A lot can change in a decade or two. Social networks, automobile engines, and chatbots all come to mind — all driven by leaps and bounds forward in technology. That's true when it comes to how accounting has changed, too. Evolution abounds, both within accounting as a profession and an organizational function.
There's a lot of internet ink that's been spilled about how these changes have affected the roles within the finance function over the years, and we should know: we've spilt our fair share. There's more to the story, though — and talent, technology, and transformation within the wider sphere of business all have a role in telling it.
Covering all the changes to the 21st century accounting landscape in depth could easily take up more time than you have to spare, so we're going over the TK most significant recent development in accounting and what they mean for finance leaders today.
The Evolution of Accounting: From Transactional to Strategic
Let's start with the basics: bean-counting is out, impact is in. There's been a marked shift away from seeing accounting as a necessary but value-neutral function within business and a rapid progression toward its strategic utility.
A survey conducted by the American Institute of Certified Public Accountants (AICPA) in 2020 found that 72 percent of finance professionals believed that strategic accounting and financial analysis had become more important in their roles compared to five years ago. (AICPA).
CFOs are increasingly prioritizing value creation, according to a study that revealed 83 percent of CFOs said their role was becoming more focused on creating value "beyond cost management". (McKinsey)
This changing mandate hasn't just inspired new and lasting accounting trends, it's changed the kinds of skills accountants need to effectively perform this crucial work day-to-day.
In 2000, the AICPA established the Certified Information Technology Professional (CITP) credential to address the growing importance of technology in the profession. (The CPA Journal)
By 2020, 92 percent of organizations expected their finance and accounting professionals to have advanced technology skills. (Deloitte)
Accounting Technology Has Transformed Finance — And Driven Accounting & Finance Transformation
From automation and artificial intelligence to cloud computing and Big Data, accounting technology has both changed significantly and catalyzed significant changes within the finance function within the past quarter century:
In 2019, 79 percent of CFOs surveyed by Deloitte said they believed automation would significantly impact the way their company worked by 2024, and 28 percent said it already was. (Deloitte)
In 2021, 62 percent of business leaders said they had deployed three or more types of artificial intelligence. That number jumped to 79 percent in 2022.
Finance leaders reported the most bang for their AI buck when they invested in reporting & accounting (53 percent), research and development (53 percent) and profit and loss or cash flow forecasting (51 percent) deployments. (Deloitte)
58 percent of all businesses and 78 percent of small businesses were estimated to have taken their accounting to the cloud as of 2020. (Accountancy Age)
In 2020, 70 percent of accounting firms were using cloud-based accounting software in their daily operations, which allowed for more efficient collaboration, real-time updates, and remote access to financial data. (AICPA)
In 2018, 67 percent of accounting professionals said they preferred cloud accounting, citing 24/7 client connectivity as a major draw. (Sage)
Fifty-eight percent of accounting professionals in 2020 said that technology has helped them improve their overall productivity and efficiency. (Sage)
In 2021, 34 percent of financial services providers reported being targeted by ransomware attacks. In 2022, that number rose to 55 percent. In 2023, it jumped again — to 64 percent. (SentinelOne)
Fifty-six percent of accounting firm leaders polled by AICPA said they believed that big data analytics would have a significant impact on the accounting profession. (AICPA)
McKinsey conducted research in 2018 that predicted a 10 percent mismatch in financial and risk management skills among workers within companies with high levels of AI and automation adaptation. The disparity jumped to over 30 percent for data and analytics skills. (McKinsey)
This makes for an apt segue — as the technology that accounting professionals use (and the priorities that technology centers) continues to change, the accounting workforce will, too. It already has.
The Modern Accounting Workforce: Changed by the Numbers
As the way the world does business transforms, so does accounting, and as accounting transforms, so have the demographics of its workforce.
