accountant and the technological environment
IT is one of the core
competencies of professional accountants and requires special attention.
BY Mujahid Eshai, FCA
Jul 31 - Aug 06, 2000
Thirty years back when I was sent on my first audit assignment as a
junior articled clerk, the job incharge asked me to cast and cross cast 15 pages of a
sixteen column cash book. I hesitatingly asked him if he could teach me how to use the
"machine" that he had on his table and was used for calculations. He very
politely told me to "use your head, it will do you good," and refused the use of
Today a child grows with a calculator if not a computer and the
articled clerk / student demands that he be allowed the use of the computers in the
Change must take place and will take place. The only thing constant in
life is change. We must adapt to the changing times and we must recognise the oncoming
changes much in advance and prepare ourselves for the new requirements and use of
methodologies. However, human nature being what it is, change is always resisted and more
so in regions which pride themselves in ancient civilizations and culture and a history of
introducing learning and knowledge to the world.
The biggest change in the last decade and half has been the
introduction of Information Technology in our daily working and learning lives. More
change is inevitable. The question is, have we, the Professional Accountants, responded to
the change in an adequate manner and what measures have we taken to adapt our work
methodologies, our learning process and our vision of the role we are likely to play in
the next millennium which is expected to be the age of computer technology.
Paragraph 1, 3 and 4 of the Introduction to IEGII (Information
Technology in the Accounting Curriculum) released by IFAC state as follows:
"Professional accountants, in addition to extensively using
various types of information technologies often play important managerial, advisory and
evaluative roles in connection with the adoption and use of various information
technologies by organizations of all types and sizes.
----- Society expects that professional accountants who accept an
engagement or occupation have the required level of knowledge and can apply it to
practical problems. The accounting profession as a whole has the obligation to ensure that
candidates for membership possess the required breadth and depth of knowledge and skill
and the credibility of the accountancy profession depends on its success in fulfilling
this obligation. In addition, the accountancy profession has an obligation to ensure that,
after qualifying, members keep abreast of relevant developments through continuing
The body of knowledge and skill required of professional accountants
includes a variety of important areas. "IT is one of the core competencies of
professional accountants and requires special attention due to its explosive growth and
its rapid rate of change."
In my opinion, these three paragraphs sum up what is required of the
Professional Accountant to acquire the knowledge', skill and expertise to maintain its
utility in the world of business and finance.
Past and future
One of my colleagues on the IFAC IT Committee, Mr. Serge Yablonsky,
from France, likens the Professional Accountant to a candle maker and asks the question
"Are Professional Accountants the candlemakers' of the next century."
When there was no electricity the candlemakers' business was
prospering. But with the advent of electricity the candlemakers' business took a nose
dive. Everyone wanted electricity and there was lesser and lesser demand for candies. If
the Professional Accountant is not prepared to bring about and accept changes in his
traditional role, he is likely to meet the same fate as the
Traditionally, two of the most important activities required to be
performed by Accountants was Book-keeping and Accounting leading to the preparation of
financial statements and statutory audit of annual accounts. These roles, because of rapid
advancement of IT, have been affected of.
Disinter mediation / Internet / EDI
Event / Activity based Accounting
The statutory Audit is being criticised on account of:
The annual accounts being of historic interest
and often belatedly available.
The accounts being defined by the professional
accountant and not the decision maker
The annual accounts containing financial
The prospective investor, the stakeholder and the shareholder
Prospective data with follow-up and analysis
Non-financial information relating to
Comparison with competitors
Quality of management and operational human
Research and Development being undertaken
Quality of production
Quality of customers
Information regarding efforts to protect the
information regarding credit worthiness
service, including design of communication and
information systems, guarantee of original, reliable information (assurance) and
out-sourcing of administrative tasks, resulting in cost effectiveness and quality, of the
business, while taking new needs of the business into account.
An Audit which stresses on quality and relevance
of information, provides prospective information and is carried out on a timely basis.
The Professional Accountant therefore has to reorganize himself, his
education and skills to meet the requirements. Perhaps, the scope, the services, the
process and methods employed the tools used and the human resources deployed by the
Professional Accountant all require to be upgraded to meet the emerging challenges.
Competition for the Professional Accountant exists today from many quarters and the
possibility of meeting the same fate as the Candlemaker can turn into a reality. The
competition comes from software and IT companies, Banks and foreign colleagues.
