While advisory services had long been touted as the safe haven against the erosion of compliance-based jobs, the rise of artificial intelligence means these islands of stability are set to erode too — and soon, according to Joe Woodard, head of accounting education and coaching firm Woodard.
Long ago, accountants spent most of their days — most of their careers, really — enmeshed in repetitive, rules-based tasks like filling out tax forms or comparing invoices, Woodard told attendees of his Scaling New Heights conference, being held this week in Orlando, Florida. Their offices resembled assembly lines, but instead of cars or can openers, the output was financial data. And for a time this was good, with many firms building their fortunes on these largely compliance-based engagements.
But the time passed and so did technology. What used to take weeks to do could now be done in hours, then minutes, then seconds. These repetitive, rule-based tasks became easier and, therefore, cheaper, which meant firms could no longer support themselves entirely on these kinds of engagements. Something else was needed.
And so, Woodard explained, firms began shifting their focus from repetitive compliance-centered engagements to more analytical, advisory-centered ones. The former never went away entirely, but occupied less and less of the average firm’s revenue mixture. What replaced it were things like financial planning and analysis, tax income analysis, and other advisory work. Accounting became less about processing the data and more about what the data means. And for a time, this too was good, with many firms finding such engagements even more lucrative than the simple compliance-centered work that previously dominated.
But time has passed once more, and so has technology — in particular, artificial intelligence. With its rise has come another wave of disruption, centered around what had previously been touted as a sustainable safe haven against technological displacement: advisory.
Joe Woodard
“In less than 10 years, FP&A will be completely displaced,” said Woodard. “Ain’t this ironic? People stood on my stage at Scaling and said this is your safe place. You’ve got to stop doing bookkeeping and start analyzing financials because if you don’t start doing that, the bots will catch up with you first. And now what we have learned is that AI … is doing the work of financial analysts quite well by itself, thank you very much.”
While he regretted bringing his audience this news, he said it’s important to understand that AI will replace most of accounting. He admitted he wished he had better news, but people need to understand what is happening. Those who will last the longest will be those accountants who use AI, but even they will eventually face disruption.
“Does this mean you stop doing FP&A services? I’m not saying that. But within 10 years, that landscape will change dramatically. … We always perceive the bots as automation bots and you can automate a tax return and you can automate a bank reconciliation. But we never thought, when we were talking about this 10 years ago, that the machines would start thinking, did we? We thought of them as doing. So we thought, ‘Let’s get into the realm of thinking and the more we think the more we’ll be ahead of the bots.’ Now the bots can outthink us.”
He noted that there are already mobile apps that can take in financial information and produce extremely sophisticated insights and advice. As time goes on, they will likely get even more effective, raising the question of when services associated with it will begin waning. Similarly, he identified tax income analysis as “the next domino to fall.” The Tax Code is very complicated, and the history of tax case law even more so, but ultimately both are finite, and AI has no trouble processing them, even for mobile apps.
“Credit Karma actually has done a tax income analysis for me to determine what it believed the amount of my refund was. Know how? Once I connect it to all my financial applications and banking platforms, it knows everything I’ve done, every dollar I’ve spent, it can even compute within a reasonable margin of error how much my tax in my K1 was. It was right within a one-tenth of a percent margin of error! And I have very, very, very complex personal tax returns. But the bots are very, very smart,” said Woodard.
Time to change again
All this means that, for accountants to remain relevant, once more they must make a shift to their self-conception and the kinds of jobs they take on. Once data processing became automated, the focus shifted to data insights; now that data insights are becoming automated, the focus needs to shift to acting on those insights — what Woodard called “controllership.” This is something that, for now, AI cannot do.
“Controllership is where accountancy intersects operations. AI may be very smart, but it cannot call someone and tell them they’re overbudget, then call three other people and deal with the internal politics and emotions and personal stuff people are dealing with while it adjusts the budget. Because that’s not complicated, that’s complex, and a controllership is about navigating those things while also keeping the owner of the company happy at the same time,” he said.
What happens when AI can do this? Woodard, speculating about the next 25 to 30 years, suggested auditing will likely still be a viable practice area, so long as companies are legally required to have audit reports. He noted that auditors are well positioned to be “the truthkeepers, the protectors of humanity from AI,” something he felt will be in high demand.
“Is this not a place we’ve already gone? Right now, CPA firms tell software companies if their software is secure enough. That’s happened, we’ve noticed it, but we didn’t think how much of a paradigm shift this was,” he said.
For similar reasons, he said that income tax representation will be another area that, for now, will be relatively safe from AI disruption, as it requires humans by its very nature.
“A bot can’t stand in an IRS agent’s office, it can’t intercede for a client on the phone, it can’t go to a client’s office and supervise an IRS audit, it can’t negotiate for fees and penalties — that’s a human thing and it is legally required to be done by a human,” he said.
What this indicates, according to Woodard, is that while AI may replace accountancy, it will not necessarily replace accountants. He conceded this isn’t completely comforting news, as many professionals would prefer not to have their main fields of expertise be disrupted, but noted at least that those who adapt to AI will likely last longer than others.
“If AI will replace accountancy — and I said accountancy, not accountants — the million-dollar question is: How can you be the last? If you’re the last one to go, how do you make sure you’re last?” he said.
