by Mark A O’hanrahan July 26, 2021

The accountancy profession is frequently named as one of the industries at most risk of displacement from AI technologies. As a Chartered Accountant with just under 20 years’ experience, I give 5 reasons why I think the role of the accountant can’t be automated away.

Introduction

There’s no doubt that since the time I began my career in 2004, the finance and accounting industry has changed somewhat.

A lot of that change has come from the emergence of new technologies, such as cloud accounting software and the development and use in the larger corporates of AI technologies and on-demand MI analytics tools.

The question remains then – what is the future going to look like for accountants? More specifically – is the profession set to become a thing of the past?

In short response – my answer is that this is highly unlikely, for a whole number of reasons.

Let’s make no bones about it, being a Chartered Accountant myself, I do have some personal interest in this debate, however, even after taking a purely rational view of this issue, I still conclude that complete displacement of the profession (for the foreseeable future at least) is highly unlikely. Instead, a changed and newly positioned role seems the most plausible.

In this article I will lay out the main considerations that have led me to this conclusion.

1. You can’t automate responsibility

This is probably one of the strongest arguments in favour of a continued role for accountants.

The point here is that while a machine can push out a number, people still place reliance and responsibility on other people to obtain reassurance that what is being presented to them is correct.

This is particularly true in practice where clients seek the advice of a trusted advisor and look for a seal of approval (particularly around tax and forecasting issues).

Even within larger corporates, I have seen instances of, for example, projects to validate a number that has been automated and posted by the system, which does not appear to be correct.

That’s not to say that the ability to interrogate such numbers going forward won’t improve at some point, but I still maintain that somebody, somewhere, will have to take responsibility for checking and reconciling what’s being posted and passed up the chain.

2. Implementation and use of the software available

For larger more complex software, this becomes pretty specialist with a whole industry centred around delivering this.

Accountants often work hand in hand with IT specialists and project managers to help with the roll out of such programmes.

In the SME space, accountants are increasingly being expected by clients to help them implement and use going forward, accounting software that can help them not only with their finance and accounting needs, but also with other operational issues (such as stock management, timesheets etc).

There is so much on offer now both in terms of the number of different software packages and potential add ons (to help with things like inventory management as suggested above) that clients quite frequently feel lost and don’t quite know where or how to make a start. Moreover, they’re too busy servicing their own clients and customers.

I therefore envisage a growing role in the future for accountants whereby the gap between the end user and the software itself is bridged, with a view to enabling and implementing the most efficient use of the system at hand.

It is my expectation that at some point in the future, we will see the emergence of an increased number of combined degrees at universities offering “IT and Accountancy” related subjects, as well as more IT focused modules on some of the professional qualifications.

3. Report readers want interaction

I think there are many people out there, whether it be in big business or SME owners, that can be given a report from the system and still have a whole host of legitimate questions in respect of what’s being presented to them.

For example, questions around estimations in the accounts for work in progress, accruals, and depreciation policy.

For most decent sized businesses, there are frequently events that are outside the normal business course and which decision makers want extra comfort on.

For example, only recently, I had a client who disposed of a large element of their fixed asset base in a single sale. As such, they were extra concerned around the profit on disposal figure presented to them in the accounts (which we had to break down and explain, asset by asset).

A system could potentially automate and generate such answers (eventually) however, I think the system would become so complex to use that one would still need an accountant sat between them and the system.

The bottom line is, a set of numbers can be presented on a page to an end user, but the skill of a good accountant is to bring those numbers to life demonstrating what they mean from a commercial standpoint.

4. Changing standards

Whether it’s tax or accounting standards, they’re always changing, and that takes the time and attention of accountants to make the appropriate amendments.

In this ever-shifting environment, even if a software itself could automate some of this away, I still believe that the solution would become so complex that there would inevitably need to be an accountant involved to understand and facilitate the use of the functionality.

5. Underestimation of doing the basics well

With this one I am largely thinking of bookkeeping. I think the role of the bookkeeper is probably the most mentioned function as being within the ‘at risk’ category moving forwards.

However, I think to some degree (in the current environment at least) this is overstated.

More specifically, solid bookkeeping forms the basis of everything else – without this, no senior finance person can take what’s in the system and use that to produce value insights through reporting, cash flow models etc.

I therefore see the role of the bookkeeper as being extremely important in terms of ensuring data integrity both now and moving forwards.

Coming back again to point 1 above – “you can’t automate responsibility” – senior finance people will still need staff to take accountability for providing that hand over point.

More still, for every 10 clients I see with Xero, I would say 9 of them are using the bank feeds and rules feature incorrectly i.e. they are not getting the real value from the system. To this end, I see the bookkeeping position as pivotal in helping maximise the value of the software that’s on offer.

Bank feeds themselves sometimes fail and some of the purchase invoice software (to automate the coding of invoices) is often referred to as “unreliable by clients”.

While this will likely improve in the future, there will still need to be staff who understand this part of the process and facilitate a handover point up the chain.

Then there’s the element that non-one outside of the profession seems to raise, and that’s the role of chasing inputs and queries to address new information from end users/clients.

Bookkeepers are invaluable here in terms of making sure that the right data feeds are in place.

Conclusion

My overall conclusion for the changing role of the accountant is likely to be a greater shift towards a combined accounting and IT skillset.

Strong interpersonal and communication skills will become even more important as clients and other end users increasingly look towards their accountant for communication and comfort around what the numbers themselves mean, both now and potentially in the future.

A common theme I have noticed is that the two main contributors to the argument seem to be either from the software industry or the accounting industry itself.

I think the issue with the views coming from the software industry in particular is that they are often theory based on how things would operate in an “ideal world” where the inputs and outputs are constant. That’s not a criticism, but I do think it overlooks many of the dynamics that we as accountants face (which one wouldn’t necessarily fully understand without working in a finance function).

Most accountants I have spoken to seem pretty open to the changes, if slightly confused as to which elements really could be automated fully (as there is still with many of the current technologies offered, a significant amount of manual intervention required).

It would be great to hear more from individuals with a combined IT and accounting skillset to provide more balance to the debate.

Mark O’Hanrahan is a Chartered Accountant based in the UK with just under 20 years experience in finance and accounting across industry and practice.

https://northhillfinance.com/

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