Humans and the Value-adding Interface
It is perhaps hard to blame the students of today for feeling added angst over their future careers. They constantly read reports about the prospect of automation putting jobs at risk in the near future. For some, this conjures up dystopian scenarios from science fiction movies of machines conquering and mastering the human race.
We certainly do need to prepare for the future workplace, in which the impact of digital disruption will be deeply felt. But rather than dwell on the fears of robots stealing jobs, professionals such as accountants should look instead to the opportunities afforded by the latest digital developments.
Given the current state of technology and its impact on the accountancy profession, human accountants are still needed for the kind of multifaceted, human relations role that advisory services call for.
TECHNOLOGY OPENS UP NEW OPPORTUNITIES
Just consider for a moment how dramatically the accountancy profession has changed since the days of pen-and-paper bookkeeping; yet, accountants are far from becoming obsolete since the birth of professional accounting in 15th-century Venice. This is because the profession has continually transformed itself, and continues to do so to keep up with changing times.
The American economist Philip Auerswald underscored in his book, The Coming Prosperity, that in the course of history, whenever machine and tools substituted one type of human capability, new human experiences and capabilities actually emerged. This happened when humans made the transition from hunter-gatherers to farmers, and then from farming to more industrial modes of work.
Likewise, the boundaries of the accountancy profession are shifting, and the skills which it calls for are evolving. In fact, technology is blurring the boundaries of the profession and this has widened the scope of work that accountants can perform, thus offering accountants new opportunities. For example, the power of data analytics has led to a new service line sprouting up in the advisory arm of professional accounting firms. Auditors can use data analytics to carry out more comprehensive audits by interrogating complete sets of data, rather than just testing samples. Accountants in business can use data analytics to understand and discover patterns in customer behaviours and advise businesses on the best course of action in a competitive market.
In time to come, accountants may be involved in the design of the systems and machines that will do jobs that are currently done by accountants. Auditors would need to be trained to audit the reliability, rigour and accuracy of these systems and machines.
At the end of the day, it is no longer just about what profession one belongs to, but what skills he or she possesses, to get the work done. The impact of digital disruption will be keenly felt in all professions and jobs, not just in the accountancy profession.
WHAT REALLY IS THE VALUE OF (HUMAN) PROFESSIONALS?
Whenever the fear of machines taking over human jobs arises, the following hypothetical question from the medical profession is typically raised – would you like your doctor to be replaced by a robot? Most people, we would hazard a guess, would answer “no”.
This is not in any way to belittle the tremendous progress that has been made in research on the role of artificial intelligence in the medical industry. With the possibility of voluminous medical research knowledge being fed into a machine, the robot can realistically diagnose a patient much more accurately than a human doctor can.
However, that interface with a human professional is important for a number of reasons. The human doctor provides the person-to-person context of psychological care in which to solicit a patient’s concerns, which would enable the best diagnosis to be made. In other words, the “clinical” approach by a robot could solicit a different set of concerns and issues from the patient compared to the “softer” approach of the human doctor, who is better placed to empathise with and understand the patient’s condition.
Furthermore, Professor Richard Lilford, the University of Warwick’s Chair in Public Health, highlighted the importance of human intuition where “you’ve (often) got to act in medicine before you’ve got any certainty and that sort of thing the doctor will have to do”. He concluded that a computer “may become a second opinion, or perhaps even a first opinion, but the doctor will still make the final call”.
Then there are the issues of ethics, in medicine as in other professions, including accountancy. In a joint report released in 2016 on “The Future of Professional Learning and Entrepreneurship” by ISCA and the Institute of Chartered Accountants in England and Wales, borne out of conversations with a range of professionals, there was unanimous consensus that the real value of the accounting profession lies in the integrity and ethics of its members. Some of the participants in that conversation pointed out that clients would have more trust in audit opinions issued by a human auditor, compared to audit opinions issued by a robot.
So rather than for the robot to replace the medical or accounting professional, they need to work hand in hand with the robot, to continue raising the value of work within the profession.
IMPACT OF TECHNOLOGY TODAY AND IN THE NEAR FUTURE
Let us consider the scale at which technology is impacting and transforming the accounting profession, at the present time, to get a realistic sense of what technology can do and how accountancy professionals are harnessing it to increase the value of their work.
