2020 - January
Sharing by ISCA CEO Mr Lee Fook Chiew at the NTU Forum “Accountancy in the Digital Age – A Dialogue with Professionals & Educators” at Nanyang Technological University Novena Campus
07 Jan 2020 Category: Speeches
Professor Robert Kennedy, Dean at Nanyang Business School
Ladies and Gentlemen,
I am pleased to share about the topic of “Accountancy in the Digital Age” with you. Undoubtedly, we are living in an age of rapid, exponential change. A lot has been said about how technology has changed and will continue to change the business landscape, and how technology disruption will impact many professions, including accountancy.
Today, I would like to share with you another perspective. Amid an environment of rapid and massive changes, some things remain unchanged. Rather, this is what we call the “bread and butter” work of accountants; and that is Financial Reporting. Financial Reporting is a cornerstone requirement of the economy and businesses. I may be stating the obvious. Financial reporting and the availability of good quality financial reports are critical to functioning and growth of all organisations and the economy. High quality and reliable financial reports provide stakeholders and investors with key financial information for decision making. And only accountants have the training and education to perform this critical and essential work. The big question of course in front of us is of course how much of this work will be undertaken by machines and technology. I will speak more about this and the impact of technology on the profession later.
Beyond financial reporting, the training accountants receive provide them with strong competitive advantage in many areas of finance and related areas of specialisation. Whether it is Mergers & Acquisitions, project finance, or security analysis, a large part of the work is centred on building a financial model of the underlying transaction or company, and analysing the financial impact of various options. Who, other than an accountant could have a stronger background of knowledge in finance to do this? In addition, someone who is trained in accountancy would have strong analytical and problem-solving skills which are also critical in these areas of work.
Having talked about the work and roles of accountants are equipped, let me come back to the issue of technology and its impact on the profession. There are many aspects to the work of accountants that cannot be performed by machines – things like professional judgment, decision-making, relationship management and accountability. According to a report by the International Federation of Accountants, accountants drive organisation success by exhibiting the following traits:
-professionalism and ethical behaviour
-an investor and wider stakeholder focus
-organisational and environmental awareness
-embracing change, uncertainty and complexity
From the list of traits that I just mentioned, you can tell that the skills required of an accountant are varied and complex, and go far beyond technical competency, although that is a fundamental requirement. When news reports on the development of artificial intelligence first surfaced, people started thinking “will a robot take over my job?” Of course, no one can predict the future. But I can paint you a picture of how accountants leverage technology in their work currently.
Let us first look at how auditors leverage technology in their work. Today, data analytics tools enable auditors to gain quantitative insights and visibility over the data captured within the business sub-system and general ledger. Volumes of transactional data captured in business systems can be interpreted to improve the auditor’s understanding of an entity’s operations and associated risks. Data is extracted from the entity’s business systems, cleansed, reconciled and loaded into the data analytics tool. Based on the criteria set by the auditor, such tools can help the auditor undertake exception testing, benchmarking and trending to report results, detect anomalies and visualise data.
Take for example, the audit of a consumer retail chain. The auditor can use the data analytics tool to produce an interactive heat map showing total revenue by outlet, time of day and product. Through data visualisation, the auditor can easily analyse the data and spot unusual phenomena to ask the right questions. For example, for product lines that are moving very slowly, are there potential inventory impairment considerations? What are the reasons for the unusual spikes in revenue during certain periods – are these occurrences within the auditor’s expectations?
Asking the right questions can increase the audit’s potential for detecting material misstatements in the financials. Auditors can also increase their value-add by providing useful insights into matters of concern to those charged with governance.
What about the accountants in the finance function of organisations? How have things changed for them? Let’s look at this video.
Sok Hui, who is also an ISCA member, spoke about how DBS utilises data analytics to gain competitive advantage. Today, there is a wide array of tools for data visualisation, risk assessment and fraud detection to provide business analytics and insights. Data analytics enables accountants to identify abnormalities, uncover valuable business insights, perform real-time monitoring and auditing. Accountants who have programming skills (such as Python, Java, R) that complement their accounting technical skillsets have an edge over their peers. They can perform large-scale data analysis and create tools to handle and process tasks and boost productivity. This means greater opportunities for accountancy professionals to harness technology for better decision-making, information-processing, performance management and data storytelling.
Varied Roles of An Accountant
I have shared about the work of auditors and accountants. But that does not paint the full picture of the diverse career paths open to accountancy graduates. As an accountancy graduate, if you are in public practice, meaning in an accounting firm, you can do many things – from cybersecurity to forensic accounting, to valuations, risk management, technology advisory, obviously accounting, as well as audit. If you are an accountant in business, meaning in commerce, in industry, you have varied roles as well – in investment, financial forensics, project finance and business transformation. You can be an analyst, Chief Financial Officer, and CEO. Because of their training and versatility, accountants make very good CEOs.
The diversity of roles in accountancy can also be evinced in the profile of ISCA’s membership. As the national accountancy body of Singapore, ISCA has been contributing to the development of the accountancy profession for more than five decades. Today, there are over 32,000 ISCA members making their stride in businesses across industries in Singapore and around the world. 60% of our members are Professional Accountants in Business or in the commercial sector. They work in a variety of roles across different industries, including financial reporting, corporate finance, risk management, treasury, fund management, investment analysis, and business valuation.
Now, let’s watch a short video that illustrates the different career pathways an accountant in the Digital Age can go into.
As you can see, the profession has evolved far beyond the balance sheet. In the Digital Age, both the nature of work performed by accountants, and the nature of their contributions to the organisation in which they are employed are rapidly evolving. This means that the skill sets of accountants are changing and will continue to evolve.
In today’s world, you can develop career resilience by going deep and by going broad. You can deepen your skillset in an area of specialisation and you can broaden your skill sets by learning new skills relevant to today’s environment. For instance, cybersecurity is now a big issue. Financial crime is also getting more sophisticated and there is a need to police that.
At ISCA, we are helping our members to upskill in those areas. Opportunities abound for accountants in the Digital Age. On the flip side, accountants must never stop learning because the accountancy profession will continue to evolve with the times. And that’s where being an ISCA member is an advantage because we strive to ensure that our members have the resources to be kept updated and relevant at every stage of their career journey.
Accountancy is one of the oldest professions in the world. What is the difference between being an accountant in the past and an accountant in today’s world? In the past, perhaps after getting an accountancy degree one would have pretty much the requisite skills for a lifelong career in accountancy. Of course, accountants still have to meet the requirements to complete a number of hours in continuous professional education every year.
But today, with things moving at an exponential pace, an accountant must adopt a mindset of lifelong learning. There will be new things to learn, some things to unlearn, and other things to relearn, throughout an accountant’s career.
While we cannot predict the future, the best way to prepare for it is to keep learning in the present. As long as you are prepared to continue your journey of lifelong learning, you will be ready to seize any new opportunities that arise in the future.