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We are officially in the era of digital transformation where technology has greatly impacted audit processes. This has ushered changes that were hard to imagine as possible about a decade back. While the accounting profession has by and large embraced technology in various processes, it was restricted to the documentation, calculation, stor age and retrieval process. However, this is all set to change as cutting-edge technology dons a greater role in auditing. The clamour for different reporting and financial statements has been growing, and technology has all the right answersv. Taking a leaf out of fintech companies for development of intelligent software Bookkeeping outsourcing company in uk. Processes that will be touched by technology will include those areas where it may be necessary for a machine to understand and use that knowledge to identify complex information. Fintech companies have been able to deploy automated solutions by leveraging the power of AI and machine learning. Auditing will similarly find a greater role for technology, beyond the present functions. For instance, technology has developed to a level where it is possible for AI powered systems to look at all the data of a company that is being audited and identify anything that is amiss. This will help auditors to turn their focus to flagged areas that need more of their attention. Evolving reporting requirements Bookkeeping outsourcing company Present audit reporting helps investors and shareholders understand the financial health of businesses. However, in the context of a data driven world with more and more information available, there is an increasing chorus for auditors to share additional information. Stakeholders are of the opinion that auditors possess more information, than what is actually reflected in the reports. And the demand is for more contextual information from auditors about how a specific conclusion was made or arrive at. Readers want to know how the auditors arrived at a conclusion. This open the floodgates of confusion. Auditors crunch numbers and make conclusions, expecting a reader to do the same is an invitation to chaos. However, technology has the ability to present relevant information in the right form for dissemination, that is in alignment with the overall findings/conclusion. Impact of revisions and penalties corporate secretarial services in ukThe Financial Reporting Council released revisions to International Standards on Auditing (UK)[1], which had more to do with the Code of Ethics. This has great significance for auditors and by extension the companies that are being audited. The changed standards, despite being limited in scope can have implications for stakeholders. This needs to be read in the context of the fines levied by the FRC, on some of the top global auditing firms for misconduct. Even as the dust began to settle over the fines and the circumstances surrounding it, most of the iconic and respected auditing firms commenced an overhaul of their systems and processes, bringing in more technology driven processes to strengthen existing processes. This will be the order of the future, as auditors look towards technology for greater compliance. Moving from sample testing to testing of all transactions In the future, auditors will harness technology to carry out checks of all transactions, and not just rely on a sampling or random check of transactions. While the certainly humungous volumes of transactions may have come in the way of checking out all the transactions in the past or the present, this is all set to change. With the use of the right technology, not only will all transactions be checked, they will be completed at high speed, which means that the process of checking will not add to the time element. And this aspect of checking all the transactions will help auditors to gain more insights about the financial health and other inputs about the organization and the domain it operates. This will be invaluable to investors and shareholders who will now be able to understand reports on the basis of checking all transactions and not just a sample. Sampling has a probability of error, which will be corrected in the future. The need for speed The new techno-social order has turned time on its head. Processes that once took a specific period of time has now been shortened drastically. As a consequence, all other allied processes and procedures are also expected to commence/conclude at proportionate speed. Effectively, this has led to a cascading effect. Audit, resultantly, requires to be concluded faster than ever before. Manual processes do not stand a chance of delivering results at speed or with the accuracy and precision required. While it is impossible for technology, as it stands now, to replace the power of human intuition in tasks as complicated as auditing, many of the tasks that are repetitive or rote in nature need to be entrusted to technology and automated processes to be able to meet the deadlines. Leveraging the power of blockchain for cost effective audit processes Blockchain is the buzzword that will continue to hold sway over businesses well into the near future. And by virtue of being a distributed ledger, blockchain is the natural bedfellow for auditing processes. Auditors need not seek information or wait for clients or third parties to furnish statements, or any documents for verification and cross-verification. Auditors can simply carry out the verifications from blockchain ledgers. With the power of offering verifiable and immutable transactional information, these ledgers will save a lot of time and money, in addition to the assurance of offering information that is accurate and free from errors. This is basically, because the transactions themselves would have been carried out only after fulfilling the criteria or conditions of all –parties involved in the transaction. Analytics only as good as the data that is fed Analytics can be only as good as the data that is fed, which means that standards also need to improve so as to offer data that is of the right standard. While systems will be powered to detect anomalies over entire transaction history, the advantage of perception that is available to the human mind and the logic of perspective will be unavailable to technology driven systems. This will make it mandatory for records to conform to certain standards. The quality of the data and the processes or technology that is available to bring in the data from many sources needs to be advanced so as to prevent gaps in data capture and its use. The need for more regulations and standards Past processes had stakeholders trying to catch up with the regulations and standards. For instance, auditors and organisations had to fulfill or meet the standards and regulations as laid down and the need of the hour used to be a scramble to meet the standards. However, with changes in the way business is conducted, there are multiple issues which cannot be met or fulfilled by existing standards. This turns the whole equation of regulations and standards on its head. Regulations and standards are now expected to keep pace with the developments and evolving changes in the world of business. Till the regulations and changes are in place, auditors and businesses will have to work within the contours of existing regulations which may not be very easy considering the inherent differences among domains. Conclusion: Auditing is a proven facilitator for growth, in addition to meeting the requirements of accounting and financial reporting. While nations have their own set of policies about the size of businesses that need to be audited or not audited, it is a proven fact that auditing is one of the pillars of growth of a business. Technological innovations will assist the acumen of humans to bring about greater accuracy, improved reporting and faster conclusion. Auditing will not be limited to random checks but will encompass the whole history of transactions for specific periods. Contrary to popular belief, technology will not take the place of humans, but will help humans in their deliverables.

