Note: This article originally was posted on ADP.com. Click here to view the original post.
By: Jea Yu
The confluence of big data and accounting is not only accelerating the transformation of CPA firms and finance departments, but it’s also reshaping roles from the bottom up.
Much has been said about the coming extinction of low-skilled bookkeepers because of the proliferation of automation taking over the accounting function. Robotic process automation and artificial intelligence (AI) is taking over simple repeatable accounting functions like posting, matching and reconciling transactions and quickly expanding capabilities.
However, prudent tech-savvy bookkeepers are taking the initiative to elevate their stature by embracing rather than avoiding these types of innovations.
Big Data Adoption
The very nature of accounting involves the collection, reporting and analysis of financial data. The application of big data and accounting to derive insights and intelligence for the underlying business is the natural evolution in the field. Geni Whitehouse, CPA, expresses how accounting firms and finance departments need to transcend from just entering data to meet tax and compliance requirements to actually “looking at the information they’re putting in to gain insights about the businesses they’re working with.”
Transforming Auditors
The very word “audit” often strikes fear and inadvertently can foster the silo effect on both sides. Audits are usually required by compliance and regulation. Transform the “audit into something beneficial rather than a punishment,” says Whitehouse. With the abundance of big data, Whitehouse contends that the challenge is now to become “better translators” of the data. Much of the work of auditors involves validating and analyzing data.
Very often this intelligence is not shared with their clients. This silo effect can be a bottleneck that can undermine the optimization of big data. Auditors realize the value-added benefits that come with collaboration. As clients integrate source accounting, the audit role will likely eventually shrink.
Gradual Immersion
Whitehouse feels that the accounting profession is just starting to see how big data enhances the small data. It’s possible to take small data and create ratios to apply to performance data. “Point to how you can change a ratio by this much and see how it affects your numbers and then compare to the industry,” she says. Then, implement tweaks to improve cash flow. You’re taking the little data and combining it with the big data of the industry to gain better intelligence.
Transformation Drivers
Whitehouse points to two major forces driving transformation. “We have client pressure to get smarter and more proactive and collaborative, and we’ve got to able to respond to what the market is demanding,” she says. While accounting firms traditionally advocate new processes and changes for clients, Whitehouse sees the shift when it comes to technology. Clients are the ones adopting technological innovations and then advocating for the integration of that technology with accounting firms.
“Cloud adoption has been driven by our clients,” Whitehouse says. The clients generate the demand that firms need to accommodate “to stay relevant.”
Rise of the Bookkeeper
An interesting by-product of transformation is the elevation of the bookkeeper role. Bookkeepers are the gatekeepers on the front lines and at the pulse of operations. They are the first point of contact and exposure to financial pain points for a business comparable to triage nurses taking care of a patient first before they’re handed off to a doctor or specialist.
Whitehouse notes there’s a surging attendance of bookkeepers at major accounting conferences, who are implementing every technology they can get their hands on. Prudent bookkeepers are staying ahead of the curve and elevating their stature. “The bookkeepers are pushing the CPA profession to get smarter and more knowledgeable about technology,” she says. “The bookkeepers are really hungry. They are implementing everything. They are sponges and impassioned to solve problems. They just want to fix something for their clients.”
The Value Turbine
The convergence of digital innovation and integration has spurred the transformation of roles in the accounting industry from the ground up pressed by clients, competition and bookkeepers. The cumulative effect is the transformation of accounting firms into value turbines that shift from a defensive to offensive stance for their clients bringing more insights and intelligence that create tangible results to the bottom line.