Automation Revolution: Facts Vs Myths About CPAs Survival

About CPA

Certified Public Accountant (CPA) is a designation earned by qualified accountants after acquiring a license to provide accounting services to the public in the USA. These professionals complete a study program in public accounting and take Uniform Certified Public Accountant Examination, a mandate for the CPAs.

Mostly in the U.S., only CPAs can legally attest documents and opinions on financial statements. Many CPAs are official members of the American Institute of Certified Public Accountants and their state CPA society.

Some of the important functions performed by CPAs are related to assurance services. Financial audit services, amongst all, are their most frequently performed assurance services. Herein, the CPAs attest to the equanimity of disclosures, the autonomy from material misstatement, and the compliance to the generally accepted accounting principles (GAAP) in financial statements.

CPAs are also hired by corporates as financial analysts, finance managers, finance controllers, chief financial officers (CFOs), or chief executive officers (CEOs). They have also been essential for professional standards and Federal and State laws to uphold independence from the unit for which they are performing an attestation (audit and review) assignation. Internationally, the demand for CPA got determined by the market cap of $8,563 billion of leading American companies existing across the globe, with a growth rate of 236% between 2008 and 2018.

What Is Automation/Artificial Intelligence?

Technological advancements have time and again taken humans by surprise. Be it anything, technology has played a pivotal role in bringing ease to the lives of humans. The term ‘automation’ holds a fundamental position in technology. Say for, you give commands to your computer/mobile and it works as per your instructions. But imagine if there comes a day when humans are replaced by technology. Isn’t it astonishing? Or rather shocking!

Now, talking in context with automation becoming a catchphrase across major business arenas, many professionals are insecure about their future job prospects. Certified professional accountants are one of them, who are incessantly curious about the employment dynamics that might change left, right and center in their industry, especially when automation and subsequently, automated cloud accounting software deployment is going to be the biggest industrial revolution of the 20^th century.

So, there is an urgency to understand what automation is, or we may even call it Artificial intelligence. Automation is a term derived from the word ‘automatic’, which means ‘working by itself with little or no direct human control.’ Hence, automation/artificial intelligence refers to the existence of smart behavior in machines that can perform intelligent processes parallel to those of humans.

For example, automation in the accountancy industry may help in the extrapolative analytics in audit cases, or evaluate client accounts through speech recognition, or proof-read legal documents and contracts with the help of automated cloud accounting software. Automation can also control technology to examine and scrutinize client data.

Facts vs Myths about CPAs

Although in recent years the accountancy industry has dealt with the question of whether the accountants will be substituted by technology, the discussion has now moved on to the adaptation to this much talked about digital age. Hence, instead of being worried, CPAs must focus on their roles as they will be changed but not completely eradicated.

Perhaps to a great extent, it is a matter of how accountants will school themselves with the essential skills to flourish in this evolution, where everything is shifting towards e-commerce. This revolutionary changeover for accountants involves owning up the role of business advisers and offering value-added services to the consumers.

Analytics and reporting may entirely be taken over by business accounting software sooner or later, but accountants in the industry need to possess the ability to use the data created by technology to aid clients and company management in making informed business decisions, including pricing models, progress strategy, and risk identification.

Certified Public Accountants need to be self-assured with technology and develop business insight outside of the traditional statistical tasks. They must be able to contemplate the bigger business picture where their coexistence with accounting software can take them places, rather than limiting themselves to just one sector of an organization i.e. finance, which will majorly be digitized.

As far as communication skills are concerned, even the best accounting software won’t be able to replace the subtleties and importance of interpersonal relations. In this reference, accountants should begin to spend more time with either clients or the said organizations concentrating on their various business strategies. They must possess outstanding communication and interpersonal skills, inculcating a sense of trust and confidence in the businesses and sectors they deal with. This is a unique skill wherein the CPAs can play an irreplaceable role.