In 2000, 39 percent of working accounting professionals identified as women. In 2020, 46 percent did. (AICPA)
Twelve percent of all new CPA licenses were issued to racial or ethnic minorities in 2020, too. (AICPA)
In 2006, just six percent of all Bachelors or Master sof Accounting enrollees were Hispanic/Latino. In 2018, that group accounted for 15 percent. (AICPA)
Call it a talent shortage. Call it a CPA-pocalypse. Call it whatever you like, there's about to be a lot less CPAs in the workforce unless there's a drastic, rapid change:
In 2020, the AICPA reported that more than half of the licensed CPAs in the United States were over the age of 55, indicating a need for succession planning and efforts to attract younger talent. (AICPA)
Twenty percent of all accounting firm turnover in 2020 was due to workers leaving the profession. Retirement accounted for an additional 15 percent. (AICPA)
Ninety-seven percent of responding accounting firms told Convergence Coaching — a talent development and leadership management consultant — that they allowed employees to work remotely in 2022. (Thomson Reuters)
The same survey found that 65 percent of accounting firms leveraged outsourcing to fill talent gaps, 35 percent of which were overseas (Thomson Reuters)
Fifty-eight percent of CFOs and 62 percent of controllers told us they were experiencing a shortage of qualified accounting talent. They were either already outsourcing or considering outsourcing to cope with the crunch at a rate of 68 percent and 77 percent, respectively.
Want More Hiring Insights? Get the full Accounting Talent Outlook Survey Report
In 2021, the AICPA recommended adding outsourced, offshore, or fractional accounting resourced to augment current and coming staff shortages. (AICPA)
At the turn of the century, the median salary for the 1.1 million accountants and auditors was around $55,000.
In 2023, it's closer to $78,000 for 1.5 million working accounting professionals. (Bureau of Labor & Statistics)
Less than half of the world's largest 250 companies report on the governance risks likely to impact their compliance and integrity (bribery, anti-competitive behavior, and lobbying, for instance). Japan was the region most likely to report (92 percent), and the U.S. was the least likely (3 percent). (KPMG)
How Accounting Has Changed From a Regulatory Standpoint
Change may be the only constant, but it's fair to say that regulatory complexity is a strong runner-up. The fact is, we're all doing business in a world that's much different from the world of a quarter century ago, and changes to the regulatory reality reflect that:
In early 2022, 51 percent of accounting firms cited "keeping up with regulatory change" as their top challenge in the new year. (Accounting Today)
That turned out to be prescient, as another body of research that year found that 50 percent of firms struggled to keep up with changing regulations. (Wolters Kluwer)
Environmental, Social, and Governance (ESG) first pinged on the corporate radar in a significant in 2006, the first year its incorporation was required in the financial evaluation process of companies. That year, $6.5 trillion in assets under management incorporated ESG issues. By 2020, that number rose to more than $80 trillion, a 1130 percent increase. (Forbes)
A 2019 survey administered by State Street Global Advisors found that 46 percent of respondents cited changes to the regulatory landscape as a key driver of ESG investments. (SSGA)
Among the world's 250 largest companies, sustainability reporting was standard practice for just 36 percent in the year 2000. As of 2022, it's 96 percent. (KPMG)
Eighty-nine percent of survey respondents told Sage in 2020 that regulatory changes mandated by government, industry, and international bodies were impacted working practices and culture in accounting. (Sage)
What's Next for Accounting?
There you have it: how accounting has changed so far this century … in just 52 statistics.
That's one stat to get you through a year of small talk after the weekly finance all-hands meeting or to spice up a single game of solitaire, if you're working remotely.
These stats cover a lot of ground on the accounting changes front, from transformation within accounting as a profession to the shift in the long term to strategic accounting for better decision-making within the business.
Unfortunately, pithy factoids that quantify future developments are much harder to find. Understanding what the future of accounting has in store for organizations, leaders, and the (apparently) endangered certified public accountant species (and bravely facing it head-on) will come down to context, deductive reasoning, and a willingness to remain flexible.
For instance: within the context of an increasingly lean accounting talent pool, CFOs can deduce with a fair degree of certainty that the pre-Y2K days of abundant, affordable stateside candidates are over.
Now that remote work is on the rise, AI is accessible, and GAAP compliance is global, remaining geographically flexible can help modern finance leaders avoid becoming strategically compromised.
That's where we come in.
Personiv can help you build an accounting solution that goes beyond helping you navigate the evolving accounting landscape to keep you competitive no matter what comes your way. Ready for a change? Let's chat.