Robotic Process Automation in Public Accounting

Lauren A. CooperWest Virginia University

lauren.cooper@mail.wvu.edu

D. Kip Holderness, Jr.West Virginia University

kip.holderness@mail.wvu.edu

Trevor SorensenWest Virginia University

trevor.sorensen@mail.wvu.edu

David A. WoodBrigham Young University

davidwood@byu.edu

March 2017

We thank workshop participants at North Carolina State University for their helpful suggestions and comments on the paper. We thank the firms for providing access to the professionals to help perform this research.

Robotic Process Automation in Public Accounting

ABSTRACT:This study investigates the adoption and use of Robotic Process Automation (RPA) software—or bots—in the public accounting industry. Accounting firms use RPA software to automate the input, processing, and output of data across computer applications in order to streamline repetitive and mundane business processes. We conducted individual, semi-structured interviews with at least one RPA leader at each of the Big 4 accounting firms to gain insights into how RPA software is currently being used. Interviewees note that bots are implemented in all areas of the firm but have gained the most traction in tax services, followed by advisory services and assurance services. Interviewees report that bot implementation has increased quality and resulted in stunning increases in efficiency—although bots are a nascent technology, firms report improved processing times by 70 to 80 percent and expect reductions of 250 to 350 thousand hours of human work. Although bots are more efficient, respondents report that bot implementation is not reducing headcount, but it is decreasing offshoring and increasing employees’ job satisfaction and upward career mobility. In addition, respondents provide perspective on skills that will be needed to succeed in an accounting profession that melds RPA and human judgments. This study is the first to identify and discuss the potential benefits, opportunities, and challenges to implementing RPA in the accounting profession and serves as a catalyst to spur future research in this area.

Keywords: robotic process automation (RPA), automation, accounting efficiency, accounting effectiveness, hiring decisions, offshoring

INTRODUCTION

The purpose of this study is to investigate the adoption and use of Robotic Process

Automation (RPA), sometimes referred to as “bots,” within the accounting profession. RPA is

the use of software programs to automate repetitive, routine business processes. The use of RPA

in business has increased dramatically in recent years (Accenture 2016). A report from

Information Services Group, a technology research and advisory firm, estimates that 72 percent

of companies will use RPA by 2019 (ISG 2017). Deloitte (2015) conducted a survey and found

that its clients view the implementation of RPA as a priority within their firms. In particular,

process automation was rated as the number one technology-related priority for shared services

and global business services leaders over the next 12 months and increasing the level of

automation was rated as the second-highest strategy-related priority today as well as over the

next ten years. Given the significant interest in and use of RPA, we study how RPA is affecting

the accounting profession.

RPA is a relatively new technology to accounting firms. Because RPA is a new

technology, there is still much that firms do not understand about how using RPA will influence

the profession moving forward. This presents an important and significant opportunity for

academic researchers to help shed additional light on the costs and benefits of RPA in accounting

settings. There are many argued benefits of RPA, including drastically decreasing processing

time and improving accuracy, especially for repetitive, rule-based, mundane tasks (Deloitte

2016). These benefits do not come without potential costs. Some argue that automation will

cause significant job loss, unemployment, and ultimately more drastic income disparity and

resultant societal problems (McKinsey Global Institute 2017; Walker 2017; UBS 2016). Whether

these benefits or costs are realized likely depends on how RPA is implemented in accounting

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domains. Thus, gaining an understanding of how accounting firms are currently using RPA and

the initial effects of RPA are first steps to helping the profession deal with the likely significant

change that will result from RPA.

To provide context for the rest of the paper, we provide an example of an RPA in an

accounting setting. Deloitte (2015) outlines the specific steps that a bot takes to perform a work-

in-process (WIP) analysis for one of its advisory clients. In particular, a bot constantly monitors

a shared mailbox and checks that the enterprise resource planning (ERP) system is up to date.1

When the bot receives a WIP analysis request via email, it logs into the ERP system and runs an

ERP report on WIP. It then cuts and pastes the data into a spreadsheet template file and runs a

macro to create pivot tables and finalize the WIP analysis. The system then automatically emails

this finalized WIP analysis to the party that requested it.2 Thus, all of these steps, which were

previously performed by an accountant, are now performed by an automated system.

To learn more about RPA, we interviewed leaders of the Big 4 accounting firms to gain a

deeper understanding of RPA within the large accounting firms. Specifically, we report the

findings from interviews of five employees of Big 4 firms.3 Four of the respondents are leaders

in the RPA areas of their firm, and the fifth interviewee spends significant time on implementing

RPA within his firm. We conducted semi-structured interviews to ascertain how the firms are

1 ERP is a type of software or a set of integrated applications that companies use to collect, store, manage, and interpret data from business activities (Deloitte 2015).2 Deloitte (2015) reported that it took approximately four weeks to implement and test the automation of the WIP analysis as well as present a working demonstration to the client.3 The optimal sample size for interview-based research is subject to debate. While some argue for large samples, Salterio suggested that the right number of interviewees depends on the context. He stated, “There are two extreme reactions to field studies that I find especially bothersome. Based on a reasonably thorough study of the literature, a qualitative meta-analysis concluded that MOST studies reach saturation after about 12 cross-sectional interviews suggesting that somewhere between 15 and 20 interviews should be enough in a qualitative accounting field study!!! WRONG or right! It depends. In some studies that number will never be reached as there are not 15 to 20 people to interview in the position (see my work on Central Research Units in the 1990’s [sic]. There is only one CRU director per the then Big 6 plus 1 and I interviewed 6 of them and not surprisingly as we later learned, Arther [sic] Andersen would not cooperate.)” (see https://morebysteve.wordpress.com/2017/10/05/saturation-is-not-spelt-12/). Our sample size and composition are similar to Salterio’s example in that we interviewed an RPA leader at each of the Big 4 firms.

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currently using RPA, who within the firms is working with RPA, and how RPA may be used in

the future. In addition, we examine how RPA influences human-resource decisions such as

hiring, training, and offshoring decisions.

The results provide an important base upon which to build future research and also yield

several interesting findings, which we highlight. First, all areas within the large accounting firms

are adopting RPA, with tax services being the furthest along in adoption, followed by advisory

services and then assurance services. RPAs have not yet impacted fees as the firms are still in the

initial stages of using RPAs and are grappling with the appropriate method for allocating costs

and benefits when these are not driven directly by employee hours.

Second, firms are adopting RPA in order to increase both efficiency and effectiveness.

Firms report that efficiency gains are dramatic: one respondent indicated his firm expects to save

250 to 350 thousand hours of human work time, another respondent indicated processing time

improvements of 70 to 80 percent have been achieved, and a third respondent indicated turning a

“two man-day” task into a 17-second task. Firms are also seeing increased quality as bot

accuracy approaches 99.9 percent, compared to human performance that is often closer to 90

percent. Respondents indicated that RPA is reducing the need for offshoring and that keeping

tasks “onshore” has resulted in closer monitoring and improved quality.

Third, although respondents indicate dramatic increases in efficiency, they are not

currently reducing head count or hiring. While some respondents believe RPA may reduce the

growth in hiring in the future, all respondents are bullish that RPA will result in similar demand

for workers—but that the nature of the work will change from doing mundane, repetitive tasks to

more value-adding and interesting work. Despite these interview responses, we believe it is an

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open question whether automation, and RPA in particular, will reduce hiring—especially in the

long run, as the firms are just beginning to implement this technology.

Fourth, in contrast to what naysayers predict about automation hurting employees,

respondents report that RPA is having a positive impact on employees. Specifically, interviewees

report that employee job satisfaction is increasing, work-life balance is improving, employee

turnover is decreasing, and more employees view working for the Big 4 as a career and not just a

stepping-stone into other careers. The respondents attribute these positive outcomes to

employees not having to spend as much time on monotonous work and being able to work on

more interesting projects earlier in their career. Respondents also believe RPA will result in

employees climbing the promotion ladder more quickly as they improve critical skills at a faster

rate than when they were performing less demanding work.

