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The revolution of new technologies promotes the development of human society. Information technology becomes the key to information and intelligence age, and it changed the economic environment and business behaviors. Social-economy transforms from traditional industrialization into the digital and global economy. In 2016, the digital economy entity nearly takes over half of the total GDP in many developed countries. For China, the growth rate of the digital economy has climbed to 16%.
Information technology is composed of the Internet, Big data, Cloud computing, Visual Realization, Blockchain, and Intelligence, etc. It is the way to use data efficiently and flexibly that becomes the essential issues for all business industry as well as accounting. For traditional business, it is generally physical economy based so that the auditors can observe the tangible inventory, capital flow, and information flow. However, the digital economy changes the service and inventory from tangible into intangible.
Where will the digital economy lead the accounting industry to? Some people believe that CPA should start transforming their roles to analysts, hereafter, expanding their business into consulting era; some believe that intelligence machine will replace CPA. However, Daxin Global believes that the transformation will not weaken the accounting industry function, instead, strengthen the professional competence of CPA. The goal and mission of CPA will never change because of the two value itself, professional value and social value.
Although intelligence computer can research and collect data, the result still needs CPA to analysis because it is a complicated process, with regard to specific situations, especially financial fraud. CPA undertake the risk to supervise Chinese economic construction, and it is hardly to imagine what the capital market will turn to without CPA.
Due to the significant development of the digital economy, it is important for CPA to take the revolution to adopt the digital business behaviors. Here are the six steps that Daxin advised.
1.The management system of the accounting firm should be changed. Through expanding the business scale, many firms choose joint reorganization. Although they achieve the business purpose, they don’t have a matured and integrated managing system and still run by themselves. This becomes the biggest issues to block their development. The company should build a shared network to centralize correspondence and data analysis, which will greatly improve the auditor’s working efficiency.
2.Auditor’s risk consciousness should be changed. The basic responsibility of CPA is ensuring the accuracy, completeness, and authenticity of accounting information. Digital business behaviors will increase failure of auditing, which is mainly due to the inherent nature of auditing objects, intangible, unobservable and unpredictable. There is no comparable reference, such as the intellectual property trade in the media industry. The motivation for counterfeiting is strongly driven by interests. Therefore, CPA needs to change the old concept and raise the awareness to prevent risk.
3.The audit tools and method should be changed. Information technology auditing usually takes over 40% of some financial company’s financial statements and 80% of internet enterprises’ financial statements. The old tools should absorb new concepts, such as auditing network, intelligent auditing robot and digital center. Advanced technology can easily help to increase working efficiency. It is faster and more accurate to use robot account assets, especially for biological assets and liquid inventory, furthermore, which can avoid fraud and control audit risk.
4.Audit theory should be changed partially. Audit theory will not be changed in general, however, digital development promotes the auditing theory, especially in the information age. According to the reports, over 90% of data is produced in recent two years, and the amount of data produced in 2012 is the sum of data produced over the past 3000 years. Traditional sampling method cannot be used to infer the sample size. There will be billions of accounting inflow information produced in a large corporation’s financial record. New theory should monitor and audit full data, and then find out the abnormal transaction through an analytical procedure. Advanced technology has to be used into a new theory to avoid CPA loose competitive advantages.
5.The structure of talents should be changed. CPA needs a higher education background, and the employee’s professional competence is vital to the development of accounting firms. The practice shows that independence and lack of professional competence are two reasons mainly for the failure of the audit, and the digital economy has put forward an unprecedented challenge to all accounting firms and auditors. The new theory of audit needs the employees who not only have the accounting and audit profession but also have the ability to research and analyze data. What’s more, accounting firms’ talents are mainly from accounting or auditing orientation, the single talents structure produces a great risk to audit failure. Therefore, it is necessary to build new management structure, especially to develop digital center, and hire a professional data analyst. Diversification is essential to achieve success in the digital economy era.
6.The mode of regulatory supervision should be changed. CPA industry is an interim organization subjected to strict supervision, including industry associations, financial departments and securities departments, etc. Under the flow of the digital economy, there would be many ambiguous issues. For example, the boundary between accounting and auditing responsibility, the identification of digital audit evidence, and the interconnection and interoperability of accounting reporting system.
Compared with the development of the digital economy and the informational degree of enterprises, the construction of the CPA industry is faltering. In the digital and global business environment, it is important for firms to study advanced technologies and keep diversified so that CPA can adapt currently business trends and get successes.