The accounting profession faces a dual challenge: a persistent talent shortage and an urgent need to adapt to a rapidly changing business world. 

As businesses struggle to fill critical roles, automation and artificial intelligence are increasingly viewed as answers to these challenges. These technologies have immense promise, particularly for automating repetitive and time-consuming operations, but they also raise serious concerns about their impact on the profession. 

Automation is ideal for handling many tedious activities that have historically defined accounting work. Technology can greatly minimize the manual burden in areas such as invoice processing and account reconciliation. Robotic process automation, for example, can handle routine bookkeeping duties, freeing up accountants’ time to focus on higher-value activities such as strategic planning and advisory services. 

Similarly, advanced AI systems can examine huge data sets, detecting abnormalities or patterns that would typically require hours of human work. In sectors such as fraud prevention, AI’s capacity to detect anomalous transactions in real time can help accountants examine concerns more effectively. These efficiencies are game changers for businesses dealing with talent shortages, allowing smaller teams to accomplish more with less. 

However, over-reliance on automation carries concerns that cannot be overlooked. One major concern is the possible lack of human oversight. While machines are great at processing and analyzing data, they lack the contextual understanding and ethical judgment human accountants bring to their jobs. Recent occurrences, such as the Macy’s example, in which an employee concealed delivery expenses for several years, highlight the importance of critical thinking and professional skepticism — qualities that technology cannot replace. Furthermore, as technology replaces entry-level jobs, the workforce risks becoming deskilled. New accountants may miss out on learning fundamental skills, resulting in a knowledge gap that could undermine the profession over time. 

The key to fully realizing the benefits of automation while maintaining the integrity of the accounting industry is to strike a cautious balance. Automation should be considered as a tool that complements, not replaces, human skill. By automating mundane and repetitive processes, technology allows accountants to focus on areas where their judgment, creativity and strategic insight are required, such as complicated problem-solving and ethical decision-making. Instead of removing entry-level positions, businesses could rethink them with automated operations and opportunities for hands-on learning. This guarantees that emerging professionals continue to develop critical skills while taking advantage of automation’s benefits. 

At the same time, businesses must prioritize continual skill development to keep accountants at the forefront of technology innovations. This includes providing them with skills in areas like business/accounting analytics and AI tools, ensuring they can not only utilize these technologies effectively but also analyze and act on the insights they provide. By empowering accountants in this way, automation complements rather than replaces humans. 

Instead of perceiving automation as a threat, the accounting profession should see it as an opportunity to rethink its value proposition. Accounting may be elevated from a numbers-driven discipline to one that provides strategic insights and demonstrable business effects through thoughtful integration of technology. Educational institutions play an important part in this process. By educating students on navigating and leveraging technology while encouraging critical thinking, they may prepare the next generation of accountants for a world in which technology and human expertise coexist. 

Automation and AI have the ability to address the accounting profession’s skills shortages, but their greatest value resides in allowing accountants to focus on the creative and strategic aspects of their work. By investing in a balanced approach, the profession may ensure that technology improves its skills while not eroding its core strengths. The future of accounting does not involve machines replacing humans but rather humans and machines collaborating to achieve more.

For years, Macy’s Inc. touted its ability to boost profits by cutting delivery costs and trimming other expenses on calls with Wall Street analysts. Then on Monday, the department store chain surprised investors by revealing that those very costs had become the source of an internal investigation into what the company has described as a multimillion-dollar employee plot to manipulate the metrics.

The retailer said the incident involved only one former employee, who had hidden as much as $154 million of delivery expenses since 2021. Cash was not taken from the company and the amount of hidden expenses is a small portion of the $4.36 billion of overall delivery costs incurred during that time. 

Macy’s said it discovered the hidden expenses while the retailer was preparing its most recent quarterly earnings release, which was set to come out on Tuesday but was delayed due to the accounting issue. 

The company said it launched a probe following the discovery but declined to answer why the apparently intentional accounting errors went undetected for nearly three years. Its auditor, KPMG, declined to comment. Macy’s also didn’t provide information on what the employee’s motive was, when the employee left, whether their departure was related to the events, or if the issue was being investigated by law enforcement. Macy’s hasn’t identified the employee.

Cutting the cost of delivering online orders has been a focus for the retailer in recent years as it aims to shore up profitability in the face of flagging sales. 

To that effect, the retailer has been diversifying shipping carriers, reducing the distance its packages are sent and spearheading what CFO Adrian Mitchell recently called “process reengineering initiatives” on the company’s August earnings call. 

A month later, Mitchell called the efforts one of the “key drivers in terms of expanding gross margin” at the annual Goldman Sachs retailing conference, where investors gathered to hear about the company’s turnaround plan under a new chief executive who took the helm earlier this year. 

Macy’s is getting “our delivery expense under control for a lot of customers that are going to be receiving deliveries to their home,” said Mitchell, who joined Macy’s in 2020 from the Boston Consulting Group. He has mentioned delivery expenses in all but one of the 16 quarterly earnings calls that he’s participated in since joining the retailer.

It was a major boon for the retailer and its finance chief, who told Wall Street in May 2021 that the “largest headwind” for profits was its delivery expense. At the time, Mitchell said that the delivery expense accounted for nearly twice the drag on profits compared to the same period in 2019. The more that people shopped online, the bigger the delivery expense line item ratcheted up.

Checks and balances

To be sure, the amount of hidden expenses by the former employee is a small portion of overall delivery costs. Macy’s has been focused on cost cutting across the company, not just delivery expenses. And there’s no indication that Mitchell and other members of the company’s leadership team were aware of the single employee’s actions.

But the discovery raises questions about the checks and balances Macy’s has in place to ensure accurate accounting of its business activities, particularly around a metric its chief financial officer was keenly focused on. Macy’s declined to make its CFO available for an interview.

One possible scenario is that an accountant at Macy’s could have changed the internal coding of delivery transactions to charge those payments to the wrong account, according to Adriana Carpenter, a former accountant at auditor PwC who now serves as chief financial officer of expense management software company Emburse. 

As a result, the payments may have been recorded as cash outflows, but the expense wouldn’t have been reported, said Carpenter, who does not have first-hand knowledge of Macy’s business practices. 

A large company like Macy’s typically has controls in place to ensure such a scenario couldn’t occur but it’s unclear if that’s the case in this instance, she added. Macy’s declined to comment on its controls.

The size and duration of the incident also makes it likely that the Securities and Exchange Commission is investigating or will investigate, said Jim Barratt, a former SEC enforcement accountant and founder of Barratt Consulting Group.

The SEC, which regularly reviews company filings for unusual disclosures, said it doesn’t comment on the “existence or nonexistence of a possible investigation.” Macy’s declined to comment on any possible external investigations. 

The disclosure also draws attention to the company as a whole, not just the unnamed employee singled out in the press release, Barratt said. “Accounting entries aren’t made by one person,” he said. “It takes more than one person.”

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The Internal Revenue Service introduced changes for 401(k) and IRA plans for 2025.

These changes include an increase in annual contribution limits for 401(k), 403(b), governmental 457 plans, and the federal government’s Thrift Savings Plan to $23,500, up from $23,000.

Some aspects of these plans will remain the same, such as the catch-up contribution limit that generally applies to employees aged 50 and over who participate in most 401(k), 403(b), governmental 457 plans, and the Thrift plan, which will stay at $7,500.

Read more about the notable 401(k) and IRA plan changes for 2025.

Source: IRS