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Audit & Assurance
The Year in Review: A Look Back at Viewpoints from 2015
For the accountancy profession, 2015 was a forward-looking year. The need to attract and develop new talent, embrace rapidly changing technological trends, and demonstrate how the accountancy profession is playing a wider role in society were among the key themes we saw in our bi-weekly Viewpoint features. By and large, the profession is redefining itself in many different ways, and this was reflected in the views of our contributors, experts and leaders in their fields, who illustrated the message that change should be seen in light of the opportunities it presents. In this feature, we will take a look back at what we read on the front pages of the Gateway in 2015.
Attracting and Developing New Talent: A Workplace of Starkly Different Generations
In “Moving Forward, Together” IFAC® President Olivia Kirtley stresses the need for inclusion and diversity in the workplace, which is now indispensable as the accountancy profession becomes increasingly globalized. IFAC CEO Fayez Choudhury also stresses, in “The Importance of Winning the Beauty Contest,” that accounting firms must be cognizant of the idea that they must appeal to a new generation of young people with different skills, priorities, motivations, values, and approaches to work.
In order to foster new thinking, futurist James Canton encourages accountants to consider how they can revolutionize the profession and the workplace in “Create an Innovative Culture by Looking Outside the Profession." While building new talent is critical, in “The Importance of Revising the International Education Standards," former International Accounting Education Standards Board® Chair Peter Wolnizer stresses the importance of International Education Standards™ to address the global trend toward convergence and mobility of the professional accountant. Professors Klaus Backhaus, Hans-Jürgen Kirsch, and Christina Rossinelli, winners of the Academic Prize during the World Congress of Accountants 2014 in Rome, summarize their research on factors affecting the future of the profession in “Perspectives of the Accountancy Profession over the Next Decade—A Scenario Analysis."
Rapidly Changing Technology: Big Data, the Sharing Economy, and Predictive Awareness
We are quickly becoming a wireless society where data is instantaneous, ubiquitous, and effortlessly at our fingertips. Does this limit or expand opportunities for the accounting profession? Technology expert Brian Sommer says that “Big Data” has already embedded itself into all aspects of accounting. In "When Change Isn’t an Option but a Mandate: What Big Data Is Doing to Accounting," he highlights its potential in harnessing vital business information, financial analysis, and reducing fraud. IFAC’s Alta Prinsloo and Paul Thompson challenge readers to look at how accountants can embrace new paradigms in the collaborative, highly dynamic marketplace in "The ‘Sharing Economy’ Presents Challenges and Opportunities for the Profession." In Prepare for the Future Using Predictive Awareness,” Futurist James Canton advises that the accountancy profession must pay close attention to emerging technologies and develop “predictive awareness” to identify opportunities for new products and services, and better prepare for what the future may hold.
Society and Environment: Accountants as Stewards of Greater Public Value
The skills and experience of accountants are needed everywhere in society. There are problems to be solved and vital resources to be managed. Harvard University School of Business Professor George Serafeim calls for better accounting practices in the public sector. In "The Value of Accounting: The Case of Greece," he cautions that a lack of high-quality government financial information reduces accountability for decision making, distorts incentives, and leads to bad decision making in government. To demonstrate greater accountability to the public and global economy, IFAC’s Russell Guthrie calls for a more responsible system of international taxation in "Avoiding ‘Tax Chaos’ in the Globalized, Digital 21st Century."
With respect to the environment and corporate social responsibility, Institute of Management Accountants President and CEO Jeff Thomson calls for organizations in the United States to take up a greater role in implementing and realizing the benefits of the International Integrated Reporting Council’s integrated reporting framework in "Integrated Reporting Needs a US Strategy." Harvard University School of Business Professor Robert C. Eccles sheds light on the leadership needed from corporate boards to develop sustainable strategies in "Corporations, Sustainability, and Innovation: Early Results a Mixed Bag." Furthermore, in "The Risks and Opportunities Posed by Water Can’t Be Ignored—by Business, Industries, or Nations,” Sustainability expert Dr. Dorothy Maxwell explains how risks posed by water scarcity around the world translate into critical if not indispensable metrics that can be incorporated into management accounting and financial reporting. Water also took center stage in “The Complexity and Urgency of Water: Time for the Accountancy Profession to Step Up” by Prof. Tony Allan, Dr. Tony Colman, and Dr. Martin Keulertz.
Financial Reporting: Finding Common Ground, Seeking High Quality, and Shaping the Future
The accountancy profession understands the need for public input as a necessary and valuable aspect of the public interest. In this light, International Accounting Standards Board Chairman Hans Hoogervorst calls upon the profession to participate in considering the Conceptual Framework for International Financial Reporting Standards (IFRS) in “Help the IASB Shape the Future of Financial Reporting.” Reflecting on recent history in "What Have We Learned from the EU Experience of IFRS Reporting?", Institute of Chartered Accountants in England and Wales (ICAEW) Chief Executive Michael Izza says that the benefits of IFRS outweigh the costs, but we can still learn from jurisdictions that have recently adopted them.
Kenneth Yap, Chief Executive, Accounting and Corporate Regulatory Authority, notes the success of financial reporting as it has evolved in Singapore in "Raising the Quality Bar in Financial Reporting: The Singapore Journey." Accounting experts Gary Cokins and Larry White assess development paths for external and internal financial reporting in the US and Germany in "Looking Back to Assess the Present: Different Development Paths for Controlling in the US, Germany."
As financial reporting continues to improve around the world, Cindy Fornelli, Executive Director of the Center for Audit Quality, draws our attention to how the accountancy profession is fighting fraud in "An Abundance of Resources to Fight Financial Reporting Fraud."
The Accounting Profession and Economic Growth
Accountants have a variety of roles to play in the sound management of economic growth. In “Unlocking Global Growth,” David Thodey, Chair of the 2014 B-20 Infrastructure and Investment Taskforce, notes that International trade will also make increasing demands on investment and that the largest roadblock to increasing private infrastructure investment is the small number of properly assessed investment-ready projects.
Association of Chartered Certified Accountants Chief Executive Helen Brand says that accountants provide the necessary conditions for secure lending to happen. In "State of Business Financing: Hazards Ahead?" she notes that accountancy professionals will have an advantage in helping businesses raise finance for four very clear reasons. IFAC CEO Fayez Choudhury also discusses this in "Innovation in Financing SMEs: An Opportunity for SMPs," where he emphasizes the critical role that small- and medium-sized practices can play in assisting small- and medium-sized entities with securing capital. On the other side of the equation, ICAEW Chief Executive Michael Izza suggests that the accounting profession should develop a standard scope for an assurance report to allow different banks to obtain assurance on a consistent basis in "Reporting on Banks’ Regulatory Capital: A Role for Auditors?".
Finally, we revisit the longstanding question of auditor rotation in "Surprising Effects of Mandatory Auditor Rotation on Audit Quality" by Professors Kendall O. Bowlin, Jessen L. Hobson, and M. David Piercey, whose research study takes a different approach to assessing the effects of these mandates on audit quality.
What’s Ahead in 2016?
Although change can always seem daunting, we should never ignore the many opportunities it presents. How will the accountancy profession continue to find greater relevance in society? How will it adapt to changes in technology and public expectations? How will it continue to create new public, economic, and social value? These questions are every bit theoretical as they are practical.
On behalf of IFAC, thank you for helping us build the Gateway community in 2015. We invite you to share your views with us in 2016.
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