Accountants have heard for the past few years that technologies such as blockchain and artificial intelligence (AI) will bring radical transformation to the profession, changing everything from how audits are conducted and firms are structured to the type of work CPAs perform and the skills they'll need to succeed. Transformation, however, has not been immediate, leading to some disillusionment among CPAs about the power and potential of new technologies (especially bots, blockchain, and predictive analytics, as shown in the graphic "CPA.com Accounting Profession Megatrends, 2019"; the graphic illustrates the cycle of expectations that technology innovations experience and shows where certain technologies stood in that cycle in 2019).
CPA disillusionment with new technologies brings to mind an oft-repeated quote by Microsoft founder Bill Gates: "We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next 10."
Those words, from Gates's 1995 book The Road Ahead, seem particularly pertinent to the accounting profession as we begin the 2020s. Just consider how much the profession has changed over the past 10 years.
* In 2010, many expected that U.S. companies soon would be reporting under a global set of accounting standards after the SEC issued a statement encouraging the convergence of U.S. GAAP and IFRS. But enthusiasm over global standards quickly waned.
* Ten years ago, the Patient Protection and Affordable Care Act, PL. 111-148, changed compliance rules, the Internal Revenue Code, and the health care industry in the United States. Although the law's demise has often seemed likely, it has survived a Supreme Court decision and a repeal effort.
* The iPad debuted in 2010, a year when many CPAs were still using their first smartphone, and some were still using flip phones. The iPhone was first sold in 2007.
* A decade ago, very few firms were doing write-up work, which was written off as unprofitable due to the manual labor involved. Today, technology has automated most of the back-end work, transforming "write-up" into "client accounting services," which now accounts for 10% of accounting firm revenues and is the fastest-growing segment of public accounting, according to AICPA research.
It's difficult to predict what the regulatory future may have in store for CPAs over the next 10 years, particularly in an election year. But one thing is absolutely certain: Technology is going to bring huge changes in the 2020s.
"The past decade has been primarily about automating the inputs, such as the dynamic processing of expenses and bills, inputting of information to the general ledger, OCR [optical character recognition] reading of tax source documents, etc.," said Erik Asgeirsson, president and CEO of CPA.com, the AICPA's technology subsidiary. "Over the next five to 10 years, machine learning and predictive analytics will lead to a big boost in the sophistication of how this automated data is interpreted. This will allow the trusted adviser of 2030 to provide dramatically greater insights and actionable items for their clients and employers."
As alluded to in the December JofA article "What to Expect in 2020," the 5G cellular network and 5G-compatible device rollout will gain speed this year, hitting critical mass during the 2020s. The ability of 5G to transmit data at much faster speeds and in much greater amounts will open the floodgates to a torrent of information from what will be billions of devices connected to the internet. That data, in turn, will fuel the growth of AI, especially in the area of machine learning.
"Machine-learning algorithms use a large amount of what is known as 'training data' to make predictions or decisions without being programmed to perform the task," said Rick Richardson, CPA/ CITP, CGMA, founder and managing partner of Richardson Media 8cTechnologies LLC.
Machine learning develops based on a simple equation. More data equals more learning. This formula already is producing results, such as when you interact with your smart speaker at home or receive personalized content recommendations on Netflix--or when doctors in China use AI to review millions of CT scans for early signs of lung cancer.
"It is not a far reach to consider a similar type of AI developed for common formatted financial statements," Richardson said. This AI could have the ability to highlight anomalies in a current client's statements based on thousands of other financials in the same industry, he said.
Paired with 5G cellular networks, devices connected to the internet of things (IoT) will generate enormous amounts of data that can be accessed in real time.
"If data is the new oil, then IoT devices are the new oil wells," said Amanda Wilkie, a consultant with Boomer Consulting. She foresees a massive increase in real-time financial data driving the accounting profession toward predictive and prescriptive advisory services.
The access to real-time data analytics and analysis will give accountants the information needed to provide actionable intelligence and advice on business decisions.
"With these data insights, accountants can suggest immediate...