DR. CONCHITA L. MANABAT l March 15, 2023 l Business Mirror
THE International Auditing and Assurance Standards Board (IAASB) cognizant of the impact of technology in standards setting, engaged in the disruptive technologies information-gathering and research to prepare it for technology disruption. The IAASB has the mandate to support audit and assurance quality and to improve its own position as global standard setter, it deemed to respond appropriately to the disruptive technology.
The data gathering included the engagement of a third party, Founders Intelligence (FI), in 2020. FI researched and analyzed the landscape of innovation activity in audit and assurance. It also conducted “Disruptive Technologies” roundtable encounters attended by industry stakeholders, technology entrepreneurs and corporate innovators. The research findings were presented to IAASB in January 2021 with proposed actions that the Board broadly supported highlighting the significance of:
- Identifying adequate resources and accountabilities on technology, both in terms of current projects and longer-term disruption;
- Building and maintaining a knowledge base and keeping the Board informed and educated;
- Incorporating technology considerations into current projects; and,
- Taking advantage of the available technologies for the IAASB’s own processes.
- In November 2021, the IAASB seconded Danielle Davies, a partner from a “Big 4 Firm,” as a staff fellow to focus primarily on taking forward the proposed actions from the disruptive technologies research. The scope covers:
- Development and maintenance of a knowledge base containing curated technology-related resources for IAASB members, technical advisors and Staff;
- Establishing and leading a Digital Advisory Group to provide broad and different perspectives to the IAASB;
- Performing research and outreach activities in relation to technology matters including roundtables and external presentations;
- Preparing regular articles and thought leadership including a “Market Scan” publication on different technology topics for regular external distribution; and,
- To have breakout sessions to identify ways forward for the initiative and prioritize focus areas.
- During the recent March 9, 2023, meeting of the IAASB Consultative Advisory Group, a presentation on the landscape of the “Audit and Assurance Technology Landscape” was presented with a chart.
- Evidently, the auditor and the entity are with varying degrees of development—low, moderate and significant. The trends from research and outreach activities may be summarized as follows:
- Consistent access to appropriate data (including for use in training AI) continues to be a barrier to greater and more widespread use of technology;
- Technology adoption lags innovation—people-related factors are a significant contributor including required skills/expertise, confidence, capacity and mindset shift;
- Artificial Intelligence and Machine Learning technologies are consistently identified as the most revolutionary and are increasingly used:
- To support risk identification and anomaly detection;
- To identify key terms in unstructured documents (e.g., leases, contracts); and,
- To perform predictive analytics to support forward looking procedures (e.g., going concern);
- Diverse views exist on the expected impact of Blockchain and related technologies—however Digital Assets are becoming more prevalent; and,
- Remote working continues to influence technology innovations.
Interestingly, if the trend is technology adoption in audit and assurance lags innovation, one may wonder what could be the technology landscape in accountancy education, training and continuing professional education. This is a major concern requiring serious consideration and focus.
As the profession of accountancy celebrates its 100 years in the country, it should look into the landscape of technology in the profession considering its major groups—those in government, in commerce & industry, in education and in public practice. Much has to be done.
May the Philippine accountancy profession’s technology adoption be aligned with the global trends.
*** Conchita L. Manabat is the President of the Development Center for Finance. A past President of FINEX and past Chair of the International Association of Financial Executives Institutes (IAFEI), she serves as the chairman of the IAFEI Advisory Council. She is a member of the Consultative Advisory Groups of the International Auditing & Assurance Standards Board and the International Ethics Standards Board for Accountants.