Microsoft expands Copilot with specialized accounting and tax tools

Automating the financial close

Microsoft has significantly expanded the finance capacities of its Copilot AI platform. The update introduces specific tools designed to support bookkeeping and the heavy lifting required for month-end, quarter-end, and year-end close activities. These features allow teams to organize tasks by assigning owners, setting due dates, and managing approval workflows.

One of the primary functions is automated reconciliation. Copilot can now compare balances and transactions across various sources, including bank statements, subledgers, and vendor records. It identifies discrepancies like duplicate entries or missing records and prepares proposed corrections with supporting documentation for human review.

The goal of these updates is to streamline the repetitive nature of corporate finance. By automating the matching of transactions, the platform aims to reduce the manual effort required to ensure financial records are accurate and complete.

Audit and tax capabilities

The new update includes dedicated features for core accounting functions like audit, tax, and compliance. For auditors, Copilot can help plan and document both internal and external audits by selecting samples and testing controls. It can also trace transactions back to source records while tracking audit requests and findings.

Tax professionals can use the AI to prepare analyses, supporting calculations, and workpapers for tax planning and compliance. The system can also estimate payments, reconcile tax accounts, and track filing requirements. It even identifies issues and due dates within tax notices and documents the assumptions used in the process.

Compliance support is also enhanced through the ability to test accounting controls and review adherence to internal policies. Copilot helps prepare regulatory reports and documents test results, identifying exceptions and tracking the corrective actions needed to resolve them.

Integration with ERP and data

To make these tools useful for large organizations, Microsoft added a Dynamics 365 ERP apps plugin. This allows accountants to bring finance and operations data directly into Copilot. Users can now prepare journal entries and supporting schedules using data pulled straight from their system of record.

The platform also features a plugin for Fabric IQ, which makes governed Microsoft Fabric data actionable. This specifically helps finance teams carry Microsoft Power BI reports and semantic models into deeper analysis. It bridges the gap between high-level reporting and granular data investigation.

Additionally, a new Finance plugin for Cowork helps corporate finance teams prepare the necessary communications for reviews. Teams can use it to identify blockers, investigate variances, and draft commentary for briefings, as well as consolidate budget inputs and prepare forecast-review briefs.

Expanding the partner ecosystem

Microsoft is expanding the reach of Copilot by connecting it to a wide array of third-party integrations. For standard accounting and planning, the AI now connects with popular tools like Intuit QuickBooks, Xero, and Zoho Books. It also links to risk intelligence platforms such as D&B Finance Analytics and Moody's.

Investment and wealth management professionals can now connect FactSet, Morningstar, and Orion to their Copilot workflows. For market data and research, the platform integrates with providers like S&P Global, Statista, and LSEG. These connections allow users to pull external market context into their internal financial tasks.

The ecosystem also covers spend management and business banking through a connection with Mercury. By supporting these diverse third-party tools, Microsoft is positioning Copilot as a central hub for various financial and operational data streams.

Transparency and user adoption

To address concerns regarding accuracy and transparency, Microsoft added a specific feature for Excel. Professionals can now start an audit trail whenever they invoke an accounting capability. If this is selected, the system creates a record in the chat history explaining exactly what Copilot changed and why.

Early data suggests significant interest in these new capabilities. During a period of limited Insiders availability, more than 8,000 unique users invoked accounting skills over 44,000 times across more than 18,000 conversations. This indicates a high level of engagement with the new finance-specific tools.

While the data shows high usage, it is currently unknown what percentage of these users were professional accountants at CPA firms. However, the rapid adoption of these skills highlights the demand for AI-driven automation in the accounting and finance sectors.