As they say, change is the only constant. In the field of accounting, this is especially true. Accounting, as a profession, is considered one of the most essential pillars of any business. While businesses change how they function, the tools they use, and the goals they look forward to, it becomes inevitable for accounting leaders and professionals to change their approach.
Besides technological advancements, there are global economic shifts, changes in the regulatory frameworks, evolving business models, and most importantly, a shift in the mindset. Accounting is now dynamic and multifaceted. As we are about to enter the third month of 2024, there is an increased demand to become adaptable, and agile, while keeping up with the traditional roles.
In the past few years, there have been great sweeps in the availability of the data and the extent to which it can be analyzed and made use of to make financial decisions. Accountants, now, are compelled to take a forward-looking approach and can advise their clients on the future of the business.
And that is exactly how accountants continue to grow in their profession. This pace of changes shows no sign of slowing down, probably for the best. What is crucial for accounting firms is to keep up. In this article, Finsmart Accounting – globally trusted for outsourced bookkeeping services – will share everything about the evolution of accounting in the past decade.
Let us delve deeper into how the accounting landscape has been changing:
– From Transactional to Strategic
Unlike a few decades ago, accounting is no longer about merely bookkeeping or taxes or crunching numbers; it is about understanding a client’s business. It is about value addition. Today, accounting firms are expected to advise their clients and help make strategic decisions. A survey by the AICPA, conducted in 2020, found that about 72 percent of professionals believe that strategy and analysis have become more important than it was five years ago.
Modern-day clients look for value in their accounting service provider. A report by McKinsey found that about 83 percent CFOs found their roles to be beyond cost management.
The shift in this paradigm has encouraged accountants to learn new skills, beyond books. This helps them perform their day-to-day functions impeccably and become indispensable to businesses. Accounting firm leaders, today, encourage their teammates to grow holistically and not stay behind the pile of files. This is the true evolution of accounting!
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– Change in the Accounting Workforce
Accounting, earlier, was perceived as a male-dominated profession. In the past few decades, that has changed. Today, the number of women who ace the number profession is on the rise.
In 2000, 39 percent of accounting professionals identified as women, in 2020, the number rose to 46 percent. About 12 percent of new CPA licenses were issued to racial and ethnic minorities in 2020.
Although there has been a rise in a talent shortage in the accounting fraternity. The top cause is the fear of being overworked and burnt out. Another reason contributing to the shortage of accounting professionals in the post-pandemic world is the lack of flexibility. Firms are now known to make progress in the right direction, catering to the needs of the changing mentality of the workforce.
– Data analysis: Shift in perceiving businesses
We are in the digital era and there is a surge in the data available that can be used for businesses. Today, accounting professionals are positioning themselves to utilize this data to its maximum potential. Businesses have been adopting big data and using data analytics to enable these professionals to extract important insights from huge amounts of datasets. This not only helps businesses get a deeper understanding of what works and what doesn’t. Leaders are more aware of market trends, customer behavior, and business performance.
Making data-driven decisions has become important to stay ahead of the curve. Accounting can help business leaders with insights that can make or break business progress and data analysis makes it clearer, enabling leaders to make better decisions. A major bookkeeping and accounting evolution of the past decade indeed!
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– The Changing Roles of the Accountants and CPAs
This is a critical shift when it comes to the accounting landscape. The modern-day workforce is no longer interested in just balancing the books, they want to do more. Although their expertise lies in accounting, taxation, and auditing services, they are inclined to perform roles that allow them to do more – be more productive and provide better quality results. They have now become trusted business advisors, providing strategic advice to companies in matters of high impact. Some of the roles they are inclined to perform include:
- Help businesses navigate through mergers and acquisitions, decide on investments and expenditures
- Guide risk management and compliance issues
- Assist with long-term financial planning
As today’s CPAs favor working for these roles, it allows accounting firms to do more – take up new clients, address more complex business challenges, and provide advisory services. They are gradually becoming trusted partners who clients can rely on for making decisions that ensure success.
– Introduction of remote work and collaborative technologies
In the aftermath of the pandemic, remote work has become a top choice for modern-day accountants. One positive outcome of the pandemic is that clients are now more confident to get their accounting work done through remote teams, across geographies. Several collaborative tools have also gained immense popularity and have delivered results that clients and teams seek.
As the geographical boundaries continue to blur, accountants are more confident in discussing Zoom or Teams and understanding clients’ needs from thousands of miles away. Virtual work has also ensured greater flexibility and work-life balance, which has become the need of the hour. Accounting professionals, who work in a more flexible and hybrid/remote setup have been shown to provide better productivity and efficiency. This accounting evolution trait is here to stay!
– Enhanced Value of Integrity
Artificial Intelligence has become an integral part of the accounting landscape. As digital innovations continue to blend with AI, the need for accounting firms to become more aware of security and integrity has increased too, giving more importance to ethical considerations. Accountants must maintain the highest standards of transparency, integrity, independence, and security when it comes to their work.
With AI and automation becoming increasingly important, addressing and combating issues like data privacy, cybersecurity, and potential biases has become critical. For clients, today, finding a trustworthy partner with the potential to make unbiased financial reporting and decision-making is key.
The changing patterns in AI and automation present both opportunities and challenges. Embracing technological advancements, data analytics, and a broader service range can help accounting professionals and accounting firms become key advisors.
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Evolution of accounting: Endnote
In the past decade or more, the accounting landscape has undergone a remarkable transformation. Technological advancements, the emergence of automation tools, the integration of social media platforms, and notable mental shifts have changed the way accounting firms are progressing.
Automation tools have revolutionized traditional accounting methodologies, streamlining workflows, reducing manual errors, and allowing accountants to focus on value-added tasks. Social media has become another important aspect of the accounting fraternity. It has become increasingly important for accounting leaders to not just be on social media, but actively network. As times change and the way the industry operates changes, it becomes necessary for accounting firms to adjust to the change.
If your firm is struggling to stay up-to-date in this evolutionary age, you might want to consider outsourcing your accounting tasks. To know more about how outsourcing can help achieve success, write to us at connect@finsmartaccounting.com.
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Director Growth Strategy & Alliance
Maanoj Shah is a finance and outsourcing expert with strong Business Strategy and Scaling-up experience. Over the last 20 years, he has incubated multiple businesses and helped build global enterprises in verticals as diversified as hospitality, technology, and healthcare.
