Dr. Sean Stein Smith, CPA, CMA, blockchain expert and Assistant Professor at Lehman College (CUNY), concludes his conversation with IMA (Ep. 2 - released on 6/10/2019) on emerging technologies and their global implications across the accounting industry. "The key takeaway point I would stress is to not be anxious". In this bonus episode, you will hear Sean answer FAQs--Will I lose my job? How do I learn these technologies? How do I get started inside my firm--as well as explain what accountants need to be aware in the future, and add some future predictions for the profession.
Sean was named to the 40 under 40 in the accounting profession in 2017 and 2018, is a member of the Advisory Board for the Wall Street Blockchain Alliance, Advisory Board of Gilded "Crypto Accounting Made Simple," and FDU Board of Governors (FDU). He's widely regarded as an expert at the intersection of blockchain, cryptocurrency, and accounting, and frequently presents on the topic.
FULL EPISODE TRANSCRIPT
Mitch Roshong: (00:05) Hey everybody. Welcome back to IMA's podcast, "Count Me In". I'm your host, Mitch Roshong and I'm joined by my regular co-host, Adam Larson. Today we are going to listen to another bonus episode as we hear the remainder of the conversation we had with Dr. Sean Stein Smith. Adam, you and I both asked Sean a variety of questions about the impact of various technologies on accounting and finance. What are some of the takeaways you had from what Sean had to offer?
Adam Larson: (00:32) Sean had a lot to share with us. If you recall, Sean recently received the New Jersey society of CPAs, 2019 ovation award in innovation and as an expert in technology, blockchain and data analytics. Throughout our conversation he discussed how the role of the management accountant has changed because of technology, talked to us about global business opportunities, referenced some cybersecurity issues, and even made some future predictions for us. Without giving too much away, let's listen to the rest of our conversation.
Adam Larson: (00:59) You are clearly well versed in the emergence of technologies in accounting and have had great exposure to how they've made an impact on the industry. So I'm curious from your personal experience, how have blockchain, AI, RPA, and anything else you've come across begun to change the role of the management accountant and the accounting profession?
Dr. Stein Smith: (01:25) So, I'd say probably the biggest, biggest change that I've seen is that really all of us have been talking for years on how to transform ourselves to be a business partner or a trusted advisor. Right? And that really now these tools and these processes are actually here to help us do that. Right? Because a audit is, is great, right? It's the core of how companies publish data out to the marketplace. Tax returns are important from a compliance point of view and all the rest. But really those don't add too much value to firms on a ongoing basis. I would, I would challenge you to find a CFO or a board who would argue that their audit team adds actual value going forward. Now again, the audit function and the tax function are cornerstones of what we do. But our true, I think future is to be more forward looking and to be those business advisers. Right? Right. Cause who knows data better than we do. Nobody. Now there are a whole bunch of of new firms out there, new job roles out there, data science, data analysis, all the rest. But all of those fields and firms and individuals lack the foundational knowledge that all of us have on how a company actually works, right? From a financial point of view and they operational point of view, right? Operations, drive, finance, drive data, and then all of that drives to forward-looking choices. And so that's where I've seen that that shift and that transition happen, right? From a compliance or, or a backward looking role or a team or a firm to a to a forward looking field and a team and the individuals working there. Every conference that I go to, every article that I read, every, every book I pick up, podcast, a webinar, all the rest -- This, this whole conversation on all of these tools, right, are just that tools, right? And it's up to us to be able to understand those tools. You'll harness the power of these tools and then most importantly do something with them, right? Because knowledge is is fantastic, but the application of that knowledge is even better. And so that's really where I've seen people in firms really, I mean grow exponentially, right? Individuals who are able to be proactive to humble themselves that you learn new tools, ideas and concepts and, and to then take the time to think, to analyze and to then point out where these new tools and ideas can actually be be put to use. And, and that's really the overall message that I have and the overall theme I've seen, right? You can be a CPA, CMA, any, any of of the alphabet soup, right? But it's that idea of, of harnessing these tools finally, right? The tools and the processes are our, at our hands to help us sort of transition from always having to focus on just doing the work, getting it done and having it out the door to having those tools automate parts of that work for us. And then that frees us up to be able to actually talk to our clients, offer them advice, to help them better understand how their firms are actually doing, and then help them take that understanding and then chart a better course forward. And that's really the, the key value. And it can be AI, it can be RPA, can be blockchain and I'm sure in five years there'll be some new buzz words out there, right? But, but it's that underlying theme, right, that our roles are changing, our jobs are changing and our field is already changing and that it is changing for the better, right? There's always going to be some anxiety and, and angst out there, but it's important to really take a step back to analyze what's happening, to be able to understand which trends are, are coming anyway, like automation technology overall, and to then harness those trends, right? To understand them, to learn them and to then take those to specific processes both inside your firm and outside your firm, have those conversations at both places and then use those conversations as a springboard or as a jumping off point to really help you in your firm evolve transition, have a better handle on your data and current processes and then that frees you up to focus on new business opportunities going forward.
