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2021-06
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Global and regional accounting professional organization dynamics
Accounting Professional Organization Development Consulting Group Discuss Digital Transformation
The International Federation of Accountants (IFAC) Accounting Professional Organization Development Advisory Group (PAODAG) organized at its most recent meeting to share its experience in the field of digital transformation and discuss the "digital readiness [1] assessment tool" launched by IFAC.
PAODAG pointed out that accounting professional organizations should invest in digitalization, because digitalization can not only ensure the continuity of core work, but also improve the efficiency, effectiveness and quality of member services. Moreover, since digitalization covers all areas including governance, operations, finance, human resources, etc., and can promote the creation of a bottom-up innovation culture in accounting professional organizations, so as to encourage employees and members to promote together with senior management and leadership Reform, accounting professional organizations should integrate digitalization into their strategic planning.
Regarding where to proceed with digital transformation, PAODAG suggested that accounting professional organizations can refer to the "Information and Communication Technology Guidelines" developed by IFAC and the "Digital Readiness Assessment Tool" launched by IFAC to conduct a comprehensive review of their own information and communication technology related fields to understand information Technological infrastructure and its components, clarify the direction of its own digital transformation and the most applicable methods to conceive digital solutions and confirm the affordability of costs.
PAODAG believes that technological advancement and digitization will enable the accounting industry to remain relevant. Accounting professional organizations should have greater technical tolerance and demonstrate the leadership role of the accounting industry in sustainable development and utilization, so as to maintain the attractiveness of the accounting industry. However, the nature of digital interconnection has led to an increasingly blurred boundary between work and life. Accounting professional organizations should consider that the new software may encourage new employees to work more efficiently, but it cannot replace the interpersonal interaction and interpersonal relationships that can give employees a sense of belonging and work motivation.
Finally, PAODAG hopes that the accounting professional organization encourages its members to take the lead in advancing the digitalization process in the practice process. Accounting professional organizations can refer to the "Business Transformation Action Plan-Road Map to the Future" formulated by IFAC to guide accounting firms to implement changes using new technologies. Accounting professional organizations can also use the "digital readiness assessment tool" launched by IFAC to try to increase synergy and transparency when exploring technical solutions, new qualifications, and new training methods.
(Original link: https://www.ifac.org/knowledge-gateway/developing-accountancy-profession/discussion/perseverance-purpose-power-what-digitalization-means-paos)
International Federation of Accountants discusses blockchain technology and the future of the accounting industry
The International Federation of Accountants (IFAC) website published an article discussing the impact of blockchain technology on the accounting industry. The full text of this article is compiled as follows for reference.
1. What is a blockchain?
Blockchain is a technology that can connect people or businesses directly or point-to-point. For the past 20 years, people have shared information through the Internet. Blockchain further enhances the interconnectivity of the network and provides users with a network that transmits value.
Unlike just exchanging information, blockchain participants can also exchange value point-to-point. Although most commonly used for Bitcoin and other encrypted assets, blockchain technology can also be used to support applications (such as decentralized applications) and complex programming (such as smart contracts). It is through smart contracts that blockchain makes it possible to carry out rights and property transactions and transfer activities easily and efficiently. Smart contracts can easily, cost-effectively and efficiently transfer car ownership or corporate shares and settle immediately, without the involvement of a third party (such as a bank or stockbroker).
2. Important features of blockchain: immutability and decentralization
An important feature of the blockchain is that everything stored on the blockchain will always exist, and the information will never change and cannot be deleted. This provides us with unprecedented transparency, meaning that if A owns something and transfers its ownership or value to B, the record that A once owned the item will always exist in the blockchain and cannot be manipulated-no one can Change. This immutability has led to blockchain technology often referred to as a "trust machine."
Another important feature of blockchain is decentralization. No one, entity, or government can own or control the information. This actually means that A, B and the next trader have a copy of all the information. In a decentralized environment, all participants can access the same information, and users can choose whether to share it. Information does not need to be aggregated and stored in a central database, because it can be stored anytime and anywhere, and can be directly controlled by the user, rather than by the enterprise that provides the service. Through decentralized transformation, even if information abuse, network attacks and hacking attacks have not completely disappeared, their chances will be greatly reduced.
Third, the relationship between blockchain and the accounting industry
Due to factors such as time difference, reconciliation and accounting entries, the audit needs to confirm the transaction information and balance recorded in the accounting ledger at the end of the reporting period.
With its feature of providing immutable transaction records almost immediately, the blockchain can automatically synchronize and share transaction information in every link, without transaction reconciliation, which is conducive to continuous audit activities. For auditors, this makes it possible to transition from regular or annual audits to continuous audits.
