Recently a friend and former colleague of mine, Malcolm McClelland, Ph.D., reacted to a LinkedIn News article titled, “Accounting Wants to Look Hip. Seriously!” Malcolm lives in and works out of Brazil and has done so for quite a few years. In addition to a background in both accounting and business valuation, Malcolm works as an advisor to international capital markets.
The article focused on the shortage of young people entering the accounting profession and the reduced numbers of accounting majors in colleges and universities. Malcolm had this response:
From one perspective this was all predictable many years ago. Accounting and auditing have two primary inputs: Human capital and IT capital (think computers and software). Although human and IT capital are to some extent substitutable, they are generally complementary, i.e., the returns to each input are increasing in the other input as long as both inputs are "matched." This means that as we improve IT capital, the total demand for human capital appears to decrease as measured in number of people, but more accurately the demand shifts to more highly and more appropriately trained humans. Welcome to the Foreseeable Future.
An accurate and insightful analysis, in my opinion. But it goes deeper than that. We have not yet seen the full effect of this marriage of IT and human capital. I responded to Malcolm as follows:
Well said, Malcolm. I am reading a great book right now on AI including machine learning. In Accounting and Auditing AI and Machine learning is and will continue to have an immense impact. I believe one way to entice young people to accounting is to marry it up with Data Analytics. My grandson will graduate this year from my alma mater, Xavier University with a major in Accounting and a minor in Data Analytics. He is excited about the opportunities and the work he will be doing. The days of green eyeshades and handwritten spread sheets are long gone. Vouching done manually is also disappearing. Computers and software will take this over. Add machine learning, where the "machine" (software) will teach itself new tricks that humans likely cannot do on their own. Those who master this marriage of humans and machines will lead us to the future, and they will enjoy it.
In our specific area of business valuation and forensic accounting, I believe this marriage of humans and machines will dramatically change the look of what we do. To me, that is very exciting. When presented in the right way to young people, I believe it can be very exciting to them also. I remember being the pioneer in our office when we got our first TRS 80 computer (yes, there was only one for the entire office to use). I was the only one who learned immediately how to use an electronic spreadsheet, still a developing technology at that time.
Think how exciting it can be for this generation of young people to work with AI and machine learning. They can innovate like no other generation has had the opportunity to do. And they have all grown up in the age of technology, so it is not new to them. Now, all we have to do is find good ways to entice them into this new world of accounting and forensics.