How has Accountancy changed over the last two decades?
Oh What a Difference a Decade or Two Can Make!
The year is 2003, Tony Blair is in number 10, Arsenal won the cup, a pint costs about 2 quid and the accountants’ average salary was £42k!
The impacts of Enron, WorldCom and a host of other scandals were still very fresh and we were all yet unaware of several more and far worse to come.
Oh, and the humble accountant in the even humbler accounting practice hadn’t yet been introduced to the delights of cloud accounting. Receipts and invoices were still on paper, filing cabinets adorned the edges of the office, records were stored in lever arch files and occasionally moved to archive boxes, old printers whirred and whined in the corner, and we sat in front of high-tech for the time desktop computers with boxy monitors.
We were getting to grips with those early accounting software packages, but no automated bank feeds. Funny too, but back then, our phones were fixed to the desk and we were free, oh what a difference a couple decades can make!
And that begs the question, what has changed in those two decades?
Overall, when many now are looking forward two decades, the outlook isn’t always a positive one. There are many who feel that technology will advance to the point where the role of a bookkeeper or accountant could be replaced by automation and AI.
But if Xero’s 2023 industry report is anything to go by, the reality could be quite the opposite, with an average 31% increase in client base over the past year, with 73% of practices reporting an increase in revenue. It looks like technology could pave the way to boosting practice revenue, increasing client satisfaction, improving practice efficiency but the goal may be to develop new and improved ways of working!
So, what changes have lead us to where accounting stands today?
First appearing on the scene in 2004, Quickbooks provided us with the first cloud accounting tool that unfortunately didn’t receive much traction to start off with. But as the internet has become a more capable and prominent in our everyday lives, we’ve seen a widespread adoption of cloud computing and accounting software. Cloud solutions allow more flexibility and much easier accessibility and collaboration, subsequently enabling accountants to work remotely and provide clients with real-time access to their financial data.
Making Tax Digital (MTD)
The Making Tax Digital initiative introduced in 2019, proposed a substantial change in the way businesses and individuals submit their tax information, with the aim to digitise and simplify tax reporting, requiring businesses to maintain digital records and submit tax returns digitally. The jury’s out for some how successful this will be, but progress can be a slow process sometimes.
Automation has become a key feature everywhere, and accountancy is no exception. Routine and mundane tasks like data entry, reconciliations, and basic financial analysis are now increasingly automated, allowing accountants more time to focus on advisory and other value added services. At Bots For That, we’re producing an increasing number of ‘beanie bots’ that do all these typical, manual tasks and more – the mundane, time-consuming grind of the past is definitely more augmented with bots in the future.
Data Security and Privacy Emphasis
With the rise of digitalisation, there’s always an emphasis on stronger data security and privacy. Accountancy practices in the UK are now more aware of cybersecurity risks and measures to protect sensitive information and comply with data protection regulations. There’s always more that can and should be done here, everyone thinks it doesn’t happen to them, until it does. (the head of cyber security of a major bank was himself a victim of identity fraud). Unfortunately, we face all of the same risks today that we did 20 years ago plus a whole lot more sophistication, but regrettably most of our systems are still only geared up to address the risks of yester-decade.
Advanced Data Analytics
Advanced data analysis tools have become more prevalent and readily available. Accountants are now leveraging new tools way beyond the simple spreadsheets they came to rely on for data analytics, in-depth financial analysis, predictive modelling, and providing clients with actionable insights to support decision-making. And with AI now entering the mix, this is an area that could well see significant change over the next 2 decades.
Expanded Role of Accountants
Accountants have become even more invested in their clients businesses, expanding their roles beyond traditional bookkeeping and compliance tasks. There is an increased focus on providing advisory services, financial planning, tax services, technology advisory and strategic business guidance in the form of a virtual CFO role. This shift reflects a recognition of the value and experience they add beyond routine financial tasks.
Updates in Accounting Standards
Changes in accounting standards over the last twenty years, including the adoption of International Financial Reporting Standards (IFRS), have impacted the way financial information is reported and the work accountants do. The transition from UK Generally Accepted Accounting Principles (UK GAAP) to IFRS has brought about greater alignment with global accounting standards.
Remote Working and Flexibility
The COVID-19 pandemic accelerated the adoption of remote working practices in the accountancy sector, just as they did for everyone else. Many practices were pushed to embrace more flexible working arrangements, allowing accountants to work from home and provide services to clients virtually. This shift has also accelerated the need for better digital communication and collaboration tools within teams as well as with clients.
Focus on Environmental, Social, and Governance (ESG) Reporting
In recent years, there has been a growing emphasis on the importance of sustainability and ESG reporting. Accountants are well placed to be involved in assessing and reporting on the environmental and social impacts of businesses, aligning with a global trend toward responsible business practices.
Lets wrap things up
The accounting industry has been through some significant change over the past twenty years, and with Web4, and even more AI and automation that’s not likely to change any time soon – the future is always much faster than you think!
More importantly though, accountants are always accused of looking back, so I’ll ask you to look forward and wonder for a moment what things will look like in 2043? Answers not on the back of a postcard, just simply comment below!
Also, did I miss any significant changes from the past twenty years?
For more insights, news and updates, join the discussion on the Beanies Community , built with and for Bookkeepers and Accountants!
If you enjoyed this article, make sure you share it with your network!