ICAEW: New Positioning with Necessary Skills Crucial for Accountants in the Age of Industry 4.0

Home > Latest News > ICAEW: New Positioning with Necessary Skills Crucial for Accountants in the Age of Industry 4.0

Success Stories

David Lyford Smith discusses the impact of blockchain technology on the future of accountancy

 

Hanoi, November, 2017 – As digital technology is transforming businesses and economies across the globe and increasingly affecting the accountancy profession at the technical sessions organised by the Institute of Chartered Accountants in England and Wales(ICAEW) in Hanoi and Ho Chi Minh City. The ICAEW IT Faculty Technical Manager, David Lyford-Smith made the emphasis that it is the imperative for members of the profession to equip themselves with the necessary skills to deliver higher-value services or risk becoming marginalized by automation and artificial intelligence.

During the technical sessions, David shared the findings of recent research done by ICAEW on how the current digital technology trends are changing the accounting profession in terms of emerging business opportunities and challenges as well as outlined its approach to helping industry professionals stay on top of the game.

Today, digital technology powered by the exponential growth of computing power`, opens a whole new world of opportunities. This allows for unprecedented innovations in financial services resulting in a higher level of operational efficiency and access to entirely new markets. A good example of the technology that is changing today’s global business landscape is ‘blockchain’ - a system of universal entry book-keeping where a transaction or a single input of data can be easily viewed by or shared with many parties on the same network in an systematic and secure manner.

‘If a marketplace or system is running on a blockchain, the nature of assurance that is needed will change.  You don’t need assurance that your asset exists or that your records agree with others’ because that’s certain in a blockchain environment. So instead the focus of assurance turns to the tie between the blockchain record and the physical world, and more generally to the economic reality of the transaction that is seen in the blockchain.’ said David Lyford-Smith.

‘For example, a blockchain might give you certainty over the timing and amount of a purchase of some goods, but it can’t assure you of the condition of those goods’ added David Lyford-Smith

One much-cited use of blockchain is in land registry. The provenance and transfer of geographical assets is a great fit for its transparency, verifiability and ability to publicly show who has previously owned, sold and divided land.

These days, finance and business processes are increasingly moving online. Some finance functions have recently focused on increasing operational efficiency through sophisticated capabilities such as automation, artificial intelligence, and natural language processing. For instance, some organisations are using virtual assistants instead of finance staff in answering questions from suppliers on invoices and payments. The world is also seeing a renewed focus on shared service centres, global process hubs and outsourcing, where economies of scale justify substantial investments in extensive process automation.

To take advantage of these new emerging opportunities, it is important for accountants to look out for the key trends including big data, cryptocurrencies, distributed ledger systems, payment systems, mobile money, and also new platforms connecting providers and users of financial services as well as analytics-based financial services.

However, along with new opportunities comes the growing fear that traditional approach to financial reporting and routine accounting tasks are steadily being taken away by automation and artificial intelligence and members of the profession are not adapting to the new technological trends quickly enough to take advantage of the new available platforms and risk becoming marginalized.  

Sharing his view on the future role of accountants, David Lyford-Smith said: ‘I think what will happen is not that accountants will disappear, but that the definition of an accountant will evolve and that the profession as a whole will move to the higher-value adding activities such as assurance over complex areas, analysis, prediction, and advisory services’.

According to Trang Dang, Head of ICAEW Vietnam, technology capabilities need to be applied into specific business context in a way that provides value. As the pace of change in technology is typically faster than change in human behavior, even where capabilities exist, altering the way accountants perform their daily tasks can be a long process.  

‘To provide greater leadership on the exploitation of data, accountants may well need stronger technical skills around data, and greater understanding of statistics to challenge the method, assumptions and output of predictive models’ Trang further stressed.  

David shared an example of a fundamental skill set often overlooked by businesses, by analysing the spreadsheet risk as an area that ICAEW believe is affecting local businesses, which most of these businesses do not realise. This risk, in a nutshell, lies in under-trained staff, leading to constant time leakage through inefficient spreadsheet package use.  

On a broader level, the ICAEW digital leadership report identifies three broad sets of skills which accountants need to develop to be able to exploit data efficiently:

-              Technical data skills, such as knowledge of data formats, flows and issues of quality

-              Statistical skills and the ability to use algorithms to build models

-              Domain knowledge to enable the interpretation of data in the context of the specific organization

In conclusion, the findings from the report recognises that there is a limit to what individual actions can achieve and calls for collective actions by industry stakeholders and based upon common interest and opportunities in areas such as awareness and education, innovation and collaboration to achieve system-wide changes.