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How Technology is Transforming Accounting and Auditing
Erik Asgeirsson, President and CEO, CPA.com, The Technology Subsidiary of The American Institute of CPAS
Everyone knows the pace of technological change today is unprecedented, with deep implications for the way we work. But we see opportunity in this transformation, and are pushing to redefine and expand the accountant’s traditional role as a trusted business advisor. Automation and innovation are powerful tools in that effort and, if used correctly, will increase the strategic value of the accountant.
Think back to the early days of cloud adoption. One of the biggest trends for CPA firms over the past decade has been the rise of virtual CFO/controllership services, in which practitioners harness technology to offer outsourced finance and accounting services, bill management, human capital oversight, and the like. This category—known in the accounting profession as client accounting services—was a low-margin service mostly seen as a client retention tool before the cloud. But the ability to analyze real-time data, present it in easily-grasped dashboards, and collaborate more closely with clients to shape business decision-making has revolutionized this service line.
The most obvious application for blockchain and accountants is in the audit, since it provides verification of transactions
It’s now grown to roughly 10 percent of the average firm’s revenue, and it’s typically the fastest-growing piece, according to research by the American Institute of CPAs (AICPA) and CPA.com.
Tax and audit practices still anchor offerings for CPA firms, but these areas are undergoing some of the same transformations due to technology innovation as client accounting services. We expect artificial intelligence, machine learning and blockchain to have a major impact on how these services are delivered in the next few years.
Blockchain—a distributed, secure database that creates an immutable chain of transactions—may be the most interesting case. Gartner predicts the business value added from this emerging technology will exceed $3.1 trillion by 2030, from a negligible base today. Public blockchains—best known as the systems that support bitcoin and crypto-currencies—are probably less relevant to applications in a corporate setting than private blockchains, which are more scalable, have faster transaction speeds and are limited to only authorized users.
The most obvious application for blockchain and accountants is in the audit, since it provides verification of transactions. Unlike some of the hyperbole associated with blockchain and auditing, accountants will still need to provide assurance in several areas, such as configuration of these systems, management estimates of financial statements, etc.
How blockchain’s uses will unfold precisely is still unclear, although there is considerable experimentation going on with the Big Four and other top accounting firms. That’s one reason the AICPA and CPA.com have joined forces with the Wall Street Blockchain Alliance, an association devoted to education and advocacy surrounding blockchain for financial market professionals, to define the impact of the technology on accounting. It’s imperative that CPAs and management accountants educate themselves about blockchain and its potential applications, since it’s such a fast-moving area.
Now more than ever, accounting and finance staffs must develop complementary skills to ensure they are providing quality service to employers and clients. The skill set for transactional or compliance services are not the same as for advisory services, which we see as a critical future skill for accountants. Finally, we see the future for accountants who leverage technology and advance their skills as one full of opportunity and increasing value for their clients.