January 23 2019
By: Mike Whitmire
I’m an accountant. Like most of you, I’m also a realist. I’m tired of “doom and gloom” predictions about the profession. I’m also sick of overly rosy and optimistic pictures of what’s to come for accountants and auditors — painted by non-accountants who have no idea what they’re talking about.
With the new year already upon us, I’m going to share a tempered perspective on what accountants, controllers and CFOs should keep an eye on in 2019 based on discussions with peers in other areas of technology and business, and taking into account my own experiences with customers across a multitude of industries.
Blockchain is (mostly) a lot of buzz
There’s been a lot of talk about blockchain potentially eating up the accountant’s job, but that isn’t going to happen any time soon. Even blockchain enthusiasts are finally agreeing that blockchain isn’t going to eliminate audit or accounting. The technology is still in its infancy, and until the foundation stabilizes, the benefits of incorporating it as a substitute for human intelligence are far in the future.
That’s not to say blockchain won’t have an impact on accounting or finance — it’s already having a major impact in the supply chain world. Walmart started requiring suppliers of leafy green produce to use a private blockchain starting this month.
Expect blockchain to become a key element of modern supply chain management over the next five years, especially when it comes to food safety and any product where consumers want to know the source with certainty (think fair trade coffee, baby products and diamonds).
The talent gap is going to get worse
Advances in automation, artificial intelligence and machine learning will continue to eliminate task-based work and low-skilled positions — but that’s not a bad thing. The booming economy is making talent scarce, and we need to be able to automate as much as we can just to keep up with economic growth. In fact, despite the trend toward automation, 140,300 new accounting and auditing jobs are predicted by 2026.
I just mentioned the elimination of certain positions, so this next thought comes as slightly counterintuitive. As baby boomers retire, expect the talent shortage in the accounting and finance professions to continue to worsen. Salaries will continue to rise and firms will compete increasingly on benefits and quality of life for their workers.
In order to compete, we’ll see even more companies offer a remote/virtual office. The worsening talent shortage will accelerate the move to flexible and remote work policies for accounting and finance professionals. Cloud ERP will be a key requirement to enable this policy because it allows workers to access the information they need to do their jobs from anywhere. The good news: Experts agree that the time has come for cloud ERP.
Finance leaders will be forced to evolve their roles
Don’t think high-skilled positions are safe from change either — the roles of the CFO and the controller are evolving, and it’s happening quickly. CFOs will need to spend more time on reporting (thanks to new regulations and compliance laws), necessitating a faster close. The speed of business is picking up, and finance and accounting departments are having a hard time to keeping pace.
Customer experience will become a key offering in service industries, and controllers and CFOs will start to pivot their departments from cost centers into service centers. As CFOs take on more of an operational and strategic role as the right hand to the CEO, the controller will increasingly take on the “old” role of the CFO, particularly when it comes to risk management.
Investors will finally start paying attention to accounting standards changes
In 2018, we saw public companies forced to switch over to dual reporting. At the tail end of the year, private companies scrambled to become compliant with ASC 606 revenue recognition, and many teams in the private sector are still frantically working to adopt the new guidance. Meanwhile, investors haven’t been paying much attention. But they should be. Investors need to be aware that restated revenue is likely going to be lower than previously reported for many companies so they aren’t caught off guard.
As with revenue recognition, the ASC 842 lease accounting standard will accelerate the adoption of cloud ERP, especially since more companies are affected than with the former regulation. Due to the sheer number of leases and embedded leases in contracts, the complexity of ASC 842 is going to give far more companies trouble adopting and remaining in compliance in 2019.
With these new compliance rules and legislation going into effect, transparency in all forms of accounting will become more crucial. New tracking and measuring tools — as well as protocols — will be offered to to help ease some of the crunch finance teams will be forced to face.
Public scrutiny of the Big Four will increase
Here’s a touch of controversy that I won’t shy away from. Professionals (and analysts) are starting to pay attention to independence issues with the audit (see more of my thoughts here on that topic). It could create problems for the auditing profession in terms of relevance, and for the Big Four, in terms of whether or not to break them up.
More companies will pay attention to how weighted the customer relationship is for the auditing teams. We’ll see far more critical conversation on what true agnosticism means in terms of that relationship, and whether or not there will be repercussions.