The common wisdom these days is that every business is a technology business, but it might be more true to say that every business is a business that wrestles with technology — trying to make the most of the opportunities it offers while minimizing the disruption and disintermediation in inevitably brings — and accounting is no exception, according to the profession’s leaders.
In an informal survey of the top figures in accounting, technology and technology-related issues were top of mind, with industry experts citing a wide range of implications for accountants, from the dangers posed by automation and hackers to the new services springing up in data analytics. “The issue of technology is reaching across the profession and having an impact on human capital, marketing, business development, firm management, client service and regulation,” explained Kim Fantaci, president of the CPA Firm Management Association. “From automation to cybersecurity, everyone and every project/initiative are affected. Those within the profession will continue to struggle to remain ahead of the changes and requirements.”
“Our industry is being disrupted by accelerating change driven by technology,” added Grant Thornton CEO Mike McGuire. “With every technological advancement, our work becomes less about rote accounting tasks, and more about solving business problems, mitigating risks and creating solutions in a complex and changing world. This disruption is changing everything about our profession, including the talent profile that will drive the profession in the future.”
Three particular technologies were singled out time and again as of the most concern. “Disruptive technologies like data automation, Blockchain and artificial intelligence are changing (or will soon change) the nature of the services accountants offer their clients,” said Joe Woodard, CEO of Woodard Events. “Automation technologies are a positive disruption, but require accountants to rethink their processes and the way they deploy technologies within their firms. Blockchain and artificial intelligence, though not ubiquitous at this point, have the potential to displace thousands of jobs within the accounting profession, especially for cyclical services like bookkeeping, audit and tax preparation. To adapt, accountants must leverage technologies aggressively, while at the same time embracing roles with complex processes and/or numerous variables that technologies cannot easily displace.”
Accountants aren’t alone in facing risks from these trends, but that’s not necessarily comforting. “A recent, highly credible study shows our entire profession on par with waiters and cashiers for the risk of being replaced by technology,” noted Art Kuesel, president of Kuesel Consulting. “With millions of high-paying jobs in public accounting and private industry at risk, as well as the reputation and value of what an accountant can bring to the table, leaders in the profession have begun to take action and get the word out on automation, artificial intelligence, and robotics. What’s missing, still through 2018, will be the answers.”
While many agreed that the profession needs to pay attention to these emerging technologies, not everyone was focused on their downside. “Artificial intelligence and machine learning will be a huge game-changer for the accounting profession, as it will reduce the effort spent on coding transactions and unlock time for accountants to become true business advisors,” said Xero founder and CEO Rod Drury. “For example, accountants are spending hours and hours completing various tactical tasks throughout the day. By leveraging AI, accountants can automate those tasks and free up their time to focus on larger business objectives. If accountants do not acknowledge the power and potential of AI, it’s a missed opportunity to advance the profession.”
Similarly, Warner Johnston, the interim head of North American for ACCA USA, noted that his organization had “conducted a survey that showed young talent sees job automation and technology as an opportunity, allowing for more strategic activities than routine work. Fifty-seven percent of young professionals surveyed see technology replacing entry-level roles, but 84 percent see technology providing the opportunity for them to focus on much higher-value-added activity.”
For still others in the top tiers of the profession, in fact, the main concern is not about any particular technologies, but how accountants are embracing technology as a whole — or failing to.
FEAR OF THE FUTURE
“The issue is the accountants that are resistant to it and staying away from the opportunities to work with it, because they are afraid it could threaten their livelihood (or are incredulous that computers can take care of a large part of the work we do),” said Hector Garcia, a QuickBooks educator and CEO of QuickBookkeeping & Accounting.
Time and again, the leaders of the profession pointed out that fundamental dichotomy: on the one hand, tremendous disruption; on the other tremendous opportunity. “Emerging technology is a disruptive agent for the profession. Acknowledged and embraced, it can create tremendous advantage, but ignored it will contribute to further commoditization of many accounting services,” said Samantha Mansfield, director of professional development and community at CPA.com. “Challenges for practitioners are: staying aware of the vast amount of technology available; choosing the best solution; training staff and clients; addressing security concerns; and reimagining the services possible through a full implementation of technology. Emerging technology is more than a tool, it is an opportunity to provide higher-value service.”
