For the accounting software vendors, the ethical question boils down to whether accountants should understand the process or just trust the answers.
Accountant Freddie Faure was the first to raise concern on the ethics of accountants relying on technology. ICAEW’s Kirstin Gillon followed this with how the Institute is tackling the issue. Now it's the turn of the software vendors to add their views to the debate.
“It is important that you understand what a system is providing, and that you don’t blindly believe what it is telling you,” said Cameron John, the UK and Ireland leader at Silverfin.
“Applying professional scepticism is a key skill and a part of what an accountant does. I don’t see a time when this contextualisation skill is not relevant, and importantly it’s still what clients are looking for: automation and efficiency. But the interaction and advice is essentially human.”
Blockchain newcomer Clarity’s Aynsley Damery agrees there is much responsibility on accountants.
“You can’t abdicate responsibility - in audit you have to audit the system before you get into the data and the answers. So doing your due diligence and a basic sense check on software is essential”.
While recognising there are other obvious factors, Damery added: “Software can produce funny answers depending on what goes in, and there is a responsibility on the providers, but also on the users.”
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On the more advanced tech such as artificial intelligence (AI), Chris Downing, the head of product at Sage, recognises that the onus might change from technical understanding to other factors of reassurance.
“Accountants should still be able to do due diligence - especially around quality and support,” he said. “In these areas a vendor’s ethical code of conduct helps to ground and give confidence that whatever we build is ticking the right boxes for the future.”
While Kevin McCallum, FreeAgent’s chief commercial officer, takes a more practical view. “Not understanding the mechanism is not the same as not understanding what is going on,” said McCallum.
“Accounting is quite specific because there is a process of checks and balances, professional insight, and compliance. If there is no visibility or ability to interrogate then there is a problem.”
If we accept that there is an important role for critical thinking, whose role is it to ensure quality?
Responsibility for quality
Silverfin’s John said: “Responsibility lies between the technology to be accurate and in line with relevant standards and the accountant who can’t placate by saying ‘because the computer says so.”
However, if there is an element of doubt in a solution a vendor produces, their credibility is gone.”
In a broader context, Sage’s Downing looks at the longer data chain as client information is handed from one system to another.
“Ultimately it lies in the original data processor or creator. But this gets diluted down the line. As data moves from one app to the next ownership seems to be lost, and there is a risk that the quality could start to degrade.
“Therefore, human input, experience, and intuition is a vital control. For example, being able to react quickly and realign automation rules if needed.”
This raises another of Freddie Faure’s original concerns around how interactions between multiple software tools are creating an increasingly complex contract environment.
Are accountability and liability obscured?
“T&Cs is an interesting topic - do we read them? We review, but do we read and understand each line?” said Downing.
“When looking at all the apps in use, who is responsible for data? What happens if things go wrong? Is there a PI blackhole here? It’s certainly a challenging environment. If a client relies on AI for a strategic decision and it proves incorrect, one would like to think that a bot should be able to provide the evidence to back up its answer.”
FreeAgent’s McCallum takes a similar view. Although some of this appears to be a professional and moral issue rather than just a hard reading of the contracts.
“Accountants should care if they don’t know how all the terms and conditions relate to each other,” he said. “But I wonder if we will get to the point where there is a material loss based on decisions that were made from an inaccurate output from an AI. Will we not have a feel for when things are correct or not? Are we prepared or would we be able to abdicate responsibility?”
Specifically focusing in on the idea of liability and responsibility to clients, Clarity’s Damery provides some practical advice based on his own experience in practice.
“Your own T&Cs should acknowledge your skillset and what you are up to in order to protect your reputation and satisfy regulatory and legal requirements. Even if this means you have to disclaim that you will be relying on software at certain parts of your service.
“As accountants, we can handle this in letters of engagement (LOE), but also in upfront conversations. The closeness and trusted adviser role go beyond an LOE, which has you covered but not from a relationship perspective.”
And when it comes to bringing through the next generation who arguably are at a different starting point when it comes to tech-driven services to clients, our group see familiar challenges for qualifications to keep up.
Equip new trainees for life in practice
“Fast forward 20 years from when I qualified and the rate of change is much more now,” said Silverfin’s John. “If a curriculum doesn’t teach tech, but only fundamental principles and communication we are missing the mechanics in the middle, and possibly ending up with a profession that does possess a risk.”
However, Damery suggests a growing market feeling that some roles will have to be filled from outside the profession. “As accountants we can provide the training for simple kit, but clearly when it comes to data, analysis and interpretation we need different people and roles. So, I can see more data specialists who are not accounting qualified being hired.”
He also recognises a more general education challenge. “In general, accounting qualifications do need to move, as do universities and schools. But in the blockchain world, we are creating use cases for technology continually - so to expect education to keep up is not realistic. It’s nearly impossible”
What is clear is that the answers to the questions raised by Faure are very much in flux, and may take years yet to resolve, or evolve yet into new challenges as practical applications for new technology are uncovered.
However, it would seem good to underline the importance that the profession makes to develop the next generation. Sage’s Downing is keen to stress that this means stepping away from the keyboard once in a while. “Experience counts, so as a profession we should always be encouraging junior members of staff and taking them to meetings.
"Seeing the experience of real business life is important, so you can acknowledge their challenges and learn how to ask the right questions. And then the tech comes into play.”
About Richard Sergeant
Specialist insight and business development support for accountants and their vendors. Cloud advocate with a pragmatist eye.