The year of technological change in Australian accounting
In 2016 we saw a rush to new technologies in the big four and mid-tier firms. This year will be all about how they bring it into their workflow.
In TV series Mad Men, when the show’s fictional advertising business first invested in computers in the late ‘60s and early ‘70s, its staff had no clue as to the changes computers would eventually bring to their industry. Fast forward to 2017 and we’re facing a similar issue in accounting, only the new technology is artificial intelligence (AI).
Headlines were made in mid-2016 when KPMG Australia agreed a strategic alliance with IBM to bring the power of the Watson supercomputer on board to help out with company audits. But KPMG was careful to say the technology would not come at the cost of jobs. After all, around 25% of the firm’s partners and staff exist in an audit role.
But the truth is that just as in Mad Men when computers entered the workplace, and just as in the boardrooms of most of the world’s taxi companies when a little start-up by the name of Uber entered the market, nobody yet knows the exact effect of such technology.
Tech at the Big Four
What the Big Four do know is that if they don’t at least begin to make friends with AI, data analytics, digital automation, machine learning and more, somebody else will.
IBM says Watson is “cognitive technology that can think like a human”. It can analyse and interpret structured and unstructured data, grow subject matter expertise, understand personality, tone and emotion and interact with humans via chat bots.
Watson will allow auditors to work much faster and with a far greater level of data. At the same time, machine learning should mean that the system constantly becomes smarter and more helpful, revealing patterns and trends and anomalies that are powerful in the world of audit. Entire databases will be able to be analysed rather than samples, meaning the audit process will be more thorough, accurate and reliable.
A new era of digital specialists
PwC in Melbourne has put a Chief Data Scientist in place - Partner Matthew Kuperholz holds the position.
“We’re not driven by a technique or even by data,” Kuperholz told ITNews in 2016. “We’re driven by a business challenge, which may be to protect a space, get into a new space, or it may be to make a factory safer or a manufacturing process more efficient.”
Deloitte’s digital specialists have learned, after years of attempting to develop their own machine learning tools and other automated cognitive capabilities for their clients, that partnering with businesses more nimble than they are will help them move forward at a greater pace. At the same time the business is recommending to its clients that they take a leap of faith in to the AI arena.
“Executives need to put on their ‘paranoia hat’ and envision where AI has the potential to disrupt their business or even their entire industry,” US Vice Chairman wrote in an article for the Wall Street Journal. “Now is the time to have this discussion. In three to five years it may be too late.”
Some say that increasing automation of low-level paperwork within accounting firms will cause a major drop-off in the need for graduate employment within the next four or five years, and it’s difficult to argue with such a fact.
Executives need to put on their ‘paranoia hat’ and envision where AI has the potential to disrupt their business or even their entire industry
Traditionally, auditing and accounting is one of the biggest graduate recruitment industries globally, but tech is taking the jobs for which the graduates were previously being groomed.
And of course, at EY it was announced that former eBay executive Jeff Wong would form the Global Innovation Team. It will contain up to 25 innovators whose job will be to imagine, then workshop, large-scale projects that 10 years from now will generate a large chunk of the company’s revenue.
Just as businesses in other industries are creating semi-separate innovation groups, such as engineering firm Laing O’Rourke and their Engineering Excellence Group, to move away from the tried and true and innovate for the future, EY appears to be taking the same track.
What does the future hold?
Anybody who says they know is likely not telling the truth. Perhaps it is best summed up by Duncan McLennan, KPMG's National Managing Partner - Audit, who told the Australian Financial Review, “No-one knows exactly what the audit of the future will look like, but you can be sure it will involve two things - bright human beings and cognitive technology."
About the author
Chris Sheedy is one of Australia’s busiest and most successful freelance writers. He has been published regularly in the Sydney Morning Herald, Virgin Australia Voyeur, The Australian Magazine, GQ, In The Black, Cadillac, Management Today, Men’s Fitness and countless other big-brand publications. He is frequently commissioned to carry out copywriting and corporate writing projects for organisations, including banks, universities, television networks, restaurant chains and major charities, through his business The Hard Word.