So, what is required:
Because of the rapid use of the Internet, the consequent growth of
Electronic Commerce, the international usage of Credit and other bank cards and the growth
of International distribution companies, the Professional accountant has to be more aware
and open to the International regulations and would be required to organise himself into
international networks for client follow up: This may require small and medium sized firms
to merge into larger organisations with international affiliations.
The manner and style of reporting will have to change to become
management accounting rather than statutory or tax oriented and be in the language of the
decision maker. The Professional Accountant will be required to provide relevant financial
information in a style and form which can help rapid decision making. The stakeholder, the
prospective Customer and client are all interested in non-financial information and data
and what the business thinks it will be doing in the coming period (s). The Professional
Accountant must be prepared to report on these matters.
The Professional Accountant may be asked upon to design integrated
Management Information systems and Communication systems that are integrated with MIS.
The Audit will inevitably change in emphasis from purely financial to
information system and process audits. The Auditor would have to go beyond the financial
and historical information, hitherto stressed upon to comment on the quality and relevance
of the information being provided.
The Professional Accountant will in the new environment be required to
provide assurances in respect of the reliability not only of the information but also how
the same is being collected, maintained and processed. The professional Accountant may
have to offer services in respect of many outsourced administrative tasks. The decision
making being left to the decision makers.
There may be a school of thought which may not subscribe to the idea of
a changed scenario and role. It may be contended that taxation services will continue to
be required. Indeed they will be, but the emphasis would change from return filing to tax
planning. Technology advancement now enables the tax assesee to file his tax return
electronically and by telephone subject of course to the laws being simple and
straightforward. The requirement of statutory audits may continue but with a greater
number of Companies being listed, even larger numbers wanting to invest therein, and the
rapidly changing economic, fiscal and business scene, the need for receiving reliable
financial information on a quarterly, monthly basis, on-line, is going to arise. Will this
information be unaudited or audited? Who is going to provide the assurance in respect of
the financial information? Who is going to assure that the systems employed to collect
record process reproduce and analyse the financial information are reliable and
Electronic Commerce whether business to business or business to
cconsumer brings with it a host of issues and problems for the Professional Accountant to
attend to. The problems relate to accounting, auditing and taxation. Will the E-Com
software provide the necessary audit trail? Will there be an on-line audit of each
transaction? How will completeness of the accounting records be ensured? How will the tax
authorities be assured that all direct and indirect taxes have been paid? These and a host
of other issues emerge which will require the professional Accountant's attention and most
definitely a change in the scope, skill and expertise to provide the necessary services to
The Internet assurance services in themselves open up a new avenue for
provision of services. Competition is already emerging in this area. A multinational
banking Consortium "IDENTRUS" has been formed by 11 of the leading International
Bankers to provide security assurances for business to business commerce over the
AICPA (American Institute of Certified Public Accountants) have
developed a Web seal of trust for providing Web assurance services by its members. The
right of use the seal has also been sold to the Australian, English and Canadian
Institutes. The effort was under- taken to secure for the professional accountant a new
avenue of business and to remain a major player in the field of providing assurance
What do we do?
The SAFA regions' priorities, in the Technological environment, in my
opinion, should be.
i) to recognise IT as a core subject alongside
auditing, taxation and company law.
ii) to take suitable steps within their existing
entrance level syllabi and examination structures to ensure that the student of
accountancy is not only equipped with the general IT education requirements but is
adequately trained to become a user of IT
iii) to design and introduce curricula and examination
at the professional level to meet the requirements of IEG 11 in respect of developing the
accountant as manager of information systems, designer of business systems and evaluator
of information systems.
iv) to take effective steps to upgrade the knowledge
and skills of the qualified Accountants in respect of IT by offering post qualification
diplomas in IT through association with other recognised specialist international bodies.
v) to undertake efforts to develop a regional Web seal
and allied facilities for usage by the Accountancy bodies in the member states.
vi) to undertake research in the area of E-com
particularly taxation and based thereupon issue statements to highlight the issue and
offer practical solutions.
vii) to deliberate on and evolve a plan for delivery
of education through use of internet within and between the SAFA member bodies for
providing education to students and members of the professional bodies.
The author is Council Member and Chairman, IT Sub-Committee Institute
of Chartered Accountants of Pakistan