Merging accounting with ‘big data’ science

The second part of the JofA’s annual technology roundtable discusses the skills CPA firms must
court to meet clients’ increasing demand for insights on exponentially expanding amounts of
business information.

Journal of Accountancy, Jeff Drew

July 1, 2018
 

You may have seen the headlines: "Rise of the Robo-Accountants," "How
Artificial Intelligence Is Changing Accounting," "Blockchain: An Opportunity
for Accountants? Or a Threat?"

The rise of transformative technologies such as robotic process

automation, blockchain, and artificial intelligence (AI) has certainly raised
concerns among many accountants about what their profession will look
like in the future. What do CPAs need to be doing now to enhance their
prospects for success?

The answer, it seems, is in the data. Not a specific number or some

particularly juicy morsels of information, but all the data. The need to
collect, organize, and mine data for business insights — all in real time —
will present the accounting profession with unprecedented challenges and
opportunities in a rapidly approaching, radically different future.

The skills that accounting firms and CPAs will need to succeed in a data-
dominated, technology-driven economy took center stage during the
second half of the JofA's annual accounting technology roundtable
discussion. After exploring the impacts of technologies such as AI and
blockchain in Part 1 of their conversation (see "Paving the Way to a New
Digital World," JofA, June 2018), the panel of accounting technology
experts turned their attention to the people part of the future equation.

Short profiles of the panelists — Alan Anderson, Rick Richardson, and

Amanda Wilkie — are below.

The edited version of the conversation follows. To hear the roundtable in

full, click here for Part 1 and here for Part 2.
With new technologies changing the ways accountants do business,
what effects do you foresee on the staffing model for accounting
firms and accounting departments?

Richardson: Let's talk about some new brethren who are going to join the
staff. The first is what the business is calling a data scientist. The second is
what I'll call a big data engineer — not a data engineer, but a big data
engineer.

In the data scientist classification, you are really looking at a combination of

super technical skills and analytics. So they need to be able to program, to
be able to handle statistics, to be able to handle large data sets. They are
the ones the firm is going to rely on to take machine-learning
advancements and bring those into the practice itself. They are the people
that we would probably expect to help develop the audit and advisory
products. And they would be responsible for putting together the final
communications, which include things like data visualization, actual
presentations, that sort of thing. None of the stuff happens without being
collaborative, so the teamwork capability for those kinds of people is pretty
important.

On the other side, big data engineers are the people who understand big
data software products like Apache Hadoop [from IBM]. They understand
what SPSS [an advanced analytical software product from IBM] is and what
MATLAB does [it's a programming language created by MathWorks for
working with data]. They come to the table with good skills for working with
all of these types of data mining and statistical analysis tools. Big data
engineers also have to be able to program, and they are involved in at least
three other areas:

 Data transformation, where they are looking at extracting,

transforming, and loading tools called ETLs.
 Data collection services, where they are looking at application
programming interfaces (APIs), which are tied to existing applications
that let us get access to that data.
 Data warehousing, where they are the ones we will rely on to use
tools like MySQL and Oracle and DB2.

The ability of these two groups of people — the ones who handle the actual
data itself and the data scientists who literally map and lay out all that stuff
— is going to be crucial to firms' providing the kind of services we are
expecting them to have in five to eight years out.

Wilkie: When I speak to young people majoring in accounting, I always

encourage them to throw in a computer science minor or a math minor —
something that's going to give you that logic and help you think in code. Or,
for the CPAs reading this article, if you have the time, look into online
courses or something that is going to give [you] that computer science
background to add to your accounting knowledge. I think if you marry those
two abilities, then it's a home run in the profession.

Anderson: Because these skills need to be a part of the core fabric of a

CPA, I have been working with the academic community to modify the
accounting curriculums to embrace data analytics as well as the computer
science piece of this equation. Some strong, self-starter students will
certainly branch out to go get the minor, which is absolutely very good. But
I think it should be a core component of the accounting curriculum. It's very,
very crucial to recognize that these are core fundamental skills needed on
a go-forward basis.

Richardson: I have talked to some firms in the top 50 or 60, and several of
them are bringing in data scientists and data analysts and then getting
them taught in accounting. So, in essence, what they are saying is that, in
some cases, we need the technical skills first and the accounting skills
second.

Is it realistic to expect someone to be on an expert level with the data

stuff and with all the accounting rules?

Wilkie: I don't think it's realistic to expect them to be at the expert level in
both. That's where the collaboration comes in, but you do need to have a
bit of knowledge in both. It's going to be very important to understand and
be able to communicate what the data means to the client.

Richardson: What skills should accounting firms be looking for in

professionals in the future? First is technical and ethical competencies. You
have still got the requirement of all those people that handle SEC review
and reporting requirements and disclosure and all that stuff, and those that
understand the issues associated with what work we can and can't do.
Second is intelligence, which is just the ability to acquire and use
knowledge and apply good reasoning in solving problems. Third is
creativity, which is coming up with new ideas and new solutions and
making connections to things that already exist. This is really going to be
crucial in this next phase of our profession.

Fourth is an awareness of software applications and other issues related to

the data analytics we have been discussing. The smart partner should
know enough to ask the young data scientist if they really have a particular
problem fixed yet or if they are going to have to work around it. The fifth is
vision. I think anybody who isn't looking out at least five years is doing their
firm a disservice. Last is experience. You learn something by being around
clients all day. The fact that you understand their business sometimes
better than they do provides you with a rich opportunity to add real value to
their business. If you get people with as many of those capabilities as you
can, you are going to have a firm that's going to be very successful.

Anderson: We need to make clear that we are not saying there needs to be
one person who is a "purple unicorn." Firms need to make sure that they
have all the skills among their team. CPAs don't need the expertise or skills
in all areas, but they do need to have enough baseline understanding for
effective teamwork. A firm that has a combination of technical and
collaborative skills can leverage one another's strengths to help the CPA in
his or her analysis and creation of insights that are communicated to the
client

What should CPAs be doing now to acquire the skills and knowledge
they will need in the near future?

Wilkie: One thing they need to do is leverage those younger people who
are coming out of school and have technology skills. That's a tremendous
resource for them. A younger person can be a mentor as well, and it's
never too late to learn new skills, and there are tons of resources out there
on all of these technology topics that we have talked about. The AICPA, I
think, has done a tremendous job being a source of information on things
like blockchain. There are YouTube videos, there are online classes, there
are classes at local schools, there are Meetup groups. So, if you are
interested, whether it's blockchain, machine learning, AI, you can find
sources out there, and I think right now that's the most important thing.
People really need to start educating themselves.
Richardson: There are a lot of free resources out there. A marvelous piece
published in the Huffington Post lists nine of them.

Anderson: Firms can talk about data extraction and data analytics, but until
they make it a requirement of the job to use it, it's not going to happen.

The panelists

Alan Anderson, CPA, president of the accounting and assurance advisory

firm ACCOUNTability Plus, leader of the AICPA Rutgers Data Analytics
Initiative, and an adviser to the AICPA's future of audit initiatives.

Rick Richardson, CPA/CITP, CGMA, founder and CEO of Richardson

Media & Technologies.

Amanda Wilkie, a consultant with Boomer Consulting and former chief

information officer at regional firm WithumSmith+Brown.