Your future in the accounting profession
(This is adapted from an address by Penn State Prof. J. Edward Ketz at the university's Masters of Accounting Graduation Ceremony on May 7, 2017.)
As the students know, the motto of my advanced accounting course is that things get worse before they get better. Well, today, things are a lot better. University exams are behind you; graduation is today; your career is ahead of you. …
Today I would like to review what you’re getting yourself into. Remember that quote attributed to [19th century thinker] Elbert Hubbard?
“The typical accountant is a man, past middle age, spare, wrinkled, intelligent, cold, passive, non-committal, with eyes like a cod-fish; polite in contact but at the same time unresponsive, calm and damnably composed as a concrete post or a plaster of Paris cast; a petrification with a heart of feldspar and without charm of the friendly germ, minus bowels, passion or a sense of humor. Happily they never reproduce and all of them finally go to Hell.”
Let’s also remember our discussion about our favorite movie of 2016. That’s right, “The Accountant.” In this movie Ben Affleck stars as Christian Wolff, a math savant and crack marksman and martial arts expert who happens to know how to uncook the books. I love that term; besides, “uncooking the books” certainly helps non-accountants to understand what is meant by “forensic accounting.” But notice that the ghost of Elbert Hubbard reappears as Christian Wolff confesses that he has trouble socializing with people, even though he wants to.
Before we talk about your future, let’s talk about my future — when I was your age. Almost 50 years ago, when 21, I was graduating with my undergraduate degree, but it was in political science, not in accounting. You see, I wanted to be a lawyer. But during my senior year, for a variety of reasons, I changed my mind. Besides, I realized that all lawyer jokes were actually true. I did not know what to do, so I returned home and got a job. I eventually found myself as a clerk in a repair shop, doing job order costing. I found it so easy that it dawned on me I would like to get paid like an accountant. So I returned to school and started working on a master’s degree in accounting. While in school, I became a teaching assistant and discovered that I loved teaching. I then applied to the doctoral program, graduated four years later, and have been a university professor ever since.
What does this mean for you? First, you should be willing to change. Your interests will change and so will the job market. You must be adaptable. A few years from now, you may not be in accounting. For example, I remember a former student who became a CPA and then went to med school. Her dream was to become a hospital administrator.
I also think long-term planning is a bit overrated because planning can only be used for continuities. Planning is useless when discontinuities occur. We just do not see the future clearly enough to discern where we should be moving. But opportunities and serendipities pop up from time to time. Be adventuresome and eat these golden apples when they appear on your kitchen table.
Now, your future
Let’s now address your future and let’s ask, “Where is the profession going?” In particular, I wish to examine three major forces that are going to have a major impact on the accounting profession and on your careers.
The first major force is demographics. Demographic factors are going to work in your favor. Accounting partners and corporate accounting managers (and university professors) are retiring in droves. There are not enough young people to take their spots. There’s a real talent shortage in this country. That means a lot of businesses will desire your talents. You will have opportunities to advance quickly in the profession, perhaps changing firms. Make the most of this opportunity and your career will advance rapidly. …
The other big factors of change will be automation and offshoring. Unlike demographics, they will present significant challenges to you. ... Technology is advancing fast and will affect the accounting profession as it affected blue collar workers a few decades ago. Cloud computing and other technologies will lead to greater automation of transactional data and compliance reports. It already has led to major cuts in accounting jobs. For example, in September, Walmart announced the layoff of 7,000 positions dealing with the management of daily cash flows and the processing of vendor claims.
Another development in the IT world is blockchain technology. Blockchain allows for secure record-keeping in online ledgers where members share and confirm information. A number of firms are experimenting with this technology. ... Large accounting firms are also testing it because transactions are transparent and they leave a clear audit trail. Some accountants think it will revolutionize the audit industry.
Technology will affect auditing in other ways as well. One Big Four firm predicts that it will be hiring only half as many new staff as it currently does by 2020. Others predict the same number of hires, but substituting IT experts for accountants. Of course, what they would really like are students with expertise in both computer systems and accounting. That’s why we are proposing to modify the MAcc program to require future students to take two graduate-level MIS courses.
The third and last major force that we shall discuss is offshoring. Some transactional activities haven’t yet been automated, but corporate America is sending these jobs to other countries where the labor costs are much cheaper. Toys R Us, New York Life Insurance and Cengage Learning have reported significant offshoring of their accounting functions, especially tax. The CEO of Cengage even predicts that soon there will be more people in India knowledgeable about the U.S. Tax Code than there are tax CPAs in the U.S.
What do these changes in automation and offshoring mean for you? It clearly means that you will not be working in repetitive data processing. Instead, the accounting profession will become more and more a consulting profession. All of us will become advisory experts, using our professional judgment to help clients make better decisions.
It also means that your education is not finished. You will have to learn more technical skills. You will have to learn more integrative skills, as accounting does not exist in a vacuum. And you will have to get rid of the curse of Elbert Hubbard and gain more social skills and marketing skills because you will have to interact with your clients.
I’ll close with a personal story. About 15 years ago, some folks in the CIA asked me to lunch. We went downtown to Chili’s to talk. They did not try to recruit me and I did not apply. I am not Christian Wolff; I am not that type of accountant. Instead, they asked me about Penn State students. You see, demographic forces are affecting the CIA as well as corporate America. They wanted to know whether our graduates were able to investigate money laundering and follow the cash flows of terrorists and other undesirables. I answered, “No,” because the bad guys are quite sophisticated in their money laundering and their use of accounting to hide their activities. Our students have good fundamentals, but it takes experience and more training and a deep, deep knowledge of accounting and auditing to accomplish what the CIA desired. I suggested hiring people from the Big Four with at least three years of experience.
I feel that advice is still correct. You are leaving Penn State well equipped to start your career, but the learning process is far from over. True professionalism requires one to keep up with the necessary skills to serve our clients and to discharge our duties. But who knows — maybe the CIA will come knocking on your door a few years from now.