Hiring practices have already been affected by the fact that some accounting graduates are perceived as lacking the skills necessary for today’s work-place. Specifically, CPA firms that found graduates ill-prepared for the IT-based business environment turned to other sources for needed talent (Courtney Vien, “Wanted: More systems and analytics training for accounting students,” Journal of Accountancy, March 12, 2021, https://bit.ly/3QGrNTs). According to the 2021 AICPA Trends Report (https://bit.ly/3OcT28U), hiring of new accounting graduates decreased by 10% in 2020, followed by a 11% decrease from 2016 to 2018. Furthermore, 42.7% of new hires by accounting firms are non–accounting graduates. The accounting profession is indeed on the cusp of a major transformation because practitioners are expected to acquire a new set of skills to perform their everyday tasks effectively.
Many CPA firms have adopted prevailing technologies, including artificial intelligence (AI), big data, business analytics, and robotic process automation (RPA), to enhance their businesses. Recognizing that accountants need to develop new skills in a rapidly changing business environment, the AICPA and National Association of State Boards of Accountancy (NASBA) conducted a survey to examine whether college and university accounting programs teach students the skills needed in today’s workplace. In the survey, more than 1,200 accounting department chairs were contacted and asked if their programs currently teach eight topics deemed to be of increasing importance in practice. Exhibit 1 presents the survey responses from 317 participants, grouped by the university accounting program size (small, mid-size, and large). Carl Mayes, the AICPA associate director of CPA quality and evolution, pointed out that there are significant gaps between what practice is demanding and what students have been learning (Vien, 2021).
Important IT Topics Covered by College and University Accounting Programs
The AICPA/NASBA survey identified eight IT topics that can help accounting professionals adapt to today’s business environment. But new tools such as AI, RPA, blockchain, and data visualization continue to emerge due to rapid advances in technology. Exposure to these four new tools is also vital for accounting professionals; for example, the applications of AI or RPA can facilitate the creation of virtual workers for firms to improve productivity. The EY 2020 Global Tax Technology and Transformation Survey revealed that a typical tax team spends 40–70% of its time gathering and manipulating data, but this process could be accomplished in a fraction of the time by AI (EY America, “How artificial intelligence will empower the tax function,” https://go.ey.com/3OyYepi).
To provide an updated coverage of evolving IT tools that are relevant to CPAs and help them keep up with technology advances, this article explains the importance of developing technology agility and offers a roadmap to help professionals meet the challenges of IT-based workplace.
Relevant IT Tools for Accounting Professionals
In today’s practice environment, professionals’ ability to deal with computer data cannot be overemphasized, because this basic skill is often needed to clear the first hurdle for performing well in a digital workplace. It has been pointed out that accounting education has been doing a dismal job of preparing accountants to work deeply with technology (Daniel Hood, “The Profession’s Biggest Challenges,” Accounting Today, Oct. 1, 2018, https://bit.ly/3q2ZLKJ). Thus, to help accounting professionals stay current with technology advances, the eight IT topics identified by the AICPA/NASBA, as well as the four additional IT capabilities identified by the authors, are explained below.
Data analytics generally uses software (e.g., SAS Enterprise Miner or Tableau) to uncover relevant patterns or relationships hidden in the data. As a result of technological advances, the accounting information used for decision making has gradually evolved. In addition to conventional financial data, relevant information has expanded to include nonfinancial information and large-scale data analytics (commonly known as “big data”). This includes both semi-structured data (e.g., HTML, XML, JSON) found in webpages and unstructured data (e.g., PDF, MP4, DOCX) found in documents, e-mails, and multimedia. Using unstructured or semi-structured data for analytics may require natural language processing (NLP) and text mining methods, however, because these data often do not have identifiable attributes/fields that are commonly used by data analytics software.
An IT audit is an assessment of a firm’s management controls over its IT infrastructure, application software, and data security. IT auditors collect and evaluate the evidence obtained to determine if the information systems are protected, data and processing integrity is maintained, and IT general/application controls are effective. An IT audit may be performed in conjunction with a financial statement audit, an internal review of a company’s computing functions (i.e., an internal IT audit), or other form of attestation engagement, such as a SOC 2 report.
IT risks and controls.
The ever-increasing threats to system security can disrupt business continuity, taint corporate image, and even compromise compliance with Sarbanes-Oxley Act (SOX) requirements. Companies need to evaluate if their IT general and application controls are still effective. But not all system security threats can be mitigated due to resource constraints. Consequently, accountants need to identify material threats and prioritize and implement effective controls accordingly.
IT governance provides organizational structures to ensure that IT investments are developed with adequate control mechanisms. Effective IT governance helps ensure that IT supports an organization’s business goals, optimizes its IT investments, and manages IT-related risks and opportunities effectively. Thus, IT governance should be integrated with corporate governance to ensure that the process is aligned with an organization’s overall governance strategy.
