I was shocked to learn the last VCR rolled off the assembly line in July 2016. I remember my family buying our first VCR – the magic of being able to watch any one of our 6 cassette movies at any time, pausing when you needed a break, fast forwarding through the boring parts. It was a miracle and changed how we watched. As I reflected, I’m even more shocked that VCRs were still being made as recently as last year. Movies, television, “content” are all available on any live streaming device. I watch movies on my phone from the air when I travel. It’s a far cry from the good old days of Betamax.
The accounting profession is facing the same type of changes as VCR manufacturers. Tax services have already seen the impact of technology with the advent of tax return software. Audit has been a little slower to be impacted – but believe me when I say change is coming. Technology is currently available that allows for automation of a lot of what our staff accountants did as recently as last year. Lead sheets, roll forwards, analytics and even financial statements can be prepared with a click of a few buttons.
Big data analytics are starting to impact the approach to audits. Data mining software can be used to identify transactions that don’t meet expected parameters, allowing the auditor to focus on the more risky areas. Filters and queries are being used in limited arenas now, such as fraud analysis, and can be expanded to almost any area of an audit.
In the not too distant future, artificial intelligence will be sophisticated enough to perform most if not all of an audit with limited human intervention. I remember the long nights prior to an audit report signoff. Having a computer to do all of that work sounds as crazy as, well, watching a movie on my phone.
Whether the profession is ready or not, the technology is here. These forces will fundamentally change how we do our work. Amazon replaced Barnes and Noble, Uber is in favor over taxis, and Netflix bankrupted my beloved Blockbuster.
This is a scary time for CPAs, but also one ripe with opportunity. The technology that will change our fundamentals is simply a tool that we can and should use to shape our future. It will be incumbent on CPAs to understand how this technology can work and put it to use for our clients. Firms are already forming consortiums to explore how big data and eventually AI will impact their audit approach. Each of the big 4 has its own innovation group doing the same thing.
Changes are coming to the audit profession. Firms need to understand and accept that the approach for the last 10 years won’t be the same approach for the next 10 or even the next 3 years. Change is difficult for CPAs, so focusing on core values of service and objectivity while adapting to technology changes will be key in not just navigating, but winning at the upcoming market disruption.
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