Adam Larson: (05:53) As far as news business opportunities in the expansion of transactional, how do you think these emerging technologies fit into the global business economy?
Dr. Stein Smith: (06:02) On a global scale, I mean we're probably in the first in it, right? The first day and first quarter, first, first pitch tip off, whatever analogy works best, right? And we are just at the very beginning of this transition and it's important to to also note that that our conversation here as comprehensive as it is talking on AI, RPA and on blockchain is only about this much of a much broader change going on, right? Companies are going digital all, all across the world and to that data is really where all of that power is going to be going forward, right? Because the power and the information and the business opportunities are in that data, right? There are all kinds of opportunities out there for firms who are able to, to really analyze that data, go through it, find it patterns, and to then use those patterns to then see opportunities going forward in the marketplace. Now, hedge fund and PE firms have been doing this for years, right? You're mining information to build out trading patterns and all the rest, but now those exact same tools are out there in the marketplace for us as accounting people, to actually use ourselves, right? And to be able to help us analyze it, that data, and I always come back to that data, right? Because companies are built on, driven by and are governed by the information both, both produced internally and then gathered externally. And so we are people who understand data right? At the core of our work and our education, we are people who understand information. And so all of these tools, both in the accounting space and on a global, so the international basis, those are helping us get a better handle on that data to go through it faster, to analyze it more efficiently and then turn that data into actual business ideas to push forward. I mean, so I'd say we haven't even seen like the first 10% of the impact of these tools on a global basis. Right? And, and also don't forget, just, uh, hanging out here, uh, down the street is, is that whole shift towards 5g. So all of that is going to only amplify all of these trends, right? All of the transmission of data that's going to supercharge everything being being analyzed now. So it's really gonna be interesting over the next 10, 20, 25 years to see how all of these trends shape the global economy. But I'd say really it's going to have a profound impact on every industry and every industry is going to have to adapt, educate, and then keep learning to actually move forward.
Adam Larson: (08:47) So then how do you predict these technologies will continue to evolve and further change? The accounting profession on a global scale, what is your five to 10 year forecast?
Dr. Stein Smith: (08:57) The forecast that I have is probably within five years we aren't going to be talking about blockchain anymore because blockchain is is um, going to be part of business, right? There are teams right now in all of the big accounting software firms that are actually working on how to build some characteristics of blockchain into their current software, right. On the backend. But, but us as end users aren't going to see that. And then I'd say really the whole themes of AI and RPA, that's really gonna unlock a lot of opportunities that are hard to even imagine now. Right. Because again, sort of echoing back to our earlier conversation on the personalized and the customized services that all of us are, are, are getting, whether it's Netflix, it can be Spotify, it could be Amazon, Whole Foods, every aspect of our lives is increasingly becoming automated, customized and personalized. That's, that's only going to get more and more forceful going forward. And I do think that's going to unlock a lot of opportunities for firms who are able to harness all of that personal data and to then create better services off of that. But my last sort of forecast going forward is that this whole data dump almost, right? All of this information being produced, transmitted and stored on a international basis is going to cause some, some pushback, right? From the oversight bodies, be it the EU pushing out GDPR in May of 2018 be it other sort of regulations in, in, in other markets there is going to be that. So it's going to be interesting to see that sort of push and pull between the information being leveraged as a business tool and then the conversation on who actually owns our information. Right? Who has control over that information? And if I don't want a firm to have that data, is that even possible? Right. So it is gonna be very interesting over the next two, three, five, 10 years. But I do think those two forces, right? The force of more data being published and shared and transmitted and and sort of forming the business model of organizations and that push back almost right from consumers and from oversight bodies. Those are, I think, shaping up to be two of the dominant forces going forward.
Mitch Roshong: (11:18) We have previously provided a lot of valuable information pertaining to blockchain, AI and RPA, but I'm sure people still have questions. What are some of the frequently asked questions you field from accountants as they try to implement these emerging technologies?