Since the blockchain allows simultaneous transaction recording and settlement during the transaction process, auditors can obtain data in a real-time, consistent, and regular manner. Real-time monitoring, rather than (selectively) testing and adjusting the transaction activities that have occurred, is a major difference from modern audit technology.
Due to the use of distributed ledger technology, blockchain technology does not need to enter accounting information into multiple databases, and auditors do not need to check different ledgers. This can save a lot of time and greatly reduce the risk of human error.
Because auditors need to evaluate the accuracy of complex accounting transactions through professional knowledge and experience, accounting data reconciliation cannot be fully automated through blockchain technology. The real-time accessibility of the same basic transaction information and related accounting data recorded by all parties to the transaction will greatly improve the efficiency of accounting data reconciliation and analysis.
It is conceivable that the combination of blockchain technology and artificial intelligence (AI) can create the ability to test the differences in real time through the implementation of analysis programs, without worrying about the loss of transaction data or the blind spots of the auditor's information analysis activities.
Fourth, look forward to the future
Blockchain technology is actually a ledger system. Its immutability and decentralization give it uniqueness, and its transaction recording function makes accounting practitioners familiar with it. In order to support accounting professionals in understanding blockchain technology, the Accounting Blockchain Alliance (ABC) [2] has prepared guidelines for the accounting activities of digital assets and currencies driven by blockchain technology. Many member organizations of IFAC, including the Institute of Chartered Accountants in England and Wales (ICAEW), the Institute of Chartered Professional Accountants of Canada (CPA Canada), and the American Institute of Certified Public Accountants (AICPA), are raising public awareness of blockchain technology and digital assets. Provide training for members and stakeholders, and provide guidance for blockchain and digital asset accounting and audit activities. The development of expertise and skills for blockchain technology and its applications will help ensure the relevance of the accounting industry and urge the accounting industry to be prepared.
With the continuous development of blockchain technology, new application scenarios continue to emerge. How to realize its prospects of improving transparency and accountability will depend on the accounting industry.
(Original link: https://www.ifac.org/knowledge-gateway/preparing-future-ready-professionals/discussion/blockchain-technology-shaping-future-accountancy-profession)
The International Accountant Code of Ethics Council warns of the professional ethics hazards caused by the rapid development of digitalization
Since the second quarter of 2020, the International Board of Ethics for Accountants (IESBA) has jointly established a working group with standard setting agencies (NSS) from China, Australia, Canada, South Africa, the United Kingdom and the United States and other countries and regions to discuss the impact of new crown pneumonia Major professional ethics issues caused by the impact of the epidemic in order to formulate supporting materials to assist professional accountants in effectively complying with the "International Code of Ethics for Professional Accountants" during the epidemic. This article excerpts the digital content for reference.
The risks arising from the rapid development of digitalization have become a major professional ethics issue, causing the public to worry about how accountants and accounting firms recognize, evaluate and respond to the threats to the basic principles of professional ethics and independence caused by technological development, application and implementation. A survey conducted by Gartner found that in Australia, 79% of small and medium-sized enterprises said they needed to buy more software to adapt to a future that increasingly relied on digitalization; nearly 50% of respondents believed that the epidemic directly led to continuous digital solutions Update iterations; even in the best case, the rapid development and transformation of digitalization will also give rise to many risks, and in times of crisis, these risks will increase exponentially.
For example, during the epidemic, unconventional and remote means were adopted, and new methods that used organizational and personal information more extensively and deeply were implemented, and global cybercrime and fraud were on the rise. In 2020, the number of cybercrime reports in the United States will double, and in the United Kingdom by at least 30%. Moreover, this severe trend cannot be improved during the economic recovery period, especially in the period when companies may ignore network security and related measures to continue to conduct business in a remote environment, highlighting integrity, objectivity, professional competence, diligence and due diligence. The continuing challenges faced by the basic principles of professional ethics such as confidentiality and confidentiality. In this case, professional accountants and accounting firms should consider carefully using the work of external experts to assist in identifying, evaluating and responding to new risks, such as cyber threats.
In addition, as countries and regions gradually recover from the epidemic, many companies may no longer fully return to offline office mode. Professionals (including accountants) will also choose to work remotely as much as possible. In order to continue to give full play to the flexibility of work during the epidemic. Therefore, professional accountants must deeply understand the impact of data analysis and other technologies on the business and pay full attention to the resulting professional ethics hazards in order to maintain the good reputation of the accounting industry.
