Redefining Accounting: Embracing Technology to Transform the Profession

September 21, 2023

This guest post from our partner BlackLine, highlighting the challenges the accounting profession is facing.

Since the onset of the pandemic, the list of challenges faced by business leaders has only gotten longer with each passing quarter: geo-economic confrontations, rising interest rates, supply chain disruptions, rising cyber-crime, energy crises, failing banks, extreme weather events…and unfortunately, there is more bad news to share. Accounting—the backbone of business operations—is in decline.

The Wall Street Journal reported that over “300,000 U.S. accountants and auditors have left their jobs in the past two years, a 17% decline,” and that the diminishing number of accounting bachelor’s graduates won’t be able to fill the vacancies. Some of this decline across the profession can be attributed to retirements, however, several studies point to a much larger problem.

Accounting’s Dependence & Decline

A recent survey of over 1,400 college students (accounting and non-accounting majors alike) on their perceptions of the accounting profession revealed three predominantly negative perceptions of accounting:

1) Accounting careers require longer hours per week than other careers.

2) Day-to-day responsibilities are less interesting than other business careers.

3) Accounting degrees are more difficult to earn than other business majors.

Another survey conducted with the University of Georgia’s Consumer Analytics Program revealed even more alarming data: of the 204 professional accountants surveyed, 99% reported experiencing some level of burnout and 24% of those reported experiencing medium-high to high levels of burnout.

This burnout is predominantly associated with the financial close:

81% of participants reported having at least one month in the past year where the financial close disrupted their personal lives
85% of participants reported having to re-open the books to fix errors at least once a year
49% reported having to re-open the books to fix errors 3-4 months a year

This prevalence of errors within the financial close and subsequent burnout originates in the lack of controls, repetitive work, long hours, and weak data governance that is inherent to dependence on Excel-based accounting processes. Consequently, burnout across the profession only results in more time spent in these processes for the accountants that do remain.

Despite the well-known drawbacks of this dependence, Excel has remained the go-to for period-end accounting and finance processes since its entry into the software market in 1995. This reign as accounting and finance’s primary tool is a success by all accounts. However, the mutual relationship between the recent decline of the accounting profession and the consequences of reliance on manual processes demands a change. This demand for change is stressed even further when we consider the circumstances of our macro-environment and the challenges they pose to the priorities of business leaders.

Conflict with Leadership Priorities

In its Leadership Vision for 2023, Gartner research presents the leading 2023 priorities of Corporate Controllers and their leadership. To no surprise, the CEO’s number one priority is growth, followed by workforce management, and then technological transformation. For the Corporate Controller, the number one priority is to digitize and streamline the financial close process, followed by improving accounting staff engagement and retention, and then reevaluating the controllership’s scope and structure. Does accounting’s dependence on manual, Excel-based processes contribute to either set of priorities? The short answer is no.

With respect to the CEO’s priorities, spreadsheet-based processes:

1) Inherently conflict with technological transformation.

2) Are the root source of the accounting profession’s challenges with workforce growth and retention.

3) Lend themselves to the persistence of risk, inconsistency, lack of visibility, and inefficiency that ultimately disables the CEO from making well-informed, real-time decisions that can optimize profitability.

This is especially true during a tumultuous macroeconomic environment.

A Better Way to Achieving Controllers’ Goals

Fortunately for Corporate Controllers, they can simultaneously address the conflicts that Excel-based processes pose to the priorities of the CEO and achieve their secondary and tertiary priorities through commitment to their first priority—digitizing and streamlining the financial close process.

Of course, there are steps that need to be taken to make the close process resilient to a rapidly changing and increasingly complex business environment prior to digitizing it.

Corporate Controllers can improve accounting staff engagement and retention and reevaluate the controllership’s scope and structure by redefining accounting’s role to support the decision-making and growth priorities of the CEO by:

1) Ditching the risks and inefficiencies associated with spreadsheet-driven processes.

2) Leveraging technology that enables real-time visibility into the balance-sheet.

3) Removing repetitive, mundane tasks from the accountant’s day-to-day responsibilities.

Despite the reality of the accounting profession’s decline, the shift from bookkeeping to decision-support that’s offered by the digitization and streamlining of core accounting processes can deliver a sea change to the profession.

It can address the root causes of burnout, such as the prevalence of errors and rework and the long hours required of repetitive, spreadsheet-driven processes. It can align accounting graduates more closely to the education in analytics and strategy that they received in college, which can in turn make the most of the controllership’s valuable talent. It can dispel perceptions of accounting work as boring and repetitive. And most importantly, it can increase the accountant’s value by making them a stakeholder in the strategy and growth of the business.

If delaying this change to the accounting profession is to delay the growth trajectory of the controllership and its alignment to the priorities of the CEO, then this is a change that business leaders cannot afford to delay.

This blog post was originally published on the BlackLine blog.

Author

Revelwood

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