Dr. Stein Smith: (11:34) Excellent question. Probably the, the top question that, that I hear via, you know, the any group, right? Whether it's a CPA audience, CMA audience, corporate finance audience, probably the, the top issue or concern I that I hear quite a bit is, is all, all of these automation tools going to make me get out of a job, right? I mean, are all this automation and tools and blockchain, AI, RPA automation, is all of that going to make us obsolete? And the answer is no. I'll come back to that though. Okay. All right. So I'd say that, that, that's the first one. And then part two is how do I get started with all this stuff, right? Because all of us hear, uh, blockchain, AI, RPA, all of these emerging terminologies and tools on an almost daily basis, but a, but a top question I get is also sort of, okay, great, but so now I've, I've heard of them and I'm interested in it. How do I get started? And then the third question that I hear quite a bit to sort of round this out is then, great. So I am confident that I'm going to have a job. I'm interested in actually being engaged in this learning process. Then part three, um, how do I start actually doing it inside of, of my firm? Okay. So the first question, are all of these who's going to make us obsolete? No. Right, right. Cause as all of us know, right, any it system or controlled or any computer system is only as good as the people who are in charge of it, right? And it can be automation, it can be blockchain, it can be anything. But if those underlying controls and those people who are actually using that system aren't well informed, aren't trained, aren't educated, aren't keeping themselves up to date on these tools, it isn't going to work. So, so point 1 and then, point #2 is that great, all of this data is crunched and analyzed and then put into dashboards. Fantastic. But it is up to us to then analyze that information, interpret that information, and then communicate that information to our colleagues, our managers, our partners, MDs, and our external clients, right? So our role is going to change, absolutely full-stop. Those, those manual, you know, base level tasks, bank recs, account recs, confirmations, counts of actual inventory, all of those are going to gradually go away or at the very least to be augmented heavily by these new tools. That's great. I never liked doing them. So I'm ecstatic about that. So our role is, is they're going to change more from sort of data cruncher, like head down, working away to a data interpreter and then actually being able to offer guidance going forward, right? To our partners, our colleagues, and our external clients. And that forward-looking advice and guidance is actually what the value is. So then how do we get started, right? Learning about all of these tools and platforms and there are a whole host of options out there. The IMA has a very comprehensive catalog of courses both online in person at their annual conference all across the board on pretty much any topic possible. Right? So, and then outside of that though, uh, there are a whole host of options out there, right? It can be the Khan Academy, MOOCs, massively online open courses. All of these options out there that are, uh, that are usually a combination of a joint venture with an online educational platform and an institution of, of higher education, right? And so these courses range from introductory levels all the way up to actual programming or using AI tools, blockchain platforms, all the rest. So there are a ton of courses out there. There are more courses out there, then it's possible to actually take, right? So then it's really up to us to go through and to pick out which courses, which topics, which methods of learning are best for us going forward. And then point number three, how do we actually get this stuff going on inside of our firm, right? Cause all of us know that automation is coming, blockchain is coming, AI is coming, right? How do we actually keep pace with this and then have this actually inside of our firm so that we as a firm and as an individual can be forward looking and then proactive, right? Probably the best step to actually get that started is to have a conversation inside your firm, right? You know, bring it up, talk about it. Right. Cause right now there are a whole bunch of people in the accounting space that are anxious, right? Because there's all of this talk of blockchain, artificial intelligence, RPA, and all of that is, is is going to automate big chunks of the work currently done, right? But it's important to have these conversations to have these productive conversations as to where these tools fit in the process. Right? Because right now there are very few firms out there that are actually ready to automate everything, even if they want to. Right? And so that whole process of going through, you know, documenting your current processes, building out controls, both current controls and then the controls that are going to need to going forward. And then three, uh, being able to analyze and interpret that end result of that information are going to be core competencies and traits that anybody working in accounting is going to have to have going forward. So I mean those, those are the top questions I get. Obviously there are a whole bunch more out there, but probably the key, the key takeaway point I would stress is to not be anxious. It's to educate yourself on an ongoing basis and to three have these conversations inside the firm, right? You talked to your, your peers, colleagues, managers, and your clients on these topics, right? Cause all of us know that all these topics are coming. So it's, so it's up to us to be proactive, to be forward looking and to then figure out how to weave these into our firms.
Mitch Roshong: (17:38) Great solutions and excellent examples. Thank you. But what if you are a small to midsize business and some of these options just may not be feasible? How do you recommend weaving your suggestions into those businesses implementation strategies?
Dr. Stein Smith: (17:52) The great part about tools like this, right about automation tools, AI tools, all of these types of topics is that with almost no exception, there are price points for every firm, right? There are options packages for almost any size firm out there. But on top of that, and actually prior to that, right, prior to actually buying any software packages, if you're a SME, right? Take advantage of all of the modules and the power in your current ERP systems, right? Cause almost every ERP package out there, be it QuickBooks, Sage, Zero, any of those packages used by SMEs have traits for automation and the ability to automate processes and to turn that automated data into dashboards. So, so from an SME point of view, I'd say focus on maximizing, you're current tools now and then two, I mean there are price options and points for a firm of any size and any budget out there.
