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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.

GDPR and accounts outsourcing: consequences of working with a non-compliant partner   



Within hours of GDPR taking effect, Google, Facebook, Instagram and WhatsApp were facing the prospect of being fined to the tune of $ 9.3 billion. It is hard to imagine that the tech giants had fallen foul of the data protection regime. This brings the spotlight on organizations that deal with data of EU entities. Regardless of the location of companies, the privacy law can impose penalties in either of the two tiers.  Before we take a look at the implications of working with a non-compliant partner for outsourced bookkeeping services, let’s first look at the relevant provisions and definitions of the GDPR regime. 


Data controllers – any business or organization that holds EU data, becomes a data controller. This effectively means that an organization that outsources any task to a third party, will be deemed to be a data controller if the task comprised EU data in any form. It is important to note that this will apply to any company regardless of its location. 


Data processors – any business or organization that processes EU data will be deemed to be a data processor, regardless of location. An interpretation of this definition means that all third parties that function as outsourced bookkeeping services, and handling the data of EU entities, will fall into the category of data processors. 


Responsibility of data controllers 

The regime clearly specifies the data controllers need to rely on the services of only those outsourced accounting companies (read data processors) that are fully compliant with the various provisions of the GDPR act. In other words, the onus of responsibility of ensuring compliance of the outsourced accounting companies (data processor) lies with the data controller. This effectively means that non-compliance by the data processor will also have implications on the data controller and the liability will rest on the data controller also, tax returns outsourcing. 


Extent of penalties 

The two levels of fines that can be imposed on entities – both data controllers and data processors are – 2% or €10 million/4% or 20 millions of total worldwide revenue of previous financial year, whichever is higher. The levels of fines are determined by the nature of violation of the GDPR act. Negligence is on the lower end of the threshold for fines while willful intentions are on the higher end of the threshold. 



Direct implications of dealing with a non-compliant outsourcing partner 



The most direct implication of dealing with a non-compliant partner is the penalties that may be payable in the event of a violation by the data processor (in this case the outsourcing partner). As mentioned earlier, the data controller (organization outsourcing the task), will also be held liable for the actions of the outsourcing partner. Irrespective of the level of fines, it is important to note that a 2% or 4% penalty on the worldwide turnover can be debilitating. 


Client confidence 

The imposition of a penalty under the GDPR act will shake the confidence of clients.  In an era of heightened competition, it is hard to imagine a company covering lost ground after having lost its reputation. Clients will certainly not look forward to the prospect of dealing with a company that is compromised on data security, either directly or indirectly. Additionally, clients would certainly not want to find themselves or their operations embroiled in the various processes that may arise as a result of the penalties. 


Impact on routine processes 

The impact of routine processes will be the indirect implications of non compliance with the GDPR act. For instance, a company that has been deemed to be in violation of the GDPR act will have to temporary suspend operations till the processes are set right. This disruption in operations will not only affect the company but will have an impact on the clients.  And clients will never be comfortable with the idea of having to sit out the suspension of operations till processes are set right. 


Will location of data processors make a difference? 

Contrary to perceptions that the location of financial accounting outsourcing services will have a bearing on the compliance, it is a fact that the processes will be the only governing factor.  For instance, a company may outsource to an outsourcing partner in the EU and still be fined, if the partner is not compliant with the regulations. A partner working out of a non-EU nation may be fully complaint and consequently may not attract any penalties. It is therefore the processes that matter and not the location of the financial accountancy outsourcing services. 


Potential intangible effects of penalties 

An organization that has been levied a fine due to the non-complaints of outsourcing partner, will find itself looking up at a steep increase in insurance premiums. Combined with the effect of disruptions in operations, and possible attrition rate of clients, this could deal a debilitating blow to operations. Companies need to therefore carefully consider the capabilities and compliance aspect of outsourcing partners. 


Compliance audit of partners to prove mitigating circumstances 

Organizations and companies that outsource tasks need to carry out a comprehensive compliance audit of partners. This will ensure that the Damocles sword of fines will not hang over the data processor or data controller. By insisting on compliance audit, organizations can preempt it disaster in addition to proving mitigating circumstances. Mitigating circumstances have an impact on the levy of penalties. The 2% and 4% calculations are the upper threshold of the fine. By proving intent to stay compliant organizations can ensure that they are not fined heavily. 


Organizations and companies need to have a robust system in place that will report an incident immediately to the relevant authority. These aspects need to be fully understood and followed to prevent adverse impact on operations. The primary responsibility of an organization that relies on an offshore entity is to ensure that the entity is compliant. In addition to this, it is necessary that resources are tasked with dual responsibilities – discharging the role of a data protection officer. 




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