Will Technology Replace or Redefine Accountants?
Accountants have long served as the backbone of businesses because accounting outsourcing services has always been a "rules-based" profession that focuses on strict adherence to guidelines, measurement accuracy, and accountability. The rapid growth of AI (artificial intelligence), automation, and new advanced technologies (e.g., the internet of things - IOT) has changed the conversation among accountants about whether or not the profession will become obsolete or be completely replaced by automated solutions.
Across the globe, businesses are now utilizing automated solutions to perform bookkeeping, prepare taxes, process payroll outsourcing, audit, and issue financial statements. By using advanced technology, which includes artificial intelligence, cloud computing and robotic process automation (RPA), an accountant can now perform their job duties with much greater efficiency (speed) and much less labor required in support of the various activities they perform. In some cases, job responsibilities that would have taken days or weeks to complete can now be done in a matter of minutes with very little or no input from humans at all.
As the accounting profession is becoming more excited about increased efficiency in producing results through automation and decreased operating costs, there are growing concerns regarding job security, workforce transitions and the traditional role of an accountant in a post-automation world.
A future of no jobs for the accounting community doesn't imply that accountants will cease to exist, rather that they will have to adjust themselves to a new way of working with different skill sets and methods of providing value to their clients. This future of accounting within a technology-based business model doesn't mean the end of the human being, but rather a redefinition of the human being's function in the technology-based world.
Accounting firms, accounting professionals and business leaders must be aware of and understand how to respond effectively to the impact of automation in the future of accounting in order to remain competitive in an ever-changing industry.
The history of automation in the field of accounting is long and very complex
Initially, automation in accounting was achieved using simple tools like having spreadsheets and accounting programs such as QuickBooks, Sage and Xero. Thus, a significant portion of the manual bookkeeping work was eliminated, and managing financial records became much more streamlined and less complex.
Automation has since evolved into many different forms:
• Cloud-based accounting systems
• Bank reconciliations that are done automatically
• Tax prep services that are prepared using Artificial Intelligence (AI)
• Fraud detection that is based on machine learning algorithms
• Robotic Process Automation (RPA) for entering accounting transactions
• Predictive financial analytics
AI currently performs a variety of activities in the accounting space including reading invoices to determine the type of expense being incurred, creating financial statements, identifying unusual patterns in accounting records (i.e. anomalies) and providing recommendations for tax savings related to certain transactions.
The benefits of automating accounting processes include not only speed of completion, but also increased levels of accuracy and greater efficiency. There is a reduction in the number of repetitive human tasks due to the use of AI to process very large amounts of financial data with little or no error.
As the industry continues to evolve, routine accounting activities may require fewer human resources in the future, leading to a predominantly automated accounting function.
Why Is the Accounting Industry Moving Toward Automation?
There are many reasons that the accounting industry is transforming towards a future without jobs or automated accounting.
Cost Savings
Companies are in an ongoing search to save money by lowering costs associated with running their business. Having a large team of accountants is a costly endeavor for the majority of small or medium-sized businesses.
Automation reduces costs by performing repetitive tasks:
- Data input
- Processing invoices
- Calculating payroll
- Calculating taxes
- Creating financial reports
Because of the use of artificial intelligence, many companies are able to cut their workforces down to very small sizes and still enjoy high levels of productivity.
Increased Efficiency and Speed
The implementation of automated processes has greatly improved the overall efficiency of businesses. Previously, tasks that took hours of labour input have been reduced to just minutes.
Examples include:
- Bank reconciliations are now performed in real-time.
- Financial reporting can be produced instantly.
- Tax calculations are performed automatically.
- Audit procedures can now be made a lot more streamlined.
This has allowed firms to accommodate larger volumes of clients while providing quicker services.
Accuracy and Completeness
Errors that occur as a result of human input into accounting processes can lead to both financial loss and non-compliance. Automation systems are designed to help mitigate the risk of errors by adhering to standardised rules and algorithms.
Automated processes enable:
- Recording financial transactions correctly.
- Accurately calculating taxes.
- Ensuring compliance with regulatory requirements.
- Providing consistency in financial reporting practices.
This is very attractive for firms whose priorities are accuracy and dependability.
Increasing Interest In Having Access To Real-Time Financial Info
Today, organizations require access to timely information about their finances rather than delaying this information until the end of each month or quarter.
