What’s ‘critical’ for CPAs to learn in an AI-powered world
The experts in our annual technology roundtable assert that to benefit from the potential of new technologies, the accounting profession needs to develop new skills and new ways of thinking.
By Jeff Drew
Artificial intelligence or blockchain?
Which of those two technologies will have the biggest impact on the accounting profession? To the participants in the JofA's 2019 accounting technology roundtable, the answer is clear.
Artificial intelligence — and the technologies in and around the AI space — was one of the two key issues at the heart of our eighth annual gathering of accounting technology experts. Also taking center stage during the discussion: education — specifically, the types of skills accountants must learn to flourish in a world where AI-powered algorithms automate traditional, time-consuming tasks and data-powered analytics reveal new insights to those who can interpret the numbers.
Short profiles of the panelists — David Cieslak, Liz Mason, and Amy Vetter — are below.
The JofA is publishing an edited transcript of the roundtable conversation in two parts. Part 1 focuses on how far the accounting profession has come with technology adoption, how far it needs to go, and some of the skills needed to get there. Part 2, which will be published in the July JofA, looks at technology's effect on work relationships, technology skills young accountants should know when entering the workforce, and the importance of being patient with AI.
To accompany this year's roundtable, the JofA is also debuting an occasional series called Future Tech Today. Much has been said and written over the past few years about the impact technologies such as AI and blockchain will have on the accounting profession. The Future Tech Today series will provide firsthand accounts of accounting firms, finance departments, and others putting "future tech" to work today. This month features an accounting firm that has implemented AI in its audit function (see "How We Successfully Implemented AI in Audit," page 26) and a whale shark-sized not-for-profit that's using AI and predictive analytics to improve the guest experience (see "Data and the Deep Blue Sea," page 30).
Which of the following technologies will produce the biggest changes in the accounting profession — AI, blockchain, or something else entirely?
Cieslak: That's an easy one. Artificial intelligence.
Mason: I agree artificial intelligence will change the face of the profession, but I also think we need to be looking at augmented analytics and advanced analytics.
Vetter: I agree with Dave. Artificial intelligence.
Amy, what are the biggest changes you foresee for the accounting profession in the next five to 10 years?
Vetter: There's a lot of talk about accounting firms hiring non-CPAs. An interesting part of that shift is that firms will need privacy and cybersecurity experts and computer systems experts as automation takes on a bigger portion of audit work. When data starts feeding in automatically into systems that evaluate every transaction and flag ones that auditors should check more closely, accounting firms will need people who can test the systems. They will need to make sure that the data is feeding in properly and securely so that clients are comfortable about us having the data and keeping it safe.
The biggest change for CPAs will be the need to embrace continuous learning. So whether it's blockchain, robotics, or whatever it is, start picking out what are the things that really interest you and start building a learning plan beyond the typical CPE. What are some new skill sets that you want to take on to make sure you've got a road map to your future position?
Liz, what technology are you most excited about and why?
Mason: I'm going to break it down into three different pieces. First, I'm really excited about this concept of automated data entry and code-free accounting. We've seen technology evolve over the past couple of years to increase the base-level efficiency of my team alone by 40%, and I'm excited to see what happens next. I believe the machine-learning algorithms are only getting started on how they will make our lives so much more efficient from the client advisory and client accounting services perspective.
Second, looking into advancements occurring outside of accounting but in related industries, I'm extremely excited about natural-language processing — the concept being that you can read contracts via a robotic automated tool and pull out the information that's important. For example, in insurance right now there's a company called RiskGenius that has been building this tool to analyze insurance contracts and pull out all of the important information (e.g., deductibles, coverages).
If you take that ability and you apply it to accounting, could you imagine the implications of recording GAAP transactions? Think about how many hours people spend on M&A transactions just to get the journal entries right. If we could have a tool that did that for us, it could be amazing in terms of any kind of financial contract.
Third, I am tremendously excited about advanced analytics and what's happening in data science. The ability to take data — not only from historical sources, but current sources that are not only quantitative but qualitative — and to analyze them in real time, plus adding the ability to do predictive analytics on top of it, gives me this nerd excitement that I can't even describe in words. What it means is that as we move forward, we'll have CFOs with these augmented analytic models in front of them, showing them exactly what's going to happen with predictive indexes so they can make decisions based on math and data. It's amazing.
