In part 1 of this series, I outlined some thoughts in relation to machine learning and big data and the impact on the accounting profession. These are just some of the technologies that are mooted to transform the world of accounting. Now in part 2, we’ll consider whether the promise may be delivered and other technologies that may impact how firms will operate.

It is perhaps in auditing that we will see the promise realised. The machines may make it possible for the first time to be both the watchdog and the bloodhound. The idea of testing 100% of the transaction population is taking hold. Using big data concepts the machines look for “outliers” – transactions that are unusual and may require further investigation. The process is enhanced by the use of machine learning. By watching how humans deal with the unusual transactions the machines can learn whether they can be ignored in future tests thereby refining the focus to hone in on the truly suspect transactions. Work underway by the AICPA in the US will be the enabler. This work is creating Audit Data Standards. This will enable auditors to use a common set of tools that via the use of the audit data standards will be able to connect and read transactions from a wide variety of different accounting systems.

Big data may also move to an internal focus. Imagine a world where the machines are watching your team work. The possibility is there since most work is now performed using computers. Imagine if the machines started to work out, who was more productive and why. Who made the most mistakes and why. Who did too much work or too little work. Who raised or missed important queries. Spooky I know, but consider how firm performance might be optimised.

Another area of focus is perhaps “Robotic Process Automation” or RPA. Think car factory production lines for accountants. Will this be possible? It’s actually happening already by the work being done by the software companies. The idea of the common ledger used by both the accountant and the client is the beginning. This then enables the machines to automatically generate workpapers (which is already happening). Rudimentary reviews are occurring that surely will be enhanced over the coming years to a point that all the detail of a review will be automated leaving the human reviewer to conduct a high level overview. Tools to automate tax planning decisions are emerging.

The technologists like to say “If a process is repeatable it can be automated. If it can be automated it can be free”. I’m sure that’s where we’re heading although it will be a slow process. A scary thought but in many ways an empowering thought as it will enable accountants to provide better value to clients where compliance work can be low cost but remain profitable. Clients may then be encouraged to spend those compliance savings on higher margin advisory services.

An important part of developing advisory services is to deliver clear and concise information to clients. This gets more and more difficult as the world gets more complex and the machines are capable of storing and retrieving every transaction that has ever occurred in a business. The danger is information overload that lessens rather than improves clarity. The industry’s response is to deliver digital dashboards which graphically summarise the data and enable drill down to find the important detail when required. It is clear that accounting firms will need to adopt technologies and develop skills to clearly and simply communicate business performance to their clients using these digital dashboard technologies. A client centric rather than an entity centric view is required – especially for SMEs where all their entities are considered as being part of one “family group”.  It is for that reason a few years ago we developed out “One Page Client Report” excel template to provide this clarity (visit www.smithink.com/resources to find out more).

The profession will also need to accelerate its adoption of technologies that their clients are using to consume information. Delivery of information optimised for mobile consumption is clearly emerging as an important consideration.

Communications technologies will also change how accountants will interact with their clients. Practitioners are and will need to continue to adapt to using video technologies to communicate with clients. The ongoing development of augmented and virtual reality technologies cannot be ignored either. Delivering three-dimensional financial reports may not be that far away!

In summary, technology has the potential to fundamentally change the profession in next few years. Some may not achieve the hyped promise but other unforeseen tech might also fundamentally transform the profession. What is clear is that change is in the wind. You owe it to yourself to continue to look over the horizon and consider how you may capitalise on technology change.

Come to ATSA on October 16-17 in Sydney to learn more about how tech will transform the profession and see the latest developments from the key suppliers.