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Digital technology changing accountancy

Released at: 15:39, 21/11/2017

Digital technology changing accountancy

Photo: ICAEW

ICAEW technical sessions hear of skills crucial for accountants during Industry 4.0.

by Hong Nhung

Digital technology is transforming businesses and economies across the globe and increasingly affecting the accountancy profession, technical sessions organized by the Institute of Chartered Accountants in England and Wales (ICAEW) in Hanoi and Ho Chi Minh City heard.

Mr. David Lyford-Smith, ICAEW’s IT Faculty Technical Manager, emphasized that it is imperative for members of the profession to equip themselves with the necessary skills to deliver higher-value services or risk becoming marginalized by automation and artificial intelligence.

During the technical sessions, he shared the findings of recent research by ICAEW on how current digital technology trends are changing the accounting profession in terms of emerging business opportunities and challenges and also outlined its approach to helping industry professionals stay on top of the game.

Today, digital technology powered by the exponential growth of computing power opens up a whole new world of opportunities. This allows for unprecedented innovations in financial services, resulting in a higher level of operational efficiency and access to entirely new markets. A good example of the technology that is changing today’s global business landscape is “blockchain”, a system of universal entry book-keeping where a transaction or a single input of data can be easily viewed by or shared with many parties on the same network in a systematic and secure manner.

“If a marketplace or system is running on a blockchain, the nature of security assurance that is needed will change,” said Mr. Lyford-Smith. “You don’t need assurance that your asset exists or that your records agree with others’, because that’s certain in a blockchain environment. So instead the focus of assurance turns to the ties between the blockchain record and the physical world, and more generally to the economic reality of the transaction that is seen in the blockchain. For example, a blockchain might give you certainty over the timing and amount of a purchase of some goods, but it can’t assure you of the condition of those goods.”

Another example is the change taking place in the relationship between individuals and taxpayers and national tax authorities and the role of professional advisers, including accountants. A recent study by the ICAEW on the digitization of tax systems in seven countries shows that with greater automation and analytical capacity and based on connected database infrastructure, tax authorities can provide basic tax information based on self-contained data, and then send this to individuals and taxpayers for confirmation.

Electronic tax in Vietnam began to be deployed from 2009 and many agencies and businesses had turned to electronic declarations by 2015. “Electronic tax declarations have been implemented in Vietnam’s 63 cities and provinces,” said Mr. Phan Vu Hoang, Deputy General Director of Tax Consultancy at Deloitte Vietnam. “This new form of tax return brings clarity and reduces paperwork, helping taxpayers save a lot of time. The implementation of electronic tax in Vietnam has seen solid development.”

However, along with new opportunities comes the growing fear that the traditional approach to financial reporting and routine accounting tasks are steadily being taken away by automation and artificial intelligence, and members of the profession are not adapting to the new technological trends quickly enough to take advantage of new platforms and risk becoming marginalized.

According to Ms. Trang Dang, Head of ICAEW Vietnam, technology capabilities need to be applied into the specific business context in a way that provides value. As the pace of change in technology is typically faster than change in human behavior, even where capabilities exist, altering the way accountants perform their daily tasks can be a long process.

“To provide greater leadership in the exploitation of data, accountants may well need stronger technical skills around data and a greater understanding of statistics to challenge the method, assumptions, and output of predictive models,” Ms. Trang added.

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