At present, as online and offline office models are increasingly blended and mixed, when considering office models, professional accountants should also pay attention to human resource factors, especially the skills required in an increasingly digital environment, in order to practice effectively and compliantly. The accounting industry needs to invest more in the areas of professional competence related to technology and information systems. At the same time, in the online office environment, professional accountants should pay attention to the reality that new employees cannot interact with senior colleagues, and consider how to develop their capabilities.
(Original link: https://www.ethicsboard.org/news-events/2021-05/5-ethics-challenges-will-intensify-pandemic-wanes)
Accounting career trends in relevant countries and regions
Accounting career trends in relevant countries and regions
The Association of Chartered Certified Accountants and the Institute of Chartered Accountants of Australia and New Zealand jointly release the "Audit and Technology" report
The Association of Chartered Certified Accountants (ACCA) and the Association of Chartered Accountants of Australia and New Zealand (CAANZ) jointly released a report entitled "Audit and Technology", introducing the current and future technologies affecting the audit industry and the impact of such technologies on auditors.
The report pointed out that technologies such as robotic process automation, data analysis, artificial intelligence, machine learning, and distributed accounting will promote audit transformation, process updates, and improve audit quality and efficiency. At the same time, this has also prompted the audit business to shift from retrospective work to forward-looking work, providing customers with deeper opinions and suggestions. This means that digital technology has a profound impact on the audit business.
The advancement of new technology has brought great benefits to the audit business. A number of key factors have also promoted changes in audit technology, including rapid growth in data volume, changes in business models, automated transformation, and the need for proactive and forward-looking audit methods. . This requires that future auditors need to be proficient in digital technology and continue to provide services for enterprises with high-quality audits.
The report discusses the digital technologies that affect the audit industry, including the tools and audit systems available to auditors. These include: First, artificial intelligence frees auditors from tedious daily work and spends time on skill use, business training, and professional judgment. . The second is robotic process automation to automatically export or import financial process data to other financial processes, and consult multiple sources of information to assist in data processing. The third is the data analysis method to assist accounting firms in analyzing the full sample of historical transaction data, rather than sampling, so as to identify abnormal situations, conduct in-depth research on the most likely high-risk projects, and improve the ability to generate high-quality audit evidence. Fourth, machine learning will carry out retrospective analysis and forward-looking judgment activities, assist in the retrospective analysis of historical databases, compare with current data to carry out risk assessment, strengthen risk management, and discover fraud and uncertainty. The fifth is natural language processing, that is, the ability of computers to recognize and understand human speech, including unstructured data such as telephone recordings, board meeting minutes, or social media content. Sixth, as a subset of machine learning, deep learning can imitate human learning as much as possible through artificial neural networks to perform more complex tasks. The deep learning system has been commercialized by the "Big Four" accounting firms. Seventh is the widespread application of drones in commercial activities. The "big four" accounting firms have discovered the potential of using drones in the field of inventory monitoring, especially when the inventory is large or widely distributed. Eighth, distributed accounting technology helps auditors to return to the original source of auditing and generate abnormal reports from all transaction data. The current audit cycle may be replaced by more frequent and even continuous real-time audits. Ninth, the full utilization of cloud technology encourages enterprises to refer to unified data sources more and more to assist all users to obtain the latest information at any time, avoiding time lag or information inconsistency.
The full application of artificial intelligence and related technologies is likely to lead to doubts about the independence of auditors. ACCA believes that high-quality auditing requires auditors to maintain independence throughout the entire work process. At the same time, auditors can establish close contact with the audited entity to improve audit quality. So far, the data analysis method seems to be the most mature new technology, which has been applied to audit practice activities, especially accounting entry testing. The "Big Four" accounting firms have expanded the use of data analysis methods in risk assessment and income, accounts receivable, accounts payable and salary testing.
Small and medium-sized firms can also easily obtain data analysis tools at a reasonable cost. ACCA and CAANZ emphasize that the interpersonal relationship between auditors and clients cannot be ignored-because this is still the core of audit services. In addition to being proficient in digital technology, future auditors should have excellent project management skills and have the ability to adapt the changes that will occur.
(Original link: https://cn.accaglobal.com/content/dam/acca/pi/files/pi-audit-and-technology-cn.pdf)
The Institute of Chartered Accountants in England and Wales and the Institute of Chartered Accountants of India discuss the automation of financial functions
The Institute of Chartered Accountants in England and Wales (ICAEW) and the Institute of Chartered Accountants of India (ICAI) jointly released a financial function automation report, discussing how the financial function can create greater value through automation and the skills required by future accountants.
