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Closing the critical skills gap in accounting

skills gap in accounting

By Ian Lavis on behalf of Praxity Global Alliance

Qualified accountants are in demand as organisations seek new ways to add value in the digital age. There’s just one problem – a serious, ongoing skills gap.

For the latest generation of graduates, accountancy looks a great career choice. There’s high demand for talented individuals, lots of career openings and increasing job variety.

However, as newly trained accountants have found to their dismay in recent years, the job openings are often quite different from the skillsets they have acquired.

Furthermore, many highly-skilled professionals are finding they are ill-equipped to meet the changing needs of accountancy firms and their clients, especially with the arrival of big data, automation and artificial intelligence.

The problem is complicated by geography, with significant differences in the type of training available in different countries.

Jeff Thomson, President and CEO of the Institute of Management Accountants in the USA, said in 2017 that closing the skills gap “has never been more critical” due to advances in technology – automation, artificial intelligence, and the preponderance of data.

If anything, the situation has become more acute since then. As a result, accounting firms are finding it increasingly difficult to find the right people for a wide range of positions.

The changing nature of accountancy

The accountancy profession has seen a shift from traditional auditing, statutory reporting and compliance to value creation such as financial planning and analysis, and mergers and acquisitions. This has created demand for multi-talented professionals with broader skillsets across accounting, finance, technology, operations and leadership.

More recently, accounting professionals are having to equip themselves with higher-level skillsets in areas that aren’t easily automated such as advisory services, decision-making, strategy, and communication.

As the digital revolution gathers pace, CFOs increasingly value soft transferable skills such as emotional intelligence and the ability to evaluate situations and communicate effectively.

Renata Ardous, International Tax Director at Praxity participant firm Mazars, says: “In the digital age, with the rapid development of technology and how businesses work, our work is also changing every day; nobody can deny that. If you look back ten to 15 years the top ten MNEs delivered different services, and now, IP-rich entities like Amazon, Spotify, Facebook, Deliveroo and Uber are reshaping the world. Therefore, there is a huge demand to change with these businesses and provide different types of consultancy services.”

Commenting on the rise of big data and automation in the tax arena, she says: “Tax and tax services as we know it will not be the same in the next five to ten years. Robotization and AI will provide additional options for global MNEs and it could happen that certain compliance services will involve less or no human elements.”

This will create a need for a different approach to accounting and audit although Renata points out that if everything goes digital, “we will need somebody to oversee and audit this work, so we will still need highly trained people but for different roles”. She adds: “Within Mazars, we understand the changes and have introduced new services like data analysis.”

In an article published by the UK Association of Accounting Technicians, Paul Jarrett, MD of recruitment firm Renaix, predicts an increase in recruitment for “multi-skilled business partners” with the ability to convey technical messages effectively between departments and to build cross departmental relationships. He forecasts high demand for professionals with the ability to “tell stories from numbers and to take a range of situations and interpret the end outcomes”.

On a more technical level, there is likely to be more demand for accounting professionals competent in data science to leverage and harness the power and potential of artificial intelligence, including cognitive computing and machine learning.

Chris Schmidt, Partner and CEO of Praxity participant firm Moss Adams says: “The biggest challenge for us right now is re-training our people at all levels in how to use data more effectively. This includes new audit and tax tools as well as developing deeper advisory skills. Our clients are looking to us to help them navigate the future. We are in a great position to lead in this area.”

There is also a growing demand for individuals who can add value to clients operating across international borders, especially in the areas of corporate reporting and international tax.

How has it got so critical?

For many years, the traditional accounting curriculum has struggled to keep up with technological advances and changing CFO requirements.

Until very recently the curriculum has been too narrowly focused on financial accounting, particularly in audit, tax, statutory reporting and compliance.

Many young professionals begin their careers at public accounting firms doing audit and tax work but when they move into management accounting roles or into consulting and advisory roles, where the focus is on value creation, they don’t have the required skills.

To plug the skills gap and ensure the future of the profession, Jeff Thomson calls for a new breed of accountant with the skillsets necessary to be value-adding business partners.

He stresses the need for “an integrated approach to curricula, competencies, and training that aligns with the way business is actually conducted for sustainable value creation”.

