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It’s everywhere that demands the strong engagements of professional accountants
CPA Montly CoverageIt’s everywhere that demands the strong engagements of professional accountants Meet Rachel Grimes, President of IFAC, By Heui-jin Seo, CPA Plugged into the fourth industrial revolution, accountants have been pointed out as one of the jobs that will cease to exist in the face of rapid technological advancements. Do these kinds of views come from those who consider CPAs as ones who are just specialized in simple matching of numbers, bookkeeping and calculating tax returns? I met Rachel Grimes, President of IFAC, at the luncheon on 8th June, 2018. She came up with several important messages to young CPAs in Korea as to the fourth industrial revolution: what it means and how to respond. It is ABCD we need in the face of the fourth industrial revolution Rachel highlighted “ABCD” that stands for Artificial intelligence, Blockchain, Cybersecurity and Data analytics. In fact, a seminar, held right after this mentor session for young CPAs, under the topic of “The Fourth Industrial Revolution and Its Impacts on the Accounting Industry” could be summed up with the “ABCD.” As for audits, for example, an artificial intelligence accounting system analyzes all of the transactions of clients (companies) during continuous audits, selects exceptional items, compares them with data from the relevant industry or market and identifies their risk factors. What makes it different from past is analyzing all of the transactions of clients, not sampling a snapshot of data. All of the transactions are simultaneously stored at the public transaction ledgers, such as blockchain, and these data are accessible to anyone. The highest level of cybersecurity ？ protection against alteration and modification, which requires the consensus of the network majority ？ underpins transparency of such accounting information. The advancement of the fourth industrial revolution makes the accounting industry more transparent and makes it filled with more accurate data up to date, which places weights on the auditors’ competency of analyzing, using and judging such data. The more the fourth industrial revolution is accelerated, the more important the role of CPAs is, according to her. The more complex the society is getting, the more important the value of simplicity is I thought that technological advancements are not my concern, but of clients. However, I have become to recognize that understanding clients is the first step to take for CPAs, regardless of the nature of their engagements either in audits or consulting. Compared with what it was like my first joining an accounting firm seven years ago, circumstances surrounding the economy and companies have varied and become more complex (in the past, I might feel less complexity in companies due to less-developments in data analytics and technology to use them), but audit techniques and the way CPAs work seem still same. It is a stark reality that CPAs suffer difficulties from information gap between companies and CPAs dealing with such data. It seems that Ms. Grimes also understands the difficulties. Her dual position both as CFO of Westpac Group and President of IFAC enables her to understand the perspectives of companies and CPAs. She told, “To decrease such gap, both companies and CPAs make efforts”, adding that “Companies should strengthen the role of internal audits for their part, while CPAs concentrate on understanding computerization processes of internal accounting of companies.” Adding comment on my concerns over complexities as young CPAs, she said, “The competence of dismantling complex structures, understanding them and translating them into simple dex-x-scriptions gains importance.” Amid piles of data, it would be the destiny of professionals living in the fourth industrial revolution to get to the core of issues, make them simplified and help clients understand them easily, as I felt.
- The Mandatory Auditor Rotation Regime Temporarily Enforced in 2006 Was a Failed System? : Focusing on Prior Audit Quality ABSTRACTOn September 21, 2017, the Political Affairs Committee of the National Assembly agreed to revise the Act that a listed company, which has been audited by the same audit firm for six consecutive years,should change mandatorily the auditor. According to the Act, the new audit firms will be chosen by the Securities and Futures Commission rather than by the firms. However, as the mandatory auditor rotation was adopted in the past but it was abolished soon, there is no clear conclusion regarding the positive effects of the mandatory changes. Therefore the reintroduction of the mandatory auditor rotation regime can be a controversial issue. The study aims to review the appropriateness of reintroduction for the mandatory auditor rotation regime through analyzing the effects of that system, which was temporarily adopted in 2006. In particular, this study focuses on audit quality in the year preceding the mandatory changes, comparing to the prior research that focuses on audit quality after replacement. Under the mandatory auditor rotation regime enforced in 2006, companies could choose the new audit firms, so that they might tend to providelower audit quality thanks to adverse effects such as the low audit fee according to the excessive competition between auditors. On the other hand, the auditors who are supposed to be forced to replace should bear the consequences such as the enforcement action of the Financial Services Commission and defamation if the problems occur after their replacement. Thus we expect that the auditors will have the incentive to provide a higher level of audit service on the verge of the change. 2018.05.29
- KICPA Holds 2014 CSR Evaluation Conference The KICPA hold the 2014 Corporate Social Responsibility Evaluation Conference in collaboration with the Chosun Daily and Korea Institute for Firm Contribution. Attached, you can see more details. 2014.06.20
- Study on Accounting, Taxation & Auditing Published The KICPA publishes Study on Accounting & Auditing, an academic journal, twice a year, which attracts strong interests from the academia and practice. