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IDAS and the Accounting Professional
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IDAS and the Accounting Professional


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Ever since the pocket calculator replaced the adding machine and the slide rule, accountants have been debating whether today’s accountant is less skilled than those that went before. The increasing …

Ever since the pocket calculator replaced the adding machine and the slide rule, accountants have been debating whether today’s accountant is less skilled than those that went before. The increasing reliance upon legislative compliance and ‘best practice frameworks’ has ensured that the modern professional must rely on the computer to carry out their tasks.

This session presents preliminary results from Micheal’s research into whether the sophisticated use of computers (‘intelligent decision aids’) to assist with accounting and audit reduces the professional’s judgment capability – their ‘know-how’. Micheal’s research draws upon interviews with 59 public sector auditors to identify whether this ‘deskilling’ is occurring.
The session identifies the driving forces behind this ‘deskilling effect’ (‘technology dominance), outlines recent research into the phenomenon (and in fact whether it exists or not), and identifies risk factors that may be at play in deskilling yourself and your staff if you rely on computers too much. Potential strategies to reduce this deskilling effect are also outlined and discussed.

This session should be of interest to any professional that relies upon a computer to help them with their professional tasks.

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  • 1. Intelligent Decision Aids and the Accounting Professional
    For CPA Australia
    IT Discussion Group25th May 2011
    Presented by: Micheal Axelsen Director Applied Insight Pty Ltd
    Some of the material presented in this discussion was supported under Australian Research Council's Linkage Projects funding scheme (project number LP0882068)
  • 3. About this presentation
    Identify deskilling and whether it occurs
    Identify strategies to mitigate effects
    The what and why of deskilling
    Recent research: How does deskilling ‘work’?
    Risk factors in deskilling
    Findings: Accountants in practice
    Mitigating deskilling
  • 4. Personal motivation
    Five years on CPA Australia’s Board Education Committee
    Twelve years on IT & Management CoE
    Observation in practice that accounting partners would gladly substitute cheap ‘push a button’ IDAs for expensive senior staff
    In the long term what does continued use of IDAs mean for the development of the profession?
    Position and qualifications
    Director of Applied Insight Pty Ltd; UQ PhD Candidate
    Former Chair of CPA Australia IT & M Centre of Excellence
    Bachelor of Commerce (Hons)
    Masters of Information Systems
  • 5. Expectations?
    What are your expectations from today’s session?
  • 6. The what and why of deskilling
  • 7. Key concepts
    Intelligent decision aid: software-intensive systems that integrate the expertise of one or more experts in a given decision domain (Arnold, Collier, Leech & Sutton 2004)
    Deskilling: a decline of auditors’ skills and abilities (Arnold & Sutton 1998)
    Declarative knowledge: definitions, examples and rules that are stored into long-term memory (Anderson 1993; McCall, Arnold & Sutton 2008)
    Procedural knowledge: the ability to apply and extend declarative knowledge and is acquired through experience - a key antecedent to expertise (Anderson 1993; McCall, Arnold & Sutton (2008)
  • 8. Key concepts
    Reliance: the degree to which a user applies and incorporates the recommendations of the IDA during judgment formulation (Arnold & Sutton 1998; Hampton 2005)
    System restrictiveness: the degree to which and the manner in which a Decision Support System restricts users' decision-making processes to a particular subset of possible processes (Silver 1988) – made up of:
    Physical (Chu & Elam 1990; Speier & Morris 2003)
    Structural - embedded internally within the system (Anson et al 1995; Desanctis & Poole 1994)
    Process (Kim  et al 2002; Wheeler & Valacich 1996)
  • 9. Ever seen one of these?
  • 10. Why might deskilling occur?
    Reliance by auditors on computers in the audit process is increasing (Dowling & Leech 2007; Leech 2008; Mascha 2001)
    Many benefits of IDAs are recognised, including training , efficiency, consistency (Elliott & Kielich 1985; O’Leary 1987; Rose & Wolfe 1998; Sutton & Byington 1993)
    Regulations and compliance frameworks are so complex we have to have a computer to remember them all.