Outbooks-Brexit poised for a positive impact on the accountancy profession   

 

When the formal announcement came that the United Kingdom had voted its departure from the European Union (EU), there have been several components of the UK business scope that were shocked, and not the least of them was the accountancy firms. The Brexit decision carries a straightforward link to the accounting industry and the various dimensions in which UK accounting businesses can function in the long run. This is not really a case where we can say that everything about it is unacceptable. 

  

One particular aspect that will manifest itself as the companies formally disjoint from the EU is that businesses will start reviewing their choices to decide on the suppliers and could even move forward in forging better deals than what they had in place before. Moreover, they may push towards expanding their own lines to fulfill the prospects of the new demand for goods and products made in UK. 

 

According to a study commissioned by the AAT and ACCA, almost as half of the MPs voiced their affirmation on the imminent positive impact of Brexit on accounting firms. 47% of the MPs asserted that Brexit would be favourable and gain an approving headway as accountants would be in a position to advise their clients on the ramifications involved in getting out of the EU. Only 23% were of the opinion that Brexit does not really put forward an encouraging opportunity for accountancy while the rest 25% remained inconclusive. 

  

The survey also revealed that 55% of the MPs were convinced that the EU tax legislation needed to be reviewed right away, instead of waiting for Brexit to materialize. Only 18% of the MPs contradicted. 

  

The study reflected the confidence among the MPs about the possibilities of the accountants rising to the challenges brought forth to business by the unpredictability that ensued because of Brexit. But it is further vital to understand that politicians acknowledge the merits which the accountancy profession can bring about to the UK economy as it sets foot in one of its most significant periods of economic transformation. 

  

The impact of Brexit on accounting IFRS appears to be limited. This is a good point to know. Listed companies which are reporting under the IFRS standards must continue doing so by the EU regulation. But this is surmised to be included into UK law through the EU repeal bill. The requirements of EU for financial and non-financial reporting by different entities are present in the Accounting Directive and are covered already under the UK law. 

  

The study also looked into the matter of passport rights, which permits UK companies to render financial services within the scope of EEA. 40% of the MPs expressed their agreement over the necessity of securing auxiliary contracts for companies which are holding passport rights. 29% of the MPs were not convinced and 25% showed no inclination about this issue. 