AI-Based Accounting Systems Are Able To Provide
- Real-Time Dashboards Of Financial Data
- Instantaneous Analyses Of Financial Data
- Predictive Analytics Of Future Financial Trends
- Real-Time Monitoring Of Current Performance
This trend is encouraging accounting firms to implement automation in order to meet the customer need for timely information.
Fear of Job Loss from Automation in Accounting
Concerns about job losses due to automation are among the primary concerns around automation.
Many accounting professionals are concerned about artificial intelligence replacing traditional functions such as;
- bookkeepers
- data entry operators
- junior accountants
- payroll processors
- audit & assurance assistance
These functions or job roles are made up of repetitive functions that AI can perform faster than a human.
Trends in the accounting industry indicate that entry-level positions account for the majority of job losses as a result of automation. Furthermore, the routine work completed by beginner accountants can be completed by an artificial intelligence system in less time than it takes to hire and train a team of entry-level accountants.
This concern is not unfounded, as there are already many companies that have reduced their accounting departments after using the tools of automation.
However, this does not mean that the accounting field will not exist.
What it does mean is that specific roles will change and require a new set of skills.
What New Opportunities Are Emerging in Accounting?
While some traditional jobs may disappear due to advancements in automation, new avenues of opportunity will emerge as well.
Professional accountants of the future will be:
• Financial analysts
• Strategic advisors
• Business consultants
• Data interpreters
• Risk managers
• Technology managers
Although AI can process numerous amounts of information quickly, it cannot comprehend the business context behind conceptualizing an organization within the parameters of establishing long-term relationships with clients or developing strategies for making ideal decisions.
This indicates that human accountants will remain an important component of the accounting organization.
Potential Future Roles in the accounting profession:
• AI Accountant Specialist
• Financial Data Analyst
• Compliance Consultant
• Advisory Accountant
• Technology Integrator
• Virtual CFO
All of these roles require competency in critical thinking, communication, and strategic planning; attributes that cannot be found within AI.
AI needs to be viewed as cooperating in producing business results, rather than replacing accountants
Automation will help accountants automate repetitive processes so they can spend more time on higher-value/non-repetitive work. For example, accountants will use:
- AI to produce financial data.
- Accountants to analyze this data.
- AI to create reports.
- Accountants to develop insights.
- AI to identify anomalies.
- Accountants to assess risk.
The effect of this collaboration will lead to improved decision-making and increased productivity.
Therefore, rather than removing jobs through automation, AI will be harnessing additional productivity through creating efficiencies and creating smarter workflows.
While the accounting profession becomes increasingly technology-focused, it will continue to retain people as its focus.
How Will Automation Impact CPA Firms?
CPA firms will see many changes to their business models because of automation, some of the most important being:
High Productivity for Smaller Teams
Increased productivity through the use of automated systems will allow firms to run with smaller teams and handle more clients than their current structure allows.
Technology Is Key
CPA firms will continue to invest heavily in the following functional areas of technology:
- AI Software
- Cloud Computing Platforms
- Automated Software Solutions
- Data Analytics Systems
- Competition Will Increase
Firms using automated services will have an advantage over other firms who do not utilize any technology to help them grow.
New Income
These services will provide opportunities for CPA firms to increase income by providing high-level advisory and consulting services, AI in Accounting Solutions, and Strategic Planning Consulting.
Automation will create additional opportunities and profitability through reduced operating costs.
Final Thought: A New Era for Accounting
While the concept of a jobless future or automated future in accounting can make one anxious, it can also be seen as an opportunity for growth and change.
Automation will help remove repetitive functions from accounting processes, decrease operational costs and give rise to increased levels of efficiency. Automation will also provide new jobs and opportunities for accountants.
The evolution of accounting into the future will be characterized by the collaboration of human intelligence (HI) and machine intelligence (MI). Routine chores will be performed by AI while accountants will be responsible for strategic direction, evaluation and decision-making.
By utilizing automation, CPA practices and accountants will create a source of competitive advantage, enhance their client service/relationship activities and provide a more valuable service to clients.
Instead of fearing job elimination due to automation in accounting, this profession should see it as an avenue for innovation and forward progression.
The accounting profession is not dead; it is becoming a more intelligent, strategic and technology-enabled industry.
Those who can adapt, learn and take advantage of the capabilities of automation while still delivering human intelligence and financial knowledge will shape the future.
