Can Software Really Replace Accountants?

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It's not a reality—yet—but accounting software is poised to eliminate accountants. We are at a tipping point for many similar professions: online education replacing professors, legal software replacing lawyers. As threatening as this sounds to professionals with many years of education and experience invested in a single field of expertise, the phenomenon of new technologies disrupting the workforce isn't a new concept.

With such a radical technology disruption, there's always the same cycle of debate: outrage, denial, compromise, and defeat. Ironically, accountants are instrumental in consulting with software developers to create the very technology that will replace them.

Of course, accounting software isn't new to the accounting profession, and in fact, it has become very useful for many accountants. Even tax filing software hasn't put accountants out of business. But changes are on the horizon that could likely empower accounting software users to the point when they don't need accountants any longer, and reduce the process to a turnkey program anyone could follow. Again, automation is a common disruptor. Read about how automated cars are closer to reality than most believe, and how that is set to shake up the industries associated, especially insurance.

The latest evolution for accounting software has been in products moving into the "cloud." Some software packages, like QuickBooks Online, offer certification programs, which help set accountants apart as the go-to professionals, but others seem to compel users to do more of the accounting themselves. This act of moving accounting online doesn't precipitate the end of accountants. However, what does push accountants to the margins is how inexpensive and user-friendly the new online accounting software is. Check out FreshBooks, Xero, and Wave, for example.

If that's not enough to instill fear in a well-educated accountant, think about how the Uber app has shaken up the taxi business, and how AirBnB is threatening the tourism industry. Giving consumers a way to do something effectively themselves for cheaper, and with ease, is a recipe for a paradigm shift.

Accounting software won't replace accountants all at once, just like universities won't disappear once Massive Open Online Courses (MOOCs) become the standard fare, and there will be exceptions, just like there will likely always be students who think it's better to pay an amount that exceeds any reasonable ROI to obtain a liberal arts degree in person. Some exceptions will likely outlast predictions, especially for CPAs who play a critical role in large publicly traded organizations, for example, that need credentialed experts to conduct audits and sort through other complex regulatory issues.

Automating accounting for small business owners and entrepreneurs won't be a bad thing either, as many would prefer to have turnkey programs to handle the grunt work of a task that once cost a good bit of a start-up's small budget. Financial advisors will still have a role to play in helping entrepreneurs decipher the numbers, but it's likely the software will come more complete with better industry standards, and give feedback on the financial health of the business being monitored.

OK, we're had our say, you have yours—the debate is open.

About the author:

Jonathan Poston directs business development for BooksSetup.com, a virtual online accounting software set-up service for entrepreneurs on the move. It helps entrepreneurs choose the best accounting software for startups, then support its set-up and management.

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I think that accountants still needed but may reduce the amount of staff in a company. If a medium size enterprise need about three to produce the results, perhaps one will be enough and just need to train normal employees to operate the software. Unless the software can completely replace all the tasks an accountant can do.

staff is still very needed. notice in industry almost all of AR, AP, Payroll etc do data entry and aren't trust with much else. then you have the 'accounting dept' off to itself that then analyzes and makes sure there's no obvious irregularities in what the other departments inputted. Your accounting department for the most part is required to hold a degree in accounting and preferably be a CPA. While your AR, AP, and payroll dept don't need any degree because it's data entry. So there's been a break down in skilled workers already in the accounting process

Data entry aspect of accounting is already gone in most companies. If not a good financial analyst is needed to do so. Anybody can input or write journal entries, it's about understanding what the data is telling you.

Automating bookkeeping and accounting cannot magically create valid and relevant data. The old adage is still true: "garbage in, garbage out."

you are talking about what is available in todays market , those cheap softwares but we are talking about future here and , when it comes to future it is important to know that artificial intelligence , a power full computer system exists and is in developing stages as we speak Well probably you haven't heard of artificial intelligence that are rapidly developing at present which can take own decisions come up with own solutions can even explain what happens to particles , dna and more complex situations such as what happens inside your mind, surgeons and also engineers who made these systems are also being replaced. Accounting is something that humans made up all these formulas and theories all human made up stuff not earth natural theories. An artificial intelligence system can do and explain any of the things you said very efficiently and with no or minimum error. therefore it can be replaced. It's just a matter of time that people trying to figure out how to manufacture these systems in mass quantity and in cost effective ways.

Technology has matured to a point where the outsourcer can facilitate the internal business process on behalf of a business fairly transparently, including business bookkeeping and accounting.

All of this serves to devalue the knowledge required to perform the business and accounting processes.

There is a belief that has been marketed very well to the small business sector - “if you can write a check, then you can do your own books”. This concept has not proven as realistic as many would choose to believe. But it earned – and continues to earn – market share.

