Future of Accounting and Value of CPA

I've seen articles online which elaborate on the perpetual value of a CPA and the bright future ahead for students studying accounting. At the same time, I have seen articles written about the changes in the industry and the uncertainty present in the industry(whether that be a result of technology or outdated practices as described in this article--http://www.wsj.com/articles/the-end-of-accounting…). Is there any truth in the latter statement with regards to a career in audit or corporate accounting? I would assume that accountants will still be needed for the long run but just their roles and practices might shift with changing times.

 

The low level, monotonous tasks (bookkeeping, etc.) are already automated. When you hear about companies like Walmart laying off "Accountants", they're behind the pack in automating some processes and are laying off the $13/hr techs that counted cash and did basic stuff a monkey could do.

Comparing part-time bookkeepers to CPAs is like comparing the guy who fixed your iPhone to an engineer.

 
Best Response

CPAs aren't going to be automated away anytime soon IMO. A CPA is paid not to put together the books, like a lot of people think, but really to interpret nebulous GAAP rules on how to report revenue, expenses, etc. for transactions that aren't straightforward. A lot of people that don't work in finance don't realize how complicated it is to recognize revenue. As a very simple example, my friends think that when they buy an iPhone it's as simple as recording AR and Sales for the $200 (this is pre-leasing the phone days, mind you) the customer paid, and recording the COGS for how much the inventory costed.

If it were that easy, it could be easily automated (and I'd argue CPAs wouldn't be paid an upper-middle class wage), but the fact that there are peripheral services being sold with the phone (i.e. warranties, software updates, etc.) makes it much more difficult to figure out the real economic value being transacted at the point of sale and at various times those commitments are due. Until a computer can figure out how to sort all that out, I'm not too worried about being kicked to the curb.

And if computers do become that smart in my lifetime, I can't think of anything that will be safe from automation aside from computer engineering/mathematics jobs. Even JDs, etc. will come under pressure if that occurs.

 

To this point, until Artificial Intelligence can think like humans (not like programmed machines) and gets opposable thumbs to literally thumb through people's physical files, the idea that accounting/auditing could be outsourced to machines is kind of far-fetched. Actual accounting will be automated away around the time venture capital investing gets automated away. The reality is, accounting is like law--you're paying your professionals to navigate gray areas, not scientific rules.

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You can only define "career opportunities" for yourself. You must state a goal and then ask the question, "which path is more likely to get me there?"

I'll do what I can to help ya'll. But, the game's out there, and it's play or get played.
 

See the first post. Also use WSO's search function - you'll find answers to all your questions there. A brief summary of the answers:

1) For career opportunities, Banking > Consulting > Accounting. But amount of work is Accounting Audit > Tax and everything else. CPA is an absolute must if you do audit, but not for consulting.

You need to spend about 20 - 30 hours on this site to start to understand the big picture and explore different options. The "what should I do with my life?" question is way too broad.

 

Very vague and open questions. The answer to any of the questions you posed above is dependent on your final goal. As for switching from an audit/tax associate to an advisory position, you can search this site for transaction advisory service, it has been thoroughly discussed on many threads. For the choice of a masters of accountancy vs mba, this is again dependent on what path you want to pursue. Public accounting firms might not be interested unless you have 150 credits or are qualified to sit in that state for the CPA. The hardest part is passing the exams and the additional credits you would need to be license would be viewed as inconsequential.

"You lose money chasing women, never lose women chasing money" -Nas
 

It is common to hear that Big 4 audit has decent exit ops, but i think that they are generally limited to things like corporate finance and consulting.

Trying to decipher what you really want from your vague questions is difficult. If you want to work IB then forget about Big 4 accounting. Maybe save that as a fallback, but any way you slice it, going from Big 4 to somewhere that is not Big 4 is a waste of your time (unless you want to work corporate finance/accounting/tax whatever).

 

I have ex-coworkers/close friends in 3 of the Big4 Firms up until Partner level. Since I have worked for one :)

Your question was relating to audit. Many of my friends who left the Big4 went for CFO (Senior Managers) and Financial Controller (Supervisor, Senior, Consultant level) positions.

Fluctuation among Assistants is greater, some want to purshue their Masters, some just quit due to McKinsey-like working hours during "busy season". Spending at least 2-3 years at a Big4 (not importantly at one Firm...) is a must if you are considering this career path, less is simply pointless...

 

Disagree. Tax accounting can be extremely gray and lends itself to a ton of interpretation. From a filing perspective, think about the complexities involved with individuals working in multiple states or internationally. On a corporate side, getting to a comfortable tax benefit/liability and ultimately your company's provision is not a task I can easily see becoming automated.

On the audit side of the house, I envision a complete shift in how these jobs are performed and eventually lessen the number of jobs in the space. An auditor's pure job is to confirm the numbers through validating the periods transactions. As companies continue to automate much of their processes a need to focus on system/technology audits is becoming more important to the overall audit itself. I think there will be a major shift in the hiring of accounting auditors to IT auditor at the major firms. Now, the need for a CPA to interpret the proper accounting of these transactions will still exist, but as anyone in audit will tell you, these judgements are made at a partner/manager level.

How do you train CPAs to get to that partner/manager level if you deplete the early level staff and eliminate the opportunity for them to reach this level? I'm not totally sure, the only solution I can think of is that IT auditors also need to be trained in pure accounting and a hybrid approach would work best in the future.

 

The multi-state tax filings is a very good point. But I think you proved my second point:

"Now, the need for a CPA to interpret the proper accounting of these transactions will still exist, but as anyone in audit will tell you, these judgements are made at a partner/manager level."

This is why I do not see the demand for CPAs falling anytime soon.

Only two sources I trust, Glenn Beck and singing woodland creatures.
 

If you don't want to work in accounting don't major in accounting.

I am not saying it is impossible to have an accounting degree and work in sales/finance/marketing/construction etc... But for example, recruiters are going to see you have an accounting degree and pitch you accounting jobs. If you are targeting a finance job it will just be an added hurdle, even if its a small hurdle still.

Minor degrees are largely unimportant in the real world. Only get a minor if its something you are personally interested in & it aligns with obtaining your degree. Never waste time on a minor, an extra semester so you can get a minor is stupid.

 

It's definitely an interesting topic to think about within the next 5-10 years but, if technology does become 'that smart' then how quick will the pace of innovation be for laying off thousands of audit members and implementing the accounting knowledge into the IT audit departments.

 

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