Robot Accountants?

I recently read a post that stated that the accountancy sector is most likely to become completely automated in the coming years.

Ever since the introduction of technology in the 1980’s more and more manual tasks have been automated and the development of AI certainly looks likely to have an even more of an effect on the way that accountancy operates. Not only is accountancy software developing in its ease of operation it is becoming cheaper. This technology continues to reduce the old bread and butter of accountancy firms, the old incomplete records jobs, which would arrive in a carrier bag with cheque book stubs, bank statements, till rolls and half of the purchase invoices. This at the raw edge of practice has and continues to influence the make-up of the people employed in smaller practices. Some have reduced in size and some have adapted and act as the intermediary, receiving data in a more complete form and prepared has allowed some firms to yield up their margins. But the real question is that these published articles refer to accountancy, this a broad term and certainly does not encapsulated the whole picture. Everyone knows the difficulty with accounts and their reflection of historic transactions saying little, except in extreme cases of the current or future state of the business.

 “The problem lies in the word accountant,” says Tim Byrne FCA. “There is a fundamental difference between the gathering and presentation of numbers and their use as a true reflection of a business. There can be no doubt that processing is and can become even more automated. Even forecasting can be improved over time by the use of technology.”

The traditional way of bookkeeping, manual cash books and purchase day books, is already being made redundant. Accountants working in that book-keeping environment are having to adapt to the change. This should not be seen as a negative. The more efficiently they can work, the better. The industry has not been adapting for a long time and accountants must see these changes as opportunities to become more efficient. Also (beware I’m going to use the B word) whatever claims are made about red tape and Brexit we live in a world of increasing red tape; be it more and more direct deductions from earnings such as SMAP or AEOA’s, if the country ends up with tariffs being imposed on 50% of its exports there is an even larger role to be played around compliance.

Tim goes on to say “At the lower end of practice, there is already disintermediation with systems such as Xero and quick books cutting out a number of accountants from the preparation of accounts and returns. But this does not remove the need for the accountant’s skills when dealing with those crisis moments of investigations and queries. But more fundamentally, there is the emotional separation between the client and HMRC, doing "one's books" is one thing, being confident enough to engage in any form of conversation with the authorities is a different matter altogether.

In audit automated programmes can help look at processing systems and completeness. As most large audits are based around risk it is possible to run programmes that create scenario analysis particularly important in banks or other organisations using financial instruments or derivatives. None of this removes that final moment of an individual having to sign off on behalf of their firm the and the expression a true and fair view. This is not a matter of accuracy but whether the underlying conditions of the business are reflected. Many of the arguments about auditors signing off reports where a few months later the company is liquidated are not whether or not the historic accounts were correct but whether or not the inherent risks within the business where properly considered. A great example would be the pre-2008 bank audit reports, why given the risks of the sub-prime markets were the banks allowed clean audit reports. Technology would certainly have helped run scenario analysis, but who would have made the call which were the likely and unlikely scenarios to run. Ultimately accountants must be paid for the job that they do, which ultimately always relies on expertise, experience and informed intuition, rather than a simple translation of ledger numbers into accounts.”

Already, some of the larger practices are using AI for their audits. Not just in terms of simple technology, but some are using drones to carry out checks on inventories and stocks, but as those that have encountered the piles of empty boxes know what the eye of the drone sees might not necessarily be reality. As well as being able to use AI for straightforward tasks that couldn’t previously be automated, the use of AI will go beyond the simple tasks of historic record keeping, helping with planning, forecasting and scenario risk testing.

Could this threaten accountants’ jobs? Tim says “No, it will affect certain types of jobs and make redundant certain skills, accountants we have always been at the forefront of change whether is the nature of business, regulation or technology. Those who adapt to change thrive and those that do not fall by the wayside, but that has always been the case.

In industry the skill in accounting is to gather relevant information create a report and to disseminate that information. The key to this is communication. Systems will report what they see; the consumption of raw materials the conversion of these into finished products and the dispatch of goods leading to an invoice. But it cannot replace the fag shelter or lavatory conversations where "information" gathered can have a material effect on the numbers. A rumour about your supplier, a salesman's view about your customers new strategy, raw material shortages or deficits are all pieces of information that form part of an accountant’s story when issuing forecasts or actuals. A great example is the progression of the local football team through a European championship, ignore that and you'll miss the fact that there will be no one in at the end of the month to dispatch those vital month end orders!”

The need for Accountants will still be there, mainly as advisers and consultants. Now that processes are much more efficient than they used to be, accountants have time for other services, automation is allowing them to spend more time with clients. Free from the tedious tasks, they will be able to focus their efforts on developing relationships with their clients, advising on growth and assisting in improving cash flow.

What are your thoughts on the automation of the sector? How far is too far?