The report pointed out that companies hope that the financial function can maximize operational efficiency, reduce the time spent on worthless activities, and improve the financial reporting function to support faster and better internal decision-making. Automation is a key tool to achieve this goal, and therefore, has become a key goal of the finance department. Wider use of automation will inevitably have a significant impact on employees in the finance department, but this will encourage accountants to take on more interesting tasks and spend more time on higher-value tasks, such as data analysis and decision support. And strategic development.
The report believes that as the financial function changes, accountants also need to master more skills. To this end, the accounting industry has carried out skills improvement training and even introduced new accounting qualifications to give accountants more digital skills to carry out higher-level data analysis activities.
The report stated that key stakeholders should focus on the following three areas. One is to focus on the benefits of automation and share good practices. The benefits of automation include providing more accurate and timely data, improving internal controls and compliance, and encouraging accountants to engage in more interesting, rather than monotonous, repetitive tasks. The second is to encourage employees to learn new skills to adapt to changing responsibilities. The widespread application of automation will inevitably have an impact on employees' job responsibilities. The vast majority of jobs contain multiple different tasks, which often leads to redefining job responsibilities rather than simply canceling jobs. Digital skills are essential for accountants to be competent in changing responsibilities, and accountants must master digital tools. The third is to demonstrate the value positioning of different financial functions. The financial function department is shifting the focus of work to areas with higher value, and is working closely with the business function department to provide more opinions and suggestions. Accountants should use data to help identify problems in the business.
(Original link: https://www.icaew.com/technical/technology/technology-and-the-profession/automation-in-finance-functions)
The Institute of Chartered Accountants in England and Wales supports the business informatization of accounting firms through the data platform Engine B
The new crown pneumonia epidemic has greatly promoted the digital and intelligent transformation and upgrading of the industrial structure. In response to the epidemic, the Institute of Chartered Accountants in England and Wales (ICAEW) followed up with the changing trend of artificial intelligence in the accounting industry, increased capital in the artificial intelligence and digital data platform Engine B, and occupied a seat on its board of directors to provide information for accounting firms to conduct business during the epidemic.化Support.
The Engine B platform is derived from a series of research projects of KPMG. Its co-founder once decomposed the audit process into 18,000 different steps and realized that a large number of audit procedures can be completed through automated procedures. Since then, they have carried out a five-year automation research plan covering multiple projects of KPMG, and found that the biggest factor hindering automation is customer data. While obtaining customer data consumes a lot of funds for the "Big Four" accounting firms, it has also formed a competition protection mechanism, resulting in companies that intend to innovate in the field of auditing and taxation to create hundreds of different data sources. This is the origin of the creation of the Engine B platform. The Engine B platform, in cooperation with many organizations such as ICAEW, assists accounting firms and organizations in faster data collection and classification activities through data models and dynamic knowledge graphs. To this end, its co-founders discussed common data requirements with a number of accounting firms. After the accounting firm clearly expressed its willingness to cooperate in the field of auditing common data models, the Engine B platform was established after consultation with regulatory agencies. ICAEW is one of the shareholders, ensuring that its members provide opinions and suggestions when developing the data model.
Based on a general audit data model that integrates artificial intelligence elements, the Engine B platform has many advantages. The first is to promote the automation of audit work and improve audit efficiency. The second is to assist accounting firms to improve the efficiency of acquiring, collecting and sorting out customer data, which greatly reduces the workload of the data analysis team. The third is that ICAEW will ensure that the purpose of the platform—opening the professional service market, creating open source data and common data models, and promoting automation—will not compete with the accounting industry.
The Executive Director of ICAEW Membership and Shared Services said that the Engine B platform will promote the transformation and upgrading of the company's transaction and data acquisition methods, and support and help ICAEW members to continue to develop in the digital economy.
(Original link: https://www.icaew.com/insights/viewpoints-on-the-news/2020/nov-2020/data-models-an-engine-for-growth; https://www.icaew. com/insights/viewpoints-on-the-news/2020/oct-2020/icaew-increases-investment-in-engine-b-takes-board-position)
The American Institute of Certified Public Accountants and the Canadian Institute of Chartered Professional Accountants discuss how automation and artificial intelligence can change the responsibilities of auditing and auditors
The American Institute of Certified Public Accountants and the Canadian Institute of Chartered Professional Accountants discuss how automation and artificial intelligence can change the responsibilities of auditing and auditors
The American Institute of Certified Public Accountants (AICPA) and the Institute of Chartered Professional Accountants of Canada (CPA Canada) jointly released a report entitled "Data Driven Auditing: How Automation and Artificial Intelligence Change Auditing and Auditor Duties", pointing out that automation, artificial intelligence and computers are As an enabling tool. Although it cannot replace the auditor, it will change the audit and auditor's responsibilities.
