Key trends shaping the transformation of the accounting industry and its impact on the profession education program
The global economy is changing at a very fast pace. This is bringing with it a number of changes and challenges to the accounting profession, which must keep up with the pace of change. Accounting education, both at universities and other higher education providers, must ensure that the newly qualified accountants develop not only the technical expertise to help organisations sustain economic growth but they must supplement this with highly developed personal skills and professional qualities.
Drivers for change
In its report, Professional accountants – the future: Drivers of change and future skills (Accaglobal.com, 2016), ACCA identified the main drivers for change that will impact the accounting profession in the years to 2025 together with the skills and competencies that will be required by professional accountants in the future.
According to this report (Accaglobal.com, 2016, pg. 10), the drivers that will bring about major changes to the accountancy profession are:
1. Regulation and governance
2. Digital technologies
3. Expectations on professional accountants
to look beyond the numbers
Regulation and governance
In the coming years, increased regulation and stronger governance are expected to have the greatest impact on the accounting profession. We have seen in recent years how well-known frauds and scandals have led to an exceptionally huge increase in the demand for forensic accounting services. It is expected that tax specialists will experience the greatest challenges following intergovernmental tax action to limit base erosion and profit-sharing (Accaglobal.com, 2016, pg. 10).
We are living in a world that is being driven by the quick advancements in technology.
In their book, The Future of the Professions: How Technology Will Transform the Work of Human Experts (Susskind and Susskind, 2015), the authors forecast two different futures for professions. First, professionals are expected to use increasingly sophisticated technologies to enhance their traditional ways of working. Second, intelligent automated accounting systems (e.g. cloud-based accounting systems) are being developed and these are expected to displace the work of traditional professionals.
Blockchain and its related applications are expected to make a huge change to the accounting profession. These have the potential to enhance the accounting profession by reducing the costs of maintaining and reconciling ledgers. Accountants can gain clarity over the available resources and obligations of their organisations (Icaew.com, 2017).
The large amount of data being collected, processed, stored and communicated has transformed the way in which business is being done. Big data and data analytics can enhance the work that accountants do and the contributions that they make to their organization. Expert use of analytics will enhance financial reporting. Data analytics tools help accounting professionals create more accurate and detailed forecasts. These tools allow professionals to link financial and non-financial performance and provide more comprehensive reporting of their performance to shareholders and other stakeholders (Cfoinnovation.com, 2017).
What will be expected of professional accountants? Professional accountants will be required to look beyond the numbers; they need to interpret and explain these numbers. They will need to analyse a broader range of data, provide forward-looking information and help organizations to achieve their objectives. Professional accountants will need to make professional judgements by acting with integrity and exercising objectivity and professional skepticism.
More organisations are expanding across borders to enhance further their long-term success. This creates more opportunities and challenges to professional accountants who have to develop the required interpersonal skills to work successfully with people from different countries and culture. Globalisation increases the importance of accountants keeping abreast with global issues and adapting to any changes that may occur. This issue of globalisation is foreseen in the continuing harmonisation of accounting standards.
Impact on the professional education program
How will these changes affect accounting education? Accounting graduates will need to have better developed professional skills to succeed in the future ((Cpaaustralia.com.au, 2015)).
In its 2016 report, ACCA has identified seven professional quotients of success, i.e. seven future skills which professional accountants of the future will need to develop:
- “Technical skills and ethics: The skills and abilities to perform activities consistently to a defined standard while maintaining the highest standards of integrity, independence and skepticism.
- Intelligence: The ability to acquire and use knowledge: thinking, reasoning and solving problems.
- Creative: The ability to use existing knowledge in a new situation, to make connections, explore potential outcomes, and generate new ideas.
- Digital: The awareness and application of existing and emerging digital technologies, capabilities, practices and strategies.
- Emotional intelligence: The ability to identify your own emotions and those of others, harness and apply them to tasks, and regulate and manage them.
