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THE CHANGING FACE OF AUDIT

Four ‘drivers of change’ and the three ‘major shifts’ would have severe ramifications across occupations, including CA.

The first driver of change is Globalisation. The world today is far more borderless than ever before. It has compressed both time and space. In the years ahead this is going to get accentuated and the world will shrink in size, time and distance.
You will see an umbrella body into which all the public accounting institutes of the world will be a member and any member of an institution holding a membership in the Global Umbrella will be eligible to audit any firm anywhere in the world. While this will open up global professional opportunities enhance worldwide quality; it could knock the bottom out of our profession if the accountants don’t stay updated.
The second driver is Society. In our generation, we have seen a shift from a joint-family to a nuclear family. In the coming years, you will see a splurge of broken families. Both the husband and the wife, keen on their respective careers, will place job ahead of family. It could be entirely possible for one of them to work in one part of the country or one part of the world and the other to work in another part of the country or another part of the world and possibly meet only over the weekends.
The result: children are likely to grow up on the lap of the grandparents. This trend will spawn a generation of young boys and girls, growing outside the periphery of the immediate family, who would swear by I-Me-My-Mine. The self would come first ahead of the firm. You will see excessive job-hopping at every level, including at the senior-most level. To retain the talent, you will have to meet their aspirations head on. Those of you who plan to be running the organisations of tomorrow will have to keep this in mind.
The third driver is Technology. The Internet has been the most significant 10X change of our time. Technology will continue to lead the drive of our profession in the coming years. With the cloud becoming ubiquitous, gadgets becoming smaller and savvier, audits will be taken over by technology entirely. With the population expected to touch 9 billion by 2015, about 6 billion and counting are going to be sitting on the Internet.
Audits will happen from remote locations with the client seated many miles away. Frauds will increasingly turn white-collar; the new fraudster would be the boy-next-door, well-dressed, well-articulated and well-educated. The challenge will lie in auditing processes rather than outcomes. Most companies will have mandatory forensic audits. Audits will be on real-time, rather than on post-mortem basis. Examinations of books of certain types of organisation will cease and in some will be far more intense.
Of course, while technology will put many things in auto-motion, it will neither kill the accountant nor the auditor. Instead, accountants and auditors with a knowledge and understanding of technology will kill accountants and auditors who don’t have a knowledge and understanding of technology.
The fourth driver is Demography. The remarkable advancements in modern medicine mean that people are going to live longer. Greater health consciousness implies that people are going to live fitter. People are growing to work well into their 70s. 70 will be the new 50. Retirement at 58 will not be the norm. The workforce, therefore, will have people spawning different generations: the twenties, the thirties, the 40-50s, the 60 plus and the 70 plus.
If you plan to run accounting firms in the 2030s the challenge will lie in ensuring that these different generations cohesively work. There will have to be a lot of give and take.

THE THREE BIG SHIFTS

Three mega shifts will drive professions in general and audit profession in particular. They are Intelligence, Societal and Emotional.

Shift 1: Intelligence Quotient

A man’s Intelligence Quotient will still matter in the profession. We will see a shift from broad generalists to quick-fire continuum specialist. In the world of the Internet, the Mr. Brains will be competing with Wikipedia. Today, if you are the CEO of a company or the Country Partner of an accounting firm, you don’t have to have an in-depth understanding of any specific function. I think that will change. In the years ahead, to make the cut, you need to be a specialist in a chosen area. If you specialise in those competencies that people value, it would be great. Alas, that alone won’t do. These competencies could fast lose value; once that happens, you need to specialise in another area.
It would be the age of the continuum specialist. One area (say GST) could be an essential competency for a few years. If you specialise in it, that’s good for you. But with time, as it becomes commonplace, something else will become the wave. It could be Integrated Reporting. At that point, you will have to jump on the new bandwagon.
You need to know why some competencies are more valuable than others. Some areas become valuable because they are rare or they are plain fashionable. While it is good to specialise in what the flavour of the day is, it would be better to go with where your heart is. It is possible that what you choose to specialise may not be the hot thing, but if you want to make a mark, you need to follow your passion.

Shift 2: Social Quotient

As technology spreads its tentacles, as we increasingly become a fragmented society, as an entire generation grows up outside the broad spectrum of a social family, we would look increasingly a lonely society. Even as you specialise in a chosen field and even as you tread a lonely furrow, it would be necessary to build bridges. Like I said, 6 billion people are soon going to be sitting on the Internet, connected to the rest of the world 24×7. Yes, to survive you will have to connect to the world and be a networked individual. You may or may not have met the other person, but you will do business through and with him. The social media is just the start of a new dawn.
Work will increasingly get done through and with people whom you will never get to meet in the flesh and blood. They will do an assignment for you and then move on to crack similar jobs for others.

Shift 3: Emotional Quotient

The I-Me-My-Mine society does not ipso facto mean that people will be chasing monetary rewards. Even as people will be working into the 70s, many would want to retire in the 40s to pursue passions that are dear to them. Also when they work, conspicuous consumption may not be what will drive them. It could and would be job satisfaction. People will opt for lower emoluments in so far as they can get satisfaction and enrichment in their work profile. If you are someone who would be running a profession in the 2030s beware: you cannot get and retain people purely through what you offer as money; you also need to provide enrichment in work experience.
Tomorrow’s generation will look beyond money; it will look at fame, at fortune, at speed, at learning and at a value system. You need to pack them all in your firm if you want to run one that belongs to the 2030s.

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