Predictive analytics is a branch of data analytics that focuses on making predictions about future outcomes using historical data combined with statistical modeling, data mining techniques, and machine learning. Using predictive analytics can create competitive advantages. For example, predictive analytics can use financial ratios to predict future stock prices. Thus, the role of accountants has shifted from reporting on past transactions to providing forward-looking analytics results.
Most organizations today depend upon computer systems to serve their customers/clients, and some cannot function if their information systems are out of service; therefore, all organizations, big and small, need to deal with cybersecurity issues. As new cybersecurity threats continue to emerge, the challenge of protecting system resources has become a moving target. Consequently, all companies need an effective practice of cybersecurity risk management. In fact, many entities and their stakeholders need the attestation report on cybersecurity risk management efforts and results. In response to such needs, the AIPCA published an attestation guide, Reporting an Entity’s Cybersecurity Risk Management Program and Controls in 2017 (https://bit.ly/475ucR3L). Building on their existing expertise on auditing IT controls, CPAs can help entities communicate the effectiveness of their cybersecurity risk management to related stakeholders.
Systems and Organization Control (SOC) engagements.
Cloud computing (e.g., QuickBooks Online, NetSuite, ADP, Salesforce) uses “resources sharing” among subscribers and a “payas-you-go” model to offer affordable services. Consequently, the accounting systems are no longer under the direct control of subscribing companies, and an independent verification of controls and security matters by a CPA firm may be necessary. Specifically, SOC engagements are the services CPAs may offer in connection with system-level controls of a service organization. A SOC 1 report covers the service organization’s controls that are relevant to an audit of financial statements. A SOC 2 report provides detailed information and assurance about a service organization’s security, availability, processing integrity, confidentiality, and privacy controls, based on its compliance with the AICPA’s Trust Services Criteria; a SOC 3 report covers the same focus as a SOC 2 report, but it is shorter and intended for general distribution.
Digital acumen refers to using IT tools to perform tasks effectively and leveraging digital innovations for business enhancement. Digital acumen is generally context-dependent and evolves over time; thus, CPAs should continue to learn relevant IT tools to keep their digital acumen current.
AI is the simulation of human intelligence by computers/machines. Over the years, several subfields of AI have emerged, including robotics, perception (vision and speech), machine learning (ML), expert systems (ES), and NLP. ML studies the algorithms and statistical models that computers use to effectively perform a specific task (e.g., predicting corporate financial stress or bankruptcy). An ES is a computer program that emulates the decision-making process of human experts. It is often designed to solve complex problems by reasoning through a collection of existing experiences and knowledge, generally represented as “if-then” rules. NLP focuses on understanding and processing human language and can handle unstructured textual data.
A recent AI development is generative AI systems (e.g., ChatGPT) which go beyond NLP tasks and perform information extraction (e.g., summarize key points on a blog article), text classification (e.g., detect fake news), problem solving (e.g., how-to guide to accomplish task in Excel), and new text generation (e.g., essays) on a wide array of topics by reinforcement learning. Within the accounting profession, ChatGPT can be used to complete various activities, such as creating financial reports, giving tax advice, and making audit reports (https://bit.ly/43MF9Eh). However, it is important for CPAs to engage in responsible use of AI tools and independently assess and verify the content produced by ChatGPT to safeguard against complications from the erroneous information that may be generated by ChatGPT (https://nyti.ms/44Gqyf1).
Robotic process automation (RPA), also known as software robots, uses computer software to automate rule-based business processes that are routinely performed by office workers. Thus, software robots mimic what human employees do and become virtual office workers. Afterwards, these robots can be called upon at any time by an employee, a timer, or a predetermined event. Furthermore, AI and business analytics can be embedded to create an intelligent RPA for analytics that will collate data extremely fast or generate insights from non-accounting data (e.g., e-mail and documents). Thus, it is very beneficial for CPAs to understand RPA and how to leverage it for their firms.
Blockchain is a decentralized, distributed, public database that is used to manage a digital general ledger. First implemented to manage bitcoin cryptocurrency transactions, Blockchain has found applications in different fields, including accounting and finance. Blockchain enables direct transactions between parties or “peers” within a network without relying on a central authority. Each transaction is verified for legitimacy, time-stamped, and signed with digital signatures, resulting in a transaction record or “block,” which is encrypted using a special “hash” code. The block is then added to the “chain” and distributed to all parties on the network. It is not possible to alter the block due to the hash as well as the multiple copies of the block distributed over the network. Consequently, Blockchain allows for reliable and verifiable transactions that cannot be unilaterally altered by a single party. Thanks to these capabilities, Blockchain can be applied by CPAs to manage ledgers and audits.
