbing work and to help companies deliver more accurate reports to shareholders and regulators.
Every year, companies lose millions of dollars by having to restate earnings, usually because of errors that weren’t caught by the human eye. In 2016, Valeant Pharmaceuticals and Mitsubishi were just two companies that embarked on such costly restatements.
Such mistakes don’t just immediately affect the bottom line, they can also have long-term effects on a company’s reputation.
“These are material misstatements that aren’t being communicated properly to shareholders,” Love says.
Users of Ark Paradigm’s software upload their financial reports to the company’s platform. The AI goes through the material and analyzes it for any risks or possible instances of non-compliance with reporting requirements or regulations. Users receive a summary, complete with flags on any potential issues.
The company currently has three full-time staff conducting several pilot projects, with an eye to launching service next fall.
Mostly self-funded, Ark Paradigm has also received grant money from several sources, including $70,000 from the government of Chile. Love made the connection prior to starting his company, while working with the Canadian government’s trade commission.
As with most companies and entrepreneurs operating in the AI space, he sees increasing automation not as a threat to human jobs, but as something that can’t happen soon enough.
“When you look at [financial] audits three to four years from now, it’s going to be night and day,” Love says. “It’s something that needs to occur.”