The Future of Accounting: 6 Key Takeaways from AICPA President and CEO Barry Melancon’s “State of the Accounting Profession & Major Issues Update”
On February 14, I had the privilege to attend an Accountants Club of America (ACA)-sponsored breakfast event featuring Barry Melancon, president and CEO of the Association of International Certified Professional Accountants (AICPA), at the Union League Club in New York City.
Mr. Melancon, who gave his “State of the Accounting Profession and Major Issues Update” is the longest-serving CEO in the AICPA, a 131-year old organization with the largest membership body of certified public accountants (CPAs) in the world. The association’s long history made the Union League Club, whose own roots date back to the mid-1800s, seem like an appropriate venue of choice.
Although AICPA is steeped in accounting history, Mr. Melancon’s address covering people, services and the future of audit was anything but antiquated. Rather, his vision of the accounting industry’s future was decidedly futuristic—one in which bots and humans collaborate side-to-side, blockchain helps build up credibility and trust, and traditional “pyramid-shaped” company hierarchies become flatter and more accessible. The industry’s biggest challenge, he noted, will be keeping up with today’s rapid pace of technology.
Below are six key takeaways from his speech.
6 Key Takeaways:
- If there’s one word to describe the state of the accounting profession today, it’s “speed.” Technology is transforming the world at a remarkable pace. Huge advancements in blockchain, artificial intelligence (AI) and data analytics spell out dramatic ramifications for traditional accounting firms, demanding new structures, business models and paradigms. Incremental change, once lauded as progress, is no longer enough in today’s rapidly changing environment—and, if anything, can pave an even faster pathway to irrelevance. To thrive, accounting firms must be bold and fast in their actions and strategy.
- Generation Z will introduce drastic changes to education, recruiting and training. Gen Z—the cohort of young adults born between the mid-1990s and early 2000s—is in college today and will soon be entering the workforce in droves. Unlike Millennials and previous generations, many Gen Z’ers seem to already know what they want to major in, having taken cues from older siblings and friends. Fortunately for the accounting profession, there are still record numbers of students majoring in accounting, a number that has seen little variation since 2005. Nevertheless, continued interest is not a given, and state societies must work closely with colleges and high school programs to appeal to young professionals who have an incredible range of career paths to choose from. Meanwhile, recruiting across the profession has already undergone a significant transformation. Despite the high number of accounting graduates, firms are increasingly hiring students with different skillsets, outside of traditional accounting. This is an indicator of how technology may already be changing the specific types of skills needed, and possibly even replacing traditional accounting roles. As a result, there needs to be more than one pathway to becoming a CPA.
- Current CPAs will need to update their skillsets to remain relevant. Preparing students for an accounting career is important, but so is offering continued training for the “mid-career” professional—the proverbial “40-year old” whose skillset will need to monumentally change to remain relevant. Firms need to rapidly figure out how to help these individuals get the right mix of skills to be successful, including offering specialized technical training. One major change that is already here is the presence of AI bots. In the future, CPAs will need to be comfortable interacting with bots and AI machines. In this scenario, a CPA’s learning is then meant to help him or her figure out how to ask the right questions and interpret the AI machine’s answers.
- The future firm hierarchy will be flatter, with more career opportunities in mid-management. Today, many traditional firms are pyramid-shaped with a wide base (many junior professionals), which gets narrower as you proceed up in seniority. However, we can expect the firm of the future to resemble more of an upside-down hot air balloon that is more rounded on the bottom, with a fatter middle. This transformation will have significant implications on hiring, training, turnover issues, retiring structures, business models, and more.
- Cybersecurity attestation will soon be the new audit requirement of the 21st century—similar to how the need for financial attestation gave rise to the modern audit function in the 1920s and 1930s. In the 1920s and ‘30s, there were virtually no audit requirements; instead, the public was expected to trust CEOs and CFOs when they revealed their companies’ financial information. Nevertheless, this practice was overturned in 1929 and 1930, when a debate over third party assurance gave rise to the modern audit business. What companies are facing today when it comes to cybersecurity is similar: The unprecedented levels of cyberattacks make keeping cyber programs up to speed essential. And while audits can’t wholly prevent a business failure or a cyberattack, accounting firms can at least give investors, brands and employees peace of mind by ensuring that a company meets industry standards for cybersecurity regulation.
- Trust will continue to be a vital part of the accounting profession—and blockchain can help. Even with the transformation happening today, trust must continue to be the cornerstone of the accounting profession, with relationship-building and smart strategy planning taking precedent over blind reliance on commercial technology solutions. However, there are areas where technology can help greatly boost trust—such as blockchain, which sells itself as something that can’t be altered. For the first time in history, people can see both sides of a transaction, which will greatly increase transparency and accountability.
Overall, accounting firms must be bold and fast if they wish to keep up in a world that’s continuously propelled forward by technology. Accounting professionals, too, must continue to hone and update their skillsets, or risk losing relevancy. While the accounting profession of the future may not be recognizable to the accounting profession today, firms and individuals alike must find a way to keep moving forward in a sea of technological change.