Chief economist, Bank of England, Andy Haldane says, “The commotion caused by the Fourth Industrial Revolution would be on a much larger scale than that during the First Industrial Revolution in the Victorian period. The UK government bodies must conduct a skill training revolution to surpass the situation of people becoming technologically unemployed.” 

Haldane also threw light on the fact that training needs to be an indispensable part of the governmental framework as CPAs could pull new job opportunities. She also argued that new skills are required to contentedly work in conjunction with artificial intelligence and machine learning.

As much a fact this is that artificial intelligence will take over a lot of important human activities such as accounting software automation including Xero, Intuit and Sage, tax preparation, payroll, audits, bank reconciliations, invoice categorization, risk assessment, expense submissions, and invoice payments, etc., it is even a bigger fact that for certain professionals, this occurring will offer a perfect opportunity to automate manual tasks, provide added value to clients, and set up practices or businesses for their future.

This is the hour of collective thinking and people must understand that automation will bring along a lot of ease in the lives of both the employees and the employers. The accountancy industry is one segment to take advantage of the rise of automation. The sector has already incorporated automation, with intelligent cloud accounting software replacing the outdated compliance aspect of the accountant role. Whatever the intensity of individual enthusiasm or averseness to the rise of machine learning and artificial intelligence, everything indicates that accountancy will continue to make its path in the revolutionary growth.

Many still argue whether artificial intelligence and deployment of automated cloud accounting software indicate the beginning of the demise of CPAs’ profession. However, reliable reports suggest that it’s not happening any time soon. Employers believe that they are very much in the initial days of adopting automation for commonplace activities of businesses and accountancy practices in the US.

It can be noted that though the pace of technical developments is alarming, human intelligence and interpersonal skills can never be replaced by merely a business accounting software. Not surprisingly, many organizations prefer the human element of communication and advice over machines because you sense a certain amount of assurance through one-to-one conversation. You try to fathom the nitty-gritty and complexities of businesses and brainstorm to come up with innovative and enterprising ideas. That is where machines can never take over humans.

Undoubtedly, efficaciousness and productivity are the two key aims in the accountancy profession where automated cloud accounting software must play a leading role. But to achieve the alliance between the two pillars -accountancy and technology- businesses, clients, accountancy bodies, software companies, and the government must join hands rather than faltering each other.

We can’t shy away from the fact that CPAs are speculating what’s in store for their future. This uncertain situation is quite taxing because it’s hard to separate facts about the impact of automation from (science) fiction. A major chunk of research indicates this combination of anxiety and confusion.

For example, a 2016 study by the Pew Research Center states that 65% of Americans imagine that within 50 years, robots will be performing the simplest and most complex of the tasks done by humans. However, 80% believe it will simply impact other people’s jobs and not their own.

“Many organizations have tried to measure the number or percentage of jobs that will be taken by tech. I have seen results ranging from 14% of jobs to 50%, and few can adequately predict what jobs might be created. There is no simple answer. Technology, and people, are unpredictable. However, history has shown us that while jobs do disappear with the advent of new technology, new jobs sprout up with them.” Jamjoum said.

There is no dearth of dialogues happening on both sides of the court. One such argument states that experts around the world have been busy trying to envisage which jobs will be hit the hardest.

Shelly Palmer, CEO of The Palmer Group, in a tabloid for CNBC stated, “Machine learning algorithms running on purpose-built computers pose a clear risk to several specific jobs and industries.” His hit list includes Middle management, Commodity salespeople (ad sales, office supplies, etc.), report writers, journalists, and announcers, accountants, bookkeepers, and doctors.

Certified public accountants, especially accounting clerks and bookkeepers, appeared in first place in a 2015 PwC study under the subject of automation poses threat to what all professions in the upcoming 20 years. The study states that cloud accounting software will be able to perform simple and routine tasks faster and more accurately without any human errors. The accountants aced the list with checkout operators and cashiers, office administration staff, followed by financial and insurance administration workers.

“What you have in our industry is a big spectrum that is dealing with transaction recording. There is no question that this will become more and more automated in a very short time,” quoted Dwayne Bragonier, CITP, a chartered professional accountant and founder of BAI Bragonier & Associates Inc.

