The Future of Business Data Analytics and Accounting Automation

0

The current technological transformation in accounting and taxation shows that “companies have a large appetite for increasing complex analytics, even when they cannot adequately perform the basics” (EY.com, “Solutions to Help You Accelerate Tax Transformation,” 2022, 2022). Most companies and governments still spend 80% of their time on data cleansing, which an appropriate machine learning (ML) algorithm can perform in minutes. Thus, the market faces a challenge: accountants with technical expertise are required to design algorithms capable of reducing the human workload. Traditional accounting and business analytics are insufficient to meet current business needs; modern data analytics offer businesses in-depth insight into their daily operations. For the public accounting profession to continue to create value in the age of “big data” analytics and artificial intelligence (AI), a clear vision for the future of digital accounting, taxation, and business data analytics is essential.

The number of U.S. students earning accounting degrees has decreased in recent years. According to the 2023 AICPA Trends Report ( nearly 47,070 students earned a bachelor’s degree in accounting and 18,240 students received a master’s degree in accounting in the 2021/22 academic year, representing a significant drop of 7.8% and 6.4%, respectively, from the prior year (Mark Maurer, “Accounting Graduates Drop by Highest Percentage in Years,” Wall Street Journal, October 12, 2023,  According to Maurer, fewer people are leaving college with a bachelor’s or master’s in accounting as the shortage worsens.

Many students choose their career based solely on the starting salary, but this is no longer sufficient to attract candidates into the profession (Lindsay Ellis and Paul Overberg, “Why No One’s Going Into Accounting,” Wall Street Journal, Oct. 6, 2023). Although accountants might start at lower salaries, they outpace their peers in other business disciplines. Accounting has also always been a path for those who want to become a CEO. Furthermore, accounting is more than just a salary: It is about helping people, it is a noble profession and definitely not boring (“Accounting, a Noble and Exciting Profession,” Wall Street Journal, 2023, 

The Value of Business Data Analytics

Michael Parrinello, CPA, is a partner at the Bonadio Group, a mid-sized accounting firm with offices in New York, Texas, and Vermont that was named among the Top 100 Public Accounting Firms in 2020 by Inside Public Accounting. Parrinello (2021) stated that many of the Bonadio Group’s small- to mid-sized clients pushed digital advancements in the past year. Now, the task is to use the new tools while still delivering the service element.

It’s not just embracing and implementing technology. It’s, ‘How are we going to use technology as accounting professionals to help translate trends and opportunities in our clients’ businesses?’ and ‘How is technology going to allow me to better deliver to those who consume my service?’ (M. Parrinello, “CPA Exam Changes—And What They Mean for the Accounting Profession,” 2021, 

 

The current declining trend of hiring CPAs is due, at least in part, to a lack of data analytics skills among CPAs. The Association to Advance Collegiate Schools of Business has responded to changes in the accounting profession by updating its standards. Modern business transformation with the advancement of technology has modified the skills required for accounting students. They require new skills to apply modern analytical techniques in financial modeling, prediction, and data visualization to attract prospective employers.

In a recently published paper, Penn State University (PSU) accounting professors Matt Kaufman and Kristi Yuthas have created a teaching approach to address these issues. Within the recently developed PSU accounting analytics course, students use this approach to learn and then teach others about an advanced function in Excel, a conceptual analytics topic, and how to use a specific analytics tool (e.g., R, Python, SQL, Microsoft Power BI). The authors describe the course’s impact as follows:

“Students end the course feeling confident and become more comfortable with technology and the use of software in their capacity to continue to learn new tools and technologies throughout their careers. Especially student groups that are typically underrepresented in tech jobs,”…

“My group mates in an audit course were worried on how to get started on the project because IDEA was a whole new software they’ve never encountered before,” another student said. ….

“It was like a ‘wow’ moment for me when I realized that my attitude towards technology has changed a lot from taking this course,” said Yuthas (M. Kaufman and K. Yuthas, “Learning Analytics Through Teaching,” Journal of Emerging Technologies in Accounting

 

The Value of Accounting Automation

Ken Koskay is the vice president and head of global sales and business development at Becker, the professional education company offering CPA exam preparation and continuing professional education. Koskay (2020) states that accounting analytics is also important for small businesses (“Kenneth Koskay Joins Becker Professional Education as Senior Director,” 2020,  CPAs who learn technology effectively will be able to perform differentiating, value-added activities such as interpreting recommendations from cognitive tools, evaluating analytics, and providing clients with decision-making insights instead of traditional, repetitive tasks such as data entry.

