Home Accounting and Auditing How the Fourth Industrial Revolution is reshaping accounting

How the Fourth Industrial Revolution is reshaping accounting

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Some accountants believe their very existence is under threat from AI, machine learning and blockchain. It is a virtual certainty that the role of bookkeepers and accountants will change forever, probably within five years. Automation is coming, and this will drastically lower the value of routine functions, such as journal entries and preparation of accounts.

The SA Institute of Business Accountants (Saiba) commissioned Tangent Solutions to research how the Fourth Industrial Revolution (4IR) will impact the accounting profession. The report outlines a plausible guide for the future of finance executives operating in the 4IR.

The report – and its vitally important implications for accountants – will be discussed at the upcoming event jointly sponsored by Intuit QuickBooks and Saiba on 20 November. The theme of the event is Developing a Digital Plan for the SA Accountancy Industry. This is an event not to be missed as we launch into 2020.

Glen Ansell, head of intelligent automation at Tangent, points out the extent to which automation is already here and living with us. “We did a test run for an audit firm using a robot. The task was to conduct a materiality test (testing whether, for example, a sample of invoices were authentic). What it took at articled clerk a full day to complete, the robot did 560 times. That’s an example of what automation can achieve.”

AI and robotics go beyond journal entries and materiality testing. Even risk control can be subjected to robotic intervention. “We’re trying to help the accounting sector transform,” says Ansell. “What we’re talking about here is technology that is already in existence, not technology in some distant future. Those firms that are aware of this and embrace it are going to race ahead of their competitors.”

The accountant of the future will be forced to adopt a role she has avoided for far too long: that of trusted advisor and oracle of good financial sense. The origin of the word audit comes from the Latin “to listen” – that was the original role of accountants and auditors – they would listen to their lords and transcribe their instructions and keep records. The modern accountant must make sense of the voluminous datasets that describe the financial and operational behaviour of an organisation.

Bookkeeping skills alone won’t get you there. You’re going to have to develop additional skills – such as business rescue, immigration, independent reviews (and you can learn more about Saiba specialist licences here).

The digital revolution will come in waves, or phases, and some of the changes are already in evidence.

“Transactional and repetitive tasks are being automated, moving accountants away from clerical work and to interact more with stakeholders in order to influence how the organisation creates and preserves value,” says the Saiba-sponsored report by Tangent Solutions, entitled Accountancy – Digital Transformation Roadmap.

Finance professionals are operating as business partners, embedding themselves in different areas of the organisation, engaging with those outside of finance more frequently and seeking to influence decisions and actions more directly.

The proliferation of new and emerging technologies is disrupting traditional business models. Intelligent Automation solutions such as Robotic Process Automation (RPA), Artificial Intelligence (AI) and Machine Learning (ML) are automating routine processes and reporting, establishing a responsibility for real-time performance information.

So how do you prepare for this inevitable transition to a digital world? The roadmap is based on three focus areas in which the finance function needs to continually re-invent themselves: Optimisation, Diversification, and Transformation.

Source: Saiba/Tangent Solutions

Finance professionals will need to use their competencies to learn how to manage the finance function in a digital world. This will require a deeper understanding of the technologies, algorithms, data and organisational structures that are emerging in the digital age. Three key areas will keep professionals relevant in an ever-evolving technological world:

  1. Basic digital literacy in areas such as information treatment, digital communications, digital content creation, safety and problem solving
  2. Technology know-how will require a deeper level of expertise in areas like cloud computing, privacy and security, data analytics and new business models
  3. Mindset and behaviours will have to change to embrace a complex environment, with greater emphasis on creativity and imagination, in which lifelong learning will be essential.

So, what can finance leaders do to move along the transformation journey and close this gap between the “old world” and “new world” of finance?

Leverage technology solutions: Gain an understanding of how digital technologies are disrupting organisations’ business models and then investigate and implement solutions. If guidance is required, consult digital transformation specialists.

Develop the team’s ‘human’ skills: Leadership, empathy, creativity, decision-making and judgement are skills that machines are not able to replicate. Finance professionals need to develop and hone on these competencies and other ‘soft skills’ that are critical in the digital age.

Commit your team to continuous learning: This includes developing a digital intelligence to leverage new and emerging technologies.

Writing in Accounting Today, Jason Stein says the tax and accounting industry is no longer in the business of preparing more tax returns at a faster rate, since technology does this and it will continue to get better at it. “In fact, it’s likely that how tax and accounting professionals serve their clients isn’t really going to change. There will still be compliance work to do, but the paradigm flips in how we think about it. Once you adopt to that mindset, you can rebuild your business around it. At that point, you’re ready to build your skills differently.

“The skills you build should be focused on communication and client relationship management, sales, managing different kind of talent in your firm, and most importantly, translating real-time data into insights while tapping into your vast experience working across many different kinds of businesses. This affords you the opportunity and unique capability of advising clients on their current and future financial health and growth.”

Source: Saiba/Tangent Solutions