The changing demands on accounting professionals in the age of AI and Sustainability
By Hardesh Singh August 14, 2023
- Crafting stories behind data is set to be a valuable skill
- High regulatory and accuracy standards come naturally to accounting professionals
In an age marked by escalating environmental concerns and a heightened emphasis on corporate social responsibility, the realm of accounting is undergoing a profound paradigm shift. As the global business landscape grapples with the urgency of sustainability and Environmental, Social, and Governance (ESG) imperatives, accounting professionals find themselves at the forefront of a transformative movement. No longer confined to traditional financial metrics, the purview of modern accounting now encompasses intricate sustainability standards and ESG performance indicators. And due to rapid technological advancements, the traditional landscape of accounting is undergoing a second transformation.
As the capabilities of Artificial Intelligence (AI) continue to burgeon, a once labour-intensive profession is now being reshaped by automation and intelligent algorithms. The emergence of AI-powered tools has ushered in a new realm of possibilities, enabling businesses to streamline and expedite their financial processes.
Companies are slowly adapting to new regulatory reporting requirements in their markets, but the difficulty ramps up when they are multinational, and hence may be dealing with different reporting standards across different markets. According to Henning Diederichs (pic), Manager, Public Sector Financial Reporting, at the Institute of Chartered Accountants in England and Wales (ICAEW), the International Sustainability Standards Board’s (ISSB) new global sustainability disclosure standards (namely IFRS S1 and IFRS S2) points to the need for a comprehensive global baseline of sustainability-related disclosures, with a focus on comparability of financial statements.
In both the private and public sectors, accounting professionals are facing an unprecedented surge in demands to adopt and integrate these evolving ESG reporting standards into their practices. This paradigm shift not only requires a profound understanding of evolving regulations and guidelines but also demands a skilful integration of non-financial data into financial reporting, ensuring accuracy and integrity in portraying a holistic view of a company's performance.
Henning believes that professional bodies such as the ICAEW have a key role to play in preparing learners for the new demands required of the profession and address the role of accounting professionals in helping businesses and society achieve net zero and mitigate climate change. Henning adds that big data is also increasingly an important skill required from accountants, and the ICAEW has now added data analytics software into its ACA exams, where the role of an accountant is increasingly to interrogate data, rather than prepare it. This is reflected in the evaluation of the learner's data assimilation and visualisation skills. When asked what would constitute a competent accountant in the near future, Henning believes that the ability to craft a story and to explain data to stakeholders in an engaging manner would be an important skill to differentiate a good accountant from a mediocre one.
In its Artificial Intelligence and the Future of Accounting report, the ICAEW emphasises the need for the industry to focus on purpose and trust. Adopting AI in a typically labour-intensive data-gathering industry will help professionals free up time to focus on more valuable tasks such as decision-making, problem-solving, advising, strategy development, relationship building and leadership. A recent survey found that 24% of advisory firms were already leveraging AI.
Circling back to ESG, accounting professionals occupy a pivotal role in fostering trust and accountability within the corporate sphere, rendering them uniquely equipped to guide businesses toward sustainability. Through their expertise in record-keeping, transparent financial reporting, and adherence to regulatory frameworks, accountants have long been held to accuracy and credibility standards. This foundation of trust is now instrumental in extending its influence to sustainability endeavours.
As companies grapple with the complexities of ESG considerations, accounting professionals possess the acumen to implement measurement systems, ensuring reliable data collection and disclosure. Their proficiency in aligning financial metrics with non-financial impacts reinforces the veracity of sustainability claims, bolstering stakeholder confidence.
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