Fifth, respondents are somewhat mixed on how RPA will change the demand for skill

sets of future employees. While all respondents agreed that some exposure to computer coding is

more valuable with RPAs, they indicated that most RPAs are designed so that relatively minimal

programming skills are necessary and that for very complicated RPA implementations, teams

would use computer programmers or software engineers. Still, the respondents believed that

exposure to programming would be positive and encouraged it. As for future skills, interviewees

suggested that critical thinking skills (with a focus on creative thinking) and especially

communication skills will be more important moving forward. In relation to communication

skills, the respondents thought these skills were particularly important because of the need to

explain to and sell clients on the use of RPAs.

Finally, regarding the future of RPA within accounting, the interviewees believe that

RPA is a stepping-stone to more sophisticated automation. Specifically, they report that RPA

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vendors are already starting to add more artificial intelligence (i.e., machine learning and

cognitive computing) to traditional rules-based bots. They believe in the future that RPAs will

continue to “become smarter” and capable of doing more sophisticated tasks that require human

judgments whereas the majority of RPA work today is rules-based and requires little to no

judgment.

This initial research study looking at RPA within accounting should help spur future

research in this area. Indeed, RPAs are an important, and likely to become more important,

technology employed by the firms. Yet, little is understood about RPA, and the firms are very

open to research that helps them understand the costs and benefits of and how to use RPA

technology. This paper helps academic researchers understand the current use of RPA within

accounting and identifies important issues that need additional research.

We organize the remainder of this paper as follows. Sections II and II present our

research methodology and information about our interviewees. Sections IV through VIII present

what we learned about various RPA-related subjects. We conclude in Section IX.

RESEARCH METHODOLOGY

In a world where technology is constantly improving, more and more industries are

implementing robotic software systems to streamline business processes (Boulton 2017;

Capgemeni Consulting 2016; Olhorst 2017). The purpose of our study is to identify how public

accounting firms are using RPA software and to provide insights into the benefits, opportunities,

and challenges of implementing RPA in the accounting workplace. We conducted semi-

structured interviews with at least one RPA leader at each of the Big 4 accounting firms.

Consistent with prior literature (e.g., Maksymov, Pickerd, Lowe, Reffet, and Peecher 2017;

Brown, Call, Clement, and Sharp 2015; Christ, Masli, Sharp, and Wood 2015; Westermann,

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Bedard, and Earley 2015; Radcliffe 2010; Gendron and Spira 2009), we selected this qualitative

research approach because it allows us to obtain in-depth responses from participants through the

use of open-ended interview questions.

Development of Interview Questions

We developed initial interview questions based on preliminary research into how RPA

generally operates in businesses regardless of the business function (e.g., accounting, finance,

etc.) as well as how public accounting firms currently report using RPA software. To develop

these questions, we had informal conversations with several people with experience using RPA

and reviewed marketing materials offered by the Big 4 accounting firms as well as other

technology companies (i.e., PWC 2017; Accenture 2016; EY 2016; Deloitte 2015). Initial

interview questions were revised based on discussions with a senior manager involved in RPA

implementation at a Big 4 accounting firm. The final version of the interview consisted of 22

open-ended questions, some of which included multiple subquestions. We also asked participants

to share any additional information they felt was relevant to our discussion based on their own

experiences with RPA in public accounting.

Interview Format

We conduced five interviews in 2017, four over the phone and one in person. We

recorded and transcribed each interview using automated transcription software. During the

interview, one researcher acted as the primary interviewer while another researcher (or

researchers) took handwritten notes and asked follow-up or clarifying questions based on

participants’ responses. The interviews ranged in length from 24 to 67 minutes, with an average

duration of 43 minutes.

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We began each interview by discussing the general purpose of our research and providing

assurances that the identity of the participant and the accounting firm would remain confidential.

We then asked the participant to provide a basic overview of his experience in the public

accounting industry as well as with RPA software. Subsequently, we asked our pre-written

interview questions, which are classified into six categories: (1) current use of RPA software, (2)

RPA software implementation, (3) efficiency and quality of work performed by RPA software,

(4) human resource issues, (5) client relations and other stakeholder issues, and (6) the future use

of RPA software in public accounting.

Analysis of Interview Responses

After transcription of the audio recording, one of two research assistants and one author

independently reviewed the transcripts to ensure accuracy. The only noted errors were minor—

relating to accounting or RPA terminology. After ensuring the accuracy of the transcriptions, we

conducted a detailed analysis of the transcripts to determine similarities and differences between

the participants’ responses.

DEMOGRAPHICS OF INTERVIEW PARTICIPANTS

We interviewed RPA leaders from each of the Big 4 accounting firms. The five interview

participants, all of whom are male, consist of an advisory senior manager, a tax director, an audit

partner, and two tax partners.4 On average, the participants had approximately 22 years of

relevant work experience, ranging from 17 to 31 years of experience related to the public

accounting industry.

4 For each quotation included in the paper, we provide a reference for the quoted participant based on the title of his position. The reference “CM” refers to advisory (consulting) manager, “TD” refers to tax director, “AP” refers to audit partner, and “TP1” and “TP2” refer to tax partner. In order to preserve the anonymity that we guaranteed participants, we note in a few places that we redact information about from whom the quote came.

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The participants also had extensive experience working with RPA software within the

realm of public accounting. Four of the interviewees were leaders in the areas of automation

and/or data analytics within their firms—the fifth interviewee owning patented RPA technology

used by the accounting firms. The fifth interviewee did not serve in a leadership role but rather

worked on the technical implementation of RPA projects. All of the participants are actively

involved with the implementation of RPA software at their respective accounting firms and are

qualified to speak to the benefits, opportunities, and challenges of using RPA within the public

accounting industry.

DEFINING RPA AND ITS CURRENT USE BY PUBLIC ACCOUNTING FIRMS

RPA Implementation within Accounting Firms

Technological advances are leading to the development of a spectrum of digital

workforce tools that companies can use to automate their business processes. As shown in Figure

1, at one end of the digital workforce spectrum is basic automation, which uses technology to

manipulate existing software to complete a business process (Accenture 2016). At the other end

of the spectrum is artificial intelligence, which is software able to learn by analyzing data and

then refining future performance. RPA resides in the middle of this spectrum and consists of

rules-based automation software. Essentially, RPA ranges from a simple to a very complex

computer program that is able to automate the input, processing, and output of data across

computer applications or systems without altering a firm’s existing infrastructure. RPA software

can be used to complete a variety of tasks, including manipulating data, processing business

transactions, generating responses, and communicating with humans (e.g., via email) or other

digital systems.

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According to our interview participants, the Big 4 accounting firms have been using RPA

software within their professional service practices to varying degrees for approximately two to

four years. The firms purchase licenses for RPA enterprise platform software from third-party

vendors, such as Automation Anywhere, Winautomation, and Blue Prism, rather than develop

RPA software internally. One participant explained his firm’s decision to purchase third-party

software as follows:

There are a lot of really good suites of software that exist .  . . off the shelf to help us do a lot of the things that we want to do. So a current view is, do we really spend a lot of time internally absorbing the cost to build a lot of this . . . or, use existing software and just get software licenses for everyone—and that would be more powerful, right? [AP1]

Employees within the accounting firms then use the RPA enterprise platform to build

(i.e., code) individual bots to automate various rules-based tasks for their internal operations as

well as for work performed for their clients. Depending on the complexity of the programming

involved, an individual bot can be implemented in a matter of days or weeks (PWC 2017;

Deloitte 2015).

Accountants, particularly at the staff level, are encouraged to identify possible RPA use

cases, which consist of high-volume, manual tasks that do not require judgment (Accenture

2016). However, approval for implementing the automation generally comes from the manager

or partner assigned to the project. The quotes from the following participants further detail the

structure surrounding the identification and approval of automation within accounting firms:

The mandate at [firm name removed] is if it can be a bot make it a bot. So, I don’t think anyone is precluded in our organization from deciding that something ought to be a bot. Now does that decision have to flow up and get approval? Well certainly. I mean we don’t let staff run our projects, right? The project manager has to agree, but the idea to use a bot, in a lot of cases that will come from our staff because they’re the ones that’ll have to grunt through that work if they don’t build a bot [TD1].

We made an explicit decision about this. It was more important to engage and empower the staff than it was making sure that we weren’t writing superfluous bots. And so it’s

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like everything. There’s trade-offs and you just have a bias. That doesn’t mean there’s carte blanche for a staff to write it, but certainly we were biased towards the staff doing what the staff thinks is necessary [TP1].

