A lack of diversification and careless investments contributed to the high-profile failure of Silicon Valley Bank. Investment banking giant Credit Suisse collapsed following scandals involving non-compliant practices, money laundering and corruption. Closer to home, tech conglomerate Sea also only managed a tight turnaround to profit after instating strict cost-cutting measures.
These are sobering reminders that solid accounting systems and internal controls are non-negotiables for sound businesses and in building credibility and confidence among investors, creditors and customers.
However, with more stringent regulatory requirements comes more work for accountants. Could Artificial Intelligence (AI), with its ability to process and ‘digest’ large amounts of data in an instant, help answer the call for more stringent financial discipline?
First, let’s define ‘Good Corporate Governance’
Good corporate governance seeks to improve transparency and accountability within existing systems while driving innovation to keep up with the ever-changing times.
This includes financial reporting, which is the communication of financial performance, position and prospects to investors and other stakeholders.
Leaders must also attend to trends placing significant pressures on the organisation, such as climate change, geopolitical and economic changes, technological advancements, and more. These factors can disrupt growth, throwing organisations off their roadmaps. Ultimately, the key is to adapt and remain future proof, finding the best from each scenario.
The vast potential of AI in auditing and accounting
In today’s increasingly data-driven environment, AI has vast potential for application in this sector. Audit firms are leveraging emerging technologies to improve efficiencies and streamline workflows, while improving quality and accuracy. By leveraging AI and smart data analytics tools, auditors can gather key organisational insights and make more informed decisions.
AI’s capability in automatically pulling out information from the haystack – information that often previously was not accessible– makes it highly suitable for identifying possible hazards and areas of concern. Auditors can thus focus their testing efforts on areas with a higher risk of material misstatement.
Furthermore, industry watchdogs will continually re-evaluate regulatory frameworks to keep up with the ever-changing landscape. With the growing complexities in many jurisdictions, AI will serve as a vital tool to help businesses stay in step with these changes to keep up Singapore’s high standards of financial discipline.
Of course, a caveat applies. AI ultimately acts as a ‘tool or assistant. One should not rely on it fully as human intervention, professional skepticism and judgement still form a vital part of the equation.
Freeing up accountants to take on more strategic roles
AI will continue to push the boundaries of innovation, leading to concerns about the possibility of AI replacing the accountancy profession. But I beg to differ – in fact, I welcome this change.
Yes, bookkeeping and process-driven tasks will be automated. But this will free up highly skilled professional accountants to take on more strategic roles. Increasingly, roles of accountants will lean towards advising, as they help management develop and implement the right strategies and invest in the right technologies. Altogether, these will pave a smoother path towards innovative growth while maintaining high standards of financial discipline.
Accountants should therefore build up soft skills such as emotional intelligence, negotiation, judgement and persuasion and keep in mind ethical considerations as their roles evolve to become more interactive and increasingly more focused on being trusted business advisors and getting leaders’ buy-in.
The future also spells a rise in hybrid and synergistic roles in this sector. More roles will focus on ‘tech-enablement’, such as training machine-learning models, or on data governance. As advisory and consultancy skills interweave, accountants may also find themselves acting as brokers between technical experts and clients, again highlighting the need for soft skills.
These are all exciting evolutions for the accounting profession – one that is increasingly plagued with a growing talent gap, particularly in Singapore. Recently, Finance Minister Lawrence Wong highlighted that those pursuing accounting degrees have dropped over 10 per cent over the past five years, and fewer accounting graduates go on to take up careers in the profession.
The shift towards strategic and hybrid roles in accountancy could be just what we need to entice fresh blood, retain talent and advance financial discipline.
Different approach needed to drive financial discipline
The importance of corporate governance simply cannot be underestimated. It guides a company and its employees to do good business in a safe and ethical manner.
The accountant’s role is becoming more complex, with sustainability and non-financial reporting growing in importance, alongside increasing regulatory requirements and challenges of economic crime., Technology can help deal with the numbers and data, so that we can focus on the insights and tell the stories behind the data to protect stakeholders, ensure sustainable economies, and drive transformations.
Using these tools well will refresh our approach to the role of accountants in building stronger financial discipline in organisations.