What CPAs need to do to survive the automation revolutionPosted on: November 12, 2018, by : promotiondept
What CPAs need to do to survive the automation revolution
As automation becomes a bigger and bigger buzzword across business sectors, many workers—especially CPAs—are wondering what’s in store for their jobs. The uncertain situation is additionally stressful because it’s hard to separate facts about the future of automation’s impact from (science) fiction.
“Of course many attempt to predict the impact on jobs. You can come up with frameworks using dimensions of cognitive and physical complexity of jobs, productivity increases offered by robotics and artificial intelligence [AI], and technology adoption rates—but these are estimates and predictions at best” for jobs that might be replaced by automation, said Alanna Klassen Jamjoum, director of digital transformation at global management consulting firm A.T. Kearney.
A lot of research reflects this combination of anxiety and confusion. Just one example: A 2016 study by the Pew Research Center said that 65% of Americans expect that within 50 years robots will be doing much of the work now done by humans—but 80% believe it will happen to other people’s jobs, 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,” Jamjoum said. “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.
CPAs at risk
Even so, experts around the world have been busy trying to predict which jobs will be hit the hardest. Shelly Palmer, CEO of The Palmer Group, in an editorial for CNBC said machine learning algorithms running on purpose-built computers pose a clear risk to several specific jobs and industries. His top five hit list is:
Accountants—specifically accounting clerks and bookkeepers—appeared at No. 1 in a 2015 PwC study of which jobs are most at risk from automation in the next 20 years. The rationale: Computer learning systems or robotics will be able to perform simple and routine tasks faster and more accurately. Accountants were just ahead of checkout operators and cashiers, office administration staff, and financial and insurance administration workers on that list.
“What you have in our industry is a big spectrum that is really dealing with transaction recording. There is no question that that will become more and more automated in a very short period of time,” said Dwayne Bragonier, CITP, a chartered professional accountant and founder of BAI Bragonier & Associates Inc. “A big chunk of the manpower required to record a transaction or to accumulate transactions into an aggregate will, of course, be automated.”
Know your role
But that’s only a small part of the picture, Bragonier said, 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.”
What is a CPA’s job? Bragonier said the key tasks center on providing and interpreting “dashboards” or reports that deal with value. The real job is rising above the details and seeing meaning in information the company holds. When a cellphone manufacturer releases a new smartphone, what does that mean for the value of remaining stocks of the previous version, for instance?
“There’s no magic formula for that,” Bragonier said. “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.”
In a world of seemingly infinite data, Bragonier said, new concepts of value will need to be defined by accountants. “There are huge opportunities there,” he said, noting that automating routine tasks could free up professionals to properly identify issues.
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 it’s not all doom and gloom. In the United States, farming jobs made up 40% of the workforce in 1900, but by 2000 that share had dropped to 2%. Similarly, 25% of jobs in 1950 were in the manufacturing sector, but by 2010 manufacturing was less than 10% of the workforce, according to a McKinsey Global Institute report on automation and employment. In both cases, new jobs, sometimes in new industries, eventually offset the losses. Of course, there is an important caveat to consider: The new jobs that were created were not always as desirable 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, said Tim Fung, CEO and co-founder of Airtasker, an online marketplace for people and businesses to outsource tasks. “But just think about autonomous cars, which are on the verge of becoming reality, and the industry that is already being created around them,” he said. “That opens up a gamut of new jobs.”
The accounting profession is no different. Already businesses in accounting are shifting their focus from pure accounting work to business consulting capabilities. Software that automates processes already has taken over many back-office functions in finance, but accountants shifting to business consulting are learning that there is great demand for accountants who can add value to a client business.
The dangers of waiting too long
Technology futurist 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, technology might not be a firm’s priority. This is dangerous, Richardson said, because as we head over the technological tipping point, certain firms are going to be far better prepared.
“Auditing is going to end up being done by 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.”
How can individuals and firms prepare? When Richardson speaks at conferences, he provides a massive list of books to read and courses and webinars to attend to help people stay informed on current issues like data, the internet of things, and blockchain.
“You need to understand this new world like you understand accounting,” he said. That new world is data quality, data analytics, business intelligence, data modeling, and data governance.
According to Richardson, CPAs will be responsible for asking questions such as these: 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?
“There are very 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 really are comfortable to play in this space.”
And don’t forget that with every wave of innovation and technology, a “cottage industry of jobs” will be created, Klassen Jamjoum said. Classic examples abound: The rise of automobiles may have put stables out of business, but it created a need for auto repair shops, gas stations, and the like.
And while technology has an advantage over humans in many ways, there are other elements of financial services that it can’t replace. For example: A 2017 study from consulting firm Accenture found that even with the advent of robo-advisers, 68% of wealthy clients preferred having access to both a human adviser and a robo-adviser instead of just one of those.
“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.”
Chris Sheedy is a freelance writer based in Canberra, Australia. To comment on this article, contact Chris Baysden, senior manager of newsletters at the AICPA.
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