    However there may be negative effects: IDA use in the long term that affect accounting expertise (Arnold & Sutton 1998; Dowling, Leech & Moroney 2006; Leech 2008;McCall, Arnold & Sutton 2008; Mitroff & Mason 1989)
    Embedded IDAs affect Tax compliance decisions (Masselli, Ricketts, Arnold & Sutton 2002)
  • 11. Benefits of IDAs
    Cover your backside in legal actions demanding rigour in the work – the ‘Your Honour’ effect
    Controlling junior staff, and risk management
    Increased efficiency
    Enforces good documentation and ‘rationale’
    Particularly helps us deal with the issues of an aging and shrinking workforce
  • 12. Computer says ‘No’
    Thank you, Carol
    However, as a professional remember it is up to you to use your noggin.
    A professional should be making a professional judgment call – this cannot be made by the computer
  • 13. Recent research: How does deskilling work?
  • 14. People are strange
    They’re not machines...
  • 15. Overview
    Braverman (1974) considered that the use of technology leads to degradation of work.
    Fearfull (1992) observed a divide between office workers that developed their skills pre-computerisation and those that developed their skills post-computerisation.
    Some relate the global financial crisis of 208/2009 in the over-reliance by auditors upon the use of technological approaches they did not understand (Fraser & Pong, 2009).
    Reliance by auditors on information systems in the audit process is increasing (Dowling & Leech 2007; Leech 2008; Mascha 2001), and this is confirmed by experience and observation.
  • 16. Cognitive load theory
    Experts and novices in a problem domain adopt differing problem solving strategies (Sweller 1988):
    Novices identified end goals and worked backwards from those goals through identified sub-goals using means-end analysis
    Experts eliminated the backward-looking phase (Sweller, 1988).
    Experts have acquired schemas as a result of their experience with past problems, whereas novices are forced to use generalised problem-solving strategies as they do not yet possess these schemas (Sweller, 1988).
  • 17. Cognitive load theory
    Decision aids tend to reduce knowledge acquisition relative to manual environments because aid users can substantially reduce the effort devoted to a task and let the aid "do the work" (Todd and Benbasat 1992; Todd and Benbasat 1994)
    Auditor knowledge is a function of ability, effort and experience (Awasthi & Pratt 1990; Libby & Tan 1994)
    A well established and tested theory of determinants of knowledge that suggests factors separate to those identified by TTD as contributing to deskilling
  • 18. Cognitive load theory
    After Sweller (1988); Libby & Tan (1994)
  • 19. Adaptive Cognitive Thought - Rational
    Declarative knowledge
    Declarative encoding
    Procedural knowledge
    Tuning (of production rules)
    Compilation (of production rules)
    Definitions, rules, examples
    Declarative knowledge acquisition
    Interpretive problem solving
    Procedural knowledge acquisition
    After Anderson (1993)
  • 20. Theory of technology dominance
    Arnold & Sutton (1998) developed this theory in response to the limited success of IDAs in the audit domain, and to see how IDAs might be more effectively designed for audits
    The longer an IDA is used, the higher the level of deskilling in this domain
    Continued use of an intelligent decision aid
    Level of deskilling in this domain
  • 21. Who am I going to believe?
  • 22. Risk factors in deskilling
  • 23. Determinants of auditor judgment expertise
    Libby & Luft (1993) and Libby & Tan (1994) consider that auditor judgment performance is a function of the auditor’s ability, experience, motivation and environment:
    Ability: capacity to complete information encoding, retrieval, and analysis tasks and to undertake problem-solving tasks related to the audit domain.
    Experience: the length of time that the auditor has been a professional auditor.
    Motivation: willingness to exert effort to deal with cognitive load (Rose & Wolfe 2000).
    Environment: judgment guidance and technological aid; hierarchical group settings; accountability relationships; sequential, multi-period tasks; and substantial monetary incentives for good performance.
  • 24. Towards a conceptual model
    Anderson (1982) considers declarative knowledge a pre-requisite to procedural knowledge.
    Libby & Luft (1993) consider ability, experience, motivation and environment to determine auditor expertise - the IDA is part of ‘environment’.
    Sweller (1988) states that experience in addressing the task is necessary to become an expert, whilst Todd & Benbasat (1992) notes that a tendency to ‘let the aid do the work’ reduces knowledge acquisition.
    Arnold & Sutton (1998) propose that continuous use of an IDA deskills the auditor.
  • 25. Conceptual model

