Everything in the world is changing. This statement could be made at any point in history, and it would be correct. However, it seems like things are moving at a much faster pace and it also feels like the amount of change is incredible. While all this upheaval effects every aspect of peoples lives, it is particularly invasive in the business world – every part of the business world. The methods used to complete tasks, no matter if we are talking about accounting activities, manufacturing, sales efforts, or anything else, are evolving very rapidly. If you are an accountant, you are contending with changes, often brought about by technological advancements such as artificial intelligence. If you are an accountant that serves in a controllership position, you are not only dealing with new accounting approaches, but you are feeling the pressure of everyone else’s change.
Let’s focus on controllers for just a minute. Many in the accounting world, especially those that have gone through the process of becoming a CPA, often struggle with misconceptions by non-accountants about the job they do. Let’s say you are at a dinner party, and you meet someone who asks, “What do you do for a living?” Your response is probably going to be, “I’m a CPA.” The new acquaintance will often then respond with a quip like, “Well at least you don’t have to work too hard until tax time.” There are two things wrong with the party guest’s retort. First, tax accountants don’t sit around watching Hallmark movies eight months out of the year and then work just during tax season. Additionally, and more to my point, a lot of accountants (CPA and non-CPA) are not tax professionals. I’m not, in any way, trying to reduce the importance of tax accountants, or those that are financial accountants or auditors – but the heroes in this writing are controllers.
The question posed in the heading has a simple short answer – change. If we expand on this, the next question would be what types of change. We will break it down into four broad categories. Technological innovation, environmental impacts, regulatory change, and the dreaded, unforeseen factors. Let’s start from the last category and work backwards.
I don’t want to “date” this article too much but at the time I wrote it, fuel prices were about $1.50 more than they had been earlier in the year. This was due to an unforeseen event for many in the business world, a war in the middle east. The need for those working to keep a company running efficiently and profitably to change methods and measures was very real and pressing. Another unforeseen event that changed business operations immensely was the 2020 pandemic. This event, unfortunately, also led to the failure of numerous organizations because they either didn’t respond quickly enough or took the wrong path as they tried to pivot on the effects of the pandemic. Some unforeseen events are sizable, while others are smaller. Some might be specific to just one entity (a broken pipe floods a restaurant – did the organization have a control to require adequate insurance). All these types of occurrences place a burden on controllers.
Beit Federal, State, or Local government, new statutes are being set forth all the time. On top of this, existing laws and regulations are being changed or superseded. There is a silver lining when we think about regulatory updates. As a rule, there is “fair warning” and an adoption period that allows organizations the time to create controls in order to comply with updated codification. That being said, the amount and scope of regulatory change is on the grow which means more work for our heroes, the controllers of the world.
This could be rolled into unforeseen events, but because hurricanes, tornados, extreme heat, wildfires, torrential rain, and flooding are happening with such regularity we decided to talk specifically about the environment. Here is an example of a company that created a control related to the environment to help their patronage. If you look at a home that is listed for sale and use Zillow, the listing now has ratings for risk related to environmental events.
Figure 1 - Risk Factors as Presented by Zillow for a Home in Myrtle Beach, SC
Businesses have long been affected by catastrophic weather events and in too many instances, steps could have been taken to make the impact less significant, but they were not.
We save this one for last because it is, by far, the most significant factor driving change in the way business organizations operate. Here are a couple of examples. In 2020 the Ford Motor Company stated that by 2036 the company would only make electric vehicles. They have since scaled back on their projections, but the fact is that electric vehicle sales continue to grow not just for Ford but for all manufacturers. Here is another example, both Intuit and H& R Block, heavyweights in the tax preparation business, are planning to replace some of the services currently provided by people with AI based tools. These examples are “tip of the iceberg” technology changes. There are so many repetitive or simple logic-based tasks that artificial intelligence tools can now do, it is changing the landscape of business. It also creates some ancillary challenges.
When I was a young accountant just starting out with a CPA firm, I worked on the audit staff. I was “green”, so I was tasked with such things as sampling and testing. I regularly thought (and I think I was right) that a trained monkey could do what I was doing. It, however, provided me with a foundational understanding of the audit process and doing these mundane tasks served as a building block in my understanding of the audit process. Today, AI tools can do every last thing I did for the first five or six months I worked as an auditor. How will young accountants learn about proper accounting data flow in today’s world? Fortunately, our hero, the Controller will device training measures to fill the learning gap created by the use of AI tools.
I work providing CPE instruction and one of the questions most often asked is about AI and whether it will replace accountants. If I’m being candid, my answer is, “yes” AI will be able to do a lot of the things currently undertaken by accounting professionals. This means that the role accountants play is going to change notably. If I am being really, really honest, my answer should be “I don’t know – things are changing so fast and in so many ways it is hard to predict”. I will put a different spin on it - a lot of people that have expertise believe that there is going to be a greater amount of job security for those in both controllership roles (our heroes) and people in review and auditing roles because of the need for AI and general technology governance. This need may be temporary (only five to ten years) because technology will always evolve and become more capable. As people have done for centuries, as the world changes, business or otherwise, we will adapt. Those that embrace and address the change most effectively will quite probably be very successful!
Karl Egnatoff, CPA.CITP is a Certified Public Accountant (CPA). During the past 33 years Karl has worked as a consultant, trainer, and as a software engineer while engaged on projects for business organizations of all types. Prior to this, he worked in public accounting as well as in private accounting sector, and since 2009, he has been presenting and creating material in association with numerous continuing educations organizations. In addition to being a CPA, he is also a Certified Information Technology Professional (CITP).
Karl has written training material, numerous articles, and the book "Stories to Build a Business On," which is available from Amazon. If you enjoyed the article, review the course “Understanding and Creating an Internal Control System” as a great follow-up to your learning partnered with CPA Crossings.
This article is provided as a complimentary resource by Karl Egnatoff, CPA.CITP. Statements of fact and opinion are the author’s responsibility alone and do not imply an opinion on the part of CPA Crossings officers or members. The information contained herein does not constitute accounting, legal, or professional advice. For actionable advice, you must engage or consult with a qualified professional.