CAs and the age of AI: Hugh Shields CA
The constant march towards new and innovative technology presents CAs with opportunities they must take advantage of, according to Hugh Shields CA, who will be leading the CA Agenda thought leadership series in all things technology-related.
Hugh Shields CA is an expert author and Special Consultant on Technology and Artificial Intelligence (AI) for ICAS, and in his speech at the CA Agenda launch, Hugh invited CAs to imagine the world 30 years from now, where at one-minute past midnight the largest company in the world completes its annual accounts.
30 seconds later, the audit is completed.
This is a world where robots have surpassed humans in their ability to think and create; the age of technological singularity.
This world is one of real-time, fair value information and is increasingly penetrated by Artificial Intelligence and other new technologies
Advancements in the way businesses are using AI and machine learning are bringing us close to a future that bears some resemblance to this scenario.
“We are living in a world where this combination of huge amounts of data, and vast amounts of processing power mean that analysts can figure out the performance of companies before annual accounts are published,” said Hugh.
“This world is one of real-time, fair value information and is increasingly penetrated by Artificial Intelligence and other new technologies such as Blockchain.
“The result is that traditional company accounts will lose their relevance simply because of the speed at which machines can produce real-time data and information.”
When is a profit not a profit?
The quantum leap in the power of AI will not only increase the speed at which accountants work, it may fundamentally change the accounting standards that they have observed for decades.
“Accounting standards are a series of conventions according to which we derive a bottom-line profit,” Hugh explained.
“But that profit is the result of some things measured at cost, some things measured at fair value and some things measured at values between these.
The challenge that we now have is that data and computer processing power are allowing analysts to figure out what the true economic performance of a company is without the need for annual accounts.
“Furthermore, we do not adjust for risk and we do not adjust for inflation. So, the reported profit is not, and has never held itself out to be, a measure of true economic performance.
“The challenge that we now have is that the combination of data and vast amounts of computer processing power is allowing analysts to figure out what the true economic performance of a company is without the need for accounting standards and without the need for annual accounts.”
Hugh mused that standard-setters could eventually merge with Integrated Reporters.
“It is not too difficult to see market pressures forcing such a merger,” he said.
“And then, just possibly, we will live in a world of fair value measurement and double entry bookkeeping.
“There may no longer be accounting standards as we know them in the year 2050.”
With great challenge comes great opportunity
Far from this signalling the end of the profession, Hugh sees these advancements as the perfect opportunity for CAs to “consider how we would like to shape our future as accountants.”
A recent report from Big Four firm PwC found that AI will create as many jobs in the UK as it displaces: over the next 20 years, advancements in AI are expected to displace around seven million existing jobs but create 7.2 million new positions.
The technology is also expected to provide a plethora of savings for the financial services industry. A study by financial research fund Autonomous predicted that AI will save the banking industry around $1 trillion by 2030.
We as CAs have a very important role to play in terms of shaping our future world.
Hugh predicts that over the next five to 10 years, CAs and other finance professionals will begin to see the rise of “AI-assisted jobs” rather than technology replacing human roles.
This new way of working will bring risks that will need to be managed. This, said Hugh, makes it a very exciting time to be a CA.
“Business will always be done,” he said, “whether it is done by humans, robots or a mix of the two.
“We as CAs want to be the drivers and advisors of that business and therefore have a very important role to play in terms of shaping our future world.”
Watch: Hugh Shields CA on Technology
The CA Agenda needs you
The CA Agenda will give CAs the opportunity to shape the world ahead; ICAS is asking members to imagine the future and their place within it – are new skills required, will roles vastly change and are we prepared for the associated ethical, social and political effects?
Over the next few months, ICAS will be providing events, articles and multimedia content tailored for the modern CA, bringing three big themes facing our profession into sharp relief: technology, trust and talent.
We want to hear from CAs who are experts in the field of technology. Whether you work in business, practice, at a tech giant or an innovative fintech, if would like to be involved in influencing the agenda, or participate as a content contributor, please get in touch.