Time to Buckle up for the Accounting Industry

Technological development is rapid, and the days when small and medium-sized companies in the industry could rely on “business as usual” are over. Today, it is not enough for leaders to sit in the front seat. They must have both hands on the wheel – steering steadily into the future – with the right skills and knowledge.

Research shows that small and medium-sized companies in accounting and auditing struggle to adopt new knowledge and innovations that can improve the services they deliver.

This is bad news. Both for the companies themselves and their clients, whether they are in the public sector or in business. It is also not good for our society, which is highly dependent on the expertise of auditors and accountants.

Professionals with Important Competence

Both professions hold important roles as trusted professionals. Accountants manage everything from daily bookkeeping to financial reporting, while auditors review and verify accounts to ensure they are accurate and comply with laws and regulations.

Why is it that this industry; and the small and medium-sized players; struggle to adapt to changes? Both in terms of digital technology, communications service, talent recruitment, and new requirements?

Are the leaders overworked? Do companies have too few employees? Is there a lack of initiative, or do they not see where they are heading if they fail to keep up?

Where does the shoe pinch, really?

In a comprehensive four-year research project, researchers at Nord University – together with several partners at home and abroad – have examined the adaptability of several companies and leaders.

What factors influence them?

Do the leaders have the time and opportunity to be proactive, and are they able to adapt to a society that is changing faster than ever? And are the companies, in line with the development, able to develop the right products and services?

“Doers or thinkers?” Yes, please, both

The ability to identify trends, preferably before they occur, is just one example of a trait that an “ideal” leader in tomorrow’s accounting industry should possess.

The industry needs what researchers call “change agents.” That is, proactive leaders and employees who are ahead of the curve and able to take the right and necessary steps to ensure that companies can both survive and grow.

According to researchers, the best leaders should also recognise that diversity in the staff is a strength, whether it concerns age, nationality, different backgrounds, or competencies. The future accounting and auditing industry will need both “doers” who are action-oriented and “thinkers” who are reflective and analytical.

The trends already affecting the industry are broad. Large and international accounting and auditing firms face many of the same challenges as smaller ones. However, unlike large companies, smaller companies often have limited resources. As a result, they risk falling behind if they do not work smarter.

The Technology Paradox

One of the biggest challenges in the coming years is - paradoxically - also what could provide the industry with a range of new opportunities: namely, technology. Artificial intelligence (AI) is coming like a freight train, even in accounting and auditing. It is no longer just the company’s own employees who can perform tasks. Enormous amounts of data can be processed through artificial intelligence in seconds, saving companies time and money.

In the worst case, AI can take jobs from employees, or parts of their tasks may disappear. Unless companies themselves succeed in finding good and creative ways to use AI. If they do, researchers believe that companies have much better conditions if they can proactively and inventively use AI as internal “super agents.”

What does all this do to the companies’ ability to find good solutions, both for themselves and their customers?

Researchers believe that it will not only be highly necessary to look at new business models and service offerings but also entirely new ways of working. Add to this that the industry is subject to a plethora of legal guidelines and strict requirements for standardiation, reporting, sustainability, and ethics - and suddenly, the list of everything the boss must remember becomes long.

Data Crime and Lack of People

Just the advent of AI alone, where all data must be quality assured and simultaneously secured against ever-new forms of cybercrime, will require vigilant leaders and employees. The lack of a competent workforce with updated knowledge of technology will also be a challenge. In Norway alone, thousands of accountants and auditors are already missing. In India, for example, efforts are being made at the elementary school level in hope of recruiting more into the industry, which the whole world strictly depends on. How will Norwegian accounting and auditing firms capture the best minds? Do they have a plan?

Researchers also look at the international arena and note that unrest and turbulence - both political and economic - are the new normal. This development, along with rapid technological advancement, places greater demands on the industry than before.

At an international seminar at Nord University, researchers and several partners recently presented and discussed the consequences of the many challenges facing the industry.

Discussions are happening all over the world

Participating in the discussions was also Lee White, a man widely known in the field among accountants, auditors, and academics. As the head of the global interest organization for the accounting and auditing industry, the International Federation of Accountants (IFAC), with members in 142 countries, Lee focuses on the knowledge that researchers contribute internationally:

“I am optimistic about the future of the industry, and I encourage our members to embrace the changes that are coming,” says the CEO.

White adds that the same discussions are recurring internationally. The challenges are relevant not just for small and medium-sized companies in Norway.

“The discussions we are having here today could just as well be happening in Bogota, Colombia,” he says.

The researchers behind the project have taken a broad approach and worked interdisciplinarily.
Not only have academic staff within accounting, auditing, entrepreneurship, and innovation contributed, but so have several PhD candidates and master’s students. The research material is extensive.

Will strengthen companies’ competitiveness

At the end of last year, the project was completed, and the final research report is not yet fully finished but is just around the corner. Closer to summer, a book will be published with detailed findings and analyses. It will be suitable for professionals, accountants, auditors, leaders in the accounting and auditing industry - and not least: students.

The researchers’ goal is that the findings and analyses will help the industry identify what the profession needs to survive and succeed.

“We hope that the research will benefit the industry, making it easier for leaders to make decisions that can improve current accounting and auditing practices. Our goal is for our research to help strengthen companies’ competitiveness. We want to provide leaders with good and necessary analytical tools,” says Nord University professor and project manager Anatoli Bourmistrov and associate professor Brynjar Gilberg, who are two of the researchers who have contributed significantly to the project.

At Nord University, there is also a clear goal that the research will contribute to even better education with new and innovative teaching methods.

“Because the industry, both here at home and internationally, needs this knowledge, analyses, and tools, we hope that the project will continue in some form,” say Bourmistrov and Gilberg.