To create bots, accountants at Big 4 firms have access to a variety of RPA training

methods, including in-person training within the accounting firm as well as on-site and web-

based training provided by RPA software vendors to help them understand how RPA software

operates and identify possible RPA use cases. One participant mentioned that his firm has

developed a phone application so that employees can complete RPA training on their own time,

while another participant discussed how his accounting firm has created a template to help its

staff determine whether a possible use case is suitable for automation.

When it comes to actually programming the RPA software, participants stated that the

coding is performed by a combination of accountants and/or software programmers. Several

participants emphasized that the user-friendly nature of RPA software allows for accountants to

code bots on their own. One participant went as far as to say that “any accountant can learn how

to use these things” [TD1]. However, participants also stated that certain situations require bots

with complex and customized coding. In these cases, software programmers work with

accountants to implement the automation. The interaction between accountants and computer

programmers to code bots is illustrated in the following quote:

By and large most of the work that’s being done can absolutely be translated into a rule set, and so it’s having practitioners that are able to work through that and the designing and developing of a bot. It’s drag-and-drop software, which is why we don’t need the technical person. What I will say is that you can have very basic bots .  . . where a functional person can design it fairly quickly. You can also have highly complex bots that require bolt-on type solutions, so custom coding or programming. That’s where we start to stretch and we bring that technical person into the bot design and development. And frankly the bridge that’s built between the functional and the technical person there is around the need for that custom programming [CM1].

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Participants at all of the Big 4 firms also discussed the importance of accountants

understanding the capabilities of RPA software. Although software engineers have the technical

background to write complex computer programs, they do not have the institutional accounting

knowledge needed to properly identify use cases for automation or an understanding of the

regulatory environment in which accountants operate. Additionally, an understanding of RPA

allows accountants to communicate better with clients regarding how RPA can provide better

service to clients. In particular, one participant stated:

We wanted to teach a workforce how to identify the use cases, ROI [return on investment], [and] even how to program. I would say probably 30 to 40 percent of our tax folks say “Give me the license. I get this. I want to program.” But the other thing that we did was create an army of people that now, when they’re talking to clients, they understand in detail what’s possible. Whereas if you get the normal software engineer who doesn’t know tax the translation is difficult to figure out where the waste is that you can automate. [TP1]

Big 4 accounting firms’ RPA implementation programs focus on training accountants at

all levels, including interns, to understand how bots operate, identify use cases for automation,

and program RPA software. This allows the firms to more efficiently automate business

processes as well as communicate the potential benefits of RPA to their clients.

The Current Use of RPA in Each Professional Services Practice

The Big 4 accounting firms are currently utilizing RPA software to automate business

processes within each of their three services lines: taxation, assurance, and advisory professional

service. At the current time, two conditions must be met before a business process will be

automated (Accenture 2016). First, the process must involve only structured, digital inputs.

Second, the process must be entirely rules-based. Thus, manual business activities that are non-

subjective and high in volume are ideal candidates for automation. For business processes that

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have unique scenarios, the bot must be coded to alert the firm of situations where judgment must

be utilized to complete the process.5

Interview participants responded that accounting firms design bots to automate both

common processes that can be applied to a variety of clients and unique tasks for a specific

client. One of the main things that accounting firms consider when determining whether to

develop a bot is the possible return on investment (ROI) from implementing a bot to complete a

given process. Therefore, firms regularly program bots for tasks that can be applied to multiple

clients because they provide a greater return. However, sometimes the return on investment for a

bot is sufficient even if it is designed for a one client. The use of bots to complete common

business processes versus client-specific tasks is illustrated in the following quotes:

It’s a combination, but probably more of the former where you’re developing a robot that can be a little bit diagnostic to what you’re trying to accomplish. That’s probably 60 percent of it, and 40 percent of it is customized to specific tasks. You almost want to break it up into a factory line where you’re extracting data, then you’re loading the data, and then you’re transforming the data. The extraction and load is probably diagnostic and when you’re transforming the data, that would be more specific [TP2].

I would say it’s both, but we’re very cognizant of the ROI. There’s no doubt you can find lots of things that can be automated. The question is, is it worth it? .  . . It has to not only be a standard process, but high-volume on that standard process to make the bot worthwhile. Let me say it that way. So, if in a specific client environment or for a client engagement that’s true, that would be worthwhile to do for a specific client [TP1].

Thus, the Big 4 accounting firms use RPA software within their various professional

service practices to automate general rules-based processes that can be applied to several clients

as well as high-volume client-specific tasks.

Adoption within Taxation Services

Accounting firms extensively use RPA software in the tax practice. Firms implement

RPA in almost every area of the tax function because there is a significant number of time-

5 We note, and discuss subsequently, this is an area that is changing and companies are working to implement more artificial intelligence within bots.

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consuming, rule-based tasks associated with tax compliance and reporting (PWC 2017). The

following quote illustrates the need for RPA:

This a hot topic for everyone in the accounting industry and specifically in tax because there are so many redundant processes that folks go through for some of the larger companies. It becomes even more complex when you have multiple ERPs, multiple data sources, multiple feeder systems, and trying to aggregate all of that data. Sometimes the data is not synergized. It’s not a nice format that is tax ready so-to-speak. A lot of companies don’t center their ERP configurations around tax legal entities, tax registrations, and things of that nature at the state and local level. And so even figuring out which legal entity a transaction is attributed to can sometimes be a challenge and then, when you compound that with multiple systems, it really creates a challenge [TD1].

The Big 4 firms have applied RPA software to a variety of tax functions (PWC 2017).

For instance, bots are used to gather tax information from clients, such as trial balance data and

other industry- or company-specific information needed to prepare tax returns. The Big 4 firms

use bots to review trial balances and convert data to a tax-basis. In particular, bots calculate

book-tax differences, apply book-tax differences to the trial balance, reconcile intercompany

transactions, and complete and review tax return workbooks. Additionally, tax professionals use

RPA software to prepare tax returns. The bot can fill out tax returns through a tax return

workbook and even submit tax returns and related payments. Additionally, our interview

participants provided the following examples of how RPA is being implemented within their tax

practices:

[The client] pulled some data out of their systems for a tax calculation function to feed into a tax engine for sales and use tax determination, and the data ended up being formatted in about seven or eight different ways from the single extraction. So, we created a bot for this client that first and foremost reconciled the data, eliminated duplicates from the data set, made sure that it tied back to a trial balance for that period. And then, it took each of the seven work streams and pulled the data apart, tried to figure out what the right answer so-to-speak is, and then normalize[d] it back into one output dataset [TD1].

For example, we’ll use it in tax to pull information that we need for tax returns from a state general ledger system and then manipulate the data to fit the form of said tax return or to e-file the return [TP2].

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Adoption within Advisory Services

In the advisory professional services practice, Big 4 consultants look for ways that they

can automate their clients’ business processes and also provide consultancy services around RPA

implementation. Similar to accounting firms, clients could go directly to third-party venders to

acquire RPA software. However, advisory practices create value for clients by identifying the

processes that can be automated, programming the bots, and analyzing the output. This combined

approach is illustrated in the following quote:

What you see right now at the Big 4, and this is a macro trend, is that they’re merging products and services now because no longer can we go to a client and say “well if you bring in this product then you can bring us in as a consultancy and we’ll tell you how you should probably use the product.” They don’t have time for that and the product owners now are starting to put services around it (CM1).

The challenge in implementing RPA within the advisory practice of accounting firms is

that each client’s business processes are different. Programmers can program bots only to the

extent that client business processes conform to rules and processes as understood by the firm.

Therefore, consultants need to understand the underlying details of their client’s business

processes in order to determine the tasks that meet the conditions for automation and to

successfully program bots to perform the necessary tasks. As one participant stated:

We have a general framework on how we bring the capability in, but every client is unique in terms of what’s the path they take through that framework. Is it for an accounting function? Is it for a budget function? Accounting is a little bit more black and white. There are a lot of rules there whereas with budgeting there’s some gray areas. So how do we start to interpret those rules optimally? You have gray area but optimally how do you execute through the gray area? With accounting the rule sets are pretty clean. They’re there. Easy to deploy bots. When it comes to the budgeting side of it, that’s when we really need to sit down and ask the clients to articulate exactly what they’re thinking as they make the decisions that they do. And then, once we have that conversation we’re like, okay, of that 100 percent of the conversation, 80 percent of it falls within a rules-based framework that we can deploy bots against. This other percent is where the workforce will need to focus (CM1).

