BCAS Vice President CA Chirag Doshi’s Message for the Month of December 2022

Chartered Accountant in the world of Technology

Accountants can play a valuable role to ensure broad public trust in technologies like Metaverse, artificial intelligence, OCR and Robotics.

Recording a transaction with use of technology may or may not provide sufficient appropriate audit evidence related to the nature of the transaction. A transaction recorded in a technology environment may still be unauthorized, fraudulent or illegal could be executed between related parties or incorrectly classified in the financial statements. Auditors will still be required to consider and perform audit procedures on management’s estimates, even if the underlying transactions are recorded with use of any other technology

Metaverse:

Metaverse is a collaboration of multiple technological elements, like virtual reality, augmented reality, and video, in which users finds himself in a digital universe.

Accounting firms will have to grasp this technology for future, who would have thought two decade back about the usage of emails, internet, whatapps and other social media technologies, who would have thought tax assessments to be faceless or tax fillings will be completely online.

Various areas where Metaverse will change the way accounting firms and accountants operate would be like client in-teractions in virtual world, training of new members in a digital universe, employee meeting or client meeting with a feel of in-person without travelling or incurring that time and cost, interaction with those charged with governance in a Metaverse environment and many more.

Metaverse is about transforming how humans experience the digital world with immersive media that appears all around us and it can be experienced in the first-person. Metaverse will create many new digital assets that will re-quire accounting measurements and disclosure methods that are fair.

Auditor of Smart Contracts:

Contracting parties may want to engage an assurance provider to verify that smart contracts are implemented with the correct business logic. However without an independent evaluation, users of blockchain technologies face the risk of unidentified errors or vulnerabilities.

Audit profession needs to start thinking about a) What types of skill sets does the profession need to remain relevant? b) What factors would impact assurance engagement risk? c) What would an assurance provider’s ongoing responsibility entail once a smart contract is released into a blockchain?

Artificial Intelligence (AI):

AI is one the fastest growing technologies been used around the world. Considering that AI effects the decision making in the area of sales and marketing strategies, human resource, allocation of resources, financial transactions and many other areas related to companies growth and expansion, it is imperative that auditors will play a key role in ensuring the reliability, accuracy and completeness of the data used by the system and its output.

Furthering the trust in technology could be a job for accountants, suggested Michael Izza, Chairman of Chartered Accountants Worldwide and CEO of ICAEW. IT issues are highly relevant to the accountancy profession and to char-tered accountants in future. “Somebody has to opine on whether or not the data is accurate; whether or not the data is complete, whether or not the data on which the world is building so many of its engines can be relied upon. And I think one of the roles of chartered accountants in the future is as the guardians of data,” said Mr Izza.

At ICAI also it is discussed that it is considered to be one of the safest and most secure information-recording and financial transaction mechanisms today, blockchain technology will now become part of the Institute of Chartered Accountants of India (ICAI). The Chartered accountants’ apex body ICAI has announced its decision to explore the use of blockchain technology in auditing.

My practical recent experience of Technology:

Recently I was talking to a technology development company and we were brainstorming on if we can create a loop where in if one can scan their vendor invoice (which could be different form and formats in respect of each vendor) and the system reads the invoice data, tables it, create a journal entry and records in my accounting system and the document is scanned and saved in the Document management system to be viewed later by management and auditor.
I got to know that such processes are possible with the combinations of OCR technology (which reads the data on the invoice) Artificial intelligence which will tabulate the read data in the correct field in the pre designed template and Robotics to enter the data in the accounting system or alternatively write API code to record the transactions.
With such evolving technologies our firms will need to develop relevant skills to be in the system for long.