• Career Center

    Is Technology Making Accountants Dumb and Lazy?

    By | October 1, 2015

    For those of you that have been following me online for a while, you’ll probably know one of the early experiments I ran at Accodex was, “How do I build a firm where I can get a 19-year-old to do the work of a CPA in one-third the time.”

    With this goal we invested heavily into technology, systems, systems knowledge management and standardization. After two years, the experiment was a success* but had an unintended side effect: Laziness.

    Last week, one of my staff escalated a complex fixed asset issue to me. I sighed and thought, “Accounting work? Seriously, why hasn’t this been automated yet?” I dived into the problem for about 30 minutes and it took a lot of mental effort. Once I had the problem fixed, I was pleased for a moment. Soon after, I was disappointed again, that the technology couldn’t handle it, and that it wasn’t documented in the our knowledgement system. But then I remembered that ten years ago, that same problem would have taken about half a day to fix, and I was doing that kind of work every day!

    I thought more about the situation from a cultural perspective. I think we at Accodex have invested so much in technology and standardization, that there’s a culture of laziness prevalent in our office. Further, I think not using our core accounting muscle, has made us dumber. These days I’m barely using the skills I learned at university or my Chartered Accounting course. My team and myself see a lot of the traditional accounting value chain as a chore and an inconvenience.

    Now this is not necessarily a devastating thing. Bill Gates once said, “I choose a lazy person to do a hard job. Because a lazy person will find an easy way to do it.” This attitude sees us jump on any new technology that will save us 10 minutes a day. This keeps us innovative. Conversely, we have not invested enough in problem solving and deductive reasoning. These skills are going to be paramount in the accounting profession and I probably should have added it to my last article on how accountants can protect themselves from the Accountapocalypse.

    The fact is that the accounting value chain hasn’t been automated fully, and is still another decade away. With this in mind, I’m going back to our training system and adding these skills to our curriculum. Because even when our value chain is automated, these skills will still be useful skills, and worth the investment. To that end I encourage you all to do some training in this area, to level up your skills and future proof your career.

    * Keeping in mind we’re in general practice for small businesses and startup, this would have failed in a more complex area of practice.

    • SouthernCPA

      I will say that many of our young staff accountants have no idea how numbers flow from one tax form to another. They turn in a return for review, and have no idea if the client owes money or is getting a refund. They have no concept in many cases of how tax law actually works. Most of the numbers appear on the return automatically via the source docs being scanned and OCR technology merging with the tax program to move the numbers directly onto the return.

      I don’t know if “lazy” is the right word. “Uninformed” or “ignorant” might be.

      • Lack of critical thinking skills is what the term you’re looking for is.

        • SouthernCPA

          Yup. That’s it. Thanks.

        • Absolutely. And deductive reasoning, problem solving. How to use Google…?

      • cpanum31

        What people used to do:
        1) The colleges didn’t teach the theory of how the Federal Tax returns work. They left of the mechanics for the old PH Tax Courses and lectures tied to that book.

        2) Practitioners seeing the problem, enrolled the new hires in the old (which no longer exists) H&R Block Tax Course so they could get the needed practical understanding.

        3) That worked.

        4) Things have changed, and other than setting up your own 16 week practical tax preparation course for your new hires, I have nothing.

        • LikeABoss

          the 16 week practical tax prep course for new hires that i got in 2009 was that i started working in February and went through April with enough experienced managers and supervisors above me giving me tough review notes. somehow seemed to work…

          • I had a similar trial by fire in 2006 followed by 4 years of brutal review notes. It did work. These days, even our workpapers are semi automated though.

            • LikeABoss

              The automation part doesn’t scare me. What scares me is firms that budget their work as low as possible so they don’t lose the client to another firm, which doesn’t allow the staff enough time to verify what the hell it is that the automation is doing. If the staff felt like they could take an hour or two to read the form instructions for a tax return, they could probably use their limited deductive reasoning to figure out why the workpaper is set up a certain way, or why number X flows through a tax return a given way. The end result: correct tax returns, and tax wonks satisfied enough with their jobs not to want to leave because they can’t figure out what the hell they’re doing in accounting.

            • I think the attitudes to productivity and timesheets will change soon enough too.

              I have no issues with staffers blowing budget, so long as they learnt something in the process!

        • Real question is: Why isn’t this being taught at college?!?!