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It is important for consultants working in public accounting to understand thoroughly the

capabilities of RPA software so that they can ask clients the questions necessary to identify RPA

use cases and to implement automation properly within the client’s business processes.

There are a variety of business processes that are suitable for RPA implementation for

advisory clients. Consultants can automate finance processes including bank reconciliations,

accounts payable and expense processing, fixed assets analyses, and credit assessments (Deloitte

2015). Other types of processes consultants can automate include operational processes, such as

inventory tracking; human resource processes, including timesheet administration; and

procurement processes, such as supplier and purchase order validations (EY 2016; Deloitte

2015).

Consultants also help clients implement RPA to mine data, as noted by one interviewee.

Bots allow clients to analyze data faster and draw greater insights than if employees manually

sift through it. Accordingly, there are various opportunities for the advisory practices to

incorporate RPA into the consulting services they provide to clients.

Adoption within Assurance Services

The consensus from our interview participants is that the assurance practices of

accounting firms are in an earlier, pilot stage of RPA development and implementation than the

other professional service areas. They attribute this delay to the additional precautions needed

when conducting audit tests given the degree of risk and regulation surrounding the audit of

publicly traded companies. The delay in RPA implementation within accounting firms’

assurance practices is explained in the following quotes:

Audit was a bit behind but they used our [tax practice] blueprint and we’re funding that right now. And it’s more interesting because although tax is regulated ostensibly, the way we do tax and undertake it, that is not regulated other than you have to have appropriate

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legal standards met and so forth. Whereas in an audit, the audit procedures are highly regulated and subject to government scrutiny [TP1].

Tax is further along for sure. . . . I wouldn’t say so much that we’re just starting as opposed to being cautious given the high-risk stakes of an audit, and we can’t screw it up [AP1].

Once an auditor has programmed a bot to automate an audit procedure, the auditor field-

tests the bot to ensure it is performing the assigned task correctly. In particular, for a given client,

an audit procedure is independently performed by a bot as well as by members of an audit team.

The auditor then compares the outcomes of the procedures to assess the quality of the bot’s

performance. Given time, it is likely that more reliance will be placed on bots in the assurance

practice, but for now it seems that repeated field-tests to verify their functionality is the extent of

their application in the work environment.

Even though auditors are not fully ready to use bots in audit testing, bots can be used to

automate a variety of processes within the assurance practice. At a basic level, an auditor can

program a bot to perform routine activities, such as carrying forward a client’s data from the

prior year within the accounting firm’s audit platform. However, our participants also discussed

the use of RPA software to complete audit tests. In particular, they provided the following

examples of how RPA may be used in assurance:

Right now we’re focusing on a lot of things that are mundane or not high risk necessarily. But can a bot go in, get a client’s ledger, get all the data, and work with the data that’s provided from the client? Get all the debt obligations that a client has, prepare confirmations that go to the various banks that are then confirmed back electronically? Everything’s done by a bot, and then, to my earlier point, when we get that confirmation back, it’s checking it against the data that we got from the client. And if everything checks out okay, it automatically gets documented in our [audit platform] file so that all we have to do is validate everything happened the way that it was supposed to happen [AP1].

I think assurance uses a lot of data and processes that handle a lot of data, even through a financial audit. Even if you think about validation of your cash accounts, you have to pull

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the information from the ledger, then you have to send out letters, you have to get the letters back. And most of the time that could all be automated [TP2].

Although the Big 4 accounting firms are currently working towards the use of RPA to

automate audit tests, such as the debt and cash confirmation examples provided, we emphasize

that it is still in the early stages of implementation.

As this discussion indicates, there is a vast set of opportunities for RPA software to be

used in public accounting firms’ taxation, as well as their advisory and assurance service

practices to automate mundane, time-consuming, rules-based tasks. Although the implementation

of RPA is more developed in the areas of taxation and advisory, its use is expanding in all three

professional service practices.

WHY PUBLIC ACCOUNTING FIRMS USE RPA AND ITS VARIOUS EFFECTS

Demand for RPA in Public Accounting

The consensus from our interview participants is that both internal factors and client

demand drive the demand to use RPA software. Initially, the Big 4 accounting firms

implemented RPA software to automate repetitive and mundane processes that were time-

consuming for their employees to complete. Accounting firms benefit from this automation

because they are able to earn larger profits on fixed-fee projects (and have more competitive bids

on variable-fee projects), stemming from the fact that bots are less expensive and can complete

tasks in less time than employees.6 Accounting firms also benefit from a quality perspective. The

use of RPA software improves the accuracy of tasks and allows employees to focus their time

and effort on subjective tasks, which add more value to projects (Accenture 2016). The following

quote illustrates the demand for RPA software within accounting firms:

6 Deloitte (2015) estimates that the cost of implementing a bot to complete a task is one-ninth of the cost of a full-time employee in the UK.

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From a firm perspective, where our work is say firm-fixed-price, we’re given a million dollars to come in and do a specific function. What we do right [is] . . . understand where within those contracts we are putting people. And those people that we’re deploying are doing rules-based activities, the same things day-in-day-out, reconciliations, why don’t we just deploy bots instead of people? So, for that million-dollar piece of work, maybe there were ten people. Now we’re reevaluating that million-dollar piece of work and going, whoa its six people and maybe three or four or five bots. And bots are very inexpensive. So from a firm-fixed-price contract perspective, we can drive profit and at the end of the day, the service levels are going to improve because the bots process much quicker, [at] greater levels of accuracy. They’re much more dependable. They do it the same way every time and they work weekends. [CM1]

As this quote indicates, accounting firms began implementing RPA internally in order to

increase the quality of the services provided as well as their profits.

However, clients, particularly in the areas of advisory and tax, are also expressing

increasing interest in RPA software and how it can be used to benefit their organizations. We

highlight the demand for RPA by tax and advisory clients with the following quotes:

No one was interested I would say a little more than a year ago. Last July of [20]16, we started hearing “hey,” one or two saying, “what is this?” I remember last September actually doing a presentation: “hey here it is” and just within the last month they’re eager to know “okay, how do I get this in my organization?” So, in tax I think it’s a phenomenon that just took fire I would say in the last 12 months [TP1].

Clients absolutely need them, and they demand them now. So, they demand not just smart ways for consultants to come in and help them do their job, but they demand a mix of products and services [CM1].

Hence, the demand for RPA software in the public accounting industry stems from

accounting firms’ desire to streamline their internal processes as well as from clients as they

increase their understanding of automation’s capabilities.

The Effect of RPA on Client Relations

Our conversations with interview participants indicate that the Big 4 accounting firms

differ in terms of their openness in communicating their use of RPA software to clients. The

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majority of firms appear to be open about the extent that they incorporate automation into their

work. As one participant stated:

There’s a point in time which [the clients] are usually brought into it. So if we’re not selling bots directly to the client, instead we’re bringing them into our back-office operations with project delivery. Then what we want to do is make sure that we’ve deployed them in a manner that is improving the service levels. And we usually test those out before we take it to the client [redacted].

They also actively utilize RPA and its capabilities as a marketing tool to attract clients as

illustrated by the following quote:

It’s a big market facing initiative that we have right now to go out. We actually do roadshows for our clients. Tax data analytics and robotics roadshows. We have those ongoing. They happen every two weeks. It’s a three-day seminar that our clients can sign up for, and they can go to, and they can get an overview of what bots are capable of and what some of the capabilities are and feature functions. So, we are actively marketing [redacted].

However, one participant described a different approach to incorporating RPA into work

performed for clients. In particular, his accounting firm focuses client communications on the

end product that the firm is hired to deliver. Clients will gather information about and possibly

see the internal processes used to complete the project, but the firm does not highlight or actively

share the process used. Specifically, this participant stated:

[Bots are] invisible to them for the most part. . . . Our philosophy, for better for worse, is the clients care about the deliverable and the quality of the deliverable and the cost of that deliverable. So what our internal processes are [is] irrelevant [redacted].

Accordingly, the Big 4 accounting firms take different approaches to communicating

their use of automation to clients. While some firms may not display RPA practices for their

clients because it is viewed as one of many tools utilized to complete projects, other accounting

firms advertise their use of bots as a marketing tool.