He said that a big chunk of the manpower required to record a transaction or to accumulate transactions into an aggregate will, of course, be automated. But that’s only a small part of the picture and it ignores the many opportunities offered by technology.

“The work that will be automated is not a CPA’s responsibility. That work was simply something that needed to be done for CPAs to start their job. There’s no magic formula for that. There are a whole bunch of parameters that are, by their very nature, gray areas. They require a professional to figure them out because they can’t be coded” Bragonier said.

He further added that in a world of apparently infinite data, there are huge opportunities there, looking at the fact that automatic routine tasks could free up professionals to properly identify other grave issues of the organizations. They can spare time for in-depth research about future business prospects of their clients, future case studies to be worked upon and new situations that arise with new problems coming their way every day.

Bragonier also asked what is a CPA’s job. He said that their key task cores on providing and understanding dashboards or reports that deal with value. The real job is rising above the details and fathoming the meaning of information that the company holds. When a cell phone manufacturer releases a new smartphone, what does that mean for the value of remaining stocks of the previous version?

He also stated that “No matter what happens, it’s clear that senior accountants, finance staff, and CFOs will have their hands full keeping up with the changes. Staffing costs are likely to plummet as technology takes over, but technology costs themselves, and the cost of experts to manage that technology, will rise dramatically. The changes will cut across job descriptions and industries.”

But if you look at the wider picture, it’s not the end of the word for CPAs. In the United States, farming jobs comprised 40% of the workforce in 1900, but by 2000 that portion had dropped to 2%. Similarly, the manufacturing segment comprised 25% of jobs in 1950. But by 2010, the manufacturing industry came down to less than 10% of the total workforce, according to a McKinsey Global Institute’s report on automation and employment.

In general, the very nature of change in any industry ultimately balances the losses. Undoubtedly, there is a very important forewarning to consider- ‘The fresh opportunities that were created were not continually as necessary to some workers as the old ones were.’

“Our imaginations are simply not strong enough to know what types of jobs might be created in the future. But just think about autonomous cars, which are on the verge of becoming reality, and the industry that is already being created around them. That opens up a gamut of new jobs” said Tim Fung, CEO, and co-founder of Airtasker, an online platform for industries to outsource tasks.

One of the business moguls, Rick Richardson, CPA/CITP, CGMA, managing partner of Richardson Media & Technologies, said, “A lot of what shapes an accounting firm’s level of technological advancement is the current needs of their clients—or at least the needs their clients’ voice. If their clients are not talking about automation and the cloud accounting software, technology might not be the firm’s priority. This is dangerous.”

“Auditing will be done in about 50 to 100 firms,” Richardson predicted. Those firms are smartly building software and systems as we speak to start auditing in this new era.”

But he also emphasized the topic that how can the category in question prepares for the same in advance? “You need to understand this new world like you understand accounting. There are fundamental changes that people need to understand are happening, and they need to begin the process,” he said.

“There is a lot of training that most professionals are going to have to go through to get themselves to the level where they are comfortable to play in this space. Richardson also claims that CPAs must ask questions such as: “Who owns it? How do you get it? How good is it? Where is it kept? How secure is it? How do we analyze it? How can we take that analysis and turn it into intelligence that provides us with better business decisions?”

Another technical expert claimed, “In a future where we are increasingly surrounded by AI, we will crave human interaction even more,” Klassen Jamjoum points out. “And many jobs will be augmented by AI, meaning people can achieve things they never thought possible. Technology should empower, not take away.”

One of the biggest IT consulting organizations Accenture claimed that even with the dawn of Robo-advisers, 68% of affluent clients preferred having access to both a human adviser and a Robo-adviser instead of just one of those.

Conclusion

Humans must realize the importance of machine learning and use it to their advantage and seamlessly integrate it into their functioning. This smart approach will automatically rule out the possibility of accountancy and business accounting software coming at loggerheads with each other.