These are increasingly challenging and exciting times for the accountancy profession. Changes, driven by a range of factors, will transform all aspects of business and society in the coming years, and are reshaping how accountants at all levels interact with one another and their boards and clients.
Professor Muhammad Azizul Islam, team leader of accounting for the social and environmental sustainability research group at QUT in Brisbane, Australia, suggested in a recent paper for global accountancy body IFAC, that the three forces shaping the accountancy profession are evolving technology; globalisation of reporting; and disclosure standards and new forms of regulation. All accountants, regardless of the work they do and where they do it, have to take note of these forces.
Firms and businesses, professional accounting bodies and educational establishments need to adjust training, to equip the next generation of accountants with the skills needed to deal with these changes. With increasing adoption of new technologies such as cloud computing, digital accounting and automation (including trials of robot tax advisors), what does an evolving world mean for the profession? As companies and advisors face up to challenges from big data and machine learning, artificial intelligence and the greater connectivity of the internet of things, how can accountants make sure they have the skills to do today’s job, while also preparing themselves and their juniors for the challenges of tomorrow?
Accounting for change
The good news is that while the scale of the change today may feel more dramatic, this is not new territory for the profession, which has a long history of adapting to changing regulatory and technological environments. It may seem more pressing and transformational now, but is the arrival of AI or big data more significant than the arrival of computers into finance departments or the appearance of the spreadsheet? As Kirstin Gillon, technical manager at ICAEW’s IT Faculty, told a recent live webinar on the future of the profession, “The accountancy profession has always been very adaptable in the past and has embraced many waves of automation and there’s no reason to think it can’t adapt this time.”
One difference is that the forces of technology, globalization and a shifting regulatory environment are more connected than before, and they continue to influence each other to create greater turbulence. While a country such as India may set out to reform itself as a great place to do business and to make the most of its thriving young workforce and high-speed economy, it does so in a global context that is continually shifting as technology and globalization create challenges in a febrile landscape.
There’s no question that of the three factors, technology is having the greatest impact on the profession. It is changing the nature of the work accountants do. As Richard and Patrick Suskind explain in The Future of the Professions, while in the short term this will mean accountants continue to adapt existing models of behavior to accommodate new technology, increasingly intelligent new machines and systems will eventually transform the work of professionals beyond recognition. The automation of mundane tasks will force even the most traditional job to be completely re-thought, with work broken down into those tasks that can be automated and those than can’t. With global competition keen as ever, the pressure to reduce costs means tasks will be performed by the lowest cost provider. Increasingly, that will be machines and systems and not expensively trained people, however expert or professional.
Rather than be afraid of technology, accountants should grasp the opportunity this new world offers. A recent EY report, Prepare for the Robots, says robotic process automation (RPA) could “transform the cost, efficiency and quality of executing many of the back office and customer-facing processes that businesses rely on people to perform.”
The combination of new entrants, new products and shifting client expectations mean today’s accountancy sector is very different from that of even five years ago. In May 2017, the International Federation of Accountants (IFAC) warned in a report that to stay relevant, “accountants in business have no choice but to embrace emerging technology”.
While it’s true that some of new and emerging technology will make some more menial tasks redundant, for both accountants in business finance functions and those in practice this is not the same as wholesale job losses, particularly in the short term. Moshe Vardi is professor of computer science at Rice University, Texas and an expert on automation and its impacts on the global economy. He recently addressed ICAEW members in Brussels and expressed the view that businesses and advisory firms in all economies need to think differently about how they structure jobs. Thinking in terms of the impact of automation on jobs isn’t as helpful, he said, as breaking those jobs down into tasks, some of which can be automated and some of which can’t.
“Companies will have to re-engineer jobs, unbundling them into tasks that can and can’t be automated. New packages of tasks will be bundled together to create new jobs. We are not going to have complete automation, but there will be a reshuffling of tasks,” he explains.
How to train the next generation?
One challenge this throws up for those seeking to develop the next generation of accountants is that entry-level jobs are often made up of the more routine tasks that are likely to be automated. “The challenge will be what do new entry level jobs look like? You can’t take someone without experience and put them straight into a higher-level, judgment-based role.”
This requires a re-think of education and training of professionals, including accountants. It may be that training needs to become richer and to focus on skills currently learned through experience. As professor Vardi explains: “As accounting becomes more tech-heavy, it can not be allowed to become a black box. If a system throws up something it thinks is fraudulent, it won’t be enough to trust it. Accountants will need to have a deep understanding of how systems work and how decisions are arrived at. They will need deeper technical skills than ever. A whole new type of skill means different education. We need to start teaching and training people the skills and expertise they learn on the job now. These things will be needed, but they won’t be learned in the workplace, so education will need to pick it up.”
One positive aspect of this new pattern of work is that as new platforms pick up the more menial tasks it leaves then time to take on a more central, strategic role. Both within the finance functions of businesses and across practice, using accountants to do higher-level, added-value work is good for the profession. “Over the last few years we’ve seen software taking away a lot of the processing work,” says Bobby Lane, head of business development at UK firm Shelley Stock Hutter. “This is giving accountants time to focus a lot more on the strategic skills and the added value services they give to their clients. Accountants will need to increasingly become strategic business advisors rather than just doing compliance.”
According to a survey by ICAEW, respondents said adapting to change and taking a broader focus was the most important skill for aspirational FDs, as well as adopting a more strategic, advisory role. Recruitment firm Robert Walters said one of the most noticeable recent trends in private practice has been for national firms to take on new recruits who possess broader advisory skills, a wider range of experience and the ability to see client issues and problems from a different angle.