In other words, CPAs will be able to identify opportunities for growth or proactively recommend course corrections so that businesses can forestall problems. Moreover, their firms will continue to evolve from compliance-focused accounting firms to problem-solving consulting and advisory firms (Koskay, 2020).

The Value of Tax Automation

Automation requires knowledge of data mining and other data science techniques. These technologies can help CPA firms reduce costs, enter new service areas, analyze large data sets, and report taxes. Tax authorities are increasingly using technology such as AI to handle complex, trillion-entry data sets. Automation substitutes low-value daily tasks and permits skilled tax and accounting professionals to contribute more value in the corporate world.

The IRS has already started employing big data when deciding which returns to audit (W. Brink and V. Hansen, “Using Big Data to Identify Tax Risk,” Tax Adviser,  The IRS creates discriminant analysis functions, trained using data from millions of tax returns, to determine which returns are most likely to be noncompliant. Furthermore, the IRS employs unique data sources, such as social media, to identify tax fraud. Taxpayers themselves can use big data and discriminant analysis functions to determine the tax audit risk for their own returns.

Importance of Business Information

The business information system is a critical tool for all businesses. It monitors profitability; manages inventory and products; improves financial management; and provides accurate business information to banks, investors, and stakeholders. Data can help companies become better at predicting trends and identifying opportunities, as well as stay ahead of their competitors by providing digital data decision insight. The importance of technology to business information results in digital smart applications, improved quality data storage, and faster processing of raw data sets or elements.

Impact of Digital Transformation

Digital tax and accounting functions have become a strategic component of any enterprise transformation. Cloud computing is a significant advancement in emerging accounting technologies. Digital transformation and innovation have been shaping the world accounting by impacting the market demand that will be available. Advances in blockchain, machine learning algorithms, robotic process automation (RPA), and AI technology can handle repetitive tasks and help accountants effectively use their knowledge, skills, and professional judgment. Cloud-based systems require accountants to become proficient enough to offer customers updated financial analysis to stay competitive. With blockchain, accountants must stay current with new software, as well as learn how to update information transfer from ledgers, contracts, and records.

Leveling Up Skills

Accountants and auditors can level up their skills to meet the increasing future demand for technical expertise and data analysis by staying up to date with the latest technologies and trends through continuous learning and professional development programs. This can be done through workshops, webinars, and conferences to gain knowledge and hands-on experience. CPAs should also consider earning advanced degrees or certifications in fields including data analytics, cybersecurity, or forensic accounting.

Getting Started

The following are some tips from the authors about how to start building their technology knowledge base:

  • ▪ Pursue training in data analytics, including courses on data visualization, data mining, and statistical analysis. Knowing how to work with tools like Excel, Python, or data visualization platforms can be very useful.
  • ▪ Earn certifications such as the Certified Information Systems Auditor (CISA) or Certified Data Management Professional (CDMP) to demonstrate skills at data analysis and information systems for potential employers.
  • ▪ Learn how to use accounting and auditing software, including cloud-based accounting systems, data analytics tools, and audit software. Being able to extract and analyze data is a must.
  • ▪ Understand cybersecurity best practices and how to protect financial data. Stay up to date on cybersecurity risks and strategies to prevent breaches.
  • ▪ Boost soft skills, including communication, critical thinking, problem solving, and adaptability. These skills are important for analyzing and explaining complex financial information.
  • ▪ Collaborate with IT and data analytics professionals within the organization to learn from them and understand technology-related concepts better.
  • ▪ Build a network of peers and mentors in the accounting and auditing fields. Networking can provide opportunities to learn, share knowledge, and stay up to date.
  • ▪ Acquire hands-on experience by working on data analysis projects and real-world auditing cases that involve technology. Practical experience is invaluable.
  • ▪ Explore interdisciplinary fields such as financial technology (FinTech), data science, and business intelligence. These areas often overlap with accounting and auditing.
  • ▪ Take advantage of online resources like blogs, forums, and educational platforms (e.g., Coursera, edX, LinkedIn Learning) to access a wide range of courses and information.
  • ▪ Join professional organizations such as the AICPA or the Institute of Internal Auditors (IIA). They often provide resources and training opportunities.
  • ▪ Be open to change and adaptability. The accounting and auditing fields are changing fast, and CPAs must be willing to embrace new technologies and methods.

By investing in education, being adaptable, and committing to lifelong learning, CPAs can develop both the technical expertise and data analysis skills that will be needed to keep up with the growing demand for a more technologically advanced and data-driven approach to the profession.

