Back in 2006, when I entered in CA profession, we were thought that CAs are expected to be perfect in their accounting skills, we have to verify from the view point of substance over form, consider materiality to form a true and fair view, etc. Accounting was considered to be all about accounting standards, be it IGAAP or IFRS, and about the disclosure requirements along with Balance Sheet, Profit & Loss A/c and Cash Flow Statement. While we were trying to cope up with the international standards during all these years, there were drastic changes globally in peoples approach in carrying out their business. Ideally, CAs role is directly related to the business environment of the nation. Which is to say that since the CAs are accountable for the businesses they audit or advice, they are also expected to understand the environment in which these businesses operate.
While the business owners were adapting to the new technologies and the latest modes of carrying out their business which included digitisation of the transactions, payments, communication, etc. CA curriculum in India have always been kept traditional. All these years since the independence, where the business developments have happened in a phased manner, in the last 5 years there has been complete change in the way business is looked at in India. People have been shifted to digital means to transact, be it marketing, be it sales, be it payments, etc. Having understood this, one has to realise the requirement for a complete shift in the curriculum of CA and the approach which should be deliberated for the CA students, from the old school to the Digital Era.
Why is this so important? Ofcourse, this would be the first question which anyone would get in their mind while starting this topic. We have always seen in Indian Bollywood movies that the cops arrive at the scene after the incidence is occurred and the mischief has happened. This culture remains throughout all verticals in India, including the professional environment. There was a time when the E-commerce entered the Indian economy, it was a welcome move where trading of products was moved from showrooms to cellphones, ticket booking was moved from windows to mobile apps, etc.
The Indian systems have, after deliberating on the subject have lately comforted themselves with the way E-commerce works, excluding the bureaucrats, who are still struggling to understanding the modus operandi, due to lack of training, again it is because of their curriculum which still remains old school. And now they have seen the shift again, a new technology has stepped in the economy, BLOCKCHAIN. Blockchain, having its own advantages, has its own way of functioning. Professionals in each field which include accountancy, technology, marketing, designing, and so on, need to understand this technology. One of its most critical and important changes which has even impacted the economy which functions with blockchain technology was introduction of CRYPTOCURRENCY.
Having understood that the cryptos have a huge impact on the economy of any nation, it is also important that the nation should understand the pros and corns both of this technology.
Blockchain is an accounting technology. It is concerned with the transfer of ownership of assets, and maintaining a ledger of accurate financial information. The accounting profession is broadly concerned with the measurement and communication of financial information, and the analysis of said information. Much of the profession is concerned with ascertaining or measuring rights and obligations over property, or planning how to best allocate financial resources. For accountants, using blockchain provides clarity over ownership of assets and existence of obligations, and could dramatically improve efficiency.
Blockchain has the potential to enhance the accounting profession by reducing the costs of maintaining and reconciling ledgers, and providing absolute certainty over the ownership and history of assets. Blockchain could help accountants gain clarity over the available resources and obligations of their organisations, and also free up resources to concentrate on planning and valuation, rather than recordkeeping.
Having said the above, the auditors in India would need immense training on the concept of blockchain and the Digital considerations which they need to keep in mind before commencement of any audit which is being managed in the Digital environment. Since internal financial control review is mandatorily to be audited and commented upon by the auditors in the report in case of certain companies, there it will be of utmost importance for the auditors to understand the controls which are being exercised by the client in the Digital Financial systems being maintained. This will have to be confirmed at each stage in each area. Without there being a proper and adequate training being given in this section, the auditors will find it difficult to understand and comment upon the IFC of the Company.
The stakeholders of the Company completely rely upon the report of the auditors, the stakeholder, being layman to the entire system of the Company, would need true and fair view to be given by the auditors for understanding the level of reliability on the accounts reported by the Company.
It is usually important that where the auditors are not technically sound, till they attain proper training on the subject, they should jointly carry out their audit assignments with proper technically sound and qualified professionals to have a comfort on the accounting systems. The regulatory body of the accountants should come up with the standards to operate and also audit in such environment which would give the accountants some guidance and reliability.
As a conclusion, the Digital Era in the accountancy should be taken as an opportunity by the newly qualified chartered accountants where they are much aware and comfortable with the entire management of the Digital Environment than the traditional firms operating in the market. Also, the traditional firms can closely work with the newly qualified chartered accountant practitioners to get a comfort on the accounting environment of their client if it is operating using the modern techniques as explained above. Mind you, this is not the end, its just a beginning of the new Era and having considered the entrepreneur aspirations in the new generation, there are a lot more changes in the environment expected in near future.