The Australian government’s Department of Industry this week sent a warning to the accounting profession. Its inaugural Australian Industry Report, released on Wednesday, carries a graph on page 44 titled “Jobs most at risk of being automated”.
The largest column in that graph, at nearly double the next profession, is labelled “bookkeepers and accounting and auditing clerks”.
One of the central themes of the report is the impact of automation by software and robots across multiple professions. It’s not just blue-collar workers in factories who are in the firing line but white-collar professions requiring tertiary degrees.
Increased automation will bring higher productivity and eventually cheaper goods and higher disposable incomes, said the department’s chief economist, Mark Cully, at the launch.
“Just as it did during the Industrial Revolution, when the invention of the loom led to waves of unemployed weavers but cheaper clothing for the masses,” Mr Cully said.
Small consolation for the weavers.
A widely-quoted Oxford Martin School study published last year estimated that about 47 per cent of all US jobs are at risk of computerisation, many of them in sectors needing high-level skills, wages and education, writes the AFR.
Add this to the mission of the Australian Taxation Office to cut $500 million in accounting fees and accounting looks like it’s in for a rocky ride.
Lest you begin your holidays with an impending sense of doom, it’s worth remembering that only parts of accounting and bookkeeping are vulnerable to automation – and typically they are the bits that most in the industry don’t like.
(Well, I have met some bookkeepers who claim to enjoy data entry…)
Volumes have already been written about moving from hourly fees to fixed-price billing, and shifting from compliance to advisory and strategic work. It makes a lot of sense.
As for technology advice, the best approach is to dive in. Work out how to automate your practice with the many different tools available and you will discover which types of work will become redundant.
One accountant I spoke to recently who runs a highly automated cloud-based practice believes accountants shouldn’t be worried by the ATO. “The bits that are being automated are the work that we could never charge for anyway,” says Paul Meissner of Five Ways Group.
Meissner claims the amount of write-offs is much lower in a cloud-based practice as there is no more sending CDs back and forwards, double ledger entry, manual processing of receipts and so on.
So enjoy your holidays and once you’re rested take a fresh look the tools you use to run your business. Accounting is in for a shake-up – but as long as you’re moving with the times, it could even end up for the better.
Sholto Macpherson
Great article that is so true. At HD Accountants we has already automated our processes and this has allowed our clients to receive better service at a reduced cost.
Paul has said it well “the bits that are being automated are the bits we wouldnt charge for anyway”. While that isnt totally true around all professions and I am guessing not totally true in Paul’s world either, my view is that the items being automated are the items that should be automated!
Interesting presentations coming out of the USA/Europe around automation of professional services; in particular the example provided was the services provided by a medical GP. Computers Learning and the advancements of applying that learning to the medical profession: “Automation takes out the data processing, not the human interaction”
In the medical GP world they identified 4 steps that are typical in a medical consultation with the middle 2 being Data Analysis: Using data collected then finding the right diagnosis and then using that to prescribe the treatment. The steps that were not removed were the original “Gather Data” ie talk to the person and then “Apply the treatment”
By automating the middle two steps they are looking to create immense efficiency in the world of a GP thereby helping overcome the shortage of GP’s.
A thought:
How does that apply to our “Bookkeeping” or “Accounting” world. With the increased efficiency being provided to us for some of the data processing, the professional bookkeeper will be able to concentrate on the quality of the data and the accuracy of what is being reported. We see that the level of compliance will actually increase as it will become more cost effective to be able to comply.
That wonderful principle of materiality has all businesses constantly making a cost/risk/benefit assessment: “Will we spend the time to be 100% certain?” and typically the answer is no!. With more of the routine data compilation tasks being more efficient then more time can be invested in ensuring the accuracy and level of compliance.
However
I still come back to “computer learning” and “automation” is all about how one person or group of persons has told the computer to behave given a set of data. What about knowing whether that data has been set up the same way. There is still going to be extensive work ensuring that the computer has been given the right information to “automate” some of the tasks”
I’m interested to know just how many accountants find that cloud accounting software solutions have impacted on their businesses.
Obviously there will still be plenty of folk without the inclination to do any of it for themselves, but in these austere times there must also be plenty who’d appreciate the savings of doing it themselves and with more and more cost effective cloud accounting solutions available it would seem there’s never been a better time to look after your own books.
Good question, Jeff. There’s definitely a trend in programs such as Xero to favour plain English over accounting terms (eg. Bills You Need to Pay instead of Accounts Payable). That trend reflects the growing expectation that business owners will do more of the basic bookkeeping than they may have done in the past. Rather than just a record, the accounting program becomes a tool for managing the business.
There’s definitely room for accountants to play an advisory role, which is much easier using online accounting software. It’s also designed for better collaboration.
I believe automation has actually streamlined a few processes and made our jobs as accountants easier. Bookkeepers are more efficient now. We have easy access to clients live data files now.
At Booksmart Accountants, we have been moving our clients to fixed monthly packages, not just for cloud programs but for desktop based programs as well. It is a great cash flow incentive for both the parties. Yes, the basic individual tax return clients may decrease over the period of time as tax office streamlines their systems however I doubt businesses and complicated tax returns can do without accountants.
We don’t just do tax returns, there is lot more to the profession which no automated system can perform.
Sunny Kaur
Booksmart Accountants