- Vision: The ability to anticipate future trends accurately by extrapolating existing trends and facts, and filling the gaps by thinking innovatively.
- Experience: The ability and skills to understand customer expectations, meet desired outcomes and create value.” (Accaglobal.com, 2016, pg. 26)
Universities and higher education providers must ensure that accounting graduates will possess these professional skills and knowledge. Lecturers need to broaden their own skills in order to assist students to apply these skills in the real world. How can this be achieved?
In a study carried out recently, Shaping the Future of Accounting in Business Education in Australia ((Cpaaustralia.com.au, 2015)), participants were asked to suggest strategies for higher education providers to produce graduates who possess the necessary skills and knowledge required for the future.
Some suggestions included:
- To broaden the areas of studies, e.g. the need to include study units on cloud computing, data analytics, integrated reporting, digital technology;
- To include work integrated learning initiatives (internships) as part of the study program and use related learning strategies (including integrated case studies);
- To involve organisations, firms and alumni more in the classroom and even online;
- To integrate the development of professional skills across the whole curriculum;
- To increase focus on the social, environmental and ethical aspects of accounting.
The changing demands on the skill requirements for accountants will reflect directly on the provision of education. Recently, a number of accounting education providers have introduced changes to their qualification to ensure that it remains relevant and it develops professional accountants with the skills and knowledge required. Integrated case studies using real-world scenarios have been introduced where the students are required to blend technical, professional and ethics skills in evaluating the information given and presenting their answer. Ethics modules have been developed where the student needs to demonstrate that he/she understands and can apply ethical and professional behavior in real-world work situations.
The four drivers of change, regulation and governance, digital technologies, expectations and globalisation, are proving to be a major challenge to the accounting profession. Accounting education providers must ensure that their qualifications remain relevant: they must ensure that their qualifications are equipping students with a unique blend of professional skills and technical knowledge, which is required in a rapidly changing business landscape.
- Accaglobal.com. (2016). [online] Available at: https://www.accaglobal.com/content/dam/members-beta/images/campaigns/pa-tf/pi-professional-accountants-the-future.pdf [Accessed 9 Oct. 2018].
- Cfoinnovation.com. (2017). Are You Ready? Data Analytics Is Reshaping the Work of Accountants | CFO Innovation. [online] Available at: https://www.cfoinnovation.com/management/are-you-ready-data-analytics-reshaping-work-accountants [Accessed 10 Oct. 2018].
- Cpaaustralia.com.au. (2015). [online] Available at: https://www.cpaaustralia.com.au/~/media/corporate/allfiles/document/professional-resources/education/shaping-the-future-final-report.pdf?la=en [Accessed 9 Oct. 2018].
- Icaew.com. (2017). Blockchain and the future of accountancy. [online] Available at: https://www.icaew.com/technical/technology/blockchain/blockchain-articles/blockchain-and-the-accounting-perspective [Accessed 9 Oct. 2018].
- Icas.com. (2017). The end of the accounting profession as we know it? | News | ICAS. [online] Available at: https://www.icas.com/ca-today-news/the-end-of-the-accounting-profession-as-we-know-it [Accessed 9 Oct. 2018].
- Ifac.org. (2017). Future of Accounting Profession: Three Major Changes and Implications for Teaching and Research | IFAC. [online] Available at: https://www.ifac.org/global-knowledge-gateway/business-reporting/discussion/future-accounting-profession-three-major [Accessed 9 Oct. 2018].
- Krepublishers.com. (2013). [online] Available at: http://krepublishers.com/02-Journals/IJES/IJES-05-0-000-13-Web/IJES-05-2-000-13-Abst-PDF/IJES-05-2-137-13-181-Fouche-J-P/IJES-05-2-137-13-181-Fouche-J-P-Tt.pdf [Accessed 9 Oct. 2018].
- Susskind, D. and Susskind, R. (2015). The Future of the Professions: How Technology Will Transform the Work of Human Experts. Oxford University Press.