With the trend in software becoming the transparent outsourcing of the processes, is the consuming market likely to recognize the expertise required to manage the outcome?

Retail providers of accounting, tax preparation, and other services (H&R Block, as an example) have quite successfully marketed against the need for businesses to engage with a skilled credentialed professional.

Accounting professionals who do not view this as a threat to their value are simply not paying attention.

I think what you don't understand is what an accountant does these day. We aren't the 'bookkepers' in the traditional sense anymore. We are if anything advisers, and the field itself has done fairly well at adapting to the change in technology. So much of what we do is about getting the bigger picture, analyzing data & financial statements, essentially making up for unskilled workers they are allowed to have in other departments due to accounting software. Our courses are geared towards accounting software, and no matter what type you have, it is a system that must be ran by PEOPLE. If you have simple step by step instructions on how to use this system, great, but someone will need to be answering why the numbers look the way they do during a company's yearly audit. Someone is will need to answer the IRS when they want to review your returns for irregularities & it won't be H&R block because you sign an agreement waiving them of those responsibilities. If anything, a person with an accounting background is valued even more because i promise you, it's not that popular of a major. AP, AR , Payroll, etc are filled with people with barely a degree, all they do is data entry. Your official accounting department, finance, and internal audit of the company have to be college educated with a degree in accounting or finance, and preferably be a CPA. So for all these unskilled workers they are now allowed to have doing data entry, they try to make up for their errors at the last stop before the financials statements: the accounting department. And the fact you've reduced it down to tax preparation is laughable, few accountants enjoy tax or do it willingly, so honestly, i'm glad there's more technology out for it. Maybe now people will stop assuming accountants give a flying eff about someone's taxes who make only 40k per year. But here's the catch, tax preparation isn't meant to be hard or a secret, the IRS has a step by step guide, they don't expect people to need professionals in order to do taxes. So the fact that people need a software to do a step by step guide, of a step by step guide that is published every year that shows you what to do says a lot. You can buy software, you can outsource to H&R block, but the people using those services aren't who accountants typically serve. Accountants are going to be doing taxes of a non profit, of large corporations with complex structures. Your idea of what an accountant does is very low level, i was doing corporate taxes for an international company during my junior year of college, i doubt they were going to h&r block. In other words, most true accountants have nothing to worry about because that's not their market. H&R block does taxes, ok? Well when the government calls you saying you owe taxes on a property you just bought,that should have been paid by a previous owner, i doubt H&R block is gonna follow up with you on that problem & do the correct research. Don't talk about what you don't know, there are vast levels to accounting and it's not just in 'tax' lol as if there's one type of tax

Well probably you haven't heard of artificial intelligence that are rapidly developing at present which can take own decisions come up with own solutions can even explain what happens to particles , dna and more complex situations such as what happens inside your mind, surgeons and also engineers who made these systems are also being replaced. Accounting is something that humans made up all these formulas and theories all human made up stuff not earth natural theories. An artificial intelligence system can do and explain any of the things you said very efficiently and with no or minimum error. therefore it can be replaced. It's just a matter of time that people trying to figure out how to manufacture these systems in mass quantity and in cost effective ways.

As someone who has been in the accounting and bookkeeping software sector since the first online accounting and payroll applications went mainstream I've seen the impact of the technology first hand across Europe and North America and it's very consistent.

From my perspective, online applications such as our own Sage One and Quickbooks, Freshbooks, Wave, Xero etc etc are making it easier for small businesses to manage their books with less support from bookkeepers. However, that said, my experience from speaking to the users of all of those applications is that most businesses will retain their bookkeepers services because the reality is they at too valuable to lose because to Kathys point, if the understanding isn't there (and it often isn't) the result is "garbage in, garbage out". Bookkeepers are still the main users of the applications to ensure integrity but the application is now enabling the business owner to gain a greater sense of understanding and awareness about their business than ever before.

The context of the services provided by bookkeeping professionals are changing but often for the better in that it brings the advisor and the business closer together.

From an accountant perspective, unless we truly enter the era of AI then no software package is going to advise a small business on what vital decisions in a way that an accountant can. Sure the software will make things easier but as per the bookkeeper example, small business owners will always have a fear of getting it wrong and that fear will drive them to an advisor just as it always has.

Keith (part of the Sage One team)

By replace accountants I believe that you meant some parts of bookkeeping. In my opinion, software will not replace accountants soon.

