“Forget artificial intelligence – in the brave new world of big data, it’s artificial idiocy we should be looking out for.”
– Tom Chatfield, British author, broadcaster and tech philosopher
New technologies are significantly changing the accounting and auditing landscapes. Artificial intelligence (AI) and advanced technologies are already ubiquitous in the accounting space.
According to QuickBooks, there are already more than 700 apps that are assisting accountants to automate processes and reduce their workload. Gone are the days where accountants can be mere number crunchers, who collate and check data and allocate it to the correct cost centre. The future accountant will have transformed her/himself into a financial advisor, adding value to businesses by offering strategic advice, consulting and financial planning.
New technologies are also requiring a different kind of training and demanding new competencies. This feature looks at the impact of automation on the accounting and auditing professions, what skills are needed in an AI-future, the role of the accountant in an automated world and what role software companies are playing in the transformation of the accounting function.
Changing business model
A key change being brought about by new technologies is the enabling of new business models for accounting practices, says Christiaan Brink, Product Executive: CaseWare Africa.
“Technologies such as robotic process automation, AI and cloud are enabling advancement of the entire accounting value chain. Instead of allocating up to 50% of the working day to repetitive tasks, accounting practitioners successfully harnessing automation can dedicate more time to offering added value services, such as consulting and support in strategic financial planning.”
The widespread adoption of cloud-based solutions, adds Brink, is enabling more flexibility and mobility for accounting practitioners, with intelligent software enabling seamless integration between various systems and financial packages, which eliminates the need to export manually and collate inputs for reporting purposes. “These advances support the changing business model the market is increasingly demanding. End clients want predictable and managed cash flows. They want to pay for an outcome, not a billable hour. And by introducing greater efficiencies, reducing the resources needed, and speeding up the time taken to deliver an outcome, accounting practitioners can meet this growing demand and simultaneously scale up the practice.
Chris Becker, Investec blockchain specialist, says public blockchains, in which transactional data is stored on a public ledger and on which automated financial management applications can be built, have the potential to change dramatically the accounting and auditing landscape. “Blockchain is such an innovative new ledger system that it is often referred to as ‘triple-entry bookkeeping’. When a change is made to your double-entry books, a blockchain requires that a change is automatically made in your counterparty’s books, extending the concept of double-entry bookkeeping to triple-entry bookkeeping.”
He adds that accountants currently compile an entity’s financial statements by reconciling its bank accounts with sales and inventory management systems. “This is a labour intensive process because data must be collected from multiple ledger systems. Auditors then check the accuracy and integrity of these financial statements. The larger and more complex a business, the more scope for errors or fraud and the greater the reliance on the competence and integrity of accountants and auditors.
“A public blockchain keeps track of all dealings a company has with other companies. Third-party analysis tools can easily integrate to compile financial statements in real-time that are impossible to defraud. Accounting and auditing can now be fully automated for companies that use a public blockchain ledger such as Ethereum.”
A good example is Balanc3, a tool for businesses that leverages the Ethereum blockchain ledger to bring all accounting, consolidation, reporting, and analytics functions into one financial management system that is almost fully automated.
Role transforming
The accounting function will never be 100% eliminated, but what accountants do and the value they bring to an organisation will change, says Deirdre Fryer, SYSPRO Regional Product Manager: Africa.
“Accountants will always have to make judgement calls on certain tax rules or the accounting of provisions and contingencies. Automation will free up capacity to place more focus on strategic work rather than spending significant time and effort correcting information and structuring financial data. Time will be spent on driving change and providing business insights quicker so that business decisions can be made sooner. Accountants will become the financial business advisors they are destined to be.”
Heemal Bhaga Muljee, Partner, National Head of Audit at BDO agrees. He says that as automation replaces repetitive and routine processes and performs analysis, people will still be required to make strategic decisions and provide strategic advice.
Michiel Jonker, Director, IT Advisory at BDO, takes it a step further. He says that over and above technologies covering routine work, there is a strong drive to automate non-repetitive, non-routine work such as the analysis of financial statements and interpretation of contracts by machine learning. “As non-repetitive processes are automated the focus of accountants and auditors will move towards strategic input.”
