MBA Careers: Accountancy Careers Go High-Tech As Auditors Expand Recruiting
Cloud computing and data analytics shake-up auditing
The accountancy profession is going high-tech. The rise of digital technologies such as cloud computing and data analytics, wedded with new European regulations that are shaking up the audit process, are spurring an industry wide shift.
As accounting firms begin to embrace disruption led by tech challengers such as SAP, Salesforce, or Oracle, innovation is reshaping the auditing divisions that have traditionally been the backbone of professional services.
Accountants are striking deals with digital businesses, investing in tech-savvy start-ups, and are increasingly employing techniques more akin to the business models of Silicon Valley minnows than long-established bookkeepers.
Examples include KPMG’s partnership with Formula One automotive group McLaren to use predictive analytics in its audit and consulting work, and the joint venture PwC launched last year with Google, to combine the search giant’s tech platform with PwC’s corporate expertise.
Nick Frost, partner at KPMG in the UK, says that auditing is being re-engineered by technologies like cloud computing — which could have a “significant” impact on accounting — fuelled mostly by big data.
But, speaking to BusinessBecuase, he says that accountancy firms are under threat from technology companies like Google and Amazon: “This threat is real if we don’t take [a] lead in this area,” he says. “We are the best at accounting today, but not the best at data analytics.”
He says that accountants must be retrained to master high-tech auditing tools. “It is the mind-set first that needs to be retrained, to be risk-focused through data,” he says.
Demand for accountancy talent skilled in these areas remains robust. Sharon Spice, director of global student recruitment for ICAEW, one of the biggest accountancy bodies, says: “Top students are now taking offers of employment from more than one accountancy practice at a time.”
She says the employment market has strengthened as the economy has recovered from the recession. And it is not just the “Big Four” professional services firms PwC, Deloitte, KPMG and EY competing for accountants, but investment banks and management consultancy firms too.
Auditors are embracing technology as the battle to secure new business intensifies. New EU rules requiring large companies to invite bids for auditing work at least once a decade have upset their business models.
PwC’s 120-year audit client Barclays, for example, switched to KPMG this year. Similarly, HSBC hired PwC as its auditor in 2013, replacing KPMG after 20 years of service.
At the heart of the shift are the vast quantities of data now available to auditors, allowing them to test entire data sets, rather than extrapolating samples.
This enables accountants to improve the quality of the audit by spending more time on the areas of greatest risk, says Richard Anning, head of IT faculty at ICAEW, which has 144,000 members.
“It also provides opportunities to develop new insights about the business and challenge management’s view through a different lens,” he says.
Change has also been prompted by calls from UK regulators for firms to improve their innovation, and by criticism for not spotting practices that led to the global financial crisis.
Accounting scandals still swirl around the corporate world, such as the $1.2 billion accounting irregularities found in the books of Japanese IT group Toshiba this year, which saw nine executives including the CEO sacked.
Another area of innovation is online accounting services, powered by cloud technology. KPMG, for example, last year spent £40 million on developing cloud software that enables clients to prepare their accounts, administer payrolls, and file tax returns on the web.
Faye Chue, head of business insights at ACCA, the accountancy body with 178,000 members, says that social, mobile, and cloud technologies will change the way accountants work and interact with their clients, citing a report from ACCA and the Institute of Management Accountants.
“CFOs now need to take a leadership role in this area,” she says.
But the cloud, and crunching big data, pose a new set of problems, in particular around privacy and data security.
A recent report from accountancy body CIMA found that the sector is missing out on the benefits of cloud technology due to concern over data security.
“Data security concerns are valid, but overstated,” says Dr Martin Quinn, management accounting lecturer at Dublin City University.
With innovation, the accounting profession has expanded dramatically beyond its traditional role of recording transactions, preparing financial statements, and auditing.
Today’s accounting professionals are required to understand technologies and advise on complex business strategies.
Alex Dontoh, professor of accounting and deputy chair of NYU Stern’s accounting department, says that to meet the digital challenge accountancy firms are looking for students with not just audit training but leadership abilities too.
The big accountancy firms are increasingly emphasising “soft skills” — including leadership, communication, and team-working — in their recruitment at business schools, agrees Naeema Pasha, head of careers at Henley Business School.
Accountants must be able to move from an accountancy function to management work, says Dr Edgar Loew, professor of management practice in accounting at Frankfurt School of Finance & Management. “They are not only bean counters,” he says.
This focus allows for more career opportunities: understanding the strategies of multiple large clients is “very attractive” to employers, he says.
One sign of this shift is the increasing numbers of finance directors and chief financial officers becoming chief executive officers, says Alex Stremme, assistant dean for finance and accounting masters programs at Warwick Business School.
“There is apparent strong demand for senior and executive finance appointments,” he says, with graduates going into financial management at banks such as Credit Suisse, Lloyds Banking Group and Bank of America.
With demand for accounting talent high, accountancy firms are innovating their hiring processes. Video interviews are now common, and firm partners are targeting potential hires at a much earlier stage, with offers made in some cases several months before a recruits’ start date, says ICAEW's Sharon.
The fight for talent is likely only to intensify as digital tools continue to alter the accountancy landscape.
KPMG’s Nick says that blind reliance on technology from auditors would be dangerous. But he feels the winds of change: “We need to be aware that technology and the world moves fast and so we cannot afford to be complacent,” he says.