A reader’s skeptical comment on the second of this series — Part I and Part II — on the ominous messages for the accounting profession in Martin Ford’s prize-winning book of last year, Rise of the Robots was that, "The elephant in the room (is) that automation is nowhere close to being able to make complex judgments which are routine in the type of audit and accounting jobs that are relevant to the people who read GC,” asking if, by analogy, I was “seriously trying to argue that an attorney, currently working at a firm, needs to worry about their job prospects due to automation?"
Rather than shooting at the messenger, a deeper look at Ford’s discussion may be in order. Although that may likely only increase the level of unease and upset.
To round out the picture of the speed with which high-functioning drones and robots will displace the jobs and careers of the humans in traditional audit, Ford focuses on the ever-expanding pace with which Big Data analytics, artificial intelligence and cognitive technology can be expected to displace the higher-order roles of human expertise and professional judgment.
His proposition, in summary, is that any professional’s position is at risk, who sits at a desk and interacts with either words or numbers, or teams up with software that is self-learning and therefore likely to dispense promptly with its human collaborator.
As Ford himself puts it:
If you find yourself working with, or under the direction of, a smart software program, it’s probably a pretty good bet that –- whether you’re aware of it or not –- you are also training the software to ultimately replace you.
The Examples Are Already Here
After a brief reminder of the apparently continued validity of Moore’s law –- by which, roughly speaking, computational power has doubled every 18 to 24 months since the advent of mainframe computing -– Ford offers examples that would have been unthinkable only an eye-blink ago:
- Oncological diagnostics are now measurably more accurate as performed by algorithmic analysis rather than by trained human professionals.
- Artificial news-writing programs now convert the basic data of sports contests into narrative stories on the sports pages -– if not with the eloquence of Red Smith or Grantland Rice, every bit the equal of the average pressbox typist.
- High-volume securities trading driven by algorithms now so predominates the markets that major investment in fiber-optics connectivity is done to gain speed advantages measured by the thousandths of a second.
Big Audit Is Not Exempt From The Impacts
And the implications for Big Audit? As with the ability of the drones and the robots to perform mechanical tasks at non-human levels of both cost and quality, the strength of cognitive technology will lie in its two-fold displacement of traditional auditing techniques and methodologies.
That is, to start, gathering and analysis of all of a company’s quantitative information will render obsolete the application of sampling-based assurance. Frauds, manipulations and misstatements that have eluded or evaded traditional sampling will become discoverable or preventable when subjected to comprehensive automated capture and analysis of the elements of their scheming.
And, second, there is the business-model challenge: the only participant in this future model, able to possess both the access and the expertise to deliver that assurance, will be the party charged with a mega-system’s design, inputs and operation. No “outsider” –- traditional auditors included — will be able to endure the cost or justify the duplication of effort and sophistication of such a cognitive Big Data operation.
Which means one of two things: Either today’s “independent” auditors will fall even further behind in the value delivered by their rapidly-obsolescing techniques, or they will be obliged, for the sake of their survival, to unshackle themselves from the constraints that today bar them from evolving to be the technology-based auditors of the future.
There are alternative structures for the management and assurance of a large company’s big financial data, of course. The historical model of internal corporate ownership of IT, treasury and controllership could continue. Or, the large players in information management could evolve to take up a technology-enabled assurance function as well –- whether Accenture or IBM, Oracle or SAP, or indeed Google or Amazon.
Or –- to imagine a world where obsolete prohibitions were eliminated –- the Advisory practices of the Big 4 could become liberated to do the same, either on their own or in partnership with the existing consultancies that now lack an audit practice, to complement and broaden to full service their existing capabilities.
In the current regulatory world, these are fantasy speculations. But to envision the structure of the audit firm of the future, through the dark lens of Martin Ford’s predictions -– jobs and careers in technology-based auditing will be created and thrive and prosper somewhere –- just not in the business and practice model of the firms of today.
I have just spent an interesting three days in New York, at the annual meeting of the American Accounting Association, where the professors, researchers and administrators of the universities were obsessing over the cobbling-together of courses and syllabi to enable students to cope with the rudiments of data analytics and the gathering and manipulation of Big Data.
What they were not doing, as I bit my tongue to resist posing rude questions to the panels of the best minds in the academies, is considering whether their efforts are not essentially self-obsolescing; that is, whether their entirely earnest and worthy efforts will be promptly leap-frogged by the very technologies whose expanding powers they are trying so hard to access and comprehend.