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The shape of things to come

By Cian Molloy

What lies in store for the accountancy profession? Cian Molloy investigates how the profession might fare in the years ahead.

Since the arrival of the first accountancy software packages more than three decades ago, there have been regular predictions that IT would lead, if not to the death of the accountancy profession, to wide-scale redundancies among back office accountants, accounting technicians and book-keepers.

The latest iteration of this prophecy of doom is contained in a book by father and son Richard and David Susskind, The Future of the Professions: How Technology will Transform the Work of Human Experts, which was recently reviewed on Newstalk 106FM by Mark Kennedy, Managing Partner at Mazars, who described it as “a bit scary”. Kennedy was so impressed by the book that he had 10 copies of it to distribute among the radio station’s users.

But don’t believe the hype – Accounting Technicians Ireland reports that it has 5,000 members in employment, its highest number since it was founded 20 years ago and Chartered Accountants Ireland’s student intake recently surpassed pre-financial crisis levels. The institute also recently enrolled its 25,000th member.

“A significant amount of the existing work of accountants and accounting technicians – processing invoices, producing month-end accounts, meeting statutory reporting requirements – is being either automated through business processes and artificial intelligence or is being outsourced and exported to low cost economies,” says Ed Heffernan, co-founder of the Barden recruitment consultancy. “The traditional role of the accountant is being diluted as a result of disruptive technology, but that just means that accountants are being freed up to take a greater role in the businesses where they are employed.

“In the past, accountants were very much concerned with recording what had happened, writing month-end statements et cetera. Increasingly, the role of the accountant will be to analyse data to generate information that can be used to provide insights into what actions will affect the bottom line. They will be moving from being purely technically skilled to using a wide range of soft skills so that they can talk to other people in the business about costs and budgeting around costs, and how the company will pitch for business; how it will spend money and how it will make money.

“In the background to this is big data – audits will no longer look at a set of sample transactions, they will look at all transactions. Accountants will be people who look at financial and non-financial empirical data to help business decision-making.”

Rising HR demand

In the short- to medium-term, the good news for newly qualified accountants, says Heffernan, is that they are very much sought after by employers at present. “We have a perfect storm situation where various factors have come together to create a situation where the supply of newly qualified accountants is nowhere near close to meeting the demand for accountants who are qualifying this year or who have qualified in the last 10 years. Following the financial crisis, the big accountancy firms really cut back on their graduate recruitment programmes in 2009, 2010, 2012 and 2012 so there are less qualified accountants coming out of the system three and a half years later. Added to this is the fact that people are staying with the Big Four and with the Top 10 companies, because they are in growth mode and they are short of staff.”EY has been in growth mode for the last four years according to EY Audit Partner, Frank O’Keefe. “Last year, we took on 270 graduates. This year, we will take on at least 300. We have a lot of people from different parts of the world because we value diversity and inclusiveness. When I put together an audit team of 15 people, I don’t want 15 Frank O’Keefes, I want people with different backgrounds and different life experiences who will strengthen the team with their own skills and particular insights.”

EY has been in growth mode for the last four years according to EY Audit Partner, Frank O’Keefe. “Last year, we took on 270 graduates. This year, we will take on at least 300. We have a lot of people from different parts of the world because we value diversity and inclusiveness. When I put together an audit team of 15 people, I don’t want 15 Frank O’Keefes, I want people with different backgrounds and different life experiences who will strengthen the team with their own skills and particular insights.”
Stranger and stranger

Having non-accountants as work colleagues could be a feature of accountancy in the big firms from now on as they develop new areas of business where specialists other than accountants are required. “Two big areas of growth for us are cybersecurity and risk management,” says Paul McCann, Managing Partner at Grant Thornton. “At present, our business is growing overall at a rate of about 25% a year, but in these two areas growth is at 100% plus year-on-year.

“Both cybersecurity and risk management require people with non-accountancy skills. Risk management requires quantitative analysts, economists, people with maths and this is something that feeds into compliance – another growth area. The regulators no longer want to look at insurance companies’ and fund managers’ historical accounts; they want to see their models for dealing with market contingencies and what might happen to their assets, their liabilities and their non-performing debts. This is a huge area – one director of a major bank told me that regulatory costs accounted for 25% of total costs; that’s a huge number.”