Knowledge and proficiency cannot be replaced with automation or any accounting software. Any experienced accountant, in addition to any competent IRS examiner or reviewer, will vouch and attest to the severity of accounting errors, omissions, and irregularities committed by staff members of organizations who are chiefly responsible for data entry, collation, and transcription. The use of accounting software does not mitigate those factors nor guarantee that such individuals are sufficiently informed of accounting concepts, principles, techniques, or methods to understand the comprehensive benefits and capabilities for it. Furthermore, financial and managerial accounting are decision-making tools best utilized by those who fully understand its implications for operating a successful business, reporting the financial results of that business, and conveying relevant and conformed ( GAAP ) or reasonable information to users or investors of the business. Thus, accounting requires oversight and related accounting software requires overseers who still must ensure that numbers and figures are accurate, complete, and necessary for their management.

" will vouch and attest to the severity of accounting errors, omissions, and irregularities committed by staff members of organizations who are chiefly responsible for data entry, collation, and transcription."

Exactly. So using more advanced software would mostly eliminate the human errors right? As for the rest of what you said, that sound nice for EXPERIENCED accountants, but what are the new grads supposed to do??? If tech takes over all of the entry level work at the very least, then how is anyone new supposed to get experience?

If you believe that this next generation of software will replace accountants, then I would conclude that you do not understand the fundamental difference between an accountant and a bookkeeper. An accountant focuses on the environment, the system, its controls, the data and its usage by management and third parties. Demand has never been higher for this set of skills. Unfortunately, supply of qualified small business accountants is not meeting demand for these types of skills and those who do simply do not have the time to devote to bookkeeping so this software is a blessing.

What you are not seeing is the technology that is coming. The are talking about the software that is available right now. But quantum computing, the internet of thing and self learning computers will replace 90% of accountant by the year 2030. Then the incometax, corporate income tax and all the other taxes will be done by this computer and will probably do a better job than an accountant could ever be able to. So yeah accountant will be gone by 2040. People need marketing analysis which really helps, imo smart accountants (especially youngsters) need to focus on what value they want give to entrepreneurs. The best way to do that is to learn about big data and how to present this data to clients. Change will come very very fast.

This is an interesting post and more along the lines of my concerns as I am a accounting major. I'd like to hear an experienced accountant's thoughts on this

Computer aided audit techniques, interconnectivity, big data and artificial intelligence will allow a single auditor/accountant to take over 3/5/10 auditor/accountant workloads with more accuracy.

This is a provocative, timely discussion for the industry thanks Jonathan.

Certainly bookkeepers and accountants resting on any laurels for accounting compliance work will struggle to find relevance in the brave new world of accounting.

Simplicity helps small businesses with the day-to-day, but fundamentally this is not and should not be the role of the small business owner and does not curtail the need for experts. As an example, we are a small software business of seven people. We have our own in-house accountant on the team, but also contract a part-time bookkeeper to manage our accounting package.

That is our approach, but we know plenty of small businesses who take a different one. The diverse and varied requirements of small businesses mean it is unlikely that one vendor can provide the one size fits all, turn-key client solution. That is why there is a rich number of great packages available to UK’s ever growing number of small businesses (see 2013 statistics from the Department for Business Innovation and Skills showing the count at 4,895,000 - with 99.2 percent of all private businesses in the UK have 1-49 employees https://www.gov.uk/government/....

Perhaps the bigger challenge for bookkeepers and accountants is the proliferation of accounting software and keeping up with the eternal treadmill of new technology. Simply getting practice management suites and reporting tools working across the packages Keith mentioned - his own Sage One, Wave, Saasu, Freshbooks, Xero and Quickbooks can be an inefficient drain on the accountants and bookkeepers time and billables.

This effort can be better spent with the client.
(Carlos Chambers, Common Ledger)

well to people who say accountants cannot be replaced with computers for any reason should know that we are stepping into an era where even more complex professions that use critical thinking , data collecting and decision making according to the environment such as engineers , surgeons and nurses etc are also being replaced by computers and growing artificial intelligence technology . If someone invents a powerful and cost effective artificial intelligence managed system that can carry out accounting tasks with minimum human interference it will soon be the end of Accountants if a computer can manage a companies all accounting duties and do the same job that of an accountant with less cost and efficiently without any errors plus many more duties other than accounting, i do not think that money hungry company owners will hesitate to buy that computer to replace 10 , 20 accountants in the company . Replacing accountants with these systems and software will happen in the future and although it looks difficult to some of you now it is also important to keep in mind that its not impossible. Artificial intelligence is a powerful technology.

Pretty much everything an accountant does including financial analysis and advisory services is logic based.

Machine learning is really good at learning logic.. all it needs are huge data sets which are becoming commonplace with the low cost of cloud.

the need of humans can never be replaced by machines because we create them they did not create us