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The accounting industry is undergoing a restructure of how firms operate, but, importantly, it’s not shrinking at the hands of AI.
AI technology is changing how certain tasks, such as bookkeeping and reconciliation processes, are carried out, streamlining workloads to save hours’ worth of time. But the main tasks it streamlines are the back-office ones, because accountancy still requires human expertise to survive.
Two-thirds of firms expect AI to reduce the demand for early-career roles, while 83% believe it won’t result in fewer positions overall within the industry, according to the ICAEW.
The value within the sector is shifting, and the danger is that the bottom rung of the ladder is fading, but with governance and auditability a top priority, there’s no question that the value remains high.
Demand has already moved upstream
In some areas, that shift has already happened. The demand within accountancy has already moved upstream, with 71 per cent of firms moving higher up the value chain to prioritise advisory work and the ethical oversight of AI-driven decisions.
When people come to an accountancy firm, they still want trusted advice from a qualified accountant. Not an AI system. So that’s where firms are prioritising their staffing.
That’s not to say that AI and other technology don’t have a significant role to play within these businesses, but the people behind them remain the stars.
The firms that are having the most success balancing AI-integration within their practices are the ones that already had their house in order. From the physical files and ledgers they house to the data infrastructure powering their organisation.
Advisory only works when the underlying data and numbers are accurate. That’s where the AI risk comes in, when a single number is incorrect and then AI uses that throughout its execution.
The challenge that it now creates is who is held accountable? When AI pulls from multiple disconnected systems, that one wrong number in a client report doesn’t just go down as a software error. The consequences are far higher.
When AI generates advice and nobody owns it, the audit trail breaks, creating risk and legal problems.
Success against that backdrop requires the house to be in order, and advisors that are trained to understand audit trails, errors and put their name to these outputs.
Moving on from the broken graduate pipeline
As the AI shift occurs, one interesting trend has been firms pivoting to hiring school leavers instead of graduates.
As the ICAEW suggests, employer national insurance, changes to Level 7 apprenticeship funding, and the impact of employment rights legislation are having an impact. But it also exposes the training problem that has faced the sector for years.
Firms have long been relying on graduates absorbing knowledge from senior staff over several years in order to pick up their skills while trying to blend the theory taught in degrees. The issue there is that graduates often lack the real-world skills that can only be taught from dedicated, real-world training.
Actually, by taking on more school leavers, it forces firms to take a more hands-on approach to training as they don’t yet understand the rules and best practices of the industry.
Alongside building the foundations, like how books are set up and reconciling errors, the next generation also needs to be taught the technology, whether it’s AI, cloud platforms or data handling.
While it’s a greater time commitment up front, the benefits are significant. Rather than merging theory and practice across different backgrounds, junior staff are forced to learn on real systems from the start, which makes learning faster. That dedicated training and setting out of the rules also helps junior staff clearly understand what they do and the associated risks involved, mitigating mistakes and partner liability.
The challenge has also been widened by the downward drift of staff trained at the Big Four, due to trainees being pushed into such narrow specialisms that hinder them in general practice.
Rewriting the training book, therefore, is one of the more practical ways to repair the broken talent pipeline coming into the industry. And even for the firms fixating on AI in the short term, they must consider the longer-term talent pipeline for their business and where it’ll sit in five to ten years.
How to prove AI’s value
The ICAEW research highlighted that only 17 per cent of firms have been able to assess the impact of AI on their workforce. Firms are flying blind, staff are flying blind, and value is called into question.
It comes back to having data, files, systems and infrastructure in order. Advisory fails when AI doesn’t have the right foundations, training fails, and the ROI of AI fails.
Firms running fragmented data systems can’t audit what AI has done, let alone prove its value.
Setting up the right environment for success is the common denominator for the firms that are having success.
AI then needs to start where the outcomes are clearly measurable. The high-volume, well-defined workflows, such as corporation tax returns, AML and KYC onboarding checks, and MTD VAT submissions. All with clear auditability and human oversight.
It’s the tasks with clear inputs and clear outputs that make measurement easier. And those inputs should be drawn upon from a single, unified client record that a partner can easily check the output against.
That’s the key to maximising AI’s trust and shifting the value upstream, and that’s where people are truly freed up to focus on the higher-risk advisory work.
AI raises the ceiling on what a well-run firm can achieve, while also lowering the floor of a poorly run one. The demand for accountancy services is still high, but the AI restructure demands firms to solve their talent pipelines, prove AI value and get their house in order to drive growth.