  

The UK audit profession has undoubtedly benefitted from the use of globally acclaimed high-quality audit standards. It provides a good measure of international coordination across the audit business which is believed to be relevant to the market environment. The potential impact of Brexit on audit seems low, at least in the short-term. However, Brexit may grant an opportunity in revisiting a few of the amendments set forth by the EU audit reform. Although the probabilities for changes exist following Brexit, UK has been supportive in promoting recurrent retendering of audits of specifically listed systems. 

  

These changes have now been appended and agreed as part of a good practice. The likelihood and need for more changes, therefore, would appear to be narrow. However, it is conjectured that UK could reconsider the purview of typical facets of the EU audit legislation if these practices turn out to be unnecessarily burdensome. 

  

A good majority of the accounting laws that have so far been followed in the UK were primarily ordained by several directives that were also executed and administered by the EU. These ordinances comprised of the provisions defining the process of creation of accounting reports, the exact stage of their creation and various other features. The UK government will undeniably offer new directives which are akin to the ones held by the EU, but to what extent the similarities remain needs to be examined. 

It is familiar that opportunities go side-by-side with threats. For accountants, a dearth of relevant skills, post-recession in 2008 was already a big worry. With Brexit, the situation is probably going to be aggravated. Until now, British accountancy businesses employed accountants only from inside the EU without asking for an immigration authorization. But, in the wake of Brexit, employment assents may require an audit. 

 

Although such chances are bleak, a portion of EU accountants may at last need to surrender their jobs and return to their nation. A majority of accounting and bookkeeping services professionals voiced apprehension over jobs being shifted from the UK to EU. The principal concern seems to be over job stability, constricted opportunities, constraints associated with working abroad and a potential job loss as well when it comes to downsizing and cost-cutting. 

 

It may be a bit early to evaluate Brexit’s effect on accountancy employment. But it is being broadly revealed that in these questionable circumstances, businesses, more so the ones with solid balance sheets and accounting reports are implementing investment cost-cutting and recruitment freezes. This can kindle a more profound crisis in the UK productivity. 

 

Numerous reports have suggested outsourcing would be an excellent option and that Brexit would create a boom in the demand for bookkeeping outsourcing services as UK businesses progress forward to understand the situation. There would be a significant surge in workload connected with projections, revising forecasts, analysis of the impact on the markets, assessment of management figures, exchange rate disparities etc. There are many accountants who have already begun hiring surplus staff from outsourced accounting firms to deal with the liability of this extra paperwork. 

  

Accountancy outsourcing can be extremely advantageous to control the productivity amidst this period of uncertainty. It enables you to access qualified staff at lower fixed costs and flexibly move your practice ahead. This could imply proper sorting out of works related to compliance and self assessment tax  with the outsourced staff and focus on aiding and supporting businesses to tackle the challenges which Brexit has come forward with. Outsourced accounting firms can also assist you in quickly responding to the opportune chances without the restrictions of long-term employment contracts. 

 

The governance encompassing VAT application was previously decided by the EU since it was their proprietary concept. With Brexit, the VAT policies are most likely to be modified. Hence, this would have a direct influence on the companies’ accounting practices. It is expected that the government would design a system that is distinguishable from the VAT system because of the fact that VAT is a continuous source of extensive income generation for the country. 

  

Many of the consequences of Brexit remain obscure at this point, particularly around issues that focus on passport rights, tax and compliance. However, amongst all these apprehensions surrounding Brexit, one thing is very clear that in the coming times accountants have a crucial role to play with the sole objective in advising and assisting their clients on the financial and tax implications of the EU withdrawal. 

  

BY: AMIT AGARWAL 

 

London  

Suite 7, First Floor, Amba House,  
15 College Road, Harrow  
Middlesex - HA1 1BA  
Registration No: 10746177  

 

India  

Gurugram  
Unit No.110-111, Spaze IT Park,   

Tower b4, Sohna Road  

Gurugram, Haryana - 122001  

  

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