Five Ways 3-D Printing Will Impact the Accounting Profession

Such printers fall into the broader categories of robotics and additive manufacturing that will, in this decade, drive another industrial revolution. It will result in less outsourcing of manufacturing overseas, lower costs for consumers, and a major changes in the “social contract” between companies and their employees.

We know this because it will follow the last two industrial revolutions – the manufacturing revolution of the 19^th Century, and the computer revolution of the 20^th. Both of those revolutions resulted in a surge of productivity, which in turn spurred profitability. They created new winners and losers in the stock markets, boosted middle-class entrepreneurs into the upper-middle class, and poured millions in new capital into the economy.

But these revolutions had their dark side, including changes in legislation and regulation that were necessary to accommodate new processes.   The poor generally got poorer as wages dropped, and companies often had to take up the difference by establishing company-sponsored healthcare, housing and retirement programs. Traditional jobs were eliminated, replaced by new processes that demanded new skill sets.

The situation for workers grew so bad that in Holland, disenfranchised workers took to dropping their wooden shoes – called sabots – into the machines to destroy them. This practice was the root of the term, “sabotage.”

And accounting was changed in ways large and small. One of the more significant changes was a dramatic increase in accounting fraud, as companies manipulated their numbers and inflated profits to lure investors, influence legislation and shield profits from taxing authorities. In the 20^th Century, such “innovative accounting” resulted in a substantial boom in the importance of audits and legislation that included Sarbanes-Oxley. And a decades-long battle – still raging – over the definition of nexus.

Closer to the present are the continuing accounting scandals, the most recent of which is the $1.2 billion accounting scandal at Toshiba, which has already cost Hisao Tanaka his job as chief executive and will have deep ramifications on future legislation. While not tied directly to 3D printing, it is indicative of problems likely to look in the near future.

It doesn’t take a crystal ball to see areas in which 3D Printing could change accounting in the 21^st Century:

• New accounting practices and specialty areas will be created to handle the unique needs of this digital manufacturing industry.
• Audits will be expanded, as the supply-chain/manufacturing/marketing/distribution models adjust to the new economy. One example is that insourcing – bringing manufacturing back to the US as the balance of outsourcing to insourcing changes. This, in turn, may result in less accounting for overseas operations, but expanded accounting for global marketing.
• Wealth management will be altered by a resurgence of the middle class and a new class of ultra-high income clients.
• Tax laws will change, resulting in greater complexity of both individual and business tax returns. One possibility, already being considered by the Commonwealth of Puerto Rico, is a Value-Added Tax (VAT).
• The social contract will change again, impacting human resources management. As workers are displaced, they will drop out of the corporate benefits envelope and into tax-supported government programs. Government will likely play a larger role in affordable housing, health care, and retirement programs.

And the list goes on. While accounting firms may not yet have a use for 3D printing as part of a standard practice, no one truly knows how this next generation of robotics and manufacturing will play out. What we do know is that changes in the technologies of manufacturing and business ultimately change accounting, and this technology will be no exception.