David Powell, global brand manager, IBM Cognitive Process Services and president of Association of Chartered Accountants in the US, said that while accountancy and technology had not always mixed well in the past, they are increasingly becoming “firm friends”. As he explained, “As well as intelligent automation and machines gaining cognitive skills, reason and learning there is another 600lb gorilla that can take out huge chunks of the profession. This is blockchain. They are still being tested and developed, but it is clear these new technologies will change the profession and we’ll need different skills and a different focus to help us do whatever our jobs turn into better.”
The power of globalisation
As the global economy continues to shape and be shaped by the changing regulatory and reporting environment, what indications are there of how the future is shaping up for the younger generation of accountants? Clients across all regions are becoming more internationally minded, and this means young accountants need to be prepared to think globally. At KPMG China, the number of companies moving into new global markets prompted the firm to start a global Chinese practice, spread across more than 50 countries.
“When Chinese companies expand internationally, the client’s team prefers to communicate in Chinese, and you have to get a team ready in those major countries to be able to communicate, and to make sure you can get across the cultural and language hurdles,” says Cheryl Fung, an ICAEW Chartered Accountant and audit partner at KPMG.Similarly, in recognition of the number of technology clients and entrepreneurs in the country, PwC India set up a centre of excellence for forensics in Hyderabad. This was done to provide clients with solutions related to anti-money-laundering compliance, third-party due diligence, email and document review, as well as investigation support. It has also established an education arm, PwC Academy, offering training in the fields of finance and accounting.
“India has a large talent pool that needs the relevant training to be employable,” says Arbinder Chatwal, director and head of India Advisory, at BDO. But technology and greater regulatory consistency across the world, means that many start-ups, which might previously have only focused on domestic markets now want to export goods or services to different regions.“Historically, some accountants might have worked only domestic business, but now young SMEs want to sell to different countries, or to employ a development team overseas. All of a sudden the local Indian accountant who was working with an Indian SME needs to be aware of global issues,” says Lane.
Accountants and respected accounting standards have always been essential to building trust in business that is essential for strong local and national economies to thrive. As globalisation brings greater focus on common international standards, the work of accountants will be more central than ever to the growth of these economies.One area of activity is tax. New global tax standards and a worldwide desire to co-operate with the OECD’s BEPS project to increase tax transparency and reduce base erosion and profit shifting will create a global demand for advisors. In India, the new Goods and Services Tax (GST) regime has replaced numerous federal and state taxes into a single market that is unprecedented in size and complexity. It is one of a number of initiatives in the country to get more of the population engaged with the tax authorities and paying tax at all, as part of a wider plan to reduce government debt and narrow national and state deficits.
“Chartered accountants have a big role to play post the GST roll out and in the context of the new insolvency and bankruptcy law,” adds Chatwal. “People talk of the Big Four accounting firms, but by 2022, prime minister Narendra Modi’s aim is to have a Big Eight, where four firms are Indian. “Chartered accountants a big pillar of the Indian economy, and the prime minister has urged them to bring technological innovations to meet global standards.”
In China, the rapidly growing economy also presents opportunities for accountants. As with the Indian market, a year is a long time in China. “The economy here is moving very fast,” says Fung. “In the West, you pretty much know your portfolio and your clients, and you can plan your work. But in China a lot of the work is different each time. A few years ago, the focus was on energy, mining, coal and gas. But 10 years ago we were working with big, state companies going to market. Now the upcoming industries are healthcare and TMT, and public/private partnerships. Our team has to learn different skills and about new industries very quickly.”
Old skills for new times
To maintain relationships through these changes, accountants need to create a brand around themselves as individuals and as teams. This isn’t something accountants have always done well. In a survey from ABN Amro, 87% of respondents thought accountants needed to get better at marketing themselves. In different parts of the world, personal relationships develop at different paces. The fast pace of business in the US is in contrast to a slower growth of relationship building in Asia. “I often tell partners that you don’t meet someone and expect them to give you work,” says Fung. “They need to get to know you first, they have to get to believe that you are reliable and then you get the work.” Chatwal agrees. “Accountants need to be multi-disciplinary and to acquire and develop skills and knowledge such as psychology, leadership, negotiation, critical thinking and creativity,” he says.
Automation of much of the more basic work in the profession has left accountants free to focus on new skills and innovations. This means there are plenty of opportunities for accountants to grow new networks, develop international relationships, and be part of the pattern of global economic change.“We are at probably in the most interesting time in the profession ever,” says Lane.Perhaps the last word on what the future holds for those in the profession should go to an expert from outside it. Professor Vardi explains, “It may be that accountancy will change radically in the long run, but it is hard to change accounting very fast. Business and society rely on it for stability and it has developed a whole set of regulations and rules around itself to help protect that stability.”
Accountancy will continue to change and develop as the demands on it change over time, but whatever happens it is clear that society will continue to require the services and judgments of its highly qualified, skilled professionals.
Skills required of accountants in the future
- Tech-savvy thinkers. As innovation continues to drive forward complexity, so accountants must keep abreast of the latest developments. From automation to blockchain, big data to the cloud, they need to be able to advise clients and their bosses about how to get the best from the latest technological advances. And they need to know how the systems they will increasingly rely on work.
- Strong communicators. The ability to explain complex issues simply is one any successful accountant has always needed. A more complex world makes this ability to communicate more invaluable than ever.
- Flexible thinkers. Again, the ability to adapt has been one hallmark of good accountants for years. It will be tested more than ever at a time when the pace of change is accelerating. But the evidence from the past is that the best accountants are well prepared for whatever change comes their way.
- Strategic thinkers. As simpler compliance work is automated, so more accountants will be required to offer more value through strategic advice and support to senior staff, whether in practice to clients or senior partners, or in business to the CFO and board.
- Good networkers. Accountants will remain at the heart of the global business landscape and central to building strong local economies across the world. To do this they will need to continue to build and develop strong personal and business networks.