Attracting talent

How accountancy companies attract the brightest and the best graduates to work with them is changing too. “20 years ago when I started, people were very focused on progressing through the business at pace and would work all the hours under the sun to deliver exceptional client service,” says O’Keefe. “The current generation of graduates are not afraid of working hard, but they want flexible working; they want the opportunity to travel internationally; they want to work with brilliant teams of people and they want to be part of something that offers something back to society. A lot of our new talent first engages with us through social media and through online content and, when we do meet them, they interview us as much as we interview them.”

The growing complexity of the accountancy profession, the fact that there are now multiple standards affecting different sectors served by the profession, the increasing regulatory burden on client companies and the growing scope of IT-enabled auditing and reporting tools means that today’s newly qualified accountant is increasingly likely to specialise in one particular skill set or field.

More to study

“The days of people qualifying and knowing everything they need to know is long, long gone,” says Ronan O’Loughlin, the Institute’s Director of Education and Training. “The idea of people going back to college or doing a diploma with us is much more commonplace as people specialise in areas like forensic accounting or study to keep abreast of technical updates.

“We were one of the first professions to embrace the need for CPD, continuous professional development, and it is essential. There are many areas relating to the accountancy profession such as taxation legislation, where knowledge acquired is out of date within 12 months. Increasingly it is not about what you know; it is about knowing how to find out.

“One thing that is certain, those of us working in the profession will adapt to new circumstances. It is no accident that Tony Farmer used the title ‘The Versatile Profession’ for his history of accountancy in Ireland. We started as a sub-set of the legal profession that was involved in liquidations; now we are involved in much more than that.”

Reputations at stake

Farmar doesn’t see accountants being replaced by robots and artificial intelligence any time soon. “There is a requirement to question things, to not just accept things at face value and you need humans to do that,” he says. “However, the role of accountants is changing. Risk and compliance are a big deal now and the CFO is no longer the automatic choice to become the CEO or the company chairman; there may be others better equipped for that role.

“One of the big changes that I see coming is the role of ethics. For too long, there has been an idea in accountancy that if something is legal, then it is moral. The whole area of tax avoidance is now under scrutiny.

Across the water, Teresa May has threatened to make to make Britain a tax haven, but that risks making her country a pariah state. Already, large multinational companies who have been shown to be paying little or no tax have suffered lasting reputational damage. The accountancy profession has to ask itself if it wants to continue to take pay for helping people avoid tax.”

Artificial intelligence and the future of the accountancy profession

The accountancy profession is thousands of years old, yet it is only in the last 30 years that computers have become mainstream. Now we hear terms such as robotics, the internet of things, blockchain and artificial intelligence (AI). In a very short space of time, we have gone from book ledgers to big data and data analytics. The rate of change is accelerating, so is there a risk that accountants could be surplus to requirements in a world of robotics and AI? I don’t think so, but the accountant of the future will look different to the accountants of the past and we have already seen this evolution start to take shape.
AI is the theory and development of computer systems that are able to perform tasks that normally require human intelligence. At Deloitte, we have already started to use AI within our audit processes. Our contract interrogation solution, Argus, uses natural language processing and machine-learning technology to analyse large volumes of contracts at amazing speed. This enables the auditor to profile populations based on defined criteria and identify any exceptions requiring investigation.

Smart visualisation of results enables better decision making and ultimately, better outcomes for clients. Working with technology such as AI provides the opportunity for auditors to work smarter, analyse larger samples or even entire populations and simultaneously delivers higher quality audits and better client insights.

Computers can do things that humans simply can’t – we need to embrace this. This will enable accountants to focus their attention on key judgement areas, value-add activities and serving the client. Yes, there may be fewer accountants required to do the same task in the future but the tasks they will do will be higher value and more rewarding.

The core skills of the accountant will continue to evolve – expertise in technology and analytics will be as important as knowledge of the auditing standards and IFRS. The future of the profession is an exciting one.

Brian Jackson is Audit Innovation Leader at Deloitte Ireland.

This article was originally published in the February 2017 edition of Accountancy Ireland.