A recent article in the CPA Journal, written by Karina Kasztelnik, PhD, and Stephen Campbell, PhD,  notes that 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.” The authors add that 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 in the US 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.

According to the article, many students choose their career based solely on the starting salary, but this is no longer sufficient to attract candidates into the profession. “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.” 

The authors believe thar 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.”

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, say the authors, “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.”

The authors point out that 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 authors also note that 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.”

The article concludes that “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.”

For much more, see The Future of Business Data Analytics and Accounting Automation - The CPA Journal.