Editors’ note: This is the second of a three-part series on how technology is affecting the accounting profession. The first part can be read here. 

While the CPA profession is certainly no stranger to technological advance, innovations like blockchain technology and artificial intelligence, as well as the increasing automation of routine tasks, promise to radically reshape the industry. It is a change that will affect not only what kind of work firms do, but whom they will hire to do it, something that will be particularly important for recent graduates who are entering an increasingly tech-centered profession.

Talking to the Financial Times last year, Ernst & Young’s chairman and managing partner for the U.K. and Ireland, Steve Varley, said he expects that, “[g]iven the rate at which technology is speeding up audit,” the firm could reduce the number of graduates it hires by 50 percent in 2020.

Here in the United States, EisnerAmper LLP CEO Charles Weinstein’s projections aren’t so grim. While he noted that CPA firms are in the process of a technology-fueled paradigm shift that will reshape the profession over the next 10 years, he doesn’t think that it will necessarily translate into the need for fewer new recruits. Instead, Weinstein noted, a certain level of technical proficiencies among those recruits has rapidly shifted from “nice to have” to “have to have.” But more than knowing the technology itself, Weinstein said that the next generation of CPAs will need to be able to leverage it in creating new processes and using different tools.

“I think it’s the concept of having a vision of how to process information,” Weinstein said. “So the skill set is going to be very different. The skill set is going to be … less … gathering data, because that will all be done electronically, and more interpreting data.”

But the CPA, he said, will remain in demand.

“What do CPAs do?” he asked. “We try to make things that are complex simple. We try to make the difficult understandable, and now we’re going to do that with all kinds of data and information provided by AI [artificial intelligence],” he said. “So the skill set is going to be very different.”

What kind of world will graduates face?

Traditionally, the first few years of an accounting graduate’s career consisted largely of what could be called drudge work. Whether it was inventory counts, comparing documents or chasing down clients to explain an inconsistency, many careers began with the mundane, unglamorous tasks that, nonetheless, were vital to the work.

More and more of these tasks, though, are being taken on not by an army of first-year accounting graduates but by computer programs. For instance, William T. Brennan, managing partner for assurance transformation at PricewaterhouseCoopers LLP, said that his firm has software that can, instead of just taking samples, take almost the totality of someone’s transaction flow data for a day, a week, a month or even a period-end, and then match that data. “The beauty of that is you can have populations with isolated exceptions. Then the audit focuses [in] on those exceptions. I’ll still need to do some auditing on the positive responses. … You need to validate the system worked as intended, but once you prove that, I can focus on risk areas, those exceptions.”

So, with more mundane tasks automated, what exactly will entry-level accountants be doing? Jonathan W. Raphael, chief innovation officer at Deloitte & Touche LLP, thinks what’s likely is that the work will move up a level: New accountants will be doing the kind of work that, today, is done by their more senior colleagues. In fact, he said, it’s happening now. He said people are asking better questions more quickly and getting better insights and quality because they don’t have to focus as much on these rote tasks.

“We’re seeing a deleveraging of the higher-level thinking earlier. Historically, we may have had a first-year, and all they do in that first year is send confirmations. We have technology doing that now. So now, we have the first-year … following up on differences and places where there could be additional risk. Those are things that could be spread across a first-year or senior, but now we’re seeing it done by the first-years. So they’re doing judgment[-based] tasks more quickly, because they can do more,” he explained.

In this respect, data collection and processing will be deemphasized in favor of more analytical tasks that require something most computers cannot provide: human judgment. Bruce H. Nearon, director of IT security audits at CohnReznick LLP, said that while the computer may be able to draw on far more data than any human auditor, people will still be needed to figure out what the data means, or even whether it makes any sense. Even computers can make mistakes—or, rather, be fed faulty data that produces a puzzling result.

He brought up the example of an AI that scans images and processes them into data—perhaps PDFs of sales invoices. Sometimes, though, these images might not scan correctly. They could be blurry or off-center, or the file itself could just be corrupted and unreadable.

“Now, audit comes along and, using AI, they’ll do a reasonable check. ‘This doesn’t look right, I’ll look at the evidence,’ and [they’ll] go to the underlying evidence that supports their test and look at it and say, ‘Wait, this is wrong because it was blurry, that image was blurry.’ The AI made a mistake,” he said.

With this growing emphasis on judgment, however, will firms need fewer people overall? If work that used to take dozens of first-years can now be done with a single computer program, what happens to those dozens of first-years?

Brennan thinks that they’ll likely be reassigned. Auditors, for example, might be deployed into, say, business valuation, internal audit or consulting, all of which demand the same high level of skepticism and attention to detail that auditors need today. People redeploy all the time, he said, not just in reaction to technological change but simply because they want to do something else.

He was frank, however, in admitting that efficiencies introduced by technology could affect hiring.

“I’d be lying to say it won’t be impacting headcount. … When companies put in higher-speed equipment on their production line, inevitably, that will rationalize their people,” he said.

Today, though, he said that PricewaterhouseCoopers is hiring more people than ever—12 percent of them coming not from finance but from STEM (Science, Technology, Engineering, and Mathematics) backgrounds—because the
firm wants to develop a deep bench of professionals who can guide the firm through these changes.

