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5 ways that the crisis in trust in data will change the role of chartered accountants

Author: ICAEW Insights

Published: 27 May 2021

Work careers

In the future, chartered accountants will have an increasingly vital role to play in ensuring that societies across the world have access to reliable, fact-based information.

Over the past decade, numerous surveys, reports and articles have highlighted the declining level of trust in society, and a key factor of that is a loss of trust in the information we all use to make millions of decisions every day – large and small.

Chartered accountants have an important role to play in ensuring that societies across the world have access to reliable fact-based information that, crucially, they know they can trust.

If they don’t play a foundational role, the world will be worse off for it – and there will be less scope for the profession too. As chartered accountants think through this future, there are five areas to keep in mind, according to David Lyford-Smith, Technical Manager in ICAEW’s Tech Faculty.

These are listed below, with the types of skills and experience that are most needed now listed first, followed by those that will be increasingly needed in the next decade and beyond.

1. Data management and stewardship

“An accountant from 1991 wouldn’t be able to do the job of an accountant today, not just because of the technical things that have changed, but because they would have never sent an email, used the internet, or used an electronic spreadsheet,” says David Lyford-Smith, Technical Manager in ICAEW’s Tech Faculty. While the core skills of an accountant haven’t changed, how they apply them has. 

These core skills, he says, are an understanding of commerce, numbers, and rules, and how to apply them in a trustworthy and professional way. And this is very much how chartered accountants should think through their role in managing data. “Big data has already transformed the finance function, and that data is available to decision-makers across the business, says Lyford-Smith. “This will only accelerate now that data is being collected on more activities, and it’s easier to store and analyse than ever before.”

It has become vital for chartered accountants to understand the ‘mechanics’ of statistics, distinct from an ability to calculate various statistical measures – something that Lyford-Smith questions. “Do accountants understand data bias, error and omission? Do they understand common issues with statistical reasoning and inferences? Are they thinking about how to draw conclusions from data and how to avoid getting caught by those kinds of biases and errors?” 

As well as making sure an organisation is using data correctly, chartered accountants also have a stewardship role to play. Finance teams are directly involved in decisions about marketing and targeting customers, or on supply chain activity and a whole host of other actions where people are making use of confidential data or making decisions that will have an impact outside of the organisation.

Beyond falling foul of legislation like the EU’s General Data Protection Regulation, chartered accountants have a core role to play in spotting potentially unethical situations. “Actual ethical questions aren’t necessarily identified as questions at all. It's about actively considering those things and raising the questions even when it's awkward,” says Lyford-Smith. “That kind of bravery, when to bring things up when there is perhaps an uncomfortable ethical angle to the project, is an important skill.”

2. Data analysis – artificial intelligence and machine learning

As well as ensuring an organisation uses data intelligently and responsibly, chartered accountants will need to play a similar role with technology that manipulates and makes use of data. Lyford-Smith says that chartered accountants will need to learn to facilitate “conversations between technology specialists and businesspeople or subject-matter experts who are thinking about how to use that technology.”

The two most important technologies that manipulate data are artificial intelligence (AI) and machine learning (ML). Although the terms are used together, ML is actually a form of AI. AI is “where a machine can imitate human behaviour,” said Bethany Edmunds, Director of Computer Science at Canada’s Northeastern University in a recent blog post, whereas ML describes “machines taking in data and learning things about the world that would be difficult for humans to do … ML can go beyond human intelligence.”

This raises huge ethical considerations that regulators are still coming to terms with. The European Commission made what are so far the most comprehensive proposals for new legislation in April that commentators say could well regulate how executive decisions are arrived at in companies. For example, a CEO could decide to open a new facility in a city based on ML analysis telling her that is where she will most likely to find a labour force with the right skills. But if the ML entrenched human bias about what a ‘desirable’ employee was, does her decision come at the expense of other parts of society? This is already a hard question to answer but it could also become the subject of heavy fines and other penalties in the future.

However, this goes well beyond regulatory and reputation-based concerns. “ML is really starting to break into new areas for computing.,” says Lyford-Smith. “The fundamental difference for accountants to understand is that we're not just talking about automating or creating analysis of things which are completely tabular and completely expected, and where a person could tell you step by step what you need to do.” 