Adapting Quickly

Technology is a game changer for the accounting and auditing profession in times of crises or rapid changes. Here’s how technology can help:

  • ▪ Remote work and collaboration. Cloud-based accounting software, virtual meetings, and secure document sharing platforms are essential for maintaining productivity during unexpected disruptions including the COVID-19 pandemic.
  • ▪ Data analysis and insights. Advanced data analytics tools can analyze vast amounts of financial data, allowing professionals to identify patterns, trends, and anomalies. This helps in making informed decisions during turbulent times.
  • ▪ Risk assessment and prediction. Artificial intelligence and machine learning can assess financial and operational risks in real time and provide early warnings to help organizations take preventive actions.
  • ▪ Fraud detection. Automated tools and AI algorithms can continuously monitor financial transactions, making it easier to detect fraudulent activities.
  • ▪ Compliance and regulatory changes. Automated compliance management systems ensure that businesses adhere to evolving standards.
  • ▪ Business continuity planning. Technology can help in developing and testing business continuity plans, which are crucial for ensuring that financial operations continue smoothly during crises.
  • ▪ Secure data management. Cybersecurity technology safeguards sensitive financial data, protects it from breaches, and ensures the integrity and confidentiality of records.
  • ▪ Digital transformation. The adoption of digital technologies can streamline and automate routine accounting and auditing tasks, freeing up professionals to focus on value-added activities, such as advisory and analysis.
  • ▪ Virtual audits. Technology enables auditors to conduct virtual audits using digital tools and secure communication channels. This is especially valuable when on-site visits are not feasible.
  • ▪ AI-enhanced customer support. Chatbots and AI-powered customer support systems help business provide efficient support and guidance to customers and clients, even during times of high demand.
  • ▪ Scalability. Cloud-based accounting and auditing solutions can be easily scaled to accommodate changes in the volume of work, ensuring that professionals can adapt to shifting demands.
  • ▪ Data security and privacy. Technology solutions help businesses maintain the security and privacy of financial information, which is crucial during crises when cyber-threats often increase.
  • ▪ Real-time reporting. Technology allows for real-time financial reporting and data sharing, enabling organizations to make rapid decisions based on accurate and current information.
  • ▪ Efficiency and cost savings. Automation and technology-driven processes enhance efficiency and reduce operational costs, which are essential during economic downturns.

By embracing and leveraging technology, CPAs can respond effectively to the challenges posed by various crises, while also improving the quality and efficiency of their work.

Changing Education

To keep up with the changing landscape in accounting, tax, audit, and technology, schools need to change how they teach accounting.

  • ▪ Use real-world examples. Teachers should use real-world examples, case studies, and hands-on experiences to show students see how accounting works.
  • ▪ Teach technology and data analysis. Instructors should make sure students know how to use accounting software, data analytics, and other contemporary accounting technology.
  • ▪ Offer specialized courses. Schools should offer courses in different areas of accounting, forensic accounting, and financial technology.
  • ▪ Keep up with changes. Instructors should make sure they are up to date on new tax laws, auditing standards, and emerging technologies.
  • ▪ Teach soft skills. CPAs need to be effective at communicating, thinking critically, and solving problems, so students need to learn these skills, too.
  • ▪ Teach ethics. Ethics and professionalism in accounting should be taught to enable students to make good decisions while following professional codes of conduct.
  • ▪ Encourage practical experience. Students should have opportunities to pursue internships and co-op programs to see what working in accounting is really like.
  • ▪ Teach other subjects, too. Schools should offer courses that combine accounting with related fields including business, finance, or data science.
  • ▪ Prepare students for certifications. Teachers should offer courses that help students prepare for certifications including the CPA, CMA, or CISA.
  • ▪ Use digital resources. Schools can use online courses, interactive platforms, and other digital resources to help students learn.
  • ▪ Work with the profession. Schools can partner with companies and organizations to give students exposure to the latest technologies and practices in accounting.
  • ▪ Offer mentorship and career guidance. Students need help figuring out what they want to do after they graduate. Schools can offer mentorship programs and career guidance to help.
  • ▪ Encourage research. Teachers and students should work on research that addresses new challenges in accounting.
  • ▪ Teach global accounting. Businesses operate all over the world, so students need to know about international accounting standards and global tax issues.
  • ▪ Use adaptive learning. Instructors can use technology that adapts to each student’s learning style.
  • ▪ Make accounting fun. To attract more people into accounting, schools should talk about how exciting it is and how many different things one can do with an accounting degree.

By using real-world examples, teaching technology, and keeping up with changes, schools can help students become great accountants who are ready for anything.