Thomas J. Ray, former chief auditor of the Public Company Accounting Oversight Board (PCAOB) and a professor at Baruch College, agreed that, right now, there is a “tremendous” demand for entry-level accountants. At the same time, he also noted that many of the tools that have already been implemented have streamlined a lot of processes by replacing jobs previously done by humans. He said that, more than ever, it is important for accounting graduates to stand out from the crowd, as he anticipated that competition for the new entry-level jobs, the ones that are focused more on judgment and analysis vs. raw data processing, will be fierce.

“So, what we have is a situation where the entry-level auditor [has] to improve their capabilities and competence perhaps more rapidly than when I started in public accounting,” he said. He added that there was a lot more rudimentary material when he was starting out, so that his generation had a little more time to develop competence and move up the ladder. “Whereas now, we’re getting better at gathering the data and information, to the point where we need to make important judgments [sooner].”

Are schools ready?

But are accounting programs prepared to teach these skills? Mitchell A. Franklin, the director of Le Moyne College’s Department of Accounting, is skeptical.

“Look at a traditional accounting class: You look at disclosures and financial statements, etc., but if you’re in audit, every company has a computerized technology-based accounting system, so you need to understand the technology behind the actual work you’re doing,” he said.

Today’s accounting curricula, he believes, need to change to meet this new environment. But figuring out how to implement this change, he said, won’t always be easy. As with all academic programs, accounting departments have to deal with budgets and human resources constraints that can make it difficult to retool. Current faculty, he said, might not even know how to teach this higher-tech skill set. While he added that many are willing to learn and adapt, he said it will still take time for programs to make the necessary changes.

Ray pointed out that another issue is that programs are already bumping up against the limits of what they can hold. Even the 150 credit hours required today, he said, “seem[s] like an awful lot,” and adding even more to that may not be feasible, unless the plan is for students’ college experience to consist solely of accounting classes.

“We have a very rigorous set of accounting and auditing requirements and information system-type requirements for an accounting person. You don’t want to flood them with only these technical things, but you’ve got to teach them to be thoughtful and to be able to solve problems and exercise judgment, so it’s a real challenge,” he said.

Franklin believes that the traditional accounting program is unlikely to remain in place for long. The accounting curriculum of five years from now, he said, will look very different in order to meet the demand from firms that don’t want to have to teach new graduates on the job about how their software works. Schools that don’t make these kinds of adjustments will begin failing, Franklin said, as fewer and fewer firms will recruit from them. In this respect, he said, it’s an interesting time for accounting programs because it’s a race: Schools that can adjust their curricula fast enough can make a bigger impact than they have in the past. LeMoyne College, for example, recently launched a joint program covering both accounting and management information systems.

Change is on Baruch College’s radar screen as well, according to Robert H. Colson, a distinguished lecturer there, where he also directs the M.S. in Accountancy program. His school, he said, has begun offering undergrads a five-year program that will give them the option of getting a master’s degree in computer information systems while, at the same time, allowing them to take enough classes to qualify for CPA licensure.

Gerald S. Silberstein, an accountancy professor at Sage College of Albany, is unconvinced, however, that firms will require a great degree of technological proficiency in most of their new hires. He noted that professionals don’t have to know exactly how a tool works in order to use that tool. To illustrate, Silberstein said that there’s sophisticated auditing software today, but auditors don’t need to know how to program it.

“All you have to do is push a button,” he said.

While the CPA of the future may not necessarily need to code, Silberstein thinks that person will still need to know how to communicate with and understand those who do.

So what should accounting students do?

Keeping all of this in mind, what should accounting students be doing today so that they can best prepare for the jobs of tomorrow? The general consensus seemed to be that students should supplement their accounting curricula with additional classes outside the program to build a strong technical base and stand out from the crowd.

“I would say someone in that position should try to take some IT courses in college and immerse themselves in the subject matter relating to it, understanding how companies integrate these systems in their business and how these controls are designed and how they’re supposed to operate,” said Salvatore A. Collemi, a consultant who specializes in corporate governance and risk management.

Taking these steps, he said, will greatly help students in their career prospects, as right now, there are not enough people who can blend the IT world with the financial reporting and auditing world; to effectively combine the two, he said, would make for a “very formidable” professional.

Nearon made a similar suggestion, but added that these IT classes should have the same academic rigor as those that are presented to computer science majors. While these types of classes could be available in other programs, he feared that they might be watered down. Similarly, he said that students should also make sure they take intermediate and advanced statistics courses, warning that introductory classes are “insufficient.” On top of this, he advised that students should seek out introductory courses on data science and database structure, once again, taking care to enroll in the ones given to computer science majors.

“Take those four, and you got 16 credits already there. That’s pretty much a whole semester, but it would give them a major leg up,” he said.

Brennan went even further and said that it could be prudent to pick up a second major in information systems or other programs dealing with data.

Priscilla Z. “Penny” Wightman, an accounting professor at Hartwick College, said that within the next five years, she predicts this type of skill set will be part of the minimum competencies that firms require of their first-years.

“[It will be] just like knowing debits and credits,” she said. “You[’ll] have to be able to understand databases, to create them, to know how to ensure their quality and protect that information, and so this notion of big data, of information in the cloud, has raised the bar in terms of complexity.”

Dealing effectively with data, though, Colson said, also required effective communication.

“You’ll still have to develop relationships, you’ll still have client or customer service, you’ll still have to talk to one another, and then there’s also a whole set of things related to audits that demand keen understandings of business and human nature, not readily discernable from a spreadsheet or other analytical tool of all the transactions,” he said.