How will AI change the accountancy profession during the next ten years?

The following article discusses session two in the IR Global Virtual Series on 'The Advent of AI: Embracing Technology in Accountancy'

Australia – Bruce Saward (BS) When it comes to areas like blockchain, I must confess that we haven't seen the practical ramifications of that in the work that we do day-to-day here. I'm sure that larger firms are actually right at the core of that, and my understanding is that it will have a great impact on the future of auditing.

Certainly, though, I think the vendors seem to be relatively slow in developing and embracing AI. They get a little sluggish in the way they develop their tools. The most innovative software most often comes from smaller companies that are very nimble and agile and able to get to market pretty quickly.

There is always the question of whether you go best of breed, or whether you have specialist add-ons which means taking bits and pieces and adding them on later. We're probably a bit locked into a full suite of programs, which means we are slowed down by using a single vendor who is providing our total suite of packages, but I certainly hope that we actually are able to get a little bit of traction there.

We can take on board data analytics though, and I think being able to develop relevant tools with the expertise that we have and get those to market within our areas of influence is important.

I think that the challenge for every firm is to be able to make sure that they take the publicly available tools and package them in a way that drives new value-added services to clients in ways which are new and relevant. Some firms will be able to leverage this further and develop their own tools. I like to think that our firm is up to that challenge, with people who have a real appetite for staying abreast of AI.

Spain – Joan Luis Hereter (JLH) We have to realise that we are in the middle of an evolutionary period. If we look back 10 years and look to the next 10 years, we can probably say that we are living through a period of significant change. Regulatory changes, social changes and technological changes.

This evolution means new challenges for audit and accountancy firms, in terms of efficiency, adaptability, quality of services provided and use of information, and challenges in terms of profitability versus risk.

To face these changes properly, we’ll have to use technology. There is no other way. At some point in the next ten years, or the next five, we will have to add this new technology to our routine processes and, therefore, change and adapt these processes to the new technology.

We will have to use cloud technology to share information ‘online’ and update data simultaneously, optimising the process of version management in our documents and implement a paperless procedure to reduce costs and environmental impact.

For big data, we will need to process information through CAAT (Computer Assisted Auditing Techniques) and implement specific software, as much for audit techniques, as for accountancy processes, to optimise and improve the analysis of the information and the execution of the different tests and procedures.

Documentation tools will ensure the correct flow of approvals and reviews by implementing different levels of authorisations and responsibilities, while robots designed for the specific analysis of operating systems and databases will optimise the resources used on repeated tasks and minimise errors in the information treatment.

Blockchain, cryptocurrencies and cybersecurity are things we have to take into account, especially in the audit processes, but, in the end, it will depend on how the regulatory bodies consider these items in each jurisdiction. Technology must be a tool to make us more efficient; we have to adapt our classical procedures to the available technology, while permanent training and formation is a must to face all these changes.

Netherlands – Roland Rompelberg (RR) With regard to blockchain technology, I haven't seen it in practice yet, to be honest. We have had some discussions, especially with notaries, when it comes to recording transactions over the land registry, but not directly in the field of accounting so far.

Examples of AI are being used in strategy and tax consultancy. Intelligent software solutions combining company data with data of tax treaties and regulations have been used for at least five to ten years now.

The software comes up with several proposed solutions for the most efficient tax structuring. It is great for businesses with activities or assets in different countries and with sales offices and distribution centres around the world.

I was impressed when I saw that and I suppose that, even though the whole “treaty shopping” era is coming to an end with base erosion and profit-shifting regulations (BEPS), similar technology will still be developed for country-by-country reporting.

We see good potential for more automated solutions and, of course, labour costs will go down. I'm not expecting too much impact from that phenomenon though, because, if you look at the typical accounting firm, they would not be doing a lot of manual data entry anymore.

In recent years the focus has shifted to analysis and reporting. The next step is more and more automated generation of reporting which will bring labour costs down further, not just at the lower level of accounting work, but in the mid-level, I would say.

Switzerland – Florian Diener (FD) Everybody is talking about disruption, and indeed this new AI-based technology creates changes everywhere.

It will disrupt the accountancy profession, but overall accounting efficiency will improve. There is pressure from the market to enhance speed and accuracy and scope for value-added services will increase for accounting professionals.

It is not a bad thing though, because the pressure from the speed, on the one hand, helps you to be more customer focused, and value wise it will lead to a higher level of business support, rather than pure number crunching.

Artificial intelligence cannot really understand a client’s needs and goals. It will not think strategically and cannot handle people management.

