Accountants of the New Era: Business Support, Victims of AI, or Interpreters of Numbers and Stakeholders in Management?

Is accounting a cost or a benefit? Many small business owners would agree that fulfilling legal obligations related to accounting incurs costs, viewing these services as an expense, while others will be aware that their decision-making depends on the information that comes from it. In times when regulations frequently change and accountants are expected to meet new requirements in a timely manner it is not easy to be an accountant as it requires specific knowledge and skills in that area, as well as many other closely related jobs.

Many do not understand how accountants keep their records, yet they regularly seek specific information from them. A typical accountant is often imagined as an employee buried somewhere between mountains of paperwork and a computer. However, is an accountant merely business support, or is the modern accountant something more than that? Is the accountant Katica for everything?

What are their jobs?

To answer these questions, we need to look at what jobs the Accounting Act considers to be accounting-related. According to it, these jobs include collecting and processing data based on accounting documents, preparing and maintaining business books, preparing and compiling annual financial statements and annual reports, and collecting and processing financial data for statistical, tax, and other purposes.

While the Act describes accounting jobs very generally, a somewhat more detailed list of key jobs for each profession can be found in the occupational standard. Namely, following European experiences, the Register of the Croatian Qualifications Framework (HKO) contains a list of occupational standards that outline the competencies required to perform a specific profession and can therefore assist in defining expected tasks during hiring or job systematization. Currently, the HKO register includes 541 occupational standard, including the standard for the position of head of accounting and the standard for the position of accountant.

According to the occupational standard for accountants, they are expected to prepare, dispatch, and verify business documentation as well as record it, manage inventory and material accounting, calculate employee compensation and salaries, manage payment transactions, cash registers, and other records, prepare and organize work in the accounting department, and apply professional standards (see SZ accountant).

Higher Level of Responsibility

On the other hand, the jobs of the head of accounting defined by the occupational standard (see SZ head of accounting) understandably encompass a higher level of responsibility. Therefore, accounting managers, in addition to planning/organizing their own work, will also oversee the work of other accountants in the accounting organizational unit. Besides recording business events, it is within the manager’s domain to control the recorded entries while applying professional ethical principles. The manager should pay special attention to independent control of the application of accounting policies and the implementation of professional accounting assessments.

Although it is usually expected that the selection of accounting policies is carried out by the head of accounting, the responsibility for accounting policies still lies with the company’s management. The manager is expected to be familiar with alternative accounting policies and assessments, to be able to argue their impact on business results, thus providing the management with the appropriate informational basis for making accounting policies, while the responsibility of accountants will be in their application. Here, the provision based on the European Union Accounting Directive mentioned in the Accounting Act, which relates to the joint responsibility of administrative, managerial, and supervisory bodies regarding the preparation and publication of annual financial statements, comes particularly into play.

Business Consultant

In the domain of the manager is the preparation of the final accounts and financial statements, as well as further analysis of financial statements. Management and other users may assume that the manager has sufficient knowledge to calculate and interpret financial and non-financial indicators about the company’s operations. Namely, financial statements are prepared for users who are assumed to have enough knowledge to understand and analyze that information.

However, sometimes even such users may need expert assistance, and accounting analysis of financial statements can vividly help them better understand the financial position and security of the company, as well as its performance. The calculation of indicators is a technical part of the job, but their interpretation still requires accounting knowledge. Every number presented in the report is the result of a specific entry and adherence to accounting principles. Therefore, the accountant also becomes a kind of business consultant.

Perhaps the greatest emphasis in practice is placed on the jobs of conducting tax calculations and preparing tax reports to meet the legal requirements placed before the company. As quickly as tax regulations change, additional work is imposed on accountants who must keep up with the news and act accordingly at all times. In addition, the head of accounting is also responsible for participating in the preparation of general acts in the field of accounting, preparing business plans, consolidated financial statements, as well as other internal accounting documents and reports. Given the data they have, accountants also contribute to sales policy. According to the occupational standard, the head of accounting independently prepares the calculation of sales prices.

International and European Rules

Since the records of business events in accounting are conducted in accordance with national or international financial reporting standards, the manager must monitor changes in those standards and understand their application in specific situations that accompany the company’s business activities. This is sometimes not very simple. Namely, it is known that International Financial Reporting Standards (IFRS) are principle-oriented standards written to be applicable in institutions of various sizes and parts of the world, complexity of work, or industry. Therefore, the provisions from them are written to provide principles of recording rather than exactly prescribe all possible situations from practice.

This will sometimes mean that accountants will have to judge how the provisions from the International Standards can be applied in specific situations of business processes characteristic of the company they work for. To apply current provisions, they need to follow the Narodne novine or the Official Journal of the European Union. Thus, for example, in accordance with the European Union Regulation and the Accounting Act, entities subject to the application of IFRS are obliged to apply those standards that have been published in the official gazette of the European Union. Of course, it is also expected that the accountant monitors other legal regulations and applies them in their operations.

Following trends in environmental protection, accountants have recently received new jobs. Namely, they are expected to have knowledge of the issues of preparing and analyzing non-financial indicators and reports on health and environmental protection and the fight against corruption. The legislator requires the preparation and publication of information related to environmental, social, and personnel issues, respect for human rights, the fight against corruption, and issues of bribery. Additionally, according to the Accounting Act, it is necessary to report on the business model of the entrepreneur, describe related policies, analyze and report on those policies, associated risks, and how to manage those risks, as well as non-financial key performance indicators.

Will AI Replace Them?

In addition to professional knowledge, it is understood that accountants also possess communication skills since the head of accounting will communicate not only with colleagues within the organization they work for, management, supervisory board, audit committee but also with auditors, the Tax Administration, financial institutions, and other external users. Finally, and no less important, some IT knowledge is a prerequisite for engaging in this job.

The application of accounting knowledge with the support of accounting software, as well as the application of e-business, are assumed competencies that employers typically require from the head of accounting. The time of recording on paper is long gone, and information technologies have not replaced accountants. Moreover, they have accelerated the accounting process, facilitated application, and left more time for performing other non-routine tasks.

As with other professions, the question arises in the case of accountants whether artificial intelligence will affect their key jobs and competencies. While schoolchildren entrust their homework to ChatGPT, debates are ongoing in professional circles about the extent to which artificial intelligence will take its toll in accounting. Thus, time savings due to the takeover of routine tasks, a reduction in the number of errors, assistance in planning, more precise and reliable analysis of indicators, detection of anomalies in trends, better management of receivables collection, assistance in communication, and similar aspects are mentioned.

Producers of accounting software, listening to trends, add artificial intelligence options to their programs. How much these options will actually be utilized can only be analyzed in some future period. One thing is certain: artificial intelligence is present, and it is only a matter of the extent and manner in which it will affect accounting.

Considering all the expectations placed before accountants, it is evident that this function is not just a cost but certainly brings many benefits. Due to their tasks, they emerge from the shadows of the business support department and become important stakeholders in business management. A 2016 study by Robert Half showed that CEOs from a list of one hundred companies traded on the London Stock Exchange (FTSE 100) come from the field of accounting and finance or financial services in 55% of cases, while 23% of CEOs were certified accountants. Therefore, it is not an insignificant fact that the knowledge and skills possessed by heads of accounting are recognized in a broader sense.