Accountants need to up their game when it comes to using technology, many suggested. “The comfort level and ability to leverage technology varies across the profession and presents a challenge,” said American Institute of CPAs chair Kimberly Ellison-Taylor. “But it also provides CPAs with an opportunity to work on behalf of public interest with new offerings, strategies and approaches. The accounting profession has earned a reputation as trusted advisors and we are well positioned to provide the guidance and services required by businesses and the public during this time of rapid change. However, to fully capitalize on this opportunity, we must continue to evolve our skills and anticipate greater ways to leverage technology.”
“Technology won't replace accountants. It will just make the people who know how to use it 10 times more efficient than those who can't,” said Bob Berchtold, host of “The Abacus Show” podcast. “Learning how to use new technologies before anyone else will be a huge competitive advantage in the profession. Anyone who isn't willing to learn and grow over their entire career will be left behind.”
On a very granular level, leveraging these new tools will mean changes in the day-to-day activities of accountants. “Working well with technology is the most important issue facing the profession,” said Elizabeth Pittelkow, director of accounting and compliance at ArrowStream Inc. “We need to learn how best to interact with technology, test the inputs, ethically interpret and communicate analytics, emphasize cybersecurity, and realize efficiencies from automation. Accountants can then innovate value-adding services for our companies and customers, including recommending actionable ideas for strategic direction and technological vision.”
On a much broader level, it means “evolving to become a digital enterprise,” according to KMPG US chairman and CEO Lynne Doughtie. “Technology disruptors will continue to drive profound change. The proliferation and convergence of emerging technologies, including the Internet of Things, robotics, and artificial intelligence, are impacting every industry and business model — and society more broadly.”
TECHNOLOGY AND THE AUDIT
One area that the profession’s leaders singled out as particularly susceptible to developments like Blockchain, artificial intelligence, and data analytics is the audit — a service that had not previously been seen as much attention from software developers and digital pioneers.
“Those in attest need to start understanding the importance of data analytics in that world. The shift towards understanding the impact of that data on the audit, and how Blockchain will change the attest world forever, will be critical to their ability to continue to competitively complete in this space,” warned Jim Bourke, a partner at Top 100 Firm Withum and highly regarded expert on the impact of tech on accounting firms. “It is not a matter of ‘if’ Blockchain will impact the audit, but simply a matter of ‘when.’”
As an example of the threat, Koltin Consulting Group CEO Allan Koltin said, “It is predicted that within the next five years, audit fees could reduce by 50 percent, with a similar reduction in terms of entry-level talent entering the profession due to technology performing many of the entry-level tasks. Clearly, this will have a major impact on the profession for many years to come.”
Others noted that the necessary change to adapt to technology in the audit function had already begun, but that it is fraught with its own challenges. “Auditors today must strive to meet the needs of the investing public – the primary users of their services – to remain relevant,” explained Public Company Accounting Oversight Board member Steven Harris. ”The profession is taking steps to address this challenge by incorporating advanced technological tools, such as data analytics and artificial intelligence, in the audit. If the use of such technologies in the audit, however, does not translate into informative, accurate and independent audit reports which investors can use in making their investment decisions, questions about the relevancy of the audit will persist.”
And PCAOB chair James Doty took that caution a step further: “The most important issue currently facing the audit profession is maintaining public trust in the value of the audit and its relevance. Auditors have long embodied the ideals of professionalism, trust and respect. That has not changed but, to maintain those ideals, auditors will need to move forward and embrace what has been called the new economy. This means being open to change and evolution without losing their anchor to the importance of investor protection and fairly stated financial statements.”
CHANGE BEYOND TECH
Software and computers aren’t the only vectors for disruption these days, and in fact, many of the leaders of the profession warned that the most important issue wasn’t technology specifically, but the quickening pace and ever-increasing varieties of change accountants face.