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Respondents report a mixed initial reaction from their clients regarding the use of RPA

software.7 Overall, our participants described their clients as being curious to learn more about

RPA and its technical capabilities. They also indicated that several of their clients are interested

in having bots incorporated into the work performed by their accounting firm or having RPA

software implemented within their own organizations. Clients’ interest in automation is

highlighted in the following quotes:

I would say they’re eager to want us to use it and not reluctant [CM1].

Well, they’re very interested in them. They’re asking a lot of questions. I don’t think they care as long as the quality is where they expect it to be and if we can validate to them that the quality is the same [AP1].

However, some of our participants also indicated that certain clients are reluctant to use

RPA software. They generally attributed this reluctance to clients not fully understanding how

bots operate or their capabilities. In particular, our participants stated:

I think everyone is different, but if I had to stereotype, I would say it’s new, so people are more reluctant until they see that it works. And you see a lot of times, you’re working with a client to do a proof of concept or a proof of value to build their confidence around it [TP2].

The order of magnitude is mind-boggling to people when they finally see it, but the biggest challenge is helping folks understand what a bot can do and giving up control [TD1].

Another participant described his clients’ reluctance as primarily stemming from data

issues. Bots require access to a company’s business processes and data to perform their

programmed tasks. For multinational companies, in particular, there can be issues with

transferring data to different legal jurisdiction or countries. Accordingly, clients are expressing

7 The survey results of Deloitte (2015) suggest that the majority of its clients are at least aware of RPA software. In particular, 80 percent of surveyed clients responded that they have heard of RPA at conferences or researched and read about it on their own.

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concerns about how accounting firms plan to protect their confidential business processes and

data and where they will process it. We illustrate this concern with the following quote:

There’s a lot of data flow issues that come out of this and a lot of other technology. A lot of cross-border issues. Countries that don’t want certain data to flow to certain things. And that’s been quite a headache, to be honest, on how we exchange data with our clients, but that’s also happening now. To me, that’s the biggest area the clients are very focused on what you are doing. I’m used to having an associate come and audit this in my headquarters. And now I’m sending you a file, and it’s going to somewhere where there’s a bot. Where is it going? What servers is it going to sit on? How am I insuring that you’re keeping my data safe? That’s the big concern with clients [AP1].

As a result of these concerns, accounting firms are challenged to explain RPA to their

clients in a way that makes them feel comfortable with its implementation and confident that

their business processes and data are protected.

An additional client relations challenge that accounting firms face with the

implementation of RPA is the structuring of fee arrangements. The fixed fee model based on the

number and level of employees assigned to a project or the estimated number of work hours is

not a viable option when automation is involved. The efficiency gains that can be achieved from

the use of RPA software have caused accounting firms to incur less of these traditional costs.

Multiple participants anticipate receiving pushback on the amount of fixed fees charged for

projects once clients see the possible efficiency gains that result from automation. As one

participant stated:

I think this is a challenge for everyone that’s doing this stuff in the space is how do you price it? As an example, it takes the client two days to do something, took us an hour to build the bot and takes 17 seconds to run. In some cases, we’re the ones running the bots for the client and in some cases we hand the bots off and they run it. Some clients will [push back on costs]. We take several approaches on the pricing point [TD1].

Accordingly, accounting firms are changing the way they structure contracts. There are

significant costs involved with the development, implementation, and maintenance of bots, and

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these costs need to be reflected in the fee charged to clients. This point is illustrated in the

following quotes:

We’re educating our clients on this. The cost of an audit isn’t just a senior associate comes out and does the audit work. Now that’s going to be a senior associate comes out and spends 50 percent less time, but we also spent a whole lot more money developing the software to allow that senior associate to only spend half the amount of time there, and that cost has to be absorbed too. And so the nature of the cost structure changes and that’s not a direct one hour less on your audit, you get one hour less cost [AP1].

Robotics should not be a cost slammer. Robotics should be a data, quality of data, quality of results, quality of delivery, and then quality of life of the individuals that are working on it [TP2].

I think everyone in the market is still trying to figure out how to price these things so that it’s fair to the client. We’re getting paid for our time, but it’s also somewhat related to the value that we’re adding to the organization [TD1].

The challenge of structuring contracts for projects that incorporate RPA software so that

they best reflect the costs incurred and value created for clients is an evolving issue that

accounting firms face.

The Effect of RPA on Employees of Public Accounting Firms

An additional concern with incorporating a digital workforce into public accounting firms

is how employees will react to its implementation. Based on responses from interview

participants, it appears that employees at the Big 4 accounting firms are generally content with

the integration of RPA software into their work. This overall acceptance of RPA is attributed to

the fact that employees are now able to perform more value-added tasks and expand their skill

sets, given that bots are now able to perform the time-consuming, mundane process that

employees were previously required to do (Accenture 2016). Specifically, participants stated:

I think we’ve made jobs easier and allowed people to focus on more value-driven work. You spend 100 hours pulling information through a tax return versus an hour. Well, you’ve got a lot more time to focus on reviewing that tax return, thinking of creative ideas to help the client [TP2].

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Anyone at [firm name removed] that has a business that they’ve built a brand around doing dull, repetitive, mundane things, they are being moved up the food chain because of being displaced by the bots. And what we’re finding is they wanted to be moved up the food chain. Somebody had to be in that role to do that dull, mundane, transactional work. Therefore, they sort of happen to be the person doing it. They didn’t want to be the person doing it. And so they are actually happy to be displaced, and now they’re able to think as opposed to just do [CM1].

A lot of people don’t like the mundane. Let’s audit cash, let’s audit equity, let’s go audit AP [accounts payable]. It’s not fun. It’s not exciting. They want to talk about derivatives. They want to talk about tax, pensions, business combinations, valuations, talk to the C-suite. So if we have bots doing the boring stuff, it’s going to improve our turnover as well because we don’t look at the threat [of mundane work]. It was interesting, the guy I talked to yesterday. His point was that everybody’s talking about how in the audit profession we’re going to fire 50 percent of our people once bots do things. He’s said it’s the exact opposite, we’re going to use them to do more value-added work [AP1].

Consistent with the idea that employees at public accounting firms are embracing the use

of RPA software, firms are reporting higher job satisfaction ratings and lower levels of attrition

(PWC 2017). Multiple participants made similar points in our interviews. In particular, they

stated:

You can’t isolate the factors, but you can see it in job satisfaction ratings. You can see it in attrition going down. You can see all of those things that could potentially be part of the story of why our attrition is an all-time low right now. It’s not just because of bots. It’s a lot of things going on, but that enters the story [TP1].

One of the reasons why we’re accelerating this in our back office is so we can improve our retention as well as the quality that we attract. Because the last thing somebody coming into a first job, they’re excited it’s a first job, the last they want to hear is “hey, we’ve got this dull, mundane, repetitive stuff we would love for you to do.” And they’re really keen nowadays, when you’re sitting down interviewing reading through the glossy brochure stuff and saying “hey, that sounds like all mundane, repetitive stuff.” Where we can truly get away from that, I think it can be very genuine and authentic when we are interviewing for positions and the things that we’re going to be talking about, are these higher value things that are going to require their innate cognitive sort of ability to make decisions as opposed to just do the same thing day-in and day-out. I think it’s going to be reduced turnover, so increased retention as well as increased quality [CM1].

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Accordingly, job satisfaction indicators at public accounting firms suggest that their

employees are accepting of the implementation of RPA software, largely due to the resulting

shift to more value-added work caused by the automation of mundane, rules-based tasks.

Some of participants did, however, mentioned that a subset of employees feels anxious

about the implementation of automation with their firms. This anxiety relates to a fear of having

their existing job replaced by a bot. One participant credited this concern to employees not fully

understanding the technical capabilities of automation and how accounting firms plans to utilize

bots in conjunction with its employees to provide professional services. As one participant

stated:

I think some folks struggle to see how a robot could do what they do. So I think the more that we use them and the more we deploy them in different contexts, I think those folks will start to understand, look I’m not replacing you. I’m pushing you into more value and more into the higher value loop opposed to the low value loop [TD1].

Another participant emphasized that employees are more concerned about the future

implementation of artificial intelligence in public accounting firms, rather than RPA software.