Data visualization involves the planning and creation of tables and charts that effectively convey the results of data analysis. Although visuals have been traditionally used for presenting both statistical and nonstatistical findings, visualization has gained greater prominence due to the large volume (e.g., big data) and diversity (e.g., tabular or structured data, natural language, or unstructured data) of data in modern organizational settings. Furthermore, accountants need to serve users at various levels of an organization’s hierarchy (e.g., executives, managers, or production crews) using different means (e.g., web, mobile, or monitors); hence they need to focus on different types of presentation: from dashboards and scorecards to info-graphics involving different types of visuals, such as bar charts, heat maps, gauge charts, pie charts, and bullet graphs. Consequently, using data visualization, CPAs can make it easier for users to comprehend the financial information provided and see the hidden patterns, if any, in accounting data.
A Roadmap to Technology Agility
While the AICPA/NASBA identified the above-mentioned eight important topics in practice, the AACSB focuses on the contents of pedagogy (i.e., the curriculum) to help accounting students keep up with technology advances. Specifically, the AACSB Accounting Standard A5 requires its members to integrate current and emerging accounting and business practices in three primary components in the curricula (https://bit.ly/474JKVh). Although compliance with A5 is only required for AACSB members, these three education components can also serve well for non–AACSB-accredited accounting programs:
- ▪ Information systems and business processes including data creation, manipulation/management, security, and storage.
- ▪ Data analytics including, for example, statistical techniques, clustering, data management, modeling, analysis, text analysis, predictive analytics, learning systems, or visualization.
- ▪ Technology agility among learners and faculty should be developed, recognizing the need for continual learning of new skills needed by accounting professionals. (p. 22, https://bit.ly/474JKVh)
Technology agility for accountants refers to an ability to adapt to rapid technological advances and revitalize IT skills accordingly. In addition, CPAs must be conscious of technology trends and how to leverage emerging IT tools to create competitive advantages for their organization. Thus, technology agility will be vitally important for the future of the accounting profession as technology continues to change the way accountants work (Courtney Vien, “What to know about AACSB Accounting Standard A5,” https://bit.ly/453vpGF).
Developing technology agility does not just mean being able to use computer software, master a programming language, or memorize technological jargon. Rather, developing technology agility is a continuous process that can help CPAs foster a continual learning mindset. Thus, CPAs should learn new IT tools and use them to perform tasks whenever necessary. To help accountants stay current with evolving technologies and meet the challenge of IT-based workplace, a roadmap to technology agility is presented in Exhibit 2.
The roadmap identifies key domain knowledge underlying the various IT topics and examples of different software tools that serve those purposes. Thus, it provides one means to operationalize the AACSB Standard A5 definition of “technology agility,” as it recognizes various components that help CPAs adapt to the modern IT-based workplace. In addition, the roadmap identifies opportunities for accountants to develop specialized skills on data analytics, predictive analytics, and data visualization with which they could analyze business data, identify anomalies and unexpected patterns or trends, and predict potential problems. This is particularly helpful since CPAs can then perform tasks on their own rather than relying on others with IT expertise. Furthermore, the roadmap presents 12 “landmarks” including digital acumen, cybersecurity, and IT governance that can guide accountants to successfully navigate the IT-based workplaces. Landmarks such as AI and RPA can shed light on future potential and help increase productivity and efficiency. Ultimately, these 12 landmarks set the stage for the continuous improvement of IT skills as technology continues to shape modern workplaces.
Meeting the Challenges
CPAs are used to working with structured data, such as the dates, accounts, and amounts of transactions. Structured data refer to the information collected using a predefined template/schema, such as an Excel spreadsheet or a database table, so that its attributes/fields can be used for analytics. However, the information that CPAs need to use for risk assessment or going-concern decisions may be buried in unstructured or semi-structured data. Furthermore, the explosion of business data in the current analytics era has resulted in the collection of more unstructured and semi-structured data. As a result, the role of accountants has evolved, and they must look beyond structured data and develop data management skills to maximize the opportunities offered by today’s abundance of data.
The AACSB Accounting Standard A5 specifically requires accounting programs to document the strategies deployed to help accounting faculty and graduates develop technology agility. Thus, accounting educators must take the initiative and help students acquire the new skills needed during this digital transformation. Accounting educators can learn from how other accounting programs have enhanced their curriculum to better prepare their students for the rapidly changing practice environment. The experience of Hofstra University, for example, has been previously covered in the CPA Journal (Kathleen Bakarich, et al., “Modifying the Collegiate Accounting Curriculum to Prepare for the CPA Evolution Project,” https://bit.ly/3eXA88b). Each university accounting program, however, will need to adopt a curriculum that best reflects its mission given its resources, opportunities, and constraints.
CPAs also need to enhance their IT skills so that they will not be left behind by technological advances. Organizations cannot exhibit technology agility without technologically agile employees. Developing agility is not an overnight endeavor, however, and employers should provide adequate support and resources for their employees to devote to this transformation process. CPAs can develop technology agility through in-house training, conference seminars, self-learning, or CPE courses. In addition, employers can offer incentives for employees to embrace technology agility, creating a win-win situation.