How Technology is Changing the World of Accounting Firms
In October of last year, Sears filed for chapter 11 bankruptcy protection. From the perspective of many, it didn’t have to be this way. The 125-year-old retailer was once the leading innovator in its industry. With its catalog operations, Sears made everything from toys to kit houses available to a mostly rural America. The company started Allstate Insurance, introduced its own credit card, built its own parking lots—a first among major chains—and led the way to Sunday store hours. It even, in partnership with IBM, offered one of the very first internet services.
But then the innovation stopped. And when it did, Sears found it increasingly difficult to compete. Now, it appears the story of an American retail icon has come to an end.
A changing of the guard
The rise of big-box and internet retail, as personified by Walmart and Amazon, may have sealed Sears’ fate. But their secret weapon wasn’t price or location or format. It was technology. And now, disruptive technology is making its way to the CPA firm.
In the not-so-distant future, technology will take over many of the controls-oriented processes that auditors traditionally carry out. Digital identity applications will provide instant validation of legal entities and individuals. Smart contracts will capture obligations among the parties to an agreement and execute the appropriate actions. Blockchain, the distributed ledger technology, will safely transfer assets from one party to another without need of a trusted intermediary.
Meanwhile, inside accounting firms, an army of “bots”—the software robots that power robotic process automation (RPA)—will carry out data entry, message scanning and other routine system interactions that people ordinarily perform today. Cognitive computing will take RPA one step further, extracting insights from vast banks of data without the need for human judgment or data cleanup.
Refitting for the future
In response to these changes, CPA firms will turn to a new talent strategy. Client service leaders will expand their recruiting beyond accounting to include those with backgrounds in finance, analytics and other quantitative areas. They’ll also look for people schooled in programming, engineering, communication and other non-traditional skills.
In the CPA firm of the future, careers will be built on the ability to bring multiple talents to bear in helping clients solve specific business problems. This will require technical and analytical know-how along with industry experience, a bent for creativity and an interest in solving problems.
Does all this spell doom for the auditing profession? No. Humans will still need to maintain the integrity and proper functioning of the advanced platforms and applications put into service. But the auditors of tomorrow will shift their focus to applying the results of an automated audit against solutions to the pressing issues their clients face—including the effects of technology on their own businesses. In other words, humans will still put the “service” into “client service.”
Get ready for the new era
Straight talk is the enduring ethos of the professional services firm. It’s how we earn the trust of investors, regulators, employees—and, of course, the clients we serve.
The audit—as validated by a licensed accounting professional—remains the gold standard in assessing the health of a business. But the way audits are carried out is changing. It’s time to embrace our own straight talk and gear up for a future comprised of one-part accounting to many parts technology and advisory work. Out of this disruption, a new, stronger model will emerge to position professional services for the next hundred years.