Currently the world of work is in a constant state of change and the accounting profession is no different. Technology, globalisation and changes to where and when people work are transforming the industry and creating new opportunities. As the world of business evolves, so too does the work and expectations of accountants.
Accountants play a crucial role in helping businesses succeed and contribute to the world in a positive way. They work in many roles, providing advice both within organisations and externally. References to accounting services include both accounting practices and the finance functions within an organisation. The Department of Employment states there were 188,100 accountants in Australia in November 2015, with close to 50 per cent of them female and over 80 per cent working full time. The future growth prospects are high, with the forecast number of accountants expected to be 219,300 by 2020.
Statistics from the ABS show a decline in multi-factor productivity for the sector that includes many of Australia’s accountants. However, it is important not to focus on these measures of productivity of the sector alone. Accountants don’t just exist in isolation, they also serve the wider community. But to grow and meet the future needs of the community, the accounting profession can’t just strive to be more efficient and effective at the same things. Instead, it will need to be more innovative and transform itself so that it remains valued by business, government and the community.
Drivers and Barriers
Technology as a driver of productivity is nothing new and emerging technologies are currently transforming almost every industry, including the accounting sector. What will be new in the future is that technology-driven productivity improvements are expected to have a very high impact on the professional services sector over a very short period of time.
Technologies such as artificial intelligence and blockchain will drive significant changes to the way accountants work and the work they do. Artificial intelligence (or AI) can’t think creatively or intuitively and can’t apply the professional scepticism and judgement required from professional accountants. But use of AI will enable highly skilled employees to become more productive.
In the future, it is likely that AI will provide advice or recommendations to assist the human decision-maker, leading to better decisions as the recommendations will be based on the analysis of large amounts of data.
Blockchain has its origins in accounting as its key functions are record keeping and transaction settling. Business is currently exploring potential applications for blockchain and the successful ones will be those that effectively harness its key value drivers of veracity, transparency and disintermediation.
Application of these new technologies in combination will make them even more powerful. They will have a disruptive impact on the accounting sector, but one which could have significant gains from a productivity perspective.
Globalisation is transforming the business landscape and impacting the accounting profession. People, organisations and places around the world are more closely linked than ever before.
“Any work that can be done on a computer can now be done anywhere in the world.”
The rise of the "virtual global worker
" has been highlighted as having the potential to significantly disrupt the labour market. Accounting firms and finance functions now have access to a larger pool of global talent, including via offshoring. Government should ensure policy settings don’t create barriers to organisations operating in the most efficient manner, which might be through automation or offshoring.
And whilst technology and globalisation have the potential to drive future productivity improvements, disclosure overload and red-tape will act as a barrier. Professional accountants working in accounting firms and finance functions find themselves faced with a high volume of compliance related work. This in turn reduces the time they have available for value adding to their organisation or clients. It is critical to find the right balance between conformance and performance, retaining trust and integrity in financial information whilst increasing the productivity of the sector. Whilst the right balance will differ between organisations, embedding compliance controls into business processes will ensure compliance is aligned with business strategy rather than a primary driver of that strategy.
Government also has a role to play in simplifying and streamlining regulatory settings, and taking a holistic approach, to ensure that increasing regulatory complexity and burden does not drive accounting practices out of the market.
Government could also examine the extent to which the present regulatory settings unnecessarily encumber technology uptake. These could include for example prudential, corporate, taxation, financial advice and auditor regulations. They will need to be proactive in adjusting settings in response to new business models and to seize the opportunities presented by new technologies.
Regulators will also need to work collaboratively with organisations to ensure the adoption of new technologies creates opportunities for them to work more productively, whilst maintaining the necessary levels of supervision and oversight.
Evolving and complex business models, diverse stakeholders and new regulations are changing the expectations of accountants. As a result they will need new capabilities in addition to their existing ones, for example addressing the changing nature of risk including areas such as sustainability; climate change and cyber security. Professional accountants are now expected to look beyond the numbers, collaborate with other parts of the business and think and behave more strategically.