The former digital workforce tool has more advanced technical capabilities, which represent a

greater threat to their existing jobs. In particular, this participant stated:

There are people that hide behind busy work. Those people are in trouble, and they’re scared. And so everyone has those. But by and large we’re trying to get people who are analytical. . . . Where there is more anxiety is when I demo something that I’m doing with [artificial intelligence software] and peering around the corner on that. That aspect of intelligent automation makes people nervous because that’s where there’s manifestation of professional knowledge turning into judgment and reasoning like the way a human does [TP1].

Although certain employees are anxious about the impact that RPA and more advanced

digital workforce tools will have on the profession at this early stage of implementation, the

majority of employees in the public accounting industry appear to be embracing the shift from

working on mundane tasks to more value-added and thought-provoking activities.

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Additionally, the majority of participants indicated that they did not expect their

accounting firms to reduce the number of new employees hired as a result of implementing bots.

RPA software is not generally regarded as a job replacement. Rather, it is a tool that allows

accounting firms to reallocate their employees to more value-added activities, increasing the

overall quality of the professional services provided to clients. One participant even expressed

the opinion that RPA will result in job creation, rather than job replacement. Additionally,

participants discussed how the efficiency gains possible through automation are leading to more

work-life balance for employees. This point is illustrated in the following quotes:

We’re not ramping down our hiring efforts in any way. There’s a lot of things that we think we can refocus our time and effort on that allows us to hire just as many people. And, as you know, we’re constantly focused on work-life balance. And so, if we can have the same number of people working less, that would be something that we spent the last hundred years trying to get to the perfect state [AP1].

They want more of it [RPA] because it makes their life easier. I wasn’t sure what they were actually going to think because you do have these stories in the papers and the press that everybody’s going to lose their job. I think those people are distant from the reality of the work environment. We can’t hire enough talent to do what we need done. And so you wind up giving people a lot of work to do in a short period of time. This should give them that balance [TP2].

One participant, however, indicated that he anticipates a decrease in future hiring at

accounting firms as a result of automation. In particular, he stated:

You’ll need less people to do the same amount of work, and the way that will happen isn’t because people lose their jobs. You probably just would not hire as fast as you would otherwise when you’re growing. At least right now, that’s what I’m envisioning. We’ve grown significantly for the last five or six years, and so that typically would mean you have some growth rate at the bottom of the pyramid. You would not have to grow that bottom of the pyramid as quickly is how I would term it [TP1].

Accordingly, there appears to be some uncertainty regarding how RPA will affect future

hiring practices at public accounting firms. Although the majority do not anticipate a change in

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hiring practices in the near term and even suggest that employees may enjoy more work-life

balance as a result of automation, there is potential for a reduction in hiring at the staff level.

Career paths are also expected to change because of the implementation of RPA. Multiple

participants expressed the view that automation expands the types of careers available to

employees within accounting firms. In particular, the increased use of technology in public

accounting has led to the need to hire computer programmers and software engineers to help

with its implementation. As previously discussed, the Big 4 accounting firms rely on a

combination of accountants, computer programmers, and engineers to build the bots that are used

in their professional service practices. The following quotes highlight the expanded career

opportunities that are available to employees at public accounting firms as a result of

implementing RPA:

We’re hiring a lot of coders and computer engineers to teach ten percent of the assurance practice, who will then go out to their markets, and then further teach whatever it is that we need so that we can all on our own build bots [AP1].

It broadens the services we offer our clients, so it broadens our portfolio of services and it broadens the opportunities for individuals to be successful [TP2].

Hence, more career opportunities are available within the public accounting industry as a

result of the current shift towards incorporating a digital workforce.

Careers in public accounting are also changing because employees are now able to more

quickly advance within their firms. This advanced timeline results because employees are able to

focus more time and effort on expanding their skill sets and performing value-added work, rather

than completing time-consuming, mundane tasks. As one participant stated:

I think that [RPA] allows people to shed the more mundane work and be able to focus more on analysis and perhaps climb the curve of professional development faster. I always laugh because people say “well in order to do that you have to learn. You’re going to be taking away the basics for people to learn.” I started a long time ago. We had ten keys and a big spreadsheet. A lot of times we had to build the books and records in

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order to do a tax return. If you would ask me back then I would have thought “Yeah, in order to really know how to do taxes you got to know how to build the book and records.” As it turns out, you don’t [TP1].

Employees, particularly at the staff level, are also beginning to view careers in public

accounting differently from how they viewed them before the implementation of RPA.

Previously, many employees entered jobs at accounting firms with the expectation of leaving

after a short time due to fatigue from constantly performing tedious and dull tasks. However,

employees’ attitudes towards the possibility of a long-term career at public accounting firms are

shifting now that bots can complete these undesirable activities. One participant described this

shift in mindset as follows:

Right now there are career paths that provide the ability for upward mobility. However, some people get burned out very early on because they’re not doing what they thought. In their head, they did four years, six years, eight years, and then they’re coming out of college and they’ve got these high hopes of doing this very impressive type work that they’re excited to go home and tell mom and dad about. And where they come in and they’re not doing that exciting work that they’re proud to take home to mom and dad, then it sort of isn’t something they enjoy, they’re probably going to then start to look elsewhere. . . . So it’s viewed as a first job, not as I’m going into a career .  . . they’re going to the first job because they realize that as the newest employee you’re likely going to be doing the dull, mundane, repetitive things. And now, if we don’t have that at all for them to step into, and it’s day one that they’re stepping into a higher value role that they are excited about and want to tell mom and dad and do tell mom and dad about, I think maybe they sort of leapfrog that stuff that otherwise burns them out, and forces them to create this illusion that it’s just a first job and not a career. And maybe we do get back to this whole career thing because they value where they’ve land[ed] [CM1].

The implementation of RPA software is having a positive effect on career opportunities

within accounting firms. In addition to employees being more interested in long-term careers in

public accounting, they are also able to advance more quickly within their firms.

A final effect that RPA software is having on the work performed in the public

accounting industry relates to the outsourcing, or offshoring, of tasks outside of the US.

Specifically, the implementation of automation within accounting firms is leading to a reshoring

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of previously outsourced work. Firms are choosing to use bots to complete these tasks because

they can achieve greater cost savings from automation than they can from outsourcing (PWC

2017; Deloitte 2015). In fact, PWC (2017) estimates that RPA software can complete a business

process for less than half the cost of outsourcing. The following quote illustrates the effect that

RPA is having on accounting firms’ decision to outsource work:

What you hear now is re-shoring. Offshoring is we export this transactional work overseas because they could do it cheaper. It made absolute sense but sometimes there’s a deterioration of quality when you offshore simply because you don’t have it there, you’re not supervising it. Now with the re-shoring, you’re bringing back the task, not the job. You’re bringing back the task, and a bot is doing it as opposed to a person. And so, you’re bringing back the quality. You’re reducing cost. What we see with a lot of the offshore providers now is that they are putting bots very quickly on the operations that they’re doing just to try to compete and to try to sort of shift the tide of this on-shoring/re-shoring [CM1].

Hence, the implementation of bots is causing a disruption to the outsourcing of

accounting work. In particular, business processes that are suitable for automation, as opposed to

jobs, are being re-shored back to the US.

THE EFFECT OF RPA ON QUALITY WITHIN PUBLIC ACCOUNTING FIRMS

The implementation of RPA by public accounting firms has led to an increase in the

quality of professional services provided. Our participants attribute this overall increase in

quality to accountants’ ability to focus on value-added activities now that bots are completing the

mundane, rules-based tasks that previously occupied their time. For example, the use of RPA

software in the assurance practice to automate basic audit procedures will make more time

available for auditors to focus on areas that require more judgment and, consequently, increase

the quality of the audit. As one participant stated, “We can spend more time truly risk assessing

and focusing on high-risk areas [AP1].”

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The reduced attrition credited to the implementation of RPA also results in higher quality

performance. As explained by one participant, if the same employees work on a given account

year after year, then they can focus more time on providing value-added activities as they

become familiar with the client’s operations over time. In contrast, if new employees are

assigned to a given account each year, then time must be spent familiarizing them with the client.

The following example explains this point:

Let’s just take something as simple as doing a tax return. When you have constant turnover year-after-year on the same return, which is by nature kind of the business model, versus if you start out of college and you’re the preparer on that return, I’m talking about big things, big returns now for example and it’s not just returns, it’s clients, or however you want to think about it, and then you become the senior on that same client, and then you become the manager. When you’re able to have some consistency there, the quality does go up because there’s not as much pressure on the budget, there’s more focused analysis [TP1].

