THE CHANGING ROLE OF ACCOUNTANTS TODAY
EXPANSION AND GROWTH IN THE ACCOUNTING PROFESSION
There are four major fields of accounting and auditing as expressed by the US Dept. of Labor (2008), i.e. public accounting, management accounting, government accounting, and internal accounting. Before proceeding to the following sections it should be noted that the job specifications or roles of accountants in the four fields mentioned vary extensively.
Traditionally, the roles of accountants focused mainly on auditing and financial reporting, while common employment taken up by fresh accounting graduates are in the areas of general accounting – examples: processing journal entries, performing accounts analysis and reconciliation, and preparing tax filings (Robert Half International, n.d.), while including areas such as financial analysis and internal auditing.
In contrast to the above situation, due to the increasingly dynamic and competitive business environment of the world, it is widely alleged that an accountant’s role will be increasingly transformed from merely sourcing data and reporting, to much more technically specialized tasks such as converting accounting information into valuable knowledge influential to decision making, as well as providing forecasts, all of which are vital to senior personnel management (Accounting Web, 2004).
In the following sections we discuss the key factors of change within the accounting profession, as well as the current emerging growth areas in the accounting field.
Over the past few decades, increasing levels of demanding dynamics and competitiveness in the global business environment have led to an expansion in the job specifications of an accountant. The following are identified key factors driving the rapid change in the industry.
i. Globalization and economic growth
The constant economic growth of the world in line with globalization and the dissolving of cross country trade boundaries has seen the emergence of many new global enterprises with complex accounting needs, requiring accounting services which are more specialised and having an international reach.
ii. Information Technology Advancements
Rapid changes in information technology economy leading to its advancement and better accessibility will gradually encompass many traditional roles of the accountant such as transaction processing, data management and report generation. Therefore, accountants are prompted to be more proactive, strategic, and collaborative in their roles.
iii. Legislative and regulatory changes
Financial disclosure laws related to corporate governance and financial reporting have increased the responsibilities of accountants. They are expected to stay abreast of changes in accounting standards affecting the reporting environment while keeping clients continuously updated.
As we have discussed above the driving forces of change in the accounting profession, we now aim to highlight the various areas in the profession which are seeing an increased growth and expansion. The following table compares the current areas of the accounting profession which are offering the most career opportunities, to the areas expected to be the fastest growing in terms of job opportunities over the next five years (ACCA, 2008).
Source: ACCA Global (2008)
As seen in the above comparison tables, it can be concluded that the areas of Taxation and Risk Management are expected to expand the most and be of greatest demand within the next five years:
Based on the above research, taxation appears to be a fast growing area – emerging as the key specialism area in the next five years. Factors leading to its growth are increased regulation and complexity of tax planning issues, and the implications of tax caused by increased international trade and cross-border activities.
The increase in regulations and compliance requirements are prompting organizations to increase demand for experienced risk professionals and internal auditors, whom expertise are required for coping with social and regulatory demands for public accountability and transparency. Their expertise are also required in other areas, for example: assessing on the risks of business interruption, risks of economic changes, etc. including business recovery programmes in the event of crisis.
OTHER EXPANDING AREAS
Also resulting from the same research, it is concluded that in public practice, traditional accounting services are seen to be expanding into increasingly diverse areas such as forensic investigations and environmental accounting.
Forensic accounting is the application of investigative and analytical skills for the purpose of resolving financial issues in a manner that meets standards required by courts of law (Hopwood et.al 2008). The rise in demand for forensic accounting was clearly seen after the enacting of the Sarbanes-Oxley Act of 2002 (Curry, 2006). Skills required in the field of forensic accounting include accounting, auditing, and investigative skills as well as legal knowledge and IT skills.
Environment accounting uses the areas of traditional accounting and finance principles to compute the environmental costs of commercial and industrial decisions (Business Dictionary.com), and is also commonly employed in corporate social responsibility (CSR). It also aims to achieve sustainable development, maintaining a favourable relationship with the community, and pursuing effective and efficient environmental conservation activities (Ministry of the Environment Japan, 2005).
In conclusion of the above discussions, we agree that the accounting profession is indeed expanding into new roles, diverging from the traditional roles of financial accounting and auditing as posed in the assigned question. This is largely due to the changing global trade situation, with increased financial activity and new developments in the accountancy field (Chau, 2008). A survey commissioned by Perquest (2008) supports this statement, suggesting that accountants are increasingly asked to offer more comprehensive solutions and be experts in areas outside the normal comfort zones: 70 percent of accounting firms will provide more tax planning services, while 60 percent will provide business management and advisory services. Accountants in current times should also consider the impact of business activities on society and the environment, and be alert to ethics, social responsibility and sustainability (Chau, 2008). This further strengthens the view that accountants are also increasingly taking on managerial and leadership responsibilities (CGA, 2008).
Accounting Web, (2004). Accountants move from the backroom to the boardroom [Online] Available at: http://www.accountingweb.co.uk/cgi-bin/item.cgi?id=125847 [Accessed 11 November 2008].
Association of Chartered Certified Accountants, (2008). A changing profession? The evolution of accounting roles, skills and career aspirations [Online] Available at: http://www.accaglobal.com/documents/changing_profession.pdf [Accessed 11 November 2008].
Certified General Accountants Association of Canada, (No Date). Critical Issues: Professional Factors [Online] Available at: http://www.cga-canada.org/en-ca/AboutCGACanada/StrategicPlan/Pages/ca_sp_critical_issues_pf.aspx [Accessed 11 November 2008].
Curry, J. (2006). After Sarbanes, demand rises for forensic accounting [Online] Portland Business Journal. Available at: http://www.bizjournals.com/portland/stories/2006/12/04/focus6.html [Accessed 28 November 2008].
Hopwood, S. W. Leiner, J. J. & Young, G. R. (2008). Forensic Accounting. Boston: Mc-GrawHill Irwin.
Joshi, P. L. & Bremser, W. G., (2005). ‘Changing dimensions of accountants’ role’, Chartered Accountant - New Delhi -, 53(8), pp.1066-73.\
Ministry of the Environment Japan: Environmental and Economic Division of Environmental Policy Bureau, (2002). Understanding Environmental Accounting: Introduction to the Environmental Accounting Guiidelines [online] Available at: http://www.env.go.jp/en/policy/ssee/eag02_p.pdf [Accessed 28 November 2008].
Radebaugh, L. H. & Gray, S. J. (1997). International Accounting and Multinational Enterprises. Canada: John Wiley & Sons Inc.
Robert Half International, (n.d.). Next Generation Accountant: Specialties and Skills in Demand [online] Available at: http://www.nextgenaccountant.com/skills.html [Accessed 11 November 2008].
United States Department of Labor: Bureau of Labor Statistics, (2008). Occupational Outlook Handbook 2008-2009 Edition. US: JIST Works.
ACCA – see Association of Chartered Certified Accountants
CGA – see Certified General Accountants Association of Canada