Mitch Roshong: (18:55) Okay. Sean, so now that we've looked at some of these potential uses for technology, I think it's important to address the cybersecurity issues. What do accountants need to be aware of when it comes to technology?
Dr. Stein Smith: (19:06) Excellent question, right? Because there's almost this idea out here in the accounting space that as these tools are you moving right out of the fringe and into the mainstream, that internal controls and control over data aren't going to be as important going forward. That is completely false, right? The idea of a good cybersecurity policy is even more important now as all of this automation comes into this space, and I do want to focus on that as the core piece, right? Because automation is pretty much at the core of all of these ideas, right? Be it RPA, be it AI, even on a blockchain basis. A big upside of these tools is that automation aspect of it, that, that then as data is, is automated, it's, it is standardized, it's able to be processed more rapidly and processed on a continuous basis and all of that is fantastic. But if our internal controls are not up to par or aren't evolve in to, to keep pace with these changes on every other aspect of how data is treated, it is going to be a issue going forward. Right. So probably some of the top issues or the top items that, that, that I would always emphasize from a uh, security point of view is to, one, always make sure that you as a firm understand who has access to your information. And it sounds pretty obvious, but if you're onboarding tools like RPA, AI, blockchain, all the rest, you are going to be hiring external consultants, right? And so what level of access do those firms have to your information? It would be like hiring a external engineering firm to help you build out product, right? You would want to make sure that you had complete control over what data they had access to. That exact same idea is applicable here, right? That as you're building out these, these new systems and processes that you as a firm do understand who has access to what information both now and on a going forward basis right through a back door or through a patch to come in to actually fix issues as they pop up. Two one of the controls over that data, right? Because it's awfully easy to just automate processes, right? And to enter then trust the computer or that your black box idea, right? But having good controls both on the input side and on the output side are even more important, right? Because if that data is being processed and analyzed in sort of this black box, right? The sort of magic box that then does all of this cool stuff, it's really on us to make sure that then as that data comes out in a pie chart or graph a dashboard, uh, anything else, that we as the accounting team understand that information and are able to actually go back and to trace back to see how that data actually got transformed, right? So those controls are imperative. And then three, sort of a issue that is an issue that is not talked about too much but should be, is the issue of insurance, right? And the idea of insurance and an idea of a governance policy over how data is shared and transmitted between different firms. And I'm only bringing this up because as you know, Facebook and Google and Twitter had been hauled down before Congress. Obviously the whole idea of companies having huge amounts of consumer data is a hot topic, right? And every firm has, uh, information on consumers. Even firms working in accounting and finance have credit card scores, payment histories, addresses, all kinds of information that is identifiable. And so having a good insurance policy over these vast troves of data that cause hacking happens constantly be it JP Morgan, be it the Marriott target home Depot on and on and on. All of these companies are hacked and then after those hacks have occurred, then it's the floodgates of you know, dollars to help sort of patch these holes. It's a lot easier to be proactive and to get out in front of these issues to make sure that you have coverage and that more importantly I think that you have a policy in place inside the company to make sure that the data of your customers is treated as if it was any other asset because it is. And so all of these themes and topics sort of wrap up right into two points. One, our role as corporate accountants, corporate finance folks going forward and the expectations of our clients, right? So we are going to have to change and evolve again based on that automation trend, right? That is coming from every which side, right? We are going to have to get better at understanding how these automation processes work and then how that data comes into those black boxes or those automation tools and then is exported back out to us, right? The, the controls and then how that actually works are going to be things that we're going to have to know about. And then as far as a sort of external, sort of a client facing role, we are going to have to be able to explain these things to our clients, right? Cause our clients have expectations because in every other aspect of their life, be it personal life with their Siri, Alexa, Google home, Netflix, Teslas, it's a whole personalized, customized lifestyle. And so our clients are going to have that expectation of us and our services going forward. So it's really going to be honest to be able to meet those, uh, expectations if possible. And if we aren't able to actually meet all of them now, to be able to walk them through, why not and then our plan to get there. So really the whole issue of a governance policy or of a policy over the integrity of data is one that is being talked about at the periphery, but I believe really should be at the core of this whole technology topic. And this whole conversation.
: (25:25) This has been "Count Me In", IMA's podcast, providing you with the latest perspectives of thought leaders from the accounting and finance profession. If you like what you heard and you'd like to be counted in for more relevant accounting and finance education, visit IMA's website at www.imanet.org