          • SouthernCPA

            Because colleges teaches some theory and a lot of caste studies. Because colleges want professors who value research more than instruction.

            • This upsets me a lot:

              -Practices expect these guys to be rockstars out of college, and think it’s the university’s responsibility.
              -Colleges don’t see a problem, and expect the practices to deliver the practical.
              -Graduates and students know they need to level up, but have no idea how.

            • I don’t see a problem with this really. College gave me the necessary tools and background info to develop my practical skills.

              A university education shouldn’t be akin to a technical school. It should give you the context to be able to think critically and apply new concepts to your solid foundation of knowledge.

              I mean if my university dropped a semester or two of courses in my curriculum to teach me how to do practical auditing then I’d be pissed. Would I be more prepared as a Staff going into my job? Sure. Would it make me a better professional? No; especially not in the long term.

              And I’m definitely seeing this as I’ve transitioned from public into private industry.

            • ZPAC3

              Umm, what exactly did you learn in your shitty auditing courses that made you a “better professional”, because I honestly got nothing out of them?

            • Huh? WTF are you talking about? This was meant as a hypothetical. As in what would happen if college had an actual practical auditing course.
              Personally, I didn’t learn shit in my crappy auditing course.

            • cpanum31

              I think that is probably the best analysis of the problem (for anyone who sees it as a problem, as it hasn’t changed I guess most in the drivers seat don’t).

    • LikeABoss

      So here’s my question (keeping mind you did state above that you do think that you and your staff should have core accounting knowledge)… you state, “My team and myself see a lot of the traditional accounting value chain as a chore and an inconvenience.” Ok, so I’ll assume that you view the “traditional accounting value chain” as providing services like depreciation calculations, and tax return prep, and maybe handling some semi-complex accounting for not-so-complex “small business and start up” clients. I don’t know about your practice, but I’m extrapolating based on what I know about small firms & small clients here in the US.

      If you don’t view your core business at your firm as providing those services to your clients, what do you view as the core? General business consulting? What do you put on your engagement letters that brings in the bulk of your firm’s revenue?

      I ask this for two reasons. 1) If clients are engaging you to do things like depreciation and small tax prep and handling semi-complex accounting issues for your clients, but you view delivery of these items as “chores and inconveniences,” you should probably give up your license to practice accounting for the public and do something else. I am in corporate tax now, and although I have some very powerful software at my disposal, it’s still my job to verify that what I’m reporting on our tax returns is correct and complete. That’s the core of what my job is. There are consequences if I don’t do it, or if I just rely on software or staff to come up with the numbers without verifying it. The software just allows me to do my job more efficiently, and it introduces a level of double checks. 2) If clients are engaging you to be their small business adviser, you should probably give up your license to practice accounting for the public, and put yourself out there as a consultant. Yes, if you’re going to give tax and accounting advice to clients you should have a license, but it just doesn’t seem like that’s what you want the core of your practice to be.

      I’m generally with you and Caleb on the “the profession blows & some really radical changes need to be made because doing what we do the way we do it sucks” notion, and I think your analysis of some of the problems in the industry is dead on, and I even think some of your innovations in your firm are great. I’m starting to wonder, though, where are you guys drawing the line between “this is what an accountant does” versus “this is what a consultant does.”

      • Great question dude.

        I like how both reasons pointed toward me handing over my license! That’s exactly what I’m doing next year (however we’ll continue to have licensed practitioners in the firm).

        I think the line between consultant and accountant is blurring. We currently provide management consulting, technology and marketing services in addition to our accounting offering. Where I see “the line” is that accountants can move into management consulting pretty easily, but consultants cannot move into tax and financial advice as readily.

        In this scenario: Accountants win.

        • LikeABoss

          Ahhhhh, very interesting! In my opinion, what you just said shows that the lines really aren’t blurring. You’re giving up accounting to be a consultant, but you’re still part of a firm that offers accounting, which requires people who are still up on their accounting skills (and licenses). Now, methinks that you’re probably going to focus on being a really great consultant, and your partners who are accountants are gonna focus on being really good accountants so that you can put yourself out there as a one-stop firm for all the needs of your clients, right?

          I’m not sure this is any different than what all firms of all sizes do. Caleb has mentioned in many articles how it’s kind of a joke that the big four still parade around like they’re audit firms when their consulting revenues are as big, if not bigger than their audit revenues.