Closing the gap

So, what’s being done to train accounting professionals to be more relevant in the digital age and help accounting firms add more value?

A joint task force sponsored by the Management Accounting Section (MAS) of the American Accounting Association (AAA) and Institute for Management Accountants (IMA) has been working since 2010 on developing curricular recommendations for accounting education – with a focus on the need for more integration to best prepare students for their future careers. 

The IMA has developed an enhanced competency framework identifying the knowledge, skill and abilities that finance and accounting professionals need to remain relevant in the digital age. It has also developed its Certified Management Accountant (CMA) credential to enable accountants working in industry to “upskill for the 21st century”.

Another key development has been a shift to “nanolearning” – short-form learning to allow professionals to develop their skills in more compact increments. An example is the CSCA (Certified in Strategy and Competitive Analysis) credential for CMA-certified professionals.

In addition, universities are beginning to integrate IT and analytics into accounting programmes. An article published by the CPA Journal last year, Chanyuan Zhang, Jun Dai and Miklos Vasarhelyi list pioneering courses introduced by the Southwestern University of Finance and Economics in Chengdu in China, Singapore Management University and the University of Waterloo in Canada.

However, the authors argue more needs to be done by the profession to future-proof training, adding: “Both the AICPA, which develops the uniform CPA exam, and accounting educators should focus more on higher-level skills, especially analytical, critical, and innovative thinking skills, and decrease the emphasis on memorization and the mechanical application of rules.” 

The also call on the AICPA to consider increasing the content of IT, cybersecurity and data analytics within the exam, and for business school accounting programmes to focus more on IT and data analytics.

Firms take the lead

Accounting firms themselves are now taking a lead by developing different skills for new and existing employees to reflect the changing requirements of the industry.

Chris Schmidt, Moss Adams’ CEO explains: “We are focused on building success skills, which include critical thinking, collaboration, and emotional intelligence into our core competencies for entry-level hires as well as existing partners and team members. The accountant of the future must have a creative mindset that will allow her/him to adapt to our changing client needs as well as deal with digital disruption and complexity.”

Another area of focus is online learning in the growth area of international law. Mazars, for example, has launched a joint venture with King’s College London (KCL) to offer an advanced specialised LL.M (Masters in Law) in International Tax Law to furnish tax professionals with skills to add value to international clients.

The two-year, accredited degree – run in partnership between Mazars and the Dickson Pool School of Law, KCL – is designed to build comprehensive technical and practical skills for senior managers, directors and partners. The online course is the first of its kind for accounting employees. It covers the legal framework and intellectual tools necessary to navigate the complex international tax environment and understand the ongoing changes driven by OECD, EU and US tax reform.

Renata Ardous, who is head of the course and supported by Anita de Casparis, Global Head of Tax, Mazars, says it aims to bridge the gap between the standard university courses and training aimed specifically at tax advisors and accounting professionals in the field.

“Mazars had been looking at how to be innovative in the market, share our passion and knowledge with our talent and provide high quality services to our clients. We all believe that what we have created is a unique and tailormade online training package, with four residential weeks and guests such as OECD speakers and global head of taxes, as well as soft skills training, to provide more insight into everyday work,” Renata explains.

Keeping up

Commenting on the challenge facing accounting professionals around the world, she says firms should have two priorities:

  1. To keep up and provide the right solutions for clients
  2. To train people or find the next big solution to be competitive.

While accounting bodies must keep up too, there is much to be said for larger firms doing more themselves to attract and retain the right talent.

This is where the benefits of being a member of Praxity comes in. By sharing knowledge and expertise on training and new developments, Praxity participant firms can work together to address the skills challenge.

“We need to make sure that it is not just about providing quality but having similar mindsets and training, such as webinars, webcasts, technical niche conferences, networking and having trainers providing updates,” Renata concludes.

Bridging the skills gap is essential to ensure accounting professionals continue to add value to their clients.  Everyone has a role to play, from accounting bodies and associations to universities and individual firms. By acting swiftly to address the key challenges and by embracing new training and partnership opportunities, the profession can demonstrate its continued relevance in global business operations.