“Because these are more complicated and less clear situations, mistakes are much more subtle,” he continues. So chartered accountants must understand how “collaboration between AI and humans” works. “From a controls point of view, it’s not enough to say ‘Our ML system has only provided recommendations that a human acts on’ because that person has to be properly trained and understand what their job is, and know what kinds of errors machine learning can make, and be realistically empowered to actually override the decisions that follow the recommendations, otherwise it's not a control,” he says.

3. Making use of data – telling stories

Beyond understanding and helping to shape how an organisation collects and makes use of its data, chartered accountants should also understand how to explain clearly, concisely, accurately and fairly what a certain data analysis means and ensure that others can do so too.

This is often called ‘storytelling’ in management literature. In a large-scale survey of nearly 750 CFOs and senior finance executives, Accenture found that 81% of CFOs named “data storytelling” as an essential skill.[1] Or as Jennifer Piepszak, Head of Finance at JPMorgan Chase put it in the FT recently, a big part of Finance’s job is to “make the numbers dance”.

But beyond the hyperbole of dancing data and spellbinding stories, it’s also crucial to ensure those messages are accurate and guide good decisions. Lyford-Smith explains: “Every accountant has to demonstrate the strength of their assumptions and calculations, but often the end goal is not to calculate a final answer because, more often than not, there isn’t one.” And they must go beyond that and be ready to ensure others can also explain the assumptions they’ve made, the probabilities of success and, if need be, how this fits with the organisation’s risk appetite.

Finally, given how the management and presentation of data has become so central to both decision-making in an organisation and then how that organisation presents itself and its activities to all stakeholders, CFOs are playing an increasingly central role in all major decisions. A separate Accenture survey from 2019 found that “86% of CFOs have increased the frequency and scope of collaboration across” the senior management team.[2] As Natalie Knight, CFO of retailer Ahold Delhaize told that study, “More than any other function in the business, Finance sees every piece along the value chain of how things are created. But I think one of the most important things is that everybody’s connected. 

“As CFO, it’s my job to form personal connections throughout my function and the business: it’s like being at the centre of the spider web.”

4. Supporting new types of decisions

There’s growing momentum behind our approach to capitalism moving from a shareholder to a stakeholder model. The World Economic Forum, which has worked on this idea for nearly half a century now, sums up “four important steps” that have happened since 2019 that are moving this idea forward. 

At heart, stakeholder capitalism “positions private corporations as trustees of society, and is clearly the best response to today’s social and environmental challenges,” says Klaus Schwab, founder of the World Economic Forum. He goes on to list three main reasons for stakeholder capitalism, including that “millennials and Generation Z no longer want to work for, invest in, or buy from companies that lack values beyond maximizing shareholder value.”

This is key to the issue of trust. If organisations cannot show all stakeholders how the decisions they make benefit wider society or, worse, are found to be hiding activity that they know directly harms people or the planet, public trust is eroded. So there is a growing imperative for chartered accountants to help colleagues and clients alike understand the implications of the decisions they make. The importance of this ability will only grow across the next decade.

Peter Bakker, CEO of the World Business Council for Sustainable Development, sums it up by urging chartered accountants to think how this ‘stakeholder’ approach to business will “change the decision-making in a company? If you apply true pricing, true costing – meaning integrated costing of externalities – how does that change decision-making? If you disclose this type of information to capital markets, how does it change the capital allocation of capital valuation models that shareholders have done?”

This goes beyond simply being a CFO ‘integrated’ into decision-making at the top of a company – it requires new thinking and skills from accountants around the world.

5. Future roles

Finally, there’s a good chance that the increasingly central role the management and stewardship of data plays in the economy and society, and that being seen to be a trustworthy user of it will see the creation of new roles. For example, the European Commission proposals on AI regulation will require a wide range of professions to create that regulation and monitor that organisations and individuals are compliant.

As chartered accountants think about a career path, and what kinds of emerging roles they might like to take on, it’s important to remember Lyford-Smith’s observation of an accountant from 1991. Although the world will be different again 15 years from now, one point is unlikely to have changed. He says, “For many accountants trust is the key product they produce. They're selling trustworthiness, whether that’s because they're an auditor who is employed to add trustworthiness to the financial reporting of the auditors’ entities, or whether they're working in a financial department, and controlling business processes and internal reporting, so that the management knows that they can trust that operations are going the way they want.”

 

[1] Accenture, “The CFO Reimagined: From driving value to building the digital enterprise” (2017)

[2] Accenture, “CFO Now: Breakthrough speed for breakout value” (2019)

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