With advances in technology and the rise of artificial intelligence, there’s the looming question of what jobs will be replaced by robots. Rest assured, the accounting profession isn’t going away, says Maryland Smith’s Rebecca Hann. But her new research finds that jobs are changing as firms’ needs shift.
“The accounting profession is actually getting more interesting, if anything,” says Hann, the Dean’s Professor of Accounting at the University of Maryland’s Robert H. Smith School of Business.
Hann worked with Charles (Chad) Ham and MaryJane Rabier of Washington University in St. Louis, and Wenfeng Wang of City University of Hong Kong. Spurred by other research on how technology has affected the labor market, the researchers look specifically at how the accounting industry has evolved.
Hann and her co-authors looked at a decade’s worth of job-posting data to gauge the skills accounting firms are looking for in auditors. They looked at what auditor skills can be replaced by technology – repetitive tasks, like number crunching – and how that changes the skills employers demand from the people they hire. They observed a clear trend.
“Firms have always wanted auditors to have financial skills, but we see a significant increase over time in the demand for cognitive and social skills,” Hann says.
With blockchain technology, AI and more technological advances – especially in the last five years – the accounting profession has changed a lot, says Hann. She says the big accounting firms have invested heavily in the new technology. And that has made them look for new skills in the new auditors they hire.
“As we observe more automation in the audit process, accounting firms now have a stronger demand for auditors with more cognitive and social skills. This makes sense, because tasks that require human interactions and more high-level thinking – those are much more difficult to replace with machines.”
The researchers looked at firms at the office level, because the largest accounting firms – the Big 4 (Deloitte, EY, KPMG, and PwC) – have many different office locations, and there is substantial heterogeneity in how each office adopts technology.
They find that offices that invest more in emerging technologies are the ones that have increased their demand for more cognitive and social skills in new hires.
The researchers spoke with partners, managers and others at the firms, all who report that technology is increasingly being used to automate the routine tasks auditors used to do. With emerging technologies, there’s not really a one-person task anymore, says Hann. Everything requires teamwork – meaning good communication skills, people skills and social skills are more important than ever in the team members that firms hire.
The researchers also wanted to know: Does it actually matter? Do team members with more “soft skills” make better auditors?
“We find that the offices that are demanding more of these cognitive and social skills do have higher audit quality,” Hann says. “The results were particularly strong for people skills, social skills.”
Hann is clear that these skills don’t replace other important auditor skills.
“You still need that literacy on financial reporting and on data analytics. The fundamental financial skills are always important, and in today’s environment, even if a person isn’t savvy on certain technology skills, firms still want them to be able to understand how to use the output. In that sense, firms now demand auditors to have an expanded skillset.”
The research findings have direct implications for Hann’s students and anyone studying accounting at business schools.
“We’re always thinking about how to revamp our programs to meet the evolving needs of the firms,” she says. “They don’t want our students to just know accounting – they want more. As we move toward placing a greater emphasis on technology – AI, automation, analytics – we can’t forget the importance of people skills, social skills, the ability to communicate, skills that complement the use of advanced technology.”
The research, “Auditor Skill Demands and Audit Quality: Evidence from Job Postings,” is a working paper.
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