I left the world of audit and accounting nine years ago.
I started off in the Big Four world, as so many eager accounting students do. I left audit because I wanted to do something value-added rather than simply vouching and verifying transactions. For those of you not in the industry, the role of an auditor is to audit. Everything. (Vouching, in the auditing sense, is the process of confirming that a transaction actually occurred.)
I cannot tell you how many accounts payable files, invoices and bank statements I have gone through in my lifetime. (Hint: a lot.)
After a few more roles in the accounting and finance world, I launched my own business consulting and marketing agency.
In Part 2, I discuss the butterfly effect of blockchain on the roles of auditors and accountants.
Two ways blockchain will transform auditing forever
In my opinion, blockchain will create automation, instant verification, cost savings and efficiencies which will lead to:
1. Industry upheaval
Blockchain will eliminate the very scope of what most auditors are hired to do for the first few years of their career: mundane repetitive tasks. If vouching invoices and verifying transactions through bank statements and documents is no longer required, the entire auditing profession will become obsolete.
What will the new role of an ‘auditor’ be?
Will audit, as we currently know it, even exist anymore?
What will an audit ‘team’ look like in the future?
Will the role of auditors be completely transferred to technologists who will be able to efficiently audit the blockchain technology instead?
Phrased another way: will the role of an auditor disappear?
My opinion is: in the traditional sense, yes.
Auditors will no longer be ‘auditors’. I believe auditors should be using the critical thinking skills and problem solving techniques they learned in school to spend more time on projects that provide actual business insight and added value to clients such as business strategies that may a direct operational or bottom-line impact.
There will be a need for any transactions that are not recorded on the blockchain to be audited (such as the audit of the blockchain itself, valuation of assets, calculation of taxes, and any figures requiring estimates and judgment). However, I truly believe the time spent on verification and validation will drastically decrease — and I predict an entire industry being disrupted, or even completely phased out in the future, just like the Internet was the precursor to the death of traditional advertising.
Fellow CA, CPA Ryan Lazanis believes that “… the role of the auditor, and therefore the accounting profession would be completely transformed [with blockchain]. The role would, at best, be greatly reduced and at worst, be completely eliminated” (Techvibes).
There is also a trend in bookkeeping and accounting which proves a similar movement in audit is to come. Toni Scott, CA, CPA, now runs her own financial consultancy. As a CFO for hire, Scott often oversees the work of junior accountants for her clients.
According to Scott, “due to the automation of the traditional bookkeeping role, there has been a recent shift from being a ‘data entry clerk’ towards being a ‘data manager’. Since bookkeeping and accounting platforms perform many of the monotonous data entry tasks that a bookkeeper once performed, I now expect my junior accountants to take on more of an analytical and management role than before.”
2. Opportunities for smarter work
If auditors will no longer be required in the same capacity as they are today, then I hope there will be an opportunity for those in the audit and accounting profession to assume more of a business strategy, consulting and coaching role. Auditors could turn into ’business strategists’ and provide valuable services. Instead of verifying a sample of revenue transactions to bank statements, auditors could help clients ideate on ways to improve costing systems, generate more income, consult on internal processes and controls, and provide business insights and strategic direction, similar to the consultants at Bain, Accenture and McKinsey.
At least one accounting firm CEO agrees, and has stated that blockchain could potentially “…free up team members to do more of the high-growth, value-added, higher-margin business consulting and advisory business” (Inquisitr).
In a nutshell: blockchain will make auditors smarter
The ideological blockchain technology would function so that information on the blockchain cannot be modified and records can never be destroyed. Future generations may never have to vouch ever again.
Change doesn’t happen overnight. There is still a long road ahead when it comes to industry consensus and development of regulatory frameworks for audit and accounting firms to fully transform processes in every industry.
But there is no question in my mind that the audit and accounting industry will be elevated to play a more strategic role. The sooner we start working on these initiatives, the sooner we can stop delegating glorified administrative work to ambitious, career-hungry employees who are starting out in this field.
Interestingly, all Big Four firms have proactively taken leadership roles in the blockchain revolution and even offer blockchain consulting services. However, I hope decisions makers at Big Four firms will start the conversations about changes that need to be made within their own walls too. What will the role of junior staff look like? How should we train them? Will Big Four firms need to revamp their training to mirror those going through a MBA?
Ultimately, blockchain has huge implications in the long run as the auditing and accounting students starting out in the labour force will be relieved from performing routine verification duties. They will be able kickstart their critical thinking and problem solving skills earlier than those who came before them — which will inherently help them become better thinkers and stronger leaders.