Accounting Is a Job Software Already Does, and We Keep the Humans to Have Someone to Blame

I have argued that banking is obsolete because money is a number in a database. This is the companion piece, about the profession that exists to add those numbers up.

What Accounting Is

At its core, accounting is rule-following. There is a body of rules about how a transaction is to be recorded, which category it falls in, how an asset is depreciated, what may be set against what. A transaction arrives; the rules say where it goes; it goes there. At the end of a period the columns are summed and the sums are reported in a prescribed format.

This is a description of a program. Not a metaphor for one: it is literally the kind of task a program is written for. Deterministic rules, structured inputs, arithmetic, formatted output. Everything an accountant does that is actually accounting, a computer already does, and has done for decades, and does more reliably.

If you doubt this, look at how an accounting firm operates. The work is done in software. The humans feed the software, check what the software says, and sign.

What Remains

Two things remain, and they are worth separating because only one of them is real work.

The first is judgement about intent. Was this expense for business or for pleasure? Is this arrangement a legitimate structure or a scheme? Should this asset be valued at what was paid for it or at what it would fetch? These are not rule-following. They require a view about what someone was trying to do, and about what the rules were trying to prevent.

The second is liability. Someone must sign. When the numbers turn out to be wrong, someone must be the person who said they were right, so that there is a name to strike off, a licence to revoke, a person to sue.

Now look at the proportion. The judgement calls are a small fraction of the work and they are concentrated at the top. The liability is the whole reason the profession exists in its current form and size: regulation requires a licensed human to blame.

Why the Profession Persists

Not because the work needs doing by hand. Because the law says a certified person must attest, and the certification is controlled by the profession, and the profession has every incentive to keep the attestation mandatory and the certification scarce.

This is the same pattern as every institution that outlives its function. The function was real once. Somebody did have to add up the ledgers, and getting it right was skilled. The function has been automated, but the institution built around it has not gone away, because institutions do not go away. It has repositioned itself as the guarantor of trust, and it has arranged for that guarantee to be legally required.

The cost is paid by every firm that must hire an attester, by every citizen whose tax affairs require a professional to file a form a program could file, and by everyone who pays more for goods because compliance is priced into them.

What Doing Away With Them Would Mean

I do not mean that nobody would think about money. I mean three things.

The rule-following goes entirely to software, openly. Not software inside a firm that charges for access to it, but software the same way a tax calculator is software: the rules are public, the program applies them, anyone can check it.

The judgement calls go to whoever has to make them anyway, which is the people running the business, with the incentive that they are answerable for the judgement rather than able to buy a signature that transfers the answerability to a professional.

And the blame function is dropped, because it does not work. The large frauds of the last decades were all audited. The signatures were all on the documents. The existence of a human to blame did not prevent a single one of them; it provided, afterwards, a person to blame, which is a different thing and not one worth the price.

The Objection

Accountants will say that the judgement calls are far more of the work than I allow, and that the software only looks simple because they are the ones telling it what to do.

Some of that is true, and the honest reply is that it is true in proportion to how badly the rules are written. Rules that require constant human interpretation are rules that could be written better. A tax code that needs a profession to navigate it is a tax code designed, by a legislature with its own reasons, to need one. Simplify the rules and the judgement shrinks to the genuinely hard cases, and the genuinely hard cases do not need a profession of this size.

Which brings it back to the same place as the banks. The institution is large because the job has been made complicated, and the job has been made complicated by people who benefit from the institution being large. Untangle that and what is left is a program and a handful of hard questions.