By Chua Kim Chiu
A few years ago, a website was launched that claimed to rank various professions according to their likelihood of automation. For accountants and auditors, the website spelt out its blunt verdict in a stark, bold font, “You are doomed.”
But is this really the case?
As a former partner with a Big Four firm and now a professor of accounting, I obviously have a significant stake in the trade. But to adapt a line from American author Mark Twain, reports of the death of accountants have been greatly exaggerated.
Let’s consider the facts. The Singapore Accountancy Commission’s Accounting Entity Survey 2019 (AE Census 2019) found that the nation’s accounting industry actually registered strong revenue growth in 2018. The revenue reached $2.53 billion, an 8% growth compared to 2017, with a 7% expansion in the workforce in 2018. The sector is doing well in relation to the whole Singapore economy, which grew by 3.2% in 2018.
There is no doubt that automation is here to stay. A recent report from PayPal showed that 89% of respondents believe that automation is good for the Singapore economy. It is clear that automation will change the way we work. In the same report, 77% of respondents said that new technology would greatly impact their jobs.
Accountants can ride the wave of automation. As technology takes over more rules-based and repetitive recordkeeping tasks, accountants and auditors have moved up the value chain to undertake more complex, challenging and enriching work. Today’s accountant may be an external auditor evaluating the client’s complex merger and acquisition transaction, an internal auditor assessing the organisation’s cyber defence strategy, a Chief Financial Officer exploring various fundraising options or an analyst valuing an Initial Public Offering-aspirant’s shares.
And help is given. In 2018, Singapore announced the Accountancy Roadmap that focused on developing skills, boosting productivity, fostering innovation and promoting internationalisation. The Roadmap included $2.4 million in funding support for smaller accounting firms’ digitalisation. A year later, the Accountancy Industry Digital Plan was set in place to support the Roadmap. Small and medium-sized accounting firms can go to new innovation centres to seek digital solutions or prototype ideas.
The application of data analytics (DA), robotic process automation (RPA) and artificial intelligence (AI) is still at a nascent stage in the accounting industry, when compared to other fields such as retail, banking, insurance and medical services. However, most large auditing firms are currently in a game-changing phase as they embark on pilot projects to automate the auditing process.
For instance, PwC has initiated the re-engineering and automation of the audit of journal entries with a software tool called Halo. Halo utilises data auditing technology capable of analysing huge volumes of accounting or other business-critical data, thereby improving the overall efficiency of the testing process. The firm has also invested heavily in a firm-wide programme to make all staff more digital-savvy.
There is potential in automation. In Deloitte’s 5th Annual Global Robotics Survey 2019, over 500 executives in 26 countries across the globe were asked about their intelligent automation strategies and the impact on their workforce. The respondents said they expected automation to increase their workforce capacity by 27% over the next three years, with a significant rise in productivity and enrichment in human experience as the employees’ work becomes more meaningful.
Accountants and auditors play a key role in producing high-quality and reliable financial information. This function has existed since the 1800s and is expected to continue, as long as there is a separation of company ownership and management. This function also exists because investors need financial reporting for accountability, corporate governance and decision-making. Automation has certainly taken over many of the more monotonous process elements of traditional accounting and auditing.
But in today’s complex and dynamic global business climate, accountants and auditors are performing much more than a technical role. Delivering insightful judgements, spotting meaningful patterns from big data, balancing stakeholders’ interests and having the mental flexibility to understand the many humanistic nuances are among the critical competitive skills needed to add value for employers or clients. In one firm, a valuation team has devised a comprehensive spreadsheet to automate the valuation of acquisition targets. With a few key strokes, the valuations pop out of the computer but the results are often far out of the reasonable range expected by the valuers. This is because while the automated model incorporates some clear-cut factors, it lacks the human ability to consider other nuanced factors too complex for modelling. The machine’s output, based on a narrow set of inputs, is just the first cut. From this, humans must continue to use their broader business sense and professional experience to polish it to a final product. Ultimately, it is the business leaders, not the machine, who make a final call based on their vision, judgement and business acumen.
The human element will continue to be essential, especially when it comes to building trust with clients, understanding their business and helping them address the challenges they face. Those of us who have interacted with the chatbots of service providers understand how impersonal and rigid the chatbot can be in answering our questions, let alone understand our real concerns and build rapport with us.
The real high-value intelligence comes from skilled humans who are able to apply this powerful technology to produce innovative applications and deliver critical insights – actionable intelligence that offers tangible business solutions and opens up opportunities.
For example, OCBC’s internal audit team has begun to use DA and AI technology to help identify risk and improve audit efficiency. Starting with audit planning, they use the new tools to perform continuous monitoring of branch activities. This has proven more effective in spotting high and emerging risk areas for allocating audit hours. In audit execution, they leverage on the DA and AI technology to detect anomalies, spot trends and gain greater insights. The overall result is a higher degree of assurance compared to what was achievable without the aid of new technology. This also frees up the staff to spend more time on emerging issues in areas such as digitalisation and cyber security. This is a good example of how technology will be complementing and augmenting auditors’ capabilities instead of replacing them.
Advances in technology do not spell the death of accounting and auditing. Few would yearn to go back to the days of menial number-crunching and form-filling. We must also recognise that technological change is an inevitability and something to be embraced as part of a process of continual learning.
For students considering studying for an accounting qualification, it is important to be aware that no job today is a job for life. The skills you learn at one stage are the stepping stones to another stage of learning, where you must acquire new skills and unlearn outdated ones.
Upskilling, after all, is not just about learning to cope with new technology. We must also keep pace with emerging business trends, enhance our business acumen, and improve our social and emotional skills such as creativity, versatility and agility that make the core attributes of a future-ready professional accountant.
Chua Kim Chiu is Professor (Practice) of Accounting, NUS Business School, National University of Singapore.
This article was first published in ISCA Journal. You can read the original version here.