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Embrace the new world
Garry Carter argues the digital revolution is fundamentally changing accountancy – and you must take note!
Daniel Defoe (1659-1731) once wrote: “I saw the cloud, I did not see the storm.”
The accounting profession is indeed in the eye of a storm, brought about by the digital revolution, facilitated by the Cloud. Revolution might seem like a strong or evocative word but revolution it most definitely is. And if history tells us anything it is that in any revolution neither side comes out completely unscathed. Technology is driving change at breakneck speed and it is already obvious that some in the accounting profession are scurrying round dazzled by the headlights.
The six consultation documents released by HMRC on their Making Tax Digital (MTD) regime are game changers. What I have gleaned so far from their proposals I see as hugely positive, although not without risk. What lies ahead will certainly not suit everyone, but what we all have to remember is the most important component in all of this – the businesses we all serve.
Is the customer ready?
Accountancy is seen by many as some sort of quasi-Masonic order, designed to keep secret the knowledge gained over years of tortuous study and certainly not to be understood by the common man or woman. So this new revolution has the potential to cast all that asunder and cede control back to the customer. But is the customer really ready for it and do they really want it?
Evidence would suggest that most businesses, particularly micro and small businesses, do not want to spend their time ‘doing the books’, but want instead a cost-effective service from someone who talks to them in a language they understand. It’s no good telling business owners after their year end that they have been doing it all wrong when what they really need is some serious hand-holding throughout the whole year.
This is all positive for bookkeepers. A business is a living thing; it doesn’t recognise year ends or accounting periods. This is why bookkeepers can be positive about this brave new world. Unlike the once-a-year compliance accountant the bookkeeper is a pro-active constant within the business.
Sage Executive Vice President Jennifer Warawa recently sat in my office and raised the valid point: “Why is everyone so hung up on month-end and year-end when new software advances mean businesses can have live accounts?” Why indeed? Take banking as a prime example; we simply go online at any time of the day or night on our PC, laptop, iPhone or even watch, and get an accurate, up-to-the-minute figure.
In their book, ‘The Future of the Professions’, Richard and Daniel Susskind suggested that within a relatively short timeframe many professions, bookkeeping and accounting among them, will disappear. They cite technology and even artificial intelligence as the catalysts for this seismic change. But they blame the professions for their own demise. They suggest that in the legal profession the big losers will be solicitors, who have priced themselves out of the reach of the common man and thereby making recourse to law unattainable for many. The result will be, they suggest, that solicitors will lose their stranglehold with much of their work being taken by paralegals and, eventually, by Big Data and algorithms. Do you see the similarities?
Sitting on a thought leaders panel at the recent Sage conference in Chicago I and my fellow ‘global thought leaders’ suggested that the accountancy profession has been similarly neglectful and unapproachable. So is control about to be wrenched from the accountant and passed to the bookkeeper?
Accountants are struggling to adapt to these new changes. Their current costing model surely precludes them from more frequent interaction with clients who already cringe at their annual fees.
Some firms of accountants, most notably KPMG, are now offering ‘bargain-basement’ bookkeeping to try address the shift from compliance accounting to a more value based modus operandi. Surely this is like doctors trying to be nurses instead of concentrating on being better doctors and working with the nurses to give the patient an all-round better service.
Behaviour has to change
In a recent Economia column, ICAEW chief executive Michael Izza was perhaps trying to steady his troops when he wrote: “But while technology will drive change, it would be overly pessimistic to assume that it only presents threats. New technology does not change human needs or behaviours, it facilitates them.” While I agree, the point surely is that some human behaviour has to change and will.
So my question is simply this: If we are about to see a major directional switch from accounting to bookkeeping, is it now time for students and PQs to follow this new direction?
• Garry Carter is the CEO of ICB Global and ICB UK
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