So, AI techniques can help you to increase and improve the speed of work, but, on the other hand, it creates new opportunities for advisory work. Artificial intelligence systems can eliminate accounting errors and reduce accounting liabilities. This is important because the advisory role can be more lucrative if it includes data analysis and client counselling.

My advice for accountants is to actively change the role from a pure number cruncher and to see artificial intelligence as an opportunity, not as a threat. It's a tool to be more productive and proficient, and it helps a practice to handle more clients and deliver more added value. The most important thing: bring more emotional intelligence to the job!

Oklahoma, U.S. – John Curzon (JC) Smaller, nimbler, companies are much more inclined to embrace the new technology and move faster. I see my firm in that exciting space, particularly with the younger staff that we are hiring.

Many of our clients have been around a long time and are doing things the same way they always have.

We've tended to avoid some of the new start-up companies in the past because they don't have any money to pay for the types of services we provide, but we've discovered the value that comes from interacting with some of these smaller companies. They are the ones embracing AI and that helps us change our practice for the better.

I would add that we have been changing our practice for quite a while since there's been an evolution in the use of technology during the last 20 years. We now look at things like AI and blockchain, and know we need to be very aware of them – it’s part of an ongoing education.

I think it will continue over the next 10 years, and it really requires a kind of eyes wide open approach.

They'll be a change in the accounting profession to become more customer service or client service focused. While some accountants will shift and be able to do new and better things some won't be able to make that shift.

We’ll be looking for new people that understand the value of emotional capital that Florian talked about because that's where we see the delivery of value to our clients – helping them understand their business better, including the tools that they can use. The future of accounting is going to be geared more toward strategic conversations with clients.

Computers and machines may help take care of the data, but it's understanding the output of the data that is something we're going to have to do. When we talk about how that changes the business model, we’re looking at how to incentivise accounting staff to take on this new and different role.

It may possibly mean a division of the firm, which is something large accounting firms did 25 years ago when they split off their consulting practices from the more traditional accounting side.

You're going to see more and more of that, where you're isolating those people that can really be strategic thinkers and strategic communicators, and then utilising the more compliance-focused accounting firm as just another resource.

My practice is looking at that model right now, but we haven't implemented anything yet.

India – Arvind Rao (AR) There will be changes coming in India, very quickly, because the government has put in place, technical skill sets and education to upgrade the skills of students at university level.

They have brought out things like online filing, so everything is going online, including compliance which is going online. We just need a program to extract data and give it to us accountants in a form that can be interpreted, so we can be more client-focused and give the clients the advice they require.

One thing to add here surrounds strategic advice to clients after all this technology has been put in place and the interpretation is done. There will be two things.

Firstly, we will require fewer people in the profession, and secondly, will the clients really want strategic advice from us, or would they be able to do it themselves once all the AI-enhanced number crunching is done?

That is something that is to be seen and that is where they could be a problem. The other problem could be getting the right kind of human resources to do the job. These are the things which I think could hamper us a little bit, but I'm quite optimistic about the future.

Ireland – Damien Malone (DM) As long as I've been working in accounting it has always been the way, we have to keep up with and embrace technology changes which will include advances in AI.

What I don't see changing is client retention and relationships with people. No matter what advances technology brings it is critical not to lose focus on how important this is. Developing and maintaining relationships with clients and staff alike is also just as important.

Attracting clients and then retaining good clients for the long term is key and I think that no matter what changes there are with robots or with anything else, one thing robots won't be able to do is develop relationships on a personal level.

I do see the need for a change in focus by accountants, whereby previously there may have been an emphasis to the more mundane and labour-intensive tasks, we will be focusing more on issues such as investment advice, business strategy and tax planning among other things with clients.

CONTRIBUTORS

Florian Diener (FD) Diener Advisory GmbH – Switzerland www.irglobal.com/advisor/florian-diener

John Curzon (JC) CCK Strategies, PLLC – U.S. – Oklahoma www.irglobal.com/advisor/john-curzon

Damien Malone (DM) Malone & Co.– Ireland www.irglobal.com/advisor/damien-malone

Bruce Saward (BS) Saward Dawson Chartered Accountants. – Australia www.irglobal.com/advisor/bruce-saward

Joan Lluís Hereter (JLH) HyC Consulting Empresarial SL – Spain www.irglobal.com/advisor/joan-lluis-hereter

Arvind Rao (AR) August Consulting Private Limited – India www.irglobal.com/advisor/arvind-rao

Roland Rompelberg (RR) Maprima – Netherlands www.irglobal.com/advisor/roland-rompelberg

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