The report pointed out that artificial intelligence technologies, such as face recognition, are changing our daily lives and work. The auditors who provide auditing and attestation services have keenly felt this and hope to keep the same frequency with the new technology.
The use of automation and data analysis technology is the first step for auditors to achieve artificial intelligence audits. Like previous digital development achievements, artificial intelligence will perform repetitive tasks, improve work efficiency and quality, and encourage auditors to make better use of their knowledge, skills, and professional judgment. Through information automation, auditors will spend less time collecting, associating, editing, and summarizing information, and invest more time and energy in analyzing and evaluating the results or impact of information and data, so as to gain a deeper understanding of the audited entity for the purpose of auditing. Determine the audit method as early as possible in the early stage of the work.
The report believes that in the future, there may be many changes in the financial report audit. One is that the audit team will be composed of cross-professionals, including auditors, non-auditors and other professionals. The skill framework of auditors will also change, and audit and assurance professionals need to master more data management and machine learning skills. Second, because of the ability to analyze a higher proportion (even up to 100%) of transactions and data, new technologies may continue to widen the gap in public expectations for the accounting industry and raise the threshold of "reasonable assurance". Third, artificial intelligence tools may cause problems with audit sampling procedures. For example, when performing substantive procedures, if all the data are reviewed, the number of outliers will greatly increase. If the auditor is unable to design procedures with sufficiently precise parameters to avoid dealing with these outliers, sampling may be more effective. Fourth, given that multiple audit tasks can be carried out automatically or at the same time, each audit step will be completed more quickly, with continuous audits (such as monthly, quarterly, or other relevant time) or real-time audits and reports (such as when transactions occur) May become mainstream.
In addition, with the development of artificial intelligence and the application of artificial intelligence tools in auditing clients’ workflows, new types of attestation services will also emerge, including the issuance of attestation reports on customer artificial intelligence tools, and the issuance of customer artificial intelligence tool controls and processes. Attestation reports, attestation reports on whether customers are using artificial intelligence correctly, and attestation reports on artificial intelligence-driven robotic process automation (RPA) applications, etc.
(Original link: https://www.aicpa.org/content/dam/aicpa/interestareas/frc/assuranceadvisoryservices/downloadabledocuments/the-data-driven-audit.pdf)
International Accounting Company News
International Accounting Company News
Ernst & Young discusses the transformation of internal audit through lightweight digital audit
In view of the fact that the audit industry clearly accelerates the digital development and promotes the digital transformation of the industry. Many companies also regard digital transformation as a key work objective. Under this circumstance, digitalization of internal audit has become an inevitable development trend, and internal audit departments of companies have all started digital transformation.
Ernst & Young pointed out that many companies encounter difficulties in the digital internal audit process. First, they lack experience and cannot start. Even if the urgency of digital transformation is recognized, the company's digital internal audit talent is scarce and the team is immature, making it difficult to implement digitalization. It is more difficult for third-party suppliers to understand the business risks and audit requirements of the enterprise in a short period of time. The second is that the data is messy and cannot be analyzed. Due to problems such as old systems, inconsistent data between systems, and missing parts of the system data, internal auditors often cannot obtain the data required for the audit or cannot directly use the obtained data, causing them to spend a lot of time collating data that meets the requirements of digital audits. The third is huge investment and weak flexibility. The internal audit system has a long procurement or self-development cycle and large investment. Although the digital audit system can identify important risks and issue monitoring and warning information in a timely manner, its flexibility is relatively weak, and flexible audit methods cannot be adopted when business risks change.
To this end, Ernst & Young puts forward the concept of lightweight digital internal audit, integrates digitalization into daily work, and assists companies in solving the above-mentioned problems. First, the core of digital internal audit is not technology, but digital thinking. Enterprises should create a digital internal audit atmosphere and gradually shift to digital internal audit thinking, so as to encourage existing internal auditors to learn how to achieve digitalization in daily audit projects and realize automated auditing or real-time monitoring. Second, through the data quality problems faced by the enterprise, the management of the enterprise should find the root cause of the problem, promote effective data governance of the enterprise, consolidate the foundation of digital transformation, and realize the promotion of construction through review. The third is to use lightweight digital internal audit, such as robotic process automation, data visualization, data analysis and other tools to create and update digital internal audit models.