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Risks and Opportunities from digital disruption By David Smith on Oct 14, 2014

Risks and Opportunities from digital disruption

A few weeks ago I spoke at the Chartered Accountants SMSF Conference. At the end of my address I made some comments that accountants need to consider that technology may drive automation to such an extent that accountants may be disintermediated from some services. These comments were reported in some news services and social media and generated some comments to the effective I am living in a different universe.

So with fear of fuelling the fire, here’s what accountants need to ponder when we consider the potential digital disruption of the profession over the next ten to fifteen years.

Data feeds driving automation of bookkeeping & compliance:

Particular to the world of SMSF we’re seeing data feeds automate much of the basic booking. When we are getting (or will be getting) feeds from stock brokers, banks, wrap accounts, ASX, share registries, land titles offices, rent roll systems, property valuation systems, Superstream and actuaries much of processing is fully automated resulting in significant increases in efficiency and accuracy. Furthermore, the almost universal use of EFT for payments that load bank datafeeds with sufficient information to enable automatic transaction processing. Unique to SMSF applications design is the capacity for the transaction to also hold the tax consequences of the transaction. This design enables automatic generation of all the year end compliance documents including the tax return. This is easier to achieve in the SMSF space due to regulation controlling much of what SMSFs can do but it is a sign of perhaps what might happen more generally in the cloud accounting space.

When you look out ten to fifteen years it would seem obvious that the cloud accounting applications will also carry the tax consequences of the transaction with the transaction. I can also see a world where the cloud accounting applications are talking to each other via some sort of data exchange so that a sale transaction in one company’s system will automate (create or update) the purchase transaction in another company’s system. As businesses eliminate paper invoices the capacity to automate will be further enhanced. That said, services such as shoeboxed, invitbox and receiptbank are all trying to achieve greater automation of these transactions now.

Intelligent Intrepretation of Data – the automation of advice:

If you want to be controversial, suggest that judgement and advice can be automated. Yet we’re starting to see signs of it. There are moves, again in the SMSF space, that providers are integrating to the SMSF admin platforms, interpreting the data and suggesting strategies that might optimise the outcomes for the fund. Users may then request the system to generate the required documents and process the necessary transactions are you’re done.

At ATSA being held in Melbourne on October 20-21 (details at Andrew Noble of Perth based Noble Accounting will be discussing “Artificial Intelligence and Accounting – Emerging Threats and Opportunities. Andrew’s firm has won the inaugural Smithink 2020 ATSA Innovation Award for their LodgeiT application ( designed around automatic completion and lodgement of forms. This is only the first step as to where Andrew wants to go as he sees opportunities to apply artificial intelligence to more of the functions of an accountant.

When you look at the advances in machine learning and artificial intelligence, it is possible to see a world where, at least, clever systems will be able to deliver information and make recommendations to advisers as to the appropriate advice to be given.

Big Data – A looming revolution:

One of the consequences of cloud accounting systems is that the providers are building huge databases of business data. It’s not hard to imagine that, in the future, these providers will use this data and apply data mining and other business intelligence tools to unlock key trends in a business. These trends could be delivered automatically to the accountant (or the business owner) in real time. Furthermore the data will also allow real time comparisons between a particular business and their industry as a whole. Auditors as well will use intelligent agents to trawl the data looking for unusual or potentially fraudulent transactions.

So the question is – could disintermediation of the accountant happen. To me, it would be possible but it won’t happen tomorrow or for many years. For it to happen providers would have to do a lot of work. Systems would to be engineered so that all potential errors could be eliminated. Artificial intelligence tools would have to be deployed to analyse data to suggest actions that should be taken. Systems would need to incorporate educational content to help businesses to make appropriate decisions. Simplicity would be key.

Accountants in practice need to keep reviewing the business and the opportunities. Automation of transaction processing and compliance work will happen first. Advice will take much longer. But it would be dangerous to assume that it will never happen. It’s staggering the advances that are occurring in machine learning and artificial intelligence.

Come to ATSA in October and join the debate.

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