Dave, you are the only member of this panel who has participated in a prior roundtable. As you look at the changes that have taken place with accounting technology since the first roundtable way back in late 2011, what stands out to you?
Cieslak: Thinking about the changes that have transpired in the last eight years, I'm struck by the fact that we're really at a place where firms and practitioners are appreciating the impact of technology. It's probably because they've seen the impact it's had in their personal lives. We're all connected to our smart devices day in and day out. Many, many people have brought Amazon Alexa or Google Home into their households. They see the impact technology has for them personally, and they naturally then ask if they're doing all they can to leverage technology in the workplace. Also, Millennials are assuming leadership roles in firms and that can't help but to help push a digital mindset to the organization.
Where does the accounting profession stand when it comes to technology — ahead of the game, on the right track, or not where we need to be?
Cieslak: On balance, I think we're on the right track, but I think firms that are largely rooted in traditional or legacy services are trailing and may still find themselves largely in a kind of a survival mode, diminishing the remaining value within their organization. We find that other firms are understanding the opportunity that technology presents and crafting their service offerings accordingly.
Mason: I think we're way behind. There are new technologies out there that people aren't even talking about. The large firms have great big budgets and are making these newer technologies a priority. They are working very hard to implement them across the board. Some young firms are pushing the industry forward, or I should say pulling it if you're looking at a tech adoption curve, but I believe the majority of firms are behind. Even firms that think that they've adopted cloud-based technology in my opinion have not fully integrated cloud-based technology.
Vetter: I think it's a mix. I consider the technology companies part of the accounting profession, too. I would say the technology companies are on the right track. I would say the segment that may be even further behind than accounting firms is the corporate side of accounting. I have found that a lot of these corporate accounting departments are stuck in very antiquated technology because budgets can't get approved for them to actually upgrade or get to the cloud.
Mason: I completely agree with you that corporate accounting departments are probably the furthest behind. Companies are not making accounting a priority because it's "overhead."
Liz, what needs to be happening within the accounting profession to get to a position where you would say they're not behind?
Mason: If you're looking at the firm level, I think every single team member — every partner, every director, every manager, every senior, every staff — needs to be thinking about what technology could do to help them. We need to train people to have critical-thinking skills instead of "we want you to be a robot and produce the same results as the prior year." It's a culture shift that needs to happen.
I've done a lot of consulting with large companies on how to make their departments more efficient, and one of the biggest issues is redefining roles. They put these people in buckets, and buckets are no longer working from that perspective. To have streamlined technology and efficient processes, you need more dynamic roles and the ability to leverage (and) outsource when you don't have the expertise internally. Analyze your processes, map them, make sure you understand what your team is doing internally or externally. Understand how to fix your processes first and then review technology solutions to help with the issues and hire experts when needed. Then, of course, there's always training and ongoing analysis. The rate of change is only increasing. If you implemented a new technology three years ago and that company has not released any updates or put any funding into R&D, the technology is already out of date.
What skills should CPAs be developing now to stay competitive in the new tech future?
Cieslak: It can seem overwhelming and daunting, but it's a mindset on the part of the individual. It's revisiting roles and responsibilities. The ideal individual has a combination of technical and digital skills, business skills, people skills, and leadership skills. Behind or underneath all of that is a mindset of constant learning.
Vetter: I think the problem is that there can seem like this huge hurdle we have to get over — new skills we have to learn, new technology we have to learn, new services we need to offer — and then all of that seems overwhelming.
When you're doing an implementation plan, you should not just be thinking about the business process or new services. You have to spend equal time on the people side of the implementation, understanding how they're feeling about it. Now sometimes there can be some negativity, but if you really dive deep into what the negativity is, you can understand what's holding people back and make small adjustments that can get most people on board. Do it intentionally, do it with a plan, and stay really grounded in what you need to accomplish each day without getting overwhelmed by the process.
Mason: To quote Walt Disney, keep moving forward. All of those small incremental changes add up over time, and that's what a great change management plan does.