Question

Electronic commerce and cloud computing have increased exponentially in recent decades. What might be some more recent trends that may be posing greater attention by accountants and auditors for these technology subject matters. Electronic data interchange and data imaging

Answer 1

The internet has evolved from a

platform that connects millions of

computers, into the network of

interactive computing platforms now

known as ‘the cloud’. It can deliver IT

resources (such as software

applications, computing power and

data storage) flexibly and efficiently

online, as a service. These resources

can be scaled up and down to meet

demand, and accessed anytime,

anywhere, from fixed and mobile

devices. Numerous services are offered

from ‘public clouds’, businesses are

creating their own ‘private clouds’ and

these are evolving into ‘hybrid clouds’

that meet spikes in demand with public

cloud services.

ADOPTION

Accountants and the organisations they

work with and for, are exploiting the

cloud - in business, practice and the

third sector. Accounting systems were

among the first software to become

available online where they (and their

associated data) have been joined by a

growing range of business ‘software as

a service’ (SaaS): from budgeting to

spreadsheets. Using cloud-based

infrastructure such as computers and

data storage can provide access to

unlimited resources without the need

for up-front investment, maintenance or

IT expertise. But the consumption-

based, pay-as-you-go approach is a

mixed blessing.

IMPLICATIONS

Cloud has the potential to deliver many

business benefits but these can create

opportunities and challenges for

accountants.

Opportunities

• Ease of access, scalability, data

sharing and collaboration.

• Reduced up-front costs and

management overheads.

• Fewer physical and logical space

constraints.

• Basis for developing new products

and services.

Challenges

• False perception that pay-as-you go

is ‘cheaper’ than other ways to

resource IT.

• Difficult to monitor/control/analyse

IT costs (particularly for

infrastructure).

• Inadequacy of traditional

approaches to IT cost/benefit

analysis.

• Expectation that IT systems will be

Big data

world creates 2.5 quintillion (1018)

bytes of data each day in the form of

barcodes, phone signals, digital

images, transactional databases,

personal location records, statutory

reporting systems, online searches,

radio-frequency identification tags,

social data, video clips, website visits,

and more. Converging technology

trends, the shift from analogue to

digital, widespread mobile device

adoption, internet-connected systems

and ‘exhaust data’ from physical objects

(the internet of things) are constantly

creating vast amounts of structured and

unstructured data. The ability to collate,

manage and analyse it effectively can

lead to better decisions and generate a

competitive advantage for business,

and the technology to do this is

becoming more accessible and

affordable.

ADOPTION

Amazon, IBM and Google are among

the organisations using big data to

business advantage by targeting sales

efforts and personalising products,

driving efficiency and quality, and

producing higher levels of customer

satisfaction and experience.

Researchers are exploiting big data in

aerospace, broadcast, genetics,

manufacturing, retail and transport.

Vendors of software for business

intelligence, enterprise resource

planning, sales management and more

are adding the capability to analyse vast

amounts of data ‘in-memory’, and

cloud-based platforms are emerging to

provide on-demand access to the tools

that organisations and individuals need

to tap into the ‘internet of things’ and

unlock the power of big data.

IMPLICATIONS

The profession’s trademark analysis and

problem-solving skills can help

accountants to manage the complexity

of the vast amounts of data being

generated.

Opportunities

• Improve understanding of market

conditions, forward planning and

risks.

• Potential to increase business

effectiveness and lower process

costs.

• Transform audit and forensic

accounting by improving corporate.

• Level playing field for small

businesses and larger organisations.

Challenges

• Shortage of data mining and

interpretations skills.

• Knowing which questions to ask to

gain insights.

• Affordability, interoperability and

standards.

• Obtaining high quality data. Lots of

data is not the answer.

• Data security, privacy and other

important legal issues.

ACTIONS

As every aspect of business and

personal life adds to the volumes

of information being amassed,

accountants will need to:

• apply their analytical and

critical skills to establish a

broader and more strategic

remit

• explore ways to manage the

increasing volume and

complexity of the data to be

analysed and audited

• help other parts of the

business to better analyse and

exploit data

• investigate new ways to

estimate cost and return on

investment.

Artificial intelligence

Artificial intelligence (AI) describes a

machine or software that can

demonstrate behaviour

indistinguishable from that of the

human brain. This is not yet possible

but there are many examples of

software that can demonstrate limited

‘intelligence’ (depending on how you

define this). Most of us have used

software that can emulate the decision-

making processes of an expert: lots of

software now has expert knowledge

built in and the capacity to ‘learn’ how

to improve its own processes and

performance. The internet is awash with

software agents (bots) that mimic

human behaviour as they make

independent decisions, learn and

interact with each other.

ADOPTION

Accountants increasingly rely on the

expert knowledge built into software in

a range of scenarios. Auditors use smart

software to automate parts of the

auditing process, and there are other

specialist applications to help with

compliance in areas ranging from

financial reporting to international tax.

E-commerce businesses are using AI

chat bots to gain attention, engage

users, and to act as sales people, as well

as FAQs and support agents: the bots

use sophisticated algorithms to

interpret natural language questions

and then deliver answers using online

chat or computer-generated voice –

they even integrate back into

accounting, CRM, and inventory

systems.

IMPLICATIONS

Smart systems, bots and other AI tools

can deliver benefits in business and

practice but, they can also create

opportunities and challenges for

accountants.

Opportunities

• Automating routine and repetitive

tasks and processes.

• Replacing humans with software-

based entities.

• Improving compliance and decision-

making.

• Delivering focussed services more

efficiently and effectively.

Challenges

• Deciding when to use professional

judgement/rely on software.

• Progressive de-skilling of the

accountancy profession.

• Managing expectations.

• Self-learning systems could become

more effective than expert

professionals.

ACTIONS

As AI technology and expert

systems become more

commonplace accountants will

need to become more adept at

monitoring, assessing and

exploiting them. Accountants will

need to:

• stay informed and know what

is possible

• assess the potential to

automate tasks and

procedures

• up-skill to take advantage of

the potential to focus on

higher value work.