ICAEW: technology transforming traditional audit and enhancing quality of risk assessment in Africa
Technological advances are progressing at an exponential pace in Africa and transforming traditional audit practices. However, while digital transformation heralds a new era of innovation, especially in improving the quality of risk assessment, a critical element of all financial statement audits, significant challenges remain. This was the consensus of business leaders during a recent pan-Africa online event organised by global professional accountancy body ICEAW (the Institute of Chartered Accountants in England and Wales) (www.ICAEW.com).
The online event was held on 30 March 2021 and provided insight from a panel of business leaders who shared knowledge and views on the future of the accountancy profession in a world where digital technologies are transforming business models, industry sectors and the workplace.
Discussions focused on how disruptive technologies are evolving in the accounting profession, the ethical implications, and the strategies required for managing the risks associated with the emerging applications of technology. Panellists included:
- David Matthews, President, ICAEW
- Chemutai Murgor, CFO & Finance Director, East Africa, Standard Chartered Bank, Kenya
- Catherine Musakali, Founder of Dorion Associates & Corporate Governance Consultant, Kenya
- Walter Muwandi, CEO, CCG Systems, South Africa
- Dr Reynolds T Muza, Senior Partner, Harare Ralph Bomment Greenacre & Reynolds
- Ede Dafinone, Deputy Managing Partner, Crowe Dafinone and ICAEW Council Member for Africa
According to the panellists, the automation of audit processes, such as data analysis, will lead to greater consistency and give more opportunities to identify business risks. This will allow better planning of audit activities, especially during the current global crisis.
The panellists applauded government efforts to support the development of innovation and technology by providing the required digital infrastructure. However, while many African nations are embracing digital transformation, the panellists agreed that the adoption of disruptive technology has had a major impact on the workforce across the continent, and that care should be taken to not make many jobs redundant.
While traditional accounting has ancient roots, the tools and techniques used by the profession have always evolved. According to the speakers at the online event, accountants must be able to adapt and upskill to manage these technological changes, such as the need for increased knowledge of data analytics and cybersecurity, to remain competitive.
Ethics and professional judgement must also play a critical role in the digital age to ensure accountants continue to build public trust in business and uphold the reputation of the profession. Panellists agreed there is an opportunity for codes of ethics to be broadened to recognise the role of the accountancy profession in championing ethical principles when developing and applying technology.
The speakers also highlighted how the rapid growth in technology has automated many compliance elements of accountancy but increased complexity and risk. Such elements involve ensuring that a company’s financial matters are being handled in accordance with federal laws and regulations. They called for the creation and promotion of standards for how technological tools should be developed and implemented to reduce risk and make sure that benefits, such as reducing the effort needed and increasing productivity, are achieved. They also advised that audit teams need to be properly equipped with experts on different software applications and platform technologies to be able to inform clients on the strengths of their security.
David Matthews, ICAEW President, said: “Technology is transforming the accountancy profession. Automation technologies, in particular, will change the role of chartered accountants. As technology’s influence in the working world spreads, accountants will have to diversify their skills, and an increased focus on advisory skills will mean that accountants will often find themselves acting as the broker between technical experts and clients.”
Michael Armstrong, FCA and ICAEW Regional Director for the Middle East, Africa and South Asia (MEASA), said: “In the coming decades, intelligent systems will take over more and more decision-making tasks from humans. While accountants have been using technology for many years to improve productivity and deliver more value to businesses, this is an opportunity to reimagine and radically improve the quality of business and investment decisions.
“To realise this potential, our profession needs to imagine how new technologies can transform our approach to the fundamental business problems we aim to solve. Accountants that stay on top of technology trends, and can adapt to integrate changes, will be best positioned to leverage them for future growth.”
Ede Dafinone, Deputy Managing Partner, Crowe Dafinone, said: “The rate at which technological advancement is accelerating across industries in Africa is astonishing. And the implementation of such technologies presents a unique opportunity for economic development in the continent.
“Accountants have embraced waves of automation over many years to improve the efficiency and effectiveness of their work. However, technology has not been able to replace the need for expert knowledge and decision-making. Therefore, we must recognise the strengths and limits of this different form of intelligence, and build an understanding of the best ways for humans and computers to work together.”
The panellists advised audit firms in Africa to invest in digital initiatives, such as AI, blockchain, cybersecurity and developments in data capabilities. Investment in these initiatives will equip accounting professionals with the capability to expand their assurance services to deal with the new technology-driven risks that their clients face and safeguard their digital assets.
The webinar was attended by over 250 professional accountants, ICAEW students and members, as well as members of other professional bodies across Africa including the Institute of Chartered Accountants of Nigeria (ICAN), Institute of Chartered Accountants of Zimbabwe (ICAZ), Institute of Chartered Accountants of Ghana (ICAG), the Institute of Certified Public Accountants of Kenya (ICPAK), and the Pan African Federation of Accountants (PAFA).