Accordingly, public accounting firms’ implementation of RPA software has led to an

increase in the overall quality of professional services provided through multiple channels.

One specific area of quality improvement attributed to RPA is increased accuracy of the

work performed (PWC 2017; Accenture 2016; EY 2016). In particular, the use of bots to

complete business processes reduces the risk of transactional errors, such as inaccurate data

input, sequential steps being overlooked, and rules being applied incorrectly (Accenture 2016).

One participant quantified the increase in accuracy stemming from automation as follows:

We have seen accuracy and compliance levels go straight up to 99.9 percent overnight. What is the base it comes off of? That’s usually around a 90 percent base. That doesn’t sound like a lot in terms of 90 to 99 [percent], but at the end of the day, what’s important is that bots are getting it right 99.9 percent of the time [CM1].

This increase in accuracy results in less time and resources being spent to re-perform

work done incorrectly the first time.

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RPA software has also improved public accounting firms’ efficiency. Bots are able to

complete tasks 24 hours a day for 365 days of the year, which allows for the continuous

provision of services (Accenture 2016). RPA service providers estimate that bots reduce average

handling times of business processes by 30 to 40 percent (PWC 2017; Accenture 2016).

Additionally, EY (2016) estimates that average run times decrease by 76 percent through the use

of RPA. Interviewees illustrate the improvements in the following quotes:

Processing times we’re seeing improved 70 to 80 percent, and that’s not because the bot has been capped out in terms of the capability. Because the bots interact with the process, automates the process by interacting with the IT that it needs to, so the systems and applications that it needs to work with. The constraint is how fast is the client’s IT environment. Could that 70 percent be higher? Absolutely, it could be [redacted].

I think right now we have about 70 bots that are built or under construction. We think by end of our fiscal year [date removed] we’ll have about 100. We do an ROI on all these, and we have a library and all that kind of stuff. We believe that’ll take about 250 to 350 thousand hours out of our processes [redacted].

We did another bot for a client in [city name removed] where they were spending two man-days doing something. We built a bot in about an hour that turned that task into a 17 second task [redacted].

The efficiency of RPA implementation can also be measured in terms of throughputs, or

the amount of work that can be completed in a given time period. One participant quantified the

increase in throughputs as follows:

What we’re seeing with throughputs is a 3 to 5 [times improvement] easy, and the logic behind it being easy 3 to 5 [times improvement] is that the bots can work all day long, so 365-24-7. So if your baseline is an eight-hour day, and you’re simply going to go 24 hours, so three of those shifts, you’re going to get 3 [times improvement] in any one day period. And if the bots are able to work on the weekend, so those systems or applications aren’t down . . . and the bot can be open for business, you can get 5 [times]. [redacted]

Hence, public accounting firms are documenting significant improvements in efficiency

resulting from the implementation of RPA software in their professional service practices.

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Accounting firms are able to monitor the quality of deployed bots through features

embedded in RPA software. As discussed by our participants, users can retrieve information

regarding the accuracy and efficiency of bots on a continuous basis. In terms of accuracy, this

information includes error rates as well as identified exceptions to the programmed set of rules.

Users can obtain several efficiency metrics, such as processing time, the amount of time that the

bot is not in use, and maintenance time. Our participants described the monitoring features of

RPA software as follows:

They are monitored through a dashboard. It’s easy to know the error rate, their up time, down time, maintenance time. That’s just part of the technology [TP2].

You should be continuously monitoring the bots, and a lot of the RPA . . . software comes with a performance dashboard. It will tell you: did the bot operate today, how many cases did it process today, what is the processing time, or the average per case. It will tell you all these things and also tell you how often it breaks, the exceptions to the process, why it was an exception, so you can start to build rules to monitor the bots. The bots don’t do it by themselves, but just like you program the bot against a rule set, you can also build in checks for the bots. So you could be checking the bots on a daily basis [CM1].

In summary, these documented efficiency improvements have led to substantial cost

reductions for accounting firms (Accenture 2016, EY 2016). For example, PWC (2017)

estimates a decrease in costs of up to 80 percent as a result of implementing RPA software.

Perhaps most importantly, the accounting industry is using RPA to become more efficient while

improving the overall quality of the professional services.

THE SKILLS NEEDED TO WORK WITH RPA

Given the influence that RPA software is having on the public accounting industry, we

also asked our interview participants to describe the skills accountants need to succeed in this

changing environment. The majority of participants highlighted the importance of having, at a

minimum, an awareness of RPA. RPA significantly impacts staff-level work, so it is imperative

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that employees at this level understand the technology and are able to identify use cases for

automation. As one participant stated:

Think of it as a pyramid structure and a lot of the heavy lifting is done at the bottom of the pyramid by your younger individuals that are getting that time back to do things that they couldn’t do in the past [TP2].

Several participants also emphasized the importance of accountants graduating from

universities with computer programming or coding experience. As previously discussed, staff

level accountants perform much of the bot programming. One participant stated how easy it was

to train interns to code bots:

In two weeks we trained interns how to program basic bots and we thought “If we can do that with the interns why can’t we do with our own folks?” [TP1]

The following quotes from our participants summarize the importance of accountants

having experience with technology in the public accounting industry:

They need two things: one, an awareness of what it [robotics] is and how it operates, and two, some level of programming around it. I think it’s important [TP2].

I’m more interested in what technologies are you familiar with, what ERP experiences have you had, what analytic tools are you familiar with? Are you certified in any of those tools? It’s more centered around the data part of it. . . . It’s going to be very hard for students if they walk in just knowing a lot of tax stuff, and they’re not tech savvy. It’s going to be tough to compete in this space over the next three to five years [TD1].

Accordingly, accountants entering the workforce with an understanding of the

capabilities of RPA and computer programming experience have a competitive advantage with

regards to working with the technology tools that are being implemented in public accounting

firms.

Participants also stressed that accountants need to cultivate critical thinking as well as

social skills. Given that bots complete many of the mundane, rules-based tasks previously

performed by accountants, accountants are now expected to spend their time on value-added

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activities. This requires accountants to be creative and innovative as well as capable of solving

problems. Accountants also need to be able to work well in teams so that they can collaborate on

creating new ideas and finding solutions. This point is highlighted by the following quotes:

I think it’s more of the soft skills. I think most would think programming language. I don’t think it’s that because so much of this is drag-and-drop type stuff now, so a functional person can design and develop bots. I think it is the critical skills: critical thinking, problem-solving, collaboration. They [students] are already used to doing it on social media. They’re used to collaborating but sometimes they don’t think about it in that manner. But as it relates to the workforce, I think a greater collaboration, meaning you’re bringing in new ideas. Knowing that you can cycle new ideas much quicker than you could before [CM1].

Having the skills of empathy and building relationships and understanding knowledge is dispersed. So not one person can know it all. You have to have the ability to be able to function in a group in a way that makes the team IQ higher. All of them being creative and innovative, those are the real key skills [TP1].

Similarly, it is important that accountants have developed oral and written

communication skills. Staff need effective communication skills to collaborate with a team to

provide value-added solutions. Additionally, accountants must also be able to explain RPA

software and its technical capabilities to clients. As one participant stated:

Some of the other skills that have been taken for granted is around communications and that could be chalked up to social media again. Twitter, 140 characters, no punctuation needed. We don’t struggle with it but we’re just mindful of it at [firm name removed]. Good ol’ oral and written communications. That’s not going anywhere. And frankly, to be able to deliver these more innovative-type solutions to our clients, you need to be able to effectively tell a good story, and you can’t tell the story in 140 characters. It’s not just the written but it’s also being able to step through. There’s a problem that we’re solving and being able to articulate it. There’s an approach we’re putting to it. And then there are results or there are hypotheses as a result of the problem and the approach would apply [CM1].

Hence, accountants entering the public accounting industry must have critical thinking

and social skills in order to effectively communicate the capabilities of RPA software to clients

as well as to successfully complete the creative, value-added activities that they now engage in

earlier in their careers.