          Yes, accountants can move into consulting roles. And with some education, consultants could move into accounting roles. But the roles and the functions are still distinct, even if the people move, and enhance different areas of their skill sets. Just because firms choose to have their employees dilute their core practice and knowledge base by spreading them between professions, doesn’t mean lines are blurring, it means we’re spread too thin!

          • I think we’re on the same wave length. Maybe I should use the collective nouns, instead of accountants/consultants: Accounting firms and consulting firms.

            Using my earlier analogy, it’s easier for a top tier firm to move into consulting, than it would be for a consulting firm to move into accounting practice. I don’t think McKinsey will be moving into audit anytime soon.

            And you’re on the money with B4 too, I’ve been watching them diversify their revenue streams for years now. You only have to look at the acquisition activity to know what the play is here. I’d be interest to see the breakdown of fee types if anyone has them.

    • Another exKPMGer

      “For those of you that have been following me online for a while, you’ll probably know one of the early experiments I ran at Accodex was…”

      In other words, no one has ever heard of these experiments at Accodex.

      • How long are we expected to deal with these Accountingfly legacy costs?

        • Quixote’s BFF

          Accountingfly is not so fly, Bro

      • What?!? You haven’t heard of an obscure accounting technologist from Australia?

        But yeah, fair call.

    • Another exKPMGer

      Chris… I don’t know if you log on to review the trolling comments on your posts or not, but assuming you do… How do you think all this translates to the US? I know we’re a global community and all that bull, but your business doesn’t seem scalable to a larger business environment. I actually spent some time reviewing Accodex’s website, and while it all seems interesting enough, I’m just not sure how applicable all your ideas and concepts are. For instance, I’m not at all familiar with Australian tax law and how it’s administered by the government, but is it is as complex and user-unfriendly as the tax code and IRS here in the United States (where most of the GC readers are)? Do you have the layers of red tape surrounding every hopeful transaction any business wants to make? Can you really, as you suggest above, hire a bunch of college dropouts (or non-attendees) to plug numbers into a software program when they don’t understand what those numbers represent, and are clients OK with this approach? One of my current roles at my employer is to read legal contracts and determine the financial impacts of what the management team wants to do, and it’s complicated. I mean, really, really complicated. How can people who don’t know what the hell is going on do this? And how can software be adapted without first streamlining contract law to prevent unusual transactions? There are so many “What if” questions that it leaves me truly unable to relate to a lot of what you’re talking about. Thoughts?

      • Good morning from Australia trolls. I’ve done a bit of research into the American and UK tax environment as we’re expanding overseas (Australia to small and too hot for my tastes).

        Two great papers on this PwC Paying Taxes Report and Tax Foundations International Tax Competitiveness Index. The results are as follows:
        -US more complex on Income Tax (No surprises there)
        -Australia more complex on sales tax (Which is BS IMO as your stuff confuses the hell out of me)

        Put simply when comparing the two systems USA has about 9,000 statutes and regulations compared to Australia’s 7,000. I would put the difference down to the state level taxes. Considering Australia’s national population at 22 million (lol) puts it smaller than Texas and California, we didn’t have much need for complex state taxes.

        Anyway, an of this in play is we’re working on some technology called a “Tax Expert System” where all tax rules are programmed into a machine, let’s call him IRS Watson. You can then the enter client/contract/transaction variables into the system and it will spit out standardized analysis. It will flag the inevitable “discretionary” professional judgement areas you were alluding to and provide the corresponding case law for analysis.

        The complex BS we deal with is never going away. I think that’s a good thing for the profession. And knowing our governments, it’s going to get more complex. I do maintain that more and more of the scut work we never enjoyed will be done by machines.

    • SmallFry

      Problem: Automation and technology can potentially cause a huge disconnect between cognitive skills reaching the end product in an efficient manner.

      Positive: However, I was able to solve it with 30 minutes instead of taking half a day before the technology was around! Thanks technology!

      End Note: This should be an automated thing, but it’s not yet SO we should invest in developing these skills until this can be automated 10 year later- then the staff can sit back and punch in numbers while we roll in the fees and let the accountapocalypse consume us!

      Let’s self-fulfill this doomsday prohesy!

      • Cheers mate. I shall get you to write my tl;dr summaries from now on.

