Traditional accountant must move with the times, or it is the end of the road
PRESS RELEASE 8-11-2018 – In 2020 we will have 40 zettabytes of stored data at our disposal, and it is predicted that after the launch of the ‘Internet of things’ in 2020 over 30 billion devices will be connected wirelessly and continuously exchanging data. In addition, the quantum computer and the latest developments in artificial intelligence point to data processing making great strides. The obvious outcome is a paradigm shift from exchanging documents to exchanging data and this will inevitably have a major impact on accounting information systems and, specifically, accountancy as a profession. This in a nutshell is the theme of the farewell address Professor Verkruijsse will deliver at Tilburg University on November 9.
Investors, financial analysts, employees, customers, suppliers, regulators, and lawmakers are demanding more and more information from businesses. They need that information to adequately respond to the rapid and big changes, as well as the issues, in economic life. Exchanging all this information is predicated on the accuracy of the data. Much of the information and many devices are controlled by organizations and only if internal management and control protocols satisfy the relevant requirements can the accuracy of the data be verified.
Framework of continuous control
According to Verkruijsse, the current data monitoring concept no longer matches technological developments. During periodic data exchanges accounting information systems must ensure continuous monitoring of data, and in this connection Verkruijsse introduces the ‘framework of continuous control’, which comprises four concepts: (1) continuous monitoring; (2) continuous internal auditing; (3) continuous external auditing; and (4) continuous data level assurance. These related concepts are not only relevant to accountants but also to management, which can use continuous monitoring to respond swiftly and adequately to discrepancies in production processes. Also, internal auditors will be able to identify risks quickly, and cost savings will be achieved. Research shows that in large corporations 75% of all manual audits can be automated in this way.
New role for external accountants
The traditional activities of external accountants are shifting ever further to the internal audit function. It is this function that will issue data accuracy statements; external accountants will have to redirect their focus to the metadata and metaprocesses within organizations, thus underpinning the accuracy statements issued by the internal audit function. Only by changing course in this way will traditional accountants be able to save accountancy as a profession from extinction.
Hans (J.P.J.) Verkruijsse RE RA is Professor of Accounting Information Systems at Tilburg University. He chairs the Toezichtsraad BIT, the Raden van Toezicht inzake betrouwbaar administreren, and XBRL Nederland, and he is a member of the SBR Beraad. His research areas include continuous monitoring, auditing, and data level assurance. He was a partner at EY, obtained a doctorate at Maastricht University, and was involved both internationally (IFAC/IAASB/IAESB) and nationally (CCR) in shaping the regulatory framework for accountants. He has published extensively on accountancy and IT auditing.