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THE FUTURE OF RPA

The Expanded Use of RPA

We asked our interview participants to discuss how they expect RPA to influence the

profession in the future. All participants expect the use of RPA software and other digital

workforce tools to expand in future years—and to expand at an accelerated pace. The Big 4

accounting firms are still in the process of identifying use cases that meet the criteria for

automation within their various professional service practices, so bots will be used to perform

more rules-based tasks as they are identified over time. As one participant stated:

The only answer I can think of is just expanded to include just about every function that we perform as a services organization. We’re encouraging folks to think outside the box and find ways that bots can streamline our work [TD1].

Participants also expect that continuing technological advances will lead to the use of

more sophisticated automation tools along the digital workforce spectrum, including machine

learning or artificial intelligence technology. The following quotes elaborate on participants’

predictions regarding more advanced digital workforce tools:

I see bots being replaced by artificial intelligence. This is a journey. I think robots are the first step. You need to go through the process to understand what they can do and then to lead you on the journey or the S curve. The next stop would be some type of artificial intelligence. . . . It’s so amazing, I think, the speed of change. I can’t get my head around how fast it’s moving. I would have told you bots will be here for three to five years. I think in another year, it will be commonplace, and then I think it’s going to peak. Then I think artificial intelligence will merge into what you think robotics are [TP2].

I would say there’s nothing but an accelerating trend on using [bots]. Bots is just the beginning. I think 12 months from now if we had the same conversation, we’d be talking a lot more about the higher-level intelligent automation around natural language processing, cognitive automation, using machines to at least maybe start doing the associate level work for some of the analysis that we do. I see that accelerating, not decelerating [TP1].8

8 Expert Systems, an artificial intelligence solutions provider, defines natural language processing as artificial intelligence that understands, analyzes, manipulates, and generates natural languages (www.expertsystems.com). Cognitive automation is software that leverages artificial intelligence technology to expand the set of tasks that can be performed by RPA.

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In fact, the Big 4 firms are already experimenting with deploying bots with these more

advanced capabilities. As one participant described:

We’re already seeing a bolting on of cognitive capabilities, so it’s not these rules-based bots doing one thing and then there’s this huge bridge that needs to be built before you get to machine learning and cognitive, smart algorithms. We’re seeing the RPA vendors now create that cognitive capability. . . . They’re coming out with these algorithms that are machine learning. It’s no longer a rules-based process. It can be a process that has discretion in it, so I go left sometimes, other times I go right. They’re actually deploying bots now. We’ve got a few use cases around where we’re deploying cognitive bots [CM1].

Thus, the use of digital workforce tools is likely to expand at a rapid rate in the public

accounting industry. In addition to deploying bots to complete an increasing number of rules-

based business processes, firm are using more advanced automation tools to perform higher-level

tasks that require judgment.

The advancement of automation in the public accounting industry to include forms of

artificial intelligence that are capable of making judgment-based decisions raises the concern of

how the accounting profession will evolve to avoid becoming obsolete. Frey and Osborne (2017)

developed a model to assess the susceptibility of 702 current occupations to complete

automation. His model assessed the probability of automation for tax preparers at 99 percent, the

eighth most at-risk occupation, while the model assessed the automation of accountants and

auditors at 94 percent. Accordingly, accountants, particularly in the area of taxation, are at risk of

suffering from technological unemployment.

The Big 4 accounting firms are aware of this possibility and are being proactive in terms

of making strategic changes to protect themselves from complete automation. One participant

explained how his firm is taking steps to reposition itself as a technology company that has

technical, accounting-based knowledge to provide professional services rather than simply being

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a public accounting firm. This participant described his accounting firms’ transformation as

follows:

Technology, whether you’re talking about process automation, artificial intelligence, etc., it’s dramatically changing the way we do business and more importantly, we know it’s going to even more dramatically change the way we do business in the future. Our CEO, if you will, has challenged us to think about ourselves as a tech company that provides assurance or does a lot of other things. We’re really trying to change the way we look at ourselves, but not from a financial perspective, just from our mindset, that we are a tech company. I mean that we can’t exist, we can’t survive, we can’t continue to be competitive if we aren’t a technology company and if we’re not up-to-date on all the things in the world that are technology based. That’s going to rapidly change, so we’re trying to retransform, repurpose ourselves to bring the skill sets we’ve had historically, which will always be critically important, but to layer on that technology piece [redacted].

In addition to the firms having to transform themselves into technology companies,

individual roles within firms will have to adapt to stay ahead of complete automation. Another

interview participant described how he expects the tax profession to change, given its high

susceptibility to automation. In particular, he predicts that the role of the tax accountant will

evolve from being focused on technical tax knowledge to data mining and analysis. His

prediction is summarized by the following quote:

One of our predictions is that the tax professional of the future is actually more of a business analyst and a data miner, a data manipulator, a data analyst as opposed to a technical tax person [TD1].

Other occupations within the public accounting industry will similarly have to find ways

to evolve to survive. Accordingly, one of the consequences of implementing RPA software and

more advanced digital workforce tools in the public accounting industry is that it is forcing the

profession to change.

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Governance surrounding the Use of RPA

The use of automation in the public accounting industry also raises questions relating to

the required governance and internal controls needed to protect accounting firms as well as their

clients. One participant described this governance concern as follows:

These bots do what they’re told to do. If you tell them to do bad things, they will do bad things 100 percent of the time [CM1].

Accordingly, accounting firms must continually take steps to ensure that access to the

programming interface of bots is restricted to authorized personnel and that internal as well as

client data is protected from breaches. As another participant stated:

Internally, there is a huge focus on what I’ll call the cyber risk, the cyber security risk, in that if somebody got a hold of this could they program it in a way that would be nefarious [TP1].

The profession also needs to consider the appropriateness of traditional internal control

mechanisms in the evolving public accounting industry or whether new internal controls are

required to support the digital workforce tools being utilized. For instance, accounting firms

must consider the business processes, or combination of processes, that are appropriate for a

single bot to complete. This point is highlighted with the following quote:

Right now there’s policy and procedures to drive and incentivize the behavior of us in the physical workforce. In bringing in the bots it is a rethinking of policy and procedures on these new digital labor capabilities. So in bringing in the bots, do you need segregation of duties like you had before [CM1]?

Hence, it is necessary for firms to seriously consider the proper governance and internal

controls that need to surround automation in this new era of the public accounting profession.

CONCLUSION

The use of RPA is increasing dramatically. The purpose of this study is to gain a greater

understanding of the current and potential future use of RPA in the public accounting industry.

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To do so, we conducted interviews with highly qualified individuals to learn more about the

opportunities and challenges of using RPA. Our interviewees provide valuable insight into the

adoption of RPA, RPA trends, and how RPA affects accounting personnel.

Tax services appear to have more experience with RPA than advisor or assurance

services, though RPA use is increasing in all segments of the public accounting industry due to

the impressive gains in both effectiveness and efficiency resulting from RPA. Our respondents

indicate that RPA is not reducing head count as some are concerned that it will, but rather has

shifted labor to more value-adding tasks. As a result, employee satisfaction and retention

reportedly have increased. The change in labor tasks will require a different skill set for

accountants in the future, though the use of third-party software programs allows accountants to

create bots without extensive knowledge of and experience in coding.

Our interviewees indicate that the use of RPA will continue and increase as firms

discover new ways to incorporate RPA in their business practices. RPA implementation may be

further bolstered as it incorporates artificial intelligence. The changing technological

environment provides academic researchers with an opportunity to contribute to practice. By

collaborating with practitioners, academic researchers can assist the public accounting industry

by identifying challenges and solutions for RPA implementation in order to help firms more fully

realize the gains from RPA.

As with all research, this paper is subject to certain limitations. The primary limitation of

this paper is that RPA technology is changing at such a quick rate, the firms are having to adapt

very quickly. Thus, reported results may change as firms gain experience with RPAs. Second,

the use of RPAs is still in its infancy. Thus, statements about possible benefits and costs are still

largely conjecture. For example, the human resource costs and benefits may differ from what is

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reported here as the firms scale RPA within their service lines. This is a particularly important

area for future research as the implications for the accounting workforce are potentially quite

dramatic. Third, we limited our investigation to the large accounting firms. Future research that

studies the use of RPA at the smaller accounting firms is important.

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FIGURE 1Digital Workforce Spectrum

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Basic Automation

Robotic Process Automation

Artificial Intelligence