All of August, I discussed the future of accounting…. How the Great Resignation impacts the future of your firm…. How to combat the automation problems of the Digital Age… Even how to protect your firm against commoditization. If we aren’t experiencing side effects from these things now, we can at least expect to notice some disruption from them in the next few years. But, I’ve been holding back. I’ve got a few predictions about the future of accounting that some may refer to as outrageous. Here are my most outrageous predictions about the future of accounting.
Gone Without A Trace:
The Disappearance of the Big 4
I believe that within the next few decades, the Big 4 will no longer exist. Back in 2018, Ian D Gow and Stuart Kells authored the book The Big Four: The Curious Past and Perilous Future of The Global Accounting Monopoly. You don’t need to read the book to know that they were not anticipating a friendly future for the Big Four.
Kells and Gow cite the massive and rapid expansion of the Big Four as the reason for this downfall. Sacrificing standards for increased cash flow created an unsustainable bubble that is already starting to pop… Although their advisory services have caused plenty of strife, it’s actually the audit & tax divisions of the Big Four that are coming under the most fire.
In fact, both Ernst & Young and Deloitte are already attempting to divide their audit and advisory wings amid scrutiny over conflicts of interest. Niall Ferguson, a Scottish-American historian, outlines a type of event “called the Great Dying” in his book The Great Degeneration. The Great Dying is the sudden disruption of an entire industry because of the falling of its oligarchy. Regulators have already stated that they will not let the Big Four become the Big Three. With their power already weakening, it seems inevitable that the Big Four will fall.
Tables Turned:
Accounting Will Be One of the Last Things to Be Fully Automated
Although I believe that certain parts of the accounting profession can and will be automated, the accounting profession as a whole will be one of the last things to become fully automated. And we’re not alone in this thought. Accounting Today shared similar sentiments in their article, “Let’s end the debate: Automation will never replace accountants.
In the end, some parts of accounting will indeed be taken over by automation. But this is a strength. You can and should use this to your advantage. Automation will free up your time and allow you to focus on higher-level aspects of accounting, instead of spending the bulk of your time “crunching numbers.” The all-encompassing services and knowledgeable advice a great accountant provides can never be digitized. Entrepreneurial accountants can breathe easy knowing that their profession will be around as long as they continue to pursue it.
An Extinction Event
Bookkeepers will no longer exist.
Unfortunately, bookkeeping will be a victim of automation. Despite the insistence that payroll services cannot be done well without the personal touch of a professional bookkeeper, the writing is already in the sand. Entrepreneurial accountants are already successfully using bookkeeping software to handle the time-consuming tasks required of a bookkeeper. There are plenty of benefits of automating bookkeeping and very few downsides.
The Analytix Finance & Accounting team took a look at all the reasons to automate bookkeeping here, but the overarching principle is that it saves you time and money and improves accuracy. With noticeable improvements to both precision and efficacy, it’s only a matter of time before these transactional and routine tasks are automated. And this should not be the cause of distress. As we stated before, there are plenty of branches of accounting that cannot be replaced by good software. Use the saved time and increased accuracy to boost other parts of your business.
Accountant REQUIRED:
In the next decade, it will be required by the government to have an accountant.
We’re heading into territories unknown. And I mean unknown, not unthinkable… Tax filing mistakes are increasing, the IRS backlog is growing, and the US tax code is getting more and more complicated every year. Because of this, I think that within the next ten years, the government will require you to use a professional accountant to file your taxes.
From basic math errors to incorrect filing status and inaccurate deductions, taxpayers make a variety of mistakes on their tax returns. And each mistake costs the IRS precious time and money. An amended form takes an average of an additional 16 weeks to be processed. With a current backlog of over 20 million unprocessed tax returns, IRS employees need all the time they can get.
But don’t go feeling too bad for the IRS, some of this is their own doing. Staffing shortages and the disruption of COVID years can certainly be blamed. However, even without those issues, the US has one of the most complicated tax codes in the world, and it results in the majority of taxpayers making filing mistakes, which the IRS offers little to no support to correct. To even get an IRS agent on the phone is a feat worthy of recognition. In order to help ease the pressure on the IRS and reduce the amount of mistakes, it only makes sense for the government to require the average Joe to have an accountant file their taxes.
Intuit Disabled
The monopoly will be broken up.
We’re not going out on a limb referring to Intuit as a Monopoly. Intuit provides all-encompassing services to everyone from small business owners and freelancers all the way to accounting professionals. Operating under three different divisions, Small Business & Self-Employed, Consumer, and Strategic Partner, Intuit holds a massive percentage of the market (about 66% of companies use Quickbooks). With 8,000 employees and a company worth of $18 billion, its influence is impressive relative to its size. They’re even making larger companies like Microsoft rethink their own product launches.
While they don’t hold an “exclusive” market share, there is no doubt, that Intuit is verging on a modern monopoly. So, the question is not whether Inuit is a monopoly at all, but rather when it will be broken up. And, I believe that we will see the end of Intuit within the next 30 years. Although accountants and CPAs have been aware of this issue for years, taxpayers and the general public are starting to take notice as well. It’s only a matter of time before Intuit is broken up.