    • Reasonable Assurance

      Yeah excel macros. Staff just click the button for a program someone else wrote. Zero learning.

      • Spot on. Imagine that in ten years, on steroids.

        I can’t believe at 28, I have to use the phrase, “Back in my day.”

        • CeeKayCPA

          Yeah, I know!

      • Reasonable Assurance’s Broseph

        My Broseph Reasonable Assurance is the Macro Daddy!

    • D’Angelo

      The majority of the crappy tax work I’ve seen has come from accountants treating tax returns like data entry projects without understanding the underlying concepts. I’m glad we’ve got software to handle a lot of the grunt work and calculations, but at some point people have to start understanding why the numbers work the way they do. This was a huge problem at my last firm. You can’t properly review a return if you don’t understand why numbers flow to where they do on the forms. A tax manager at my old firm used to review things almost entirely in the worksheet review of the return, by looking at source documents, and then seeing how they were entered in the data entry part of the tax software, not really looking at the forms themselves. If things had been plugged into a weird place in the software, or just not flowing through right, he never would have known. He didn’t even know how to do some of the data entry right (his foreign tax credit info and investment interest were always entered wrong), but since he didn’t know how the return should look he had no clue what a terrible job he was doing.

      At one point the answer “that’s how our software calculates it” was given to the client as an explanation for how cancellation of debt works, because he didn’t understand anything beyond taking a number from a 1099-C form and plugging it into the software. If people never learn the underlying concepts, I don’t know how they’re supposed explain anything correctly to clients.

      I’m guessing software has cut down on the number of errors made in tax preparation, but there’s no substitute for actually knowing what’s going on.

      • SmallFry

        Marc?

        • D’Angelo

          Nope.

      • taxintern

        this is the main point. data entry only gets you so far.

      • Andrew Y

        No doubt. Our people spend way too much time managing technology at the expense of learning the technical underpinnings of the law.

    • The Horniest Partner

      I don’t know about all this but I will say the inner net is the greatest invention ever but it makes me incredibly inefficient and sometimes I just need to power sign-off on files instead of reviewing them.

    • We’ve had a similar problem In the bookkeeping world ever since QuickBooks came out.

      A clerk thinks that because they know how to print a check, they can call themselves a bookkeeper. But they don’t know any of the underlying debits and credits, or how those entries affect the financial statements. So they end up making a mess that someone else has to clean up later.

      I’m lucky that during my education I worked as a bookkeeper for a business running some ancient DOS-based accounting software. Just about every entry was a journal entry, so I had no choice but to get really good at the theory.

      As the software gets more powerful, the problem is amplified. In trained hands, productivity is hugely increased. But when people don’t know the theory, automation just makes things worse.

      • Great point Blake. In the wrong hands the technology can be “dangerous” (In an accounting sense). I too had an opportunity to sink my teeth into those DOS based legacy apps in audit and bookkeeping. It was aweful but I got real good at debits and credits!

        I think the lesson here is that training is of every increasing importance.

    • Big4Veteran

      “The fact is that the accounting value chain hasn’t been automated fully, and is still another decade away.”

      Bullshit.

      P.S. Is this Going Concern, or an ad for Accodex? I never heard of Accodex until reading this article, so “Mission Accomplished” I guess.

    • CajunAuditorTeyonce

      I recently listened to a debate on NPR about a topic very similar to this thread topic. [Is Smart Technology Making Us Dumb].
      http://www.npr.org/2015/05/20/407956931/debate-is-smart-technology-making-us-dumb

    • buthurt

      Not really. Partners usually use technology advancement to hire less staff. From a minion’s perspective, yes we are more productive but we also have significantly more shit to do. Everyone is going lean to a point that some teams are just a skeleton. At the end of the day, the hours are longer than before and we are paid the same. Also when one of the systems multifunction, we have to spend extra time trying to fix the damn thing.

    • Jake

      As someone who works as a Tier 2 IT support specialist and has an accounting background. This idea of accounting through a tiered support structure is really incredible. I am not sure if I am just in the dark about this idea or if it is novel, either way I love it.

    • DeloitteSerf

      This already exists. It is called Deloitte India.

    • Great spot! I think you definitely hit the pin on the head
      here, as a clear definition of what accounting entails! Thanks for sharing your
      insight.

      • buthurt

        WTF is this?

        • buthurt

          Bro you are back!