Bhaga Muljee adds that by being freed from capturing data, the future accountant will be able to focus on business performance and how it can be improved. “That’s where the value is to be had.”
Alistair Hofert, PwC Cognitive & Intelligent Automation Lead, says the role of the future accountant will be to bring trust to the domain of finance with pervasive advanced technologies and to advise the business on financial aspects impacting the future of the business rather than recording historical events and performing routine tasks. “The functions an accountant will perform will relate to insights, such as capital and cashflow optimisation, predicting the financial impact future of business model change decisions, new channel optimisation, and financial insights per customer class.
Jo-Anne Blignault, Partner, Business Services and Advisory at BDO,says the move to providing strategic advice will make the profession far more rewarding for accountants, adding that automation will ironically bring a more human aspect to the job.
“Previously an accountant would punch numbers into a trial balance format or a financial statement. That information is now available at the click of a button, so the real accounting function will involve personal interaction.”
Jonker adds that technology is pushing accountants and auditors up the value chain, where more insight is expected and crucial business decisions are made. “Capturers have become managers of the automation process and managers are now strategic directors of business. The higher up the value chain you go, the more insight is demanded to make crucial business decisions.”
He foresees an end to the junior and middle management roles in 10 years as a result of automation. “The elimination of these roles creates a dilemma as there will be no pipeline of juniors and managers to fill strategic positions.” He also points out that although machine learning and AI might bring economic benefits (lower fees), strategic business advice will come at a higher rate, as it is considered to carry a higher value.
For Bhaga Muljee, most important for the future will be a mindset of using technology to get the required outcome and understand and mitigate the risks of using technology when it comes to cybersecurity and data privacy.”
Rashied Small, Executive: Education and Training at the South African Institute of Professional Accountants (SAIPA), says accountants of the future will channel automatically generated insights into actionable business development initiatives, risk management plans, flexible and sustainable business models, and much more.
Small says that in its strategic vision for the Professional Accountant (SA) SAIPA included the ‘value-added business advisor’ with competencies in
- creator of value (strategic business advisor);
- enabler of value (operational business advisor);
- preserver of value (risk management advisor); and
- reporter of value (business reporter).
“This requires they embrace technology while developing vital soft skills, like creativity, problem-solving and critical thinking, to intuitively deliver powerful solutions.”
Small adds that accountants’ services should remain a key business function for at least the next decade. “The US Bureau of Labor Statistics has predicted a 10% growth in the demand for accountants and a 19% growth in the demand for financial managers until 2026. That’s better than the average US profession and with the need for accountants growing worldwide, a similar projection would be valid for South Africa.”
Paige dos Santos, digital lead for SAP Africa and a SAICA member, says that SAP and Deloitte are currently working on an offering called Lights Out Finance which aims to completely automate the finance function.
“But there is no threat to the CA(SA). On the contrary, CA(SA)s are being given a better opportunity to use their thinking and specialist skill sets. They have a greater ability than ever before to help organisations advance. Once it was about evolving from a reactive business into a responsive one; now it’s about developing a business that is intuitive.”
Automation efficiencies
Each technological advance – from the first desktop accounting solution to today’s powerful cloud-based solutions – has enabled accountants to get more work done in less time and gain better visibility into finances, says Pieter Bensch,EVP, Sage Africa & Middle East.
“But the technology revolution is still in full swing. Trends such as artificial intelligence (AI), big data, IoT (Internet of Things) and blockchain will have a powerful impact on the accounting profession as lower-level services and tasks continue to be automated and delegated to technology.
One of the biggest issue with accounting is the…
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Read this Feature on THE FUTURE ACCOUNTANT by Max Marx, as well as a host of other topical management articles written by professionals, consultants and academics in the April/May 2019 edition of BusinessBrief.
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The future Accountant Max describes is already here. The role of an Accountant changed many years ago with the coming of ERPs. With Syspro ERP, my role as an Accountant is mainly advisory. Financial and management reports can be generated directly from the system with ease.