Future of Accounting Profession Three Major Changes and Implications

Busines s Reporting Future of Accounting Profession: Three Major Changes and Implications for Teaching and Research by Muhammad Azizul Islam, PhD (RMI T), CPA (Australia), C A (CA ANZ) Associate Prof essor & Team Lead er of Accounting for Social and Environmental Sustain ability Research Group, School of Accountanc y, QUT, Brisbane, Austral ia | February 10, 2017 | 5 The accountin g profess ion will face sig nificant ch anges in the nex t three de cades, and professional organization s, their m embers, and edu cational in stitutions sh ould respo nd. The three ch anges\u2014ev olving smart and d igital techn ology, continu ed globaliza tion of report ing/disclosure standards , and new form s of regulation\u2014a re also ma jor challenge s for the profes sion. Asso ciation of Ch artered Ce rtified Account ants (ACCA) re search\u2014 Driv ers of Change a nd Future Skills \u2014has expl ored the se important ch anges, expec ted to be encount ered by the yea r 2025. T hree are h ighlighted h ere: First, accou ntants will u se increasin gly sophisticated and sm art technolog ies to enhance t heir traditi onal ways of working, a nd these t echnologies mig ht even r eplace the tra ditional approa ch (see \u201cTh e End of th e Accountin g Profession as We Know It? \u201d). Smart so ftware sys tems (includin g cloud comp uting) will su pport the trend tow ard outsou rcing servi ces (including mor e oversea s outsourcin g), and greater use of soc ial media via smart tech nology will imp rove collaborat ion, disclos ure, engageme nt with sta keholders and broader co mmunities ( see ACCA res earch, abov e). Social m edia (including Facebook, Twitt er, and Go ogle search) wil l reveal mo re data (inclu ding alternative reporting , see BHP Billi ton Annual Rep ort 2012) than any corporate assurance rep ort and stake holders will u se tools to in terpret \u201cb ig data\u201d (see ACC A\u2019s Big Data: It\u2019s Power and Perils ). Second, con tinued globali zation will create more opportunities and challen ges for mem bers of the ac counting profession. While globaliza tion encou rages the free flow of m oney from on e capital m arket to anothe r, enhanced ov erseas outsou rcing activi ties and the transfer of t echnical and professional sk ills will simultaneou sly contin ue to pose th reats to resolv ing local pro blems (with diff erent cultur al, financial, and tax systems ). Accounting fir ms in the US, EU, and Au stralia are ou tsourcing ser vices to I ndia and Chi na for the purpose o f cost minim ization, whic h will create a shift in em ployment within the accou nting industr y in the West. A s globalization has already be en negativ ely impacted by Brexit a nd Trump\u2019s pr esidential v ictory, accounting profession als are likely to see themsel ves having a role in this tr ansforma tion (see Econ omist and ABC articles ). Third, increa sed regulatio n, and the ass ociated d isclosure ru les, will have th e greatest impact on th e profession for years to co me. For e xample, inc reased regul ation is immi nent because of massive ta x avoidanc e, transfer pri cing, and m oney launderin g as exposed via the pan ama papers (see Guardi an series). Many profess ional (tax ) accountants will be affe cted by intergo vernmental tax action to limit base e rosion and profit- shifting. Strengthe ning Organi zations, Adva ncing Econ omies Additionally, because of greater p ublic pressures a nd stakeh older expectatio ns, social a nd environ mental considerati ons are ge tting importan ce alongside e conomic co ncerns in con temporary o rganizations. W e see a range of s takeholder grou ps[i] includin g sharehol ders, workers, go vernmen ts or regul ators, non- governm ental organiza tions, media, and the com munity have a growing in terest in or ganizational so cial and environmen tal issues. Bec ause of th e widespre ad stakehold er concern and associated regulations to ward social and en vironmental considera tions, contemp orary organiza tions are f acing challeng es to find sustainab le solutions to deal with th e complexity of integratin g financial, so cial, and e nvironmental performan ce. Quite tied t o this, new forms of regu lation (suc h as integrat ed reporting IR>, which is required for South Africa n-listed co mpanies, an d supply chain transparenc y disclosures, wh ich are re quired for many Ca lifornia-b ased companie s) are emerg ing and mem bers of acco unting organi zations are a lready engaged in this transfor mation (see Jou rnal of Bu siness Ethi cs Study an d ACCA report, a bove). The regulat ory concer n for differen t social and env ironmental issues, along with the asso ciated me asurement and report ing complexi ties of these iss ues, has a llowed accou nting profe ssionals to open their minds to the possibility th at accounting has the capa city to change . The imp ortant imp lication is that all professi onal accountants will be expe cted to look beyond the nu mbers, wh ich will, in tur n, enhanc e collaboration s among members of multiple pr ofessions, in cluding accounta nts, do ctors, lawyers, en vironmental scientist, sociologis ts, and so on . Implicat ions for Teach ing Future acc ountants wi ll increasingly n eed educatio n in digital technology (in cluding clou d computing an d use of big data), gl obalizatio n (outsourcin g of account ing services), and evolv ing regulations (ta x regulat ion, new forms of c orporate report ing, integr ated reportin g regulation, and so on). T he ACCA r eport revealed that knowledge of digital tech