  • 26. Pop Quiz: What matters?
    Does ‘Know-What’ Matter? Or is it ‘Know-How’ that matters?
    What’s more important for an accountant?
    Their ability?
    Their ‘passion for accounting’ (motivation)?
    Their experience?
    Sense check?
  • 27. Findings: Accountants in practice
  • 28. Accounting, do we have a problem?
    The monetising lure of the ‘junior burger’ effect
    Who will write tomorrow’s decision support systems?
    Set it up to ‘push a button’ – little fish in the sea
    Too many spreadsheets?
    ‘It’s like we had to learn how to audit again.’
    Over-purchase of inventory
    What could possibly go wrong with that - VAR
    The difference between risk and uncertainty
  • 29. Status updates: Interviewee statements (guided by Leximancer)
    “If I didn't have access to this office's IT enabled audit support tool, I would do the job in half the time.” (Senior Technical Specialist, Office B, >35 years experience)
    “And the IT-enabled audit tool also makes the auditor, if the auditor follows the IT-enabled audit tool and uses the IT-enabled audit tool properly, the IT-enabled audit tool makes the auditor always consider what the impact on the audit is, or what the risks to material misstatement is, so, there's a reliance on the IT-enabled audit tool in the planning phase, definitely.” (Senior Financial Auditor, Office B, 4 years experience)
    “The IT enabled audit support tool made the auditors lazy... made the auditors stop thinking and this office's change over to IT enabled audit support tool highlighted the fact that after 13 years of the prior IT enabled audit support tool that our auditors had to learn to audit again.” (Deputy Auditor-General, Office A, >25 years experience)
    Ability [Time]*:
    “I would say yeah, that relying on an IT enabled audit support tool would definitely affect my ability to remember the details of accounting and auditing standards.”
    * These are interviewees’ ‘backfilled’ comments
  • 30. Status updates: Interviewee statements (guided by Leximancer)
    “…one of the aspects that I've found interesting… has been around… directors saying directors no longer think, directors just tick boxes, and auditors saying auditors just fill in forms and do checklists, so the need to exercise judgment's gone away.” (Auditor-General, Office A, >25 years experience)
    “Yeah, that is the difference between the two IT enabled audit support tools, the old IT enabled audit support tool didn't require the auditor to think and the current IT enabled audit support tool does require the auditor to think. I liked the IT enabled support tool that required judgment better.” (Director, Office A, 9 years experience)
    * These are interviewees’ ‘backfilled’ comments
  • 31. Status update – preliminary results
  • 32. Mitigating deskilling
  • 33. Mitigation strategies in use
    Unfortunately for my research, people are smart
    Intuitively, we do tend to avoid deskilling at the extreme.
    When methodologies get too restrictive, they change the methodologies (i.e. ‘dumb the IDA down’). We rely on the computer less
    Intelligent Decision Aids in public sector audit offices tend to be ‘dumber’ i.e. not as restrictive (but there are some notable exceptions).
    Training is relied upon heavily as a mitigating factor.
    Selecting and retaining staff with a ‘joie d’audit’.
    Work review by senior staff
    Build up understanding from practice with small clients and thence to big ones.
  • 34. Other considerations
    Institutional blindness (can’t see the wood for the trees) can lead to a form of ‘creeping deskilling’
    Time pressures allow this less and less in some instances
    No matter what happens, the auditor’s role is in decision making, as is the tax accountant’s, and it comes down to judgment.
  • 35. Keep thinking!
  • 36. Conclusion
  • 37. Conclusion
    The evidence is showing that accountants are deskilled by over-reliance on intelligent decision aids.
    Deskilling is real, and deskilling affects professional judgment
    Rushing to implement expert systems may affect the development of professional skills in the long term
    Given that IDAs generally become more intelligent in response to compliance frameworks and regulation, there may be an argument for reducing regulation (yes, I know, good luck with that…)
    In your own workplace, ask yourself if ‘institutional blindness’ is happening
  • 38. Contact details
    Micheal AxelsenDirector, Applied Insight Pty Ltd
    m: 0412 526 375t: +61 7 3139 0325e:
    Applied Insight Pty LtdPO Box 603Toowong DC 4066AUSTRALIA