Implications for Accounting firms and finance functions
Culture, talent and technology will all be critical success factors for a productivity strategy. And there won’t only be incremental changes required. To really improve productivity, there will also need to be fundamental and transformational changes to the way accounting firms and finance functions operate. They will need to consider how new technologies can be applied to their business.
- Where can automation be implemented in the organisation?
- How can mobile technology be used to widen access to data and applications?
- Could blockchain be applied to the business? and
- How can big data be used to provide actionable insights that drive decisions and growth?
When it comes to the finance function, investing in new technology has historically been a tough sell unless the return on investment to the organisation is clearly understood. Central to this will be greater collaboration and mutual understanding between the finance and IT functions in an organisation. Studies
have shown that the CFO-CIO relationship is becoming closer and more collaborative. This will enable the organisation to ensure IT investment drives business value, provides a holistic view of the digital threats and opportunities and will help connect teams and break down siloes in the business.
As the work performed by accountants changes, so will the skills they need to do the work. Employers in the accounting sector are already seeking attributes
such as critical thinking and decision-making skills, strong communication skills and those who are focused on ethics. There will also be increased demand for skills such as data science and analysis as well as relationship building.
Education institutions will also need to respond to demands from employers as to the skills they require from graduates. An education framework needs to be adopted to produce graduates at all levels with the required skill sets to ensure maximum relevance and fit for current and future employment opportunities. New skills won’t just be important to those at graduate level either, there will be a much higher level of retraining, reskilling and continuous life-long learning for all employees in the future.
Accounting firms and finance functions will also need to adapt their own business model to meet the changing expectations and increase productivity. They will need a strategy which focuses on gaining efficiencies in compliance and administrative functions and explores how to create new value providing advice through data and insights. For accounting firms, there is also a flow through benefit to broader productivity as their advice improves the productivity of their clients. Given the contribution of SME’s to the Australian economy, the potential impact of this on productivity is huge.
Diverse and inclusive workplaces increase employee engagement and productivity
. Diversity is indicative of strong governance and values within organisations. Inclusive leadership is key to meeting the challenges and uncertainty of the future and the whole organisation has a role to play in being more inclusive. With the globalisation of markets, remote working and offshoring, specific skills, such as cultural intelligence and global market knowledge, will be critical to allow organisations to keep pace with these changes.
Technology is changing how we work and workplaces are becoming much more flexible. In the workplace of the future, employees aren’t restricted by location – they can work anywhere, anytime. Research
has shown that there are a number of benefits for individuals, teams and organisations when employees are enabled to work flexibly. These include increased output and teamwork and more effective and improved client and stakeholder service.
It is up to employers to challenge themselves to change how they operate in order to accommodate this flexibility. There can be outdated mindsets, where managers or clients still believe they should be able to contact their employee or accountant anytime Monday-Friday, 9-5 and are concerned if they can’t see or reach them in the office. Employers need to focus instead on output, and trust their employees to achieve it in the way that is most efficient for them. In accounting firms, part of this transformation is a growing shift from time based billing to fixed price, based on the value add to the client.
The accounting industry is being shaped by major global and local trends and these are already transforming the way accountants work. These megatrends create opportunities to significantly improve productivity for the sector. A key challenge for accounting firms and finance functions will be to identify their future value proposition and transform so they remain valued by business, government and the community.
Whilst technical skills will remain important, there will be increased focus on higher value work to provide greater critical insight and strong relationship building. Dealing with the uncertainty of the future requires a unique mindset. Organisations will need to seek and retain employees who can demonstrate strategic thinking, business acumen and leadership capabilities and contribute to a diverse and inclusive workplace.
Fundamental changes are likely to be needed to many operating models to embrace the opportunities of new technologies and maximise the outputs and efficiencies of highly skilled employees. Regulatory settings need to enable organisations to operate in the most efficient way. And education institutions will need to prepare the future workforce for the new ways of working. Productivity increases in the accounting sector can also have a positive effect on other sectors of the economy, multiplying the impact.
‘The secret of success is not in predicting the future, it’s about creating people who can thrive in a future that cannot be predicted.’
This is an overview of a chapter written for CEDA's recent publication Improving service sector productivity: the economic imperative. Read the full report here.
This blog was originally published on Karen McWilliams’s LinkedIn, read the original blog.