nologies is th e key comp etency are a where professi onal accou ntants have s kill gaps. At present, accountants la ck knowledg e in transfo rmation of new disclosure regulations, new form s of disclosures, and awaren ess of the inte rconnecte dness of finan cial and no n-financial repo rting. Profess ional accountants will need the skills to pro vide more all- inclusive cor porate repo rting, which tells less a bout the numbers and more ab out the narr ative of the or ganization. Unfortunatel y, at the mo ment, few universities ha ve deve loped curriculu ms for accou nting stude nts in line with their future nee ds. Universitie s will need to de velop or inc orporate ne w units, su ch as cloud comp uting, big data, d igital techn ology, integrat ed reportin g, carbon emis sion accoun ting, and so on for account ing students. Professional a ccounting or ganizations sho uld consu lt with universit ies to collate experts/lec turers in the new a reas and run new courses . At the same time, unive rsities sho uld either inves t in existing f aculty members f or training a nd learnin g or recruit ex perts to coordin ate and lec ture new u nits. Implicat ions for Res earch Big accountin g firms are conductin g surveys on clo ud computing, big data, technological c hange, ne w forms of fraud a nd corruption , and corporate sustainabili ty in order to address th e ongoing an d future oppo rtunities and challe nges facing the profession. KPMG, for example, h as produced su rvey report s on cloud co mputing, fra ud/corruption /bribery, co rporate sustainab ility, and . A growing n umber of accounting aca demics are inv estigating m ore narrativ e corporate r eporting. A g rowing number o f accounting aca demics and their PhD s tudents are looking at s ocial and en vironmental sustainab ility issues and the associat ed global fram eworks, su ch as Global Rep orting Ini tiative Stan dards, , th e UN Global C ompact, Social Accountabili ty, and so on . Accountin g researchers ar e organi zing some national an d internation al conferenc es, such as CSE AR and API RA, to dissemi nate their findings to the wider communi ty. Professional a ccountin g organization s, including Cha rtered Acco untants Austr alia and New Zealand, CPA Australia, an d the ACCA (UK) are prov iding see d funding to aca demic resea rchers to inv estigate i ssues in line with future economic , technological , social, and en vironmenta l changes. Despite on going efforts by professiona l accounti ng organization s and acad emic research ers, there is a surprising ga p in resea rch that deal s with the ch anges that wi ll impact acc ountants and pr ofessional accounting organizatio ns. Future re search should drive indu stry collaborat ions and collabo rations betw een inter-disci plinary acad emic research ers in order to reveal strat egic respon ses to and pr o-active strateg ies on changes in d igital techn ology, the con tinued globali zation of s tandards, and new forms o f regulatio n and associated st akeholder expectation s. [i] Haque, S. and Islam , M.A., 2015 . Stakehold er pressures o n corpora te climate chang e-related accountability and disclo sures: Austr alian eviden ce. Business a nd Politics , 17 (2), pp.35 5-390 (can be viewed at: https://w ww.cambridge .org/core/jo urnals/bu siness-and-politi cs/article/div -classtitlesta keholder- pressures-on -corporate-cl imate-chan ge-related-acc ountability-a nd-disclosures -australian- evidencedi v/74215C61 82B535801 C3512A582 4BBADD) Like what you see her e? Subscribe t o The Latest , our customiza ble updat e sent ever y two weeks. Do you have a persp ective you'd l ike to share w ith the global profession? E mail Gatew ay@ifac.org to inquire about beco ming a Gatewa y contrib uting author. Join the Co nversation To leave a comment belo w, login or register with IFAC.org Walter Malschitzky May 16, 2017 Very good y our article DR Islan, con gratulations. I' ll try to rea d more ab out your´s a rticles. Mohd Arif March 25, 201 7 The new pr ofession more relating to IFRS, destru cting to ol d professional accountant/Pr ofessor/Resea rcher Muhammad Hadidjaja February 14, 2017 Muhamm ad Islam, I a ppreciate fo r your quick r esponse. M y comment rel ated to the part of Im plication for Research in the last se ntence of th e 1st paragra ph said:"and the challenges f acing th e profession ". Muhammad Islam February 13, 2017 Dear Muham mad Had idjaja, Your com ment relates to a diffe rent article. Muhammad Hadidjaja February 13, 2017 This surv ey ignored a var iable of a po ssibility in per forming fin ancial audit by the acco unting firms w ill be replaced by t he State Auditors who associated i n The Intern ational Organ ization of Sup reme Audit Institution s (INTOSAI ). The Account ing firms just pe rform th e current practi ces where th e private a ccounting firm conductin g the fi nancial audit by charging th e auditee wit h the audit f ee. The aud it fees have a n impact to the obj ectivity and ind ependency o f the accoun ting firm to the auditee. The State Auditors will ob jective and inde pendent to the private and pu blic audite es in perfo rming the financi al audit be cause the a uditees are free from a udit fee an d the salary of the auditors have been paid by Stat e or Govern ment. In th is chance I propose a su ggestion th at State Audi tors will replace the functio n of the a ccounting fi rms in the finan cial audit with th e purpose t o get the fu ll objective a nd independ ent audit.

Future of Accounting Profession Three Major Changes and Implications

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