ICAEW CEO Michael Izza chaired a ‘Brexit Lunch’ hosted by Burnley fabrics company Panaz on September 6. The meeting was attended by local chartered accountants and Panaz Financial Director, Michael Berry. As well as Brexit itself, the rise of data analytics and the wider scope of proliferating AI in the profession was a strong topic for discussion.
‘A direction of travel has been set,’ said Izza, tacitly acknowledging that businesses and individuals had come down on both sides of the argument, but that now it was the job of all to be professional and work for a positive outcome. He indicated that the Government was in ‘listening mode’, while pointing out that negotiations would tread a ‘time-honoured path’, with ‘a lot of tooing and froe-ing with a big rush of activity at the end’.
The hope is that the Great Repeal Act will in effect become a Continuity Bill, the key to Government strategy being that, ‘at the point of leaving we will be equivalent to the EU.’
ICAEW published a brief in June analysing the EU exit charge (estimated at between £15billion and £30billion). It succinctly sets out the major factors and commitments affecting the charge as well as pointing to some likely outcome scenarios.
As Izza pointed out; out of ICAEW’s nearly 150,000 members, 23,000 are out of country, with 6000 in EU member states and ‘feeling nervous about what the future holds’.
ICAEW members currently advise over 2,000,000 businesses a year and, with the UK keen to consolidate its manufacturing and trading position in the world, they will likely have a more prominent role to play going forward.
Liam Fox and the Department of International Trade are keen for accounting professionals to get behind an export drive. As those at the meeting agreed – and found to be their own experience – banking doesn’t have the local connections it once had; the chartered accountant is now most often a firm’s most trusted local advisor. Encouragingly, Izza pointed out, the Minister is working with the ICAEW on an export advice proposal that will see member firms supported to give advice to their clients.
This widening and in some ways redefining of the accountant’s role was something the group was keen to affirm in the light of the second major theme of the lunch; the burgeoning use of data analytics and AI.
‘The Government is not paying enough attention to this area, and not being very honest about the impact on society,’ observed Izza. ‘With every gain in technology, there are potentially fewer jobs.’
He outlined how, in the accounting business itself, data analytics and Blockchain were impacting the profession. A large FTSE 100 business has plans to reduce its accounting staff from its current 1600 to less than 100, while some of the Big Four had publicly stated they will soon need only half as many chartered accountants as today; ‘with some specialists – data analysts and data scientist moving across from the IT space’.
Although originally invented to track ownership of online currency Bitcoin, Blockchain has the potential to replace technicians and management accountants, (the middlemen record-keepers) though perhaps less so chartered accountants. All the large consultancies are experimenting with its use in finance departments and external processes; In a similar vein, the power of data analytics finds patterns and anomalies in huge amounts of data that would be beyond the analytical resource of a human team. The Chinese are among the world leaders in this and changes business decisions on the basis of the evidence unearthed.
He also emphasised how far ‘machine learning’ and neural network development had progressed ‘behind the scenes’.
Everyone acknowledged the huge scope for analytics and technology – as well as the rather daunting prospect of its proliferation – and agreed that firms and individuals needed to be both aware of and implement new technologies. They also observed that, since the invention of the adding machine, people had been predicting the demise of the accountant, but, certainly in more senior and consultative roles, there was a definite place for a human perspective.
Feeling fairly confident – or at least forearmed – at the prospect of breaking with Europe and the Rise of the Robots, the group was given a tour of Panaz’ facility, where the firm prints a range of specialised fabrics, largely for the Hospitality and Healthcare sectors.
In hearing from Michael Berry about how the firm makes its choices in machinery – some bought used and reconditioned, alongside new, state of the art digital printing equipment and machinery - in weighing up suppliers (fabrics from UK, vinyls from Turkey), and in assessing trading partners (such as those in North Carolina), it’s clear that this business has a hugely strong grasp of trade and export. Trading widely in both dollars and euros, Berry notes that Panaz’ currency dealings are ‘naturally hedged’ – protecting against further fluctuations in the pound that Brexit may bring.
Not least, his explanation of the business emphasises that the qualitative aspect of accounting and financial directing will probably remain, at least substantially, in the human domain.
Looking forward to challenges ahead from the perspective here, as those in more combative arenas might say; bring it on!