This year’s IT Conference, one of the Institute’s flagship events, focused on the new technologies and business models accountants can leverage to increase opportunities and reduce costs for organizations. Speakers discussed what it really means to be a CPA in this digitial era. Nicky Burridge reports
Photography by Juliet Shayne Lui
Anthony Staltari, Partner Consulting Director, Asia, at Xero
While technological advances are creating new opportunities for accountants, it also means that anything that can be automated will be, warned Anthony Staltari, Partner Consulting Director, Asia, at accounting software company Xero.
“Put that in the context of accounting and we are looking at a process that is very manual, that is very step-by-step, and things that are step-by-step are very easy to automate,” he told an audience of more than 450 people at the Hong Kong Institute of Certified Public Accountants’ IT Conference 2017 on 14 October at the InterContinental Hong Kong.
He urged accountants to embrace big data, machine learning and artificial intelligence (AI) to enable them to offer new services to their clients. Accountants must move away from the systems many are still using, Excel-based systems that do not connect to the rest of the world.
He said if they wanted to take advantage of the new technology, they needed to utilize cloud computing, enabling them and their clients to access information anywhere, anytime.
“As an industry, we need to start thinking about data flow rather than data entry,” Staltari said. He highlighted that the current accounting process was very labour intensive, with bank statements coming in and being inputted onto a system by a person, then reconciled, before a final report was produced, which then went through an audit process.
But technology is “flipping that on its head,” he said. “We now have banking transactions automated and flowing into the accounting software, so every day when I wake up the transactions are in my software.”
He said suppliers could also be put on the same platform, enabling invoices and bill reminders to be generated automatically, while payments could be made by credit card, meaning companies could get paid quicker.
When Xero’s cloud system was introduced in Hong Kong, the average payment time was 43 days. It has now been reduced to just 21 days for Xero’s clients with the system. “We are in an age where we have got the single ledger and everyone can connect to that all on the same platform,” he said.
Staltari told the audience to think of cloud accounting platforms as being like an iPhone with different apps that enabled a company’s operating system to be directly connected to its accounting software, which was in turn connected to an insight system.
He said technology, such as optical character recognition was also changing the way accountants worked. “With this technology, you can take a photo of receipts with a smartphone and it automatically brings up all the information on the receipt.”
He said the programme could not only identify the name of the outlet and how much was spent, but it could tell if the receipt was issued in Hong Kong, meaning it would enter it into the accounting system in Hong Kong dollars, while it could also separate goods and services tax if that was relevant to the market. “If your clients are giving you receipts, you have to sort them, file the information and store the document. We can eliminate that process completely,” he said.
“Live and breathe what you are going to do. Put your practice in the cloud. Manage change, understand that you need to train staff and align them with the goals.”
The era of account code-free accounting, he explained, is also in sight, as computer software is now able to learn from transactions. Staltari said his company had an accounting platform where if he entered a transaction, the computer could now code it for him, based on previous coded transactions. “I only have to change one in every 10 suggestions, and the more people who go on the platform the more it can learn. It is a very exciting technology,” he said.
But despite the advances in technology, accounting as a profession is “not going anywhere,” he added. While accounting processes can be automated, computers cannot build relationships with clients. “You need to talk to your clients to understand their problems, understand what they want to achieve,” he said. “What businesses really want to know from you as accountants is: is my business OK?”
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He predicted there would be a lot of growth in what he called “the connected advisor,” with accountants offering predictive analytics, real-time business advice, financial versus non-financial analysis and environmental analysis. “The firms that are starting to really run with this technology are starting to offer businesses real-time business advisory,” he said.
He advised accountants who wanted to start adopting the new technology to do so at their own firm first. “Live and breathe what you are going to do. Put your practice in the cloud. Manage change, understand that you need to train staff and align them with the goals,” Staltari said.
Once accountants feel comfortable using the technology themselves, they could start to move their clients over to it. “I think it is the most exciting time to be an accountant.”
