Technology – from AI to Blockchain – will have huge implications for how accountants work. According to research last year by Moore Global and the Centre for Economics and Business Research in the UK, accountancy firms have spent nearly four-times as much implementing Artificial Intelligence (AI) systems as law firms and other professional services organisations.
However, argues influential podcaster and accountant, Blake Oliver, a wholesale change in how accountants are trained is needed so that employees get the most from new tools. And a total overhaul of how accountancy firms work, including attitudes to employee wellbeing, is also long overdue.
Key takeaways
- Blake’s surveys have revealed that only 20% of accountants have even tried AI. In order for firms to benefit from AI, there needs to be a change in how accountants are trained.
- The traditional two-tier system in accountancy firms of partners and staff is preventing firms from even considering some ESG targets, which other sectors have embraced.
- Blockchain is not the golden bullet for audit issues.
- Data analysis could become part of every accountant’s role, but education needs to adapt to accommodate this.
- AI could help accountants keep up with regulatory changes. They just need to learn how to use it.
Bio Blake Oliver
Blake Oliver, CPA, is the founder and CEO of Earmark, an app that offers NASBA-approved CPE for listening to your favorite accounting and tax podcasts. He co-hosts The Accounting Podcast, a Top 25 Business News show on the Apple charts and the most popular podcast for accountants and bookkeepers in the world.
He has been named one of Accounting Today’s top 100 most influential people and recognized as one of CPA Practice Advisor’s “40 Under 40” in the accounting profession. Blake lives in Scottsdale, Arizona, where he enjoys swimming, hiking, and playing his cello.
Only 20% of Accountants Have Even Tried AI
Q: Do you think accountancy firms (and employees) are ready for the wider use of AI?
A: No. To get good outputs with AI, you must know how to ask good questions, and I don’t think accountants have been trained to ask good questions. I say that as a CPA myself. I went to school to learn accounting, but I did that after I did a liberal arts degree and a music degree. In my liberal arts training, I learned how to ask good questions. In my accounting courses, I mostly learned how to memorize and follow the rules.
I’ve been using AI extensively every single day for a year now. My informal surveys indicate that only 20% of accountants have even tried AI. I have found that I can make good use of it because I know what prompts to give. Most accountancy firms wouldn’t know how to approach this.
A lot of training needs to happen before they understand how to use AI to its full extent. The whole traditional curriculum needs to change. The CPA Exam, for example, is very much a knowledge test, not a critical reasoning test.
I hope accounting education will become more focused on helping accountants ask questions like: “Why do we have this particular accounting standard?” not just “How do we apply it?” My company creates professional education courses for accountants, and through this, I hope to teach accountants how to do this.
However, it’s hard to find time to develop your skills when you’re maxed out. As a profession we need to learn how to step back before we can take a step forward.
Q: As ESG ambitions continue to grow, what changes will we see in the accountancy world in regards to ethics and sustainable practices?
A: The irony of all this ESG talk in accounting is that our own firms are not very sustainable. They don’t support a good work-life balance, and they don’t pay their employees enough. They’re not great places to work in a lot of cases.
I’m not saying that’s true about all accounting firms, but the big ones have a reputation for being factories that churn and burn their staff.
This is why we have a huge talent retention problem in accounting. It’s ironic that ESG is being praised as the next big thing in accounting when we aren’t even focusing on our environmental impact.
For example, the same firms that stand to profit from ESG reporting are calling their staff back to the office. But the best thing these firms could do for the environment would be to let their people work from home and save the emissions caused by long commutes.
In terms of governance, we have a two-tier system in accounting firms where we have partners and staff. The partners make all the money, and the staff make very little money, relatively speaking. You have partners pulling in half a million dollars or more at big firms, and you have staff getting paid starting salaries of $60 or $70,000; then the C-suite wonders why they don’t want to work. And if you stick around, it takes 15 years to make partner.
It’s a system that was invented a hundred years ago, and it hasn’t really changed. It limits the ability of firms to adapt because you have to get consensus on everything from all your partners. We’re seeing the emergence of new corporate models for running firms. It’s challenging, though, because of the regulatory regime.
Blockchain Not the Answer
Q: Do you think that Blockchain technology will play a key role in the next two years?
A: I’m a cryptocurrency sceptic, and since that’s the biggest thing to come out of blockchain, I suppose you could call me a Blockchain sceptic, too. People talk about triple-entry accounting and how the Blockchain could create trust without the need for auditing. However, somebody still must understand how the Blockchain works, so if you’re not auditing the numbers, you’re auditing the system. There is always going to be a need for auditors.
I don’t think Blockchain is going to solve the problem with audit. The problem is not technology. It’s the business models – the people, the incentives, and the regulatory regime. It has everything to do with the people.
Q: Will data analytics continue to be a growing part of the accountant’s role and how do firms need to adapt to accommodate this?
A: I recently met an accountant who has pivoted from accounting to data science, and he is loving it. There’s a lot of value in data – both financially and operationally. Companies that can connect their financial data to their operational and HR data have many advantages over businesses that don’t.
Data analysis will become even more important, but the question is whether that will be something that accountants own. Many more accountants will probably opt out of accounting and into data analytics. If we want them to stay in the world of accounting, we have to update the curriculum to reflect this; otherwise, people will just major in something else.
Q: Regulatory changes and cybersecurity threats are a constant for accountancy firms. What innovations do you predict could help firms with both?
A: Plenty of innovations could have an impact, but it’s a question as to whether they will be embraced by accountants. For example, keeping up with regulatory change today means reading and analysing a lot of court cases and legislation.
AI is very good at this. I can upload a PDF and translate legalese into plain English in seconds. That means that even if I don’t have a lot of time, I can keep up.
Usability is Key When Choosing Accounting Software
Q: Do SME owners need an accountancy package?
A: Not necessarily. It depends on where you are in the world and your requirements. Most small businesses in the United States file very simple tax returns. You can do that in a spreadsheet. It depends on the company’s needs.
For example, many people sign up for QuickBooks because they need to send an invoice and get paid. If you need to do that, a system like QuickBooks makes a lot of sense. If you don’t, you may be able to get away with something simpler. For some companies, there are compliance issues to contend with that require a specific set of features, so it will depend on where you are.
Q: What should they be looking for when they decide they do need one?
A: First is consideration when choosing accounting software is its usability because it’s not worth it if people don’t use the software. Price is also important. Unfortunately, many small business owners are a little stingy about this kind of software because it doesn’t generate revenue. However, you have got to think about the value of your time. If you buy this accounting software and it saves you hours of time every month, you can figure out the ROI pretty easily.
Q: How much tailoring is possible with the packages on the market? Are off-the-peg options worth looking at?
A: For most small and medium-sized businesses, it’s better if you don’t buy customized software. You want to buy off-the-shelf and then configure it for your needs. The problem with buying customized software is that the upgrade path becomes very expensive and difficult. If you use off-the-shelf software, you get all the upgrades. That’s the beauty of SaaS.
Q: Once a package is in place, how often do business owners need to revisit whether it is the best option for them?
A: They only need to revisit if they’re growing fast. So, if you’re a start-up and growing incredibly fast, then yes, you might be on QuickBooks for a few years and then need to upgrade. Most businesses are not like that.
Consult with an accountant or whoever is doing your tax return or books to ensure your software meets your needs and their needs. You can then map out the next five years. Remember that packages like QuickBooks can be extended for a long time with add-ons. That’s the beauty of the cloud accounting ecosystems developed over the last 10-20 years.