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Will software replace the auditor?

Posted by  David McAughtrie

Software automation provides an excellent way for wrangling the amount of information generated in a big data world, but there are concerns that auditors may be entirely replaced by software. Bill Gates, CEO of Microsoft, has said, "20 years from now, labor demand for lots of skill sets will be substantially lower." Every so often, a scare-piece makes the rounds about how software is going to replace every accounting position, with accountancy quoted as being at 47 percent risk of automation by the Economist. While the auditor role will almost certainly change with data-driven technological advances, the accountancy world isn't at risk at being run out by automation for a few reasons.

The human touch

Computer Assisted Audit Techniques (CAAT) provide major improvements in productivity, but ultimately the human touch is a necessary aspect of auditing. It's helpful to go through the entire data set instead of testing bits and pieces, but the computer can't make the same connection your human brain can. An auditor can identify areas that simply don't "feel right" based on years of experience, and pull that information aside for further examination. Auditors build relationships with the companies they provide auditing services for, gaining access to databases and information that may not be available to the computer.

Machines are excellent at processing routines and identifying predictable patterns, but when a situation is entirely unexpected, it's much harder, if not impossible, for machine learning to make the same leap that a human would. Encountering complex situations outside of its programming may be overcome over time with machine learning, but the software won't know what to do with its findings at the start of the process.

Small and mid-size businesses without complex accounting needs may end up replacing auditors with an automated solution, but for large businesses and enterprises, the human element is always going to make the difference between productive auditing and a lack of insight from the software tool. Computers are great at analyzing data, but in most cases, the solutions don't even scratch the surface when it comes to intelligently interpreting the results.

Slow enterprise adoption

Another safeguard against software automation replacement is how long it takes for enterprises to cycle out legacy software solutions. Some enterprise resource planning and customer relationship management software is over a decade old, so the typical software lifecycle gives you a lot of wiggle room before anything remotely threatening comes through the pipeline. While cloud-based software that doesn't require on-premise hardware helps streamline the implementation process, many enterprises are concerned with data security for sensitive accounting records and keep everything on-site. It also takes time to test, deploy and onboard users for software automation solutions, as well as the growing pains associated with using software that's typically chosen by an executive committee.

Ultimately, the solution to this dilemma lies in the middle: Auditors benefit significantly from CAAT, so embracing software automation for the routine parts of the job provides greater productivity in the areas where the human touch is required.

The future for accounting

Interested in learning more about the future for accounting?

Read 10 changes that will determine the future for accounting

Sources:

  1. Business Insider: Bill Gates: People Don't Realize How Many Jobs Will Be Replaced By Software Bots
  2. Economist: The Onrushing Wave
  3. Accounting Web: Can Software Really Replace Accountants?
David McAughtrie

David McAughtrie

David is the global head of content development at Unit4 and is specialized in the fields of accounting, finance and HR. Prior to joining Unit4 David was the editor and head of content development for Press Association.

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