Filling the Extra 30 Credits

Adding technology-related coursework can help students prepare for the modern accounting landscape. Here are some of the benefits of using a tech focus to fill the 30 credits beyond a bachelor’s degree:

  • ▪ Better skills. By taking tech courses, future accountants can learn data analysis, data visualization, accounting software, and IT, which are all important for success.
  • ▪ Competitive edge. Employers are looking for professionals who can use technology to improve efficiency and provide data-driven insights. New CPAs with a strong tech background can use this to their advantage.
  • ▪ Adaptability. Accountants who understand technology can keep up with changes in accounting, tax, audit, and financial technology.
  • ▪ Data-driven decisions. Tech courses teach students how to analyze large data sets, extract meaningful insights, and use data to make informed financial decisions.
  • ▪ Automation. Technology knowledge can help accountants automate routine tasks, reducing the need for manual data entry and processing. This frees them up to focus on more important tasks.
  • ▪ Risk management. Tech courses cover cybersecurity and risk management, which help accountants understand and mitigate cybersecurity threats and protect sensitive financial data.
  • ▪ Audit technology. Auditors can benefit from technology courses that cover audit software, data analytics, and AI, enhancing their ability to conduct efficient and effective audits.
  • ▪ Future-proofing. Preparing accountants with strong technology skills future-proofs their careers. As technology continues to advance, professionals who can harness its power will be in high demand.
  • ▪ Compliance. Tech-savvy accountants can help clients comply with industry-specific tech requirements and regulations.
  • ▪ Interdisciplinary approach. Combining accounting and technology courses gives an interdisciplinary perspective, which helps accountants understand how technology intersects with accounting, tax, and audit practice.

It is important to strike a balance. A well-rounded accounting education should incorporate both traditional accounting concepts and technology courses.

In the end, the decision to add tech courses to the curriculum should align with the goals of the educational institution and the needs of the accounting profession, as well as the preferences and aspirations of the students. The accounting profession is constantly evolving, and educational programs should adapt to meet its changing demands.

Future Changes

The public accounting profession will continue to advance digital technologies and business intelligence tools to increase the efficiency and effectiveness of tax and accounting procedures and improve the quality of accounting services in the next decade. New competitors will enter the market, such as “remote accounting services” and “remote tax services,” to provide dashboards for daily monitoring activities; environmental, social, and governance (ESG) reporting; and new cybersecurity solutions on demand. The modern accountant will bring more business value to firms and clients around the world through remote work. New digital accountants will be in greater demand because of their knowledge of statistical inference and technological tools. The ability to analyze data and interpret it in modern ways from big data sources is the key to success. CPAs with the skills to provide more digital data insights into business operations and processes will continue to be in demand and command higher salaries.

The CPA Evolution Initiative will bring changes to the CPA licensure model starting in 2024, with a greater focus on technology in response to the shift in knowledge and skills required of newly licensed CPAs. As technology, including data analytics, continues to become increasingly vital to the accounting profession, it will be introduced in the new CPA exam not as a single discipline but throughout all exam sections.

The CPA Evolution Initiative will introduce a core and discipline model to the CPA exam. The core will include three exam sections (Auditing and Attestation; Financial Accounting and Reporting; and Taxation and Regulations) that all candidates will be required to take. Candidates will also have a choice of selecting one of the three disciplines that aligns with their interests (Business Analysis and Reporting; Information Systems and Controls; and Tax Compliance and Planning).

Accountants can help their clients adapt to the “new normal” of the post-pandemic environment by identifying the new disruptive technologies such as Blockchain, AI, and RPA to achieve long-term productivity gains while enhancing cybersecurity (O. Olayinka and T. Win, “Cybersecurity and Data Privacy in the Digital Age,” Handbook of Research on Digital Transformation, Industry Use Cases, and the Impact of Disruptive Technologies, 2022,  With AI-enabled tools, accountants can spend less time gathering, correlating, and summarizing information and more time analyzing, evaluating, and predicting the results or implications of the information and data. Robotic process automation, data analytics, and AI are collectively driving the transformation of the audit process (Brooks, 2020).

Accounting, tax automation, and business data analytics will persist as part of business operations. The profession should work on more advanced modeling techniques in the field, which will continue to change over the next decade. The development of business information and related technologies has reshaped business ecosystems. Competition is increasing in accounting and tax automation, leading to higher demand for CPAs with specialization and skills related to business intelligence software. CPAs need to be prepared for the transformative events coming over the next decade.

Karina Kasztelnik, PhD, is an assistant professor of accounting at Tennessee State University, Nashville, Tenn.

Stephen Campbell, PhD, is an assistant professor of accounting at Tennessee State University.


link

Leave a Reply

Your email address will not be published. Required fields are marked *