Technology is boosting corporate capacity, rather than replacing human accountants. The advancement of technology has freed accountants from the drudgery of menial and mundane tasks, such as the manual data entry of invoices, to pursue higher-value work that may bring in higher incomes. That includes accountants harnessing technology to provide more in-depth and timely financial expertise to help their business outfits navigate today’s volatile business landscape, such as with the use of data analytics tools.
To give a simple example, records of point-of-sale transactions can be used to project future patterns of consumer behaviour. Accountants can move from having a “hindsight view” to having more “predictive foresight”. One of the possible outcomes of predictive foresight is that companies know what inventories to hold, which frees up capital and lowers costs such as rental – since less storage space is now required – and obsolescence.
Organisations like ISCA have stressed the need for professional accountants to be the strategic business advisors for the companies for which they work. Again, this is where accountants are the ideal candidates, because they have finance and operations knowledge, underpinned by the rigorous training they have undergone. This is also reflected by the global trend of medium-sized international accountancy networks and small and medium-sized practices moving away from audit in favour of advisory, including cyber security and data analytics.
Given the current state of technology and its impact on the accountancy profession, human accountants are still needed for the kind of multifaceted, human relations role that advisory services call for. It might well be that these additional services can also be tackled by artificial intelligence and machine learning in the future, but the point here is clear – the accounting profession has had the knack for constantly upskilling its work, whenever new technological developments have helped relieve humans of some tasks.
According to a study of over 2,000 work activities in more than 800 occupations by the McKinsey Global Institute released in 2017, the easiest jobs to automate are those involving predictable physical activities such as assembly line work in manufacturing. The next easiest jobs to automate include data collection and processing activities.
At the other end of the spectrum, the hardest activities to automate are those that involve managing and developing people or those which require deep expertise in decision-making, and planning.
Rather than being a monolithic role, the accountancy profession similarly covers a spectrum of activities from routine ones such as data entry to analysis and judgement. Routine activities can be and already are being automated with accounting software like Xero accounting and Quickbooks. The implication of this would be job losses especially for accountants doing mainly routine accounting work, unless they can move on to higher-value roles.
When the accountant analyses, applies judgement, and then explains the issues relating to quality financial management to their clients or employers, they are actually assuming a role akin to an educator – an activity which the McKinsey study identified as among the most highly resistant to automation in the foreseeable future.
OPPORTUNITIES IN ASEAN MARKETS
For now, the Association of Southeast Asian Nations (ASEAN) market is big and growing rapidly. Businesses in the region will need accountants and finance professionals to support their growth, and most emerging markets are short of these professionals. Singapore accountants are well-equipped to take on these assignments. This will also give some leeway to those who may need more time to upgrade their skills to take advantage of new technologies to take on higher-value jobs.
The designation, ASEAN Chartered Professional Accountant (ACPA), created under the ASEAN Mutual Recognition Agreement (MRA) on Accountancy Services signed in November 2014, will enhance mobility into some markets which hitherto have been closed to foreign accountants. This means that Chartered Accountant of Singapore (CA (Singapore)) members who satisfy the criteria of the MRA may apply for ACPA which will be recognised in the other nine ASEAN member states. ACPAs would be allowed to provide accountancy services (excluding signing-off of the independent auditor’s report and providing services that require domestic licensing) across the ASEAN region, without having to undergo extensive re-training or re-qualification procedures.
ACCOUNTANCY PROFESSION WILL TRANSFORM, NOT VANISH
The accountancy profession involves more than bookkeeping roles today. The core competencies and skills of an accountant provide a strong foundation to go into many other high-growth fields of specialisation and trades, and even as entrepreneurs. The use of analytics, as discussed earlier, is but one example of how the accounting professional can work hand-in-hand with technology to raise the value of their work in the near term.
There is little reason to believe that the accounting profession will die out as a result of technological disruption, just as how the profession has not only survived but also transformed itself since the onset of the digital revolution. This is because the profession has continually transformed itself, and will continue to do so.
Tellingly, Martin Ford, one of the key progenitors today of the idea that machines can one day replace workers, nevertheless admitted in the conclusion of his book, The Rise of Robots, that “there is no question that the economy will remain heavily dependent on human labour for the foreseeable future”.
Lee Fook Chiew is CEO, and Loke Hoe Yeong is Manager, Insights and Intelligence, ISCA. An edited version of this article was first published in The Straits Times on 24 June 2017.