Power of data
Earlier in the day, Dr. Toa Charm, Chief Public Mission Officer at Cyberport Hong Kong, highlighted that FinTech, AI and big data were changing the profession. Looking at some of the world’s largest digital companies, such as Uber and Airbnb, he pointed out that they did not have traditional assets that would normally be put on a balance sheet.
“They only have one asset: data, and you don’t put that on the balance sheet – yet,” he said. “In accounting, you are going to see your balance sheet changing. You will have a new set of assets called data.”
Giving an example of the power of data, he said Alibaba had used big data and AI when it created Ant Financial, the online payment services provider and parent company of Alipay, to define price, calculate risk and target customers with the right product at the right time.
Responding to a question from the floor of whether 90 percent of accounting jobs would really be taken over by technology within three to five years, Charm said: “That depends on how you define accounting work. If you define it as bookkeeping, then 90 percent is too conservative.” He added that if you defined accounting as analysis and recommendations to business owners, the automation of certain functions would give accountants more time to focus on this aspect of their work. “You need to be very alert about what is happening rather than fear it. You have to embrace it or be disrupted,” he said.
Karl-Michael Mouantri, Managing Director of CCH Tagetik Asia Pacific, agreed that data was playing an increasingly important role in companies’ operations.
During his presentation, he told the audience that many companies were appointing corporate performance management officers to manage the data they had coming in and to ensure reporting was consistent across the company. He said they made sure everyone was using the same data, that there were no redundancies in data, that it was being collected in a timely manner and used to take action.
“[Hong Kong] is a late starter so we need to play the catch-up game and leapfrog.”
“What companies are looking for now is to only have data once. To unify all the financial processes into one to become more efficient,” he said. “If it is not unified, you end up with silos of information for reporting that are not connected to each other, which means you are extremely inefficient.”
Having a unified system means faster closing times, with world-class companies able to close their books within two days, he said. This left more time for analysis, enabling businesses to make better and faster decisions, leading to improved performance.
But Mouantri added that achieving a unified system involved a continuous process of improvement, and companies should not think they could buy just one new program that would solve all of the problems.
Hong Kong’s future employment
Annie Choi, the Hong Kong government’s Commissioner for Innovation and Technology, and the guest of honour at the conference, told the audience of the government’s plan to build a complete ecosystem for innovation and technology to develop and thrive in Hong Kong.
She said that the city has many strengths in terms of innovation, but there are also a number of weaknesses that need to be overcome. “We are a late starter so we need to play the catch-up game and leapfrog,” she said.
Choi noted that Hong Kong’s gross expenditure on research and development (R&D) as a percentage of gross domestic product (GDP) had averaged just 0.73 percent for the past 15 years, compared with between 2 percent and 4 percent for other advanced economies.
“The Chief Executive has set a very aggressive target for us. By 2022 [R&D spending] should reach 1.5 percent of GDP. That is huge growth,” she said. In monetary terms, this would represent an increase from HK$19 billion to HK$45 billion per annum in today’s terms, with more than half of this total coming from the private sector, compared with only 44 percent now.
In order to encourage investment, Choi said the government is introducing a tax incentive, under which companies would receive a 300 percent deduction for the first HK$2 million they spent on R&D and 200 percent on the rest. She said the incentive is the best in the world because, unlike in other countries, there is no cap.
Choi said the government was also offering subsidies to small- and medium-sized businesses to encourage the adoption of technology, under an initiative that pays HK$2 for every HK$1 the company spent on technological services and solutions, up to a maximum of HK$200,000. The subsidy, which can be used to set up document management systems, cloud computing and mobile access systems among other things, had already been claimed by a number of accounting firms.
Overall, the IT Conference highlighted how accountants should consider using the subsidies offered by the government to ensure they are able to provide the services their clients will increasingly expect, as outlined by the other speakers, in the future. ◆
The theme of this year’s IT Conference was “Grasping opportunities in the age of everything-as-a-service.” EAAS is a subset of cloud computing, and is making it easier and cheaper than ever for entrepreneurs to build start-ups.