The Future of US Tax and Audit Professionals: An Assessment of Automation and Decentralization

Despite the rapid advancements in automation and technology, many US tax and audit professionals are still grappling with the challenges and future prospects of their roles. The landscape of these professions is evolving at a pace that even sophisticated software like TurboTax cannot fully capture. Despite the prevalence of such tools, the traditional demand for human accountants is likely to diminish significantly in the coming decades, particularly for routine tax preparation tasks. However, audit functions are expected to persist due to their necessity in regulatory compliance. This article delves into how automation, specifically decentralized ledger technologies (DLTs), will reshape the US tax and audit professions and what new skills professionals may need to acquire.

The Decline of Routine Tax Preparation Tasks

At the core of the debate is the question of whether modern technology has made the need for human tax preparers obsolete. Programs like TurboTax have simplified the process of filing tax returns, eliminating the need for many individuals to seek assistance from professional accountants. This has led to a perception that tax preparation is becoming less about complex accounting and more about software operation. However, while basic return filing might indeed become even more automated, the demand for tax professionals isn't necessarily disappearing. Instead, it's more likely to shift towards higher-end services that require specialized knowledge and expertise.

The Resilience of Audit Functions

While routine tax preparation may become archaic, the need for audit professionals is likely to persist because audits are fundamentally about ensuring regulatory compliance. This makes them a more stable, albeit potentially merged, part of the accounting industry. The integration of audit functions with regulatory compliance underscores the importance of having audit professionals who can navigate the complex regulations surrounding corporate finance. Nevertheless, the nature of these tasks may change, with AI and other technologies playing a more significant role in enhancing the accuracy and efficiency of audits. Human oversight will still be crucial in interpreting results and making decisions based on the findings.

Decentralized Ledger Technologies (DLTs)

The rise of decentralized ledger technologies (DLTs) and blockchain is fundamentally disrupting the traditional accounting and auditing landscape. DLTs, such as blockchain, represent a new set of data management systems that operate independently of centralized institutions. These technologies are already transforming industries ranging from finance to supply chain management, and they are poised to disrupt the way tax and audit are conducted.

One of the most significant impacts of DLTs is the potential to replace 'double-entry ledger accounting' with a more efficient and transparent system. DLTs enable real-time tracking of transactions, which can significantly reduce the need for intermediaries in various financial and business processes. As more companies adopt DLTs, the traditional roles of auditors will evolve to include expertise in understanding and implementing these technologies. This shift not only changes the nature of the work but also necessitates a new set of digital and cyber security skills.

Emerging Business Models and Regulatory Requirements

The adoption of DLTs is also leading to the emergence of new business models that challenge current tax and regulatory frameworks. As organizations increasingly rely on DLTs and other cutting-edge technologies, the demand for tax and audit professionals who can navigate these complex regulatory landscapes will rise. Financial statements may need to be redefined to include a broader range of stakeholders, including employees, communities, and environmental factors. This shift in focus will require tax and audit professionals to not only understand traditional accounting standards like Generally Accepted Accounting Principles (GAAP) and International Accounting Standards (IAS) but also to be experts in the new realities brought about by DLTs.

Preparing for the Future

Given the rapid changes in the accounting and auditing sectors, professionals in these fields will need to adapt to stay relevant. Key skills that will be crucial include:

Expertise in decentralized ledger technologies (DLTs) and blockchain Cybersecurity and forensic accounting skills Understanding of emerging business models and regulatory frameworks

In addition, staying informed about legislative changes and emerging technologies will be essential. By embracing these changes, US tax and audit professionals can continue to be valuable assets in a rapidly evolving market.

Conclusion

The US tax and audit professions are experiencing a profound transformation driven by automation and the adoption of decentralized ledger technologies (DLTs). While routine tax preparation tasks may become less common, the need for audit professionals is likely to persist due to their role in regulatory compliance. However, the nature of these roles will change, with a greater emphasis on understanding and implementing new technologies. As the industry continues to evolve, tax and audit professionals must embrace these changes to remain relevant and continue to provide valuable services to their clients.