“The accounting profession is facing its most pivotal and transformative era,” noted Janice Maiman, executive vice president of communications, public relations and brand at the newly formed Association of International Certified Professional Accountants. “Remember when ‘The Jetsons’ seemed futuristic? Today, young adults see such a depiction as a quaint view of future possibilities that will far exceed yesterday’s imagination. The same is true for the profession. ... This shift will likely accelerate as new generations struggle with what defines prosperity in this new world. How fast the profession evolves will dictate its ongoing relevance in the new digital, gig economy.”
Or, as AICPA president and CEO Barry Melancon put it, “It all comes down to one thing: mastering the pace of change. Every day, we hear the latest examples of the enormous disruption in business and finance from technology, globalization and the changing expectations of employers and clients. And yet within that shifting landscape, we see a huge opportunity for the profession.”
Many saw the current moment as an inflection point, where the convergence of all those different changes will alter the direction of the profession. “We are at a crucial intersection of time where over the next five to 10 years what a CPA firm looks like and the services/work performed will not be what it is today,” said Dustin Hostetler, chief innovation officer of Boomer Consulting. “The lack of buy-in to change and insufficient leadership around change management at a firm-wide level will not translate well into growing the successful firm of the future. Change is happening. Firms better have a plan and direction to properly manage the change and stay ahead of the pack. Leadership must be aligned and on board with change.”
A number focused on how firms need to respond. “The key idea is what got us here won’t get us there. The strategies and techniques that made us successful are no longer working and new tools and techniques are needed to position us for the future,” said Tom Hood, CEO and executive director of the Maryland Association of CPAs. “The challenge is taking the time to see these ‘weak signals of disruptive change’ and begin to make the necessary changes before we experience disruption that can lead to irrelevance.”
Or, as CPA.com strategic advisor Greg LaFollette put it, “As a profession, we must be increasingly agile in our adaptation to change, especially as the rate of change accelerates more rapidly day by day. We must consistently adopt new and emerging technologies and business models.”
The worst possible choice would be to do nothing. “I am concerned about CPAs actually, enthusiastically and finally embracing change. Too many CPA firms and their leaders are still mired down in complacency,” said Keller Advisors president Rita Keller. “For many years, they have lived in the ‘Let’s avoid change or accept it in small increments because we are doing well and we are comfortable.’ The rapid changes in technology, just in the last year or so, are going to have a huge impact on the profession, and yet many firms are still not even digital (paperless). CPAs need to be moving more into the consulting role and away from the compliance role. CPAs are just on the fringe of really understanding this transition.”
Roman Kepczyk, director of consulting at Xcentric, agreed: “I find that an uncomfortably high percentage of firm owners are focused on retirement or are happy with the status quo, which is causing their firms to stagnate at a time when innovation in their consultative services is more important than ever. If CPAs do not embrace the digital tools that allow for predictive guidance and remediation of business issues for our corporate clients, other professions (data scientists, financial advisors) could swoop into our space and replace accountants as the trusted business advisor.”
Note that both Keller and Kepczyk pointed the way toward a new focus on services that are more consultative and advisory-focused. The need to move to these kinds of higher-value-added services was a significant issue for many other top figures in the field.
With technology commoditizing the accounting’s core services, changing demographics disrupting its members’ lives and careers, and client demands being radically reshaped, a significant group of leaders is concerned about the need to innovate to stay ahead, without losing touch with what makes the profession strong.
“To me, the most important issue is a big one: How do we reinvent our profession, evolve with the pace of change, and stay true to the north stars of objectivity, skepticism, and quality?” said Deloitte CEO Cathy Engelbert. “The profession must consider how we can provide richer context for our opinions and focus on the issues that are most important. We need a vigorous conversation about – and commitment to — innovation. What are the rewards, what are the risks, what are the trade-offs?”
Joey Havens, executive partner at Top 100 Firm Horne, put it more bluntly: “The most important issue currently facing the profession is being innovative enough to put today’s historical CPA firm out of business. It takes a bold and compelling vision to help our profession’s leadership anticipate what a complete transformation of our existing business model really means. Moving from a chargeable hour revenue model to one driven on value and outcomes. Moving from technical compliance advisors to strategic partners delivering anticipatory insights. Moving from historians of transactions to data analysts. Developing the skills to function as coaches and advisors beyond compliance. Demonstrating ownership and unrivaled expertise for cybersecurity, appropriate protocols and control systems.”
All those moves involve offering higher-value-added advisory services, which was a very popular suggestion among the profession’s leaders. “What will accountants do when they’re no longer doing accounting?” asked Rick Telberg, founder and CEO of CPA Trendlines. “Those accountants who are already offering the kind of high-value, high-margin services that only they can provide – business judgement, personal coaching, or brilliant insights, for example – are well-positioned to make the next leap.”
For some, this move up the value chain represents an opportunity; for others, a necessity. “To remain relevant going forward, accounting and finance professionals will have to stop crunching the numbers; machines can do that faster and more accurately than we ever will,” said Bill Sheridan, the chief communications officer at MACPA. “Instead, we’ll have to spend much more time interpreting those numbers — telling the stories behind the numbers, thinking strategically, anticipating future trends, and then helping our clients and customers do the same.”
A PERENNIAL PROBLEM
Technology and the imperative to address changes of all kinds were two of the top concerns among those at the top of the accounting field — but a third, more familiar concern kept pace with them, one that has been on their minds for some time now.
“People,” said BDO USA CEO Wayne Berson. “People were the most important issue last year, they are the most important issue right now and they will be the most important issue a year from now. Accounting, like all professional services, is a people business. Any firm is only as good as the professionals it recruits, trains and retains. As the U.S. economy is improving, the battle for talent will continue to intensify as we seek the best and brightest professionals to help us achieve our growth goals.”
Jeff Phillips, CEO of recruiting platform Accountingfly, pointed out that this staffing shortage is significantly constraining firms’ ability to grow: “I hear this on a daily basis from partners: It’s easier to get new clients than it is to hire the staff to carry out the work,” he said.
It’s also pitting firm against firm in an ever-more serious war for talent. “Competition is fierce,” said Christine Hollinden, principal and founder of marketing consultancy Hollinden. “Large firms have bought market presence at the universities with the most premiere accounting programs and have the resources to attract the top tier graduates to their firms. Small to midsized firms simply cannot compete head-to-head and many are finding themselves with more business opportunities than they can service. The greatest need is for accountants with three to seven years of experience. The biggest challenge is how small to midsized firms can reach those with the needed experience level when name recognition is almost non-existent at the college level. The answer is to treat the retention and attraction of talent as seriously as we treat the attraction and retention of clients. This issue comes down to market positioning, messaging, tactics, and — the driving force — culture.”
Worse yet, as the demand for accounting talent increases, the supply isn’t keeping up. “We’re not translating the pipeline of Bachelor’s and Master’s candidates into CPAs,” explained Jennifer Wilson, the co-founder and owner of ConvergenceCoaching. “The competition for accounting graduates is huge and the value proposition for sitting for the CPA Exam and working in public accounting is not as clear or compelling as it used to be. Being perceived as an ‘old-school’ profession doesn’t help. … We’re all responsible for making this profession attractive, vibrant and growing. And it won’t be, unless we change significantly.”
Fortunately, other leaders had some specific suggestions for improving the flow of young professionals into the field. “It’s important that we support a robust pipeline of talent by envisioning and implementing innovative ways to instill the skillsets that the accountant of the future will need to thrive,” said Joanne Fiore, vice president of professional media, academic and student engagement at the AICPA. “The profession can do this by playing an even stronger role in accounting education, partnering with universities to identify and teach skillsets and enhance accounting curriculum to more closely match marketplace needs.”
Finally, accountants could also do a better job of touting the advantages of a career in the field: “The single greatest challenge is educating our young professionals and future accounting graduates as to the amazing opportunity available in our profession,” said Philip Whitman, president and CEO of Whitman Business Advisors. “Too many people exit well before the carrot of partnership is dangled. While succession and transition remain top of mind for the majority of CPA firms and practices, it is not a question of there being enough money or financing, it is the lack of talent coming up the ranks to fill the client service demands. We must do a better job of sharing with the Millennials and even the Generation Zs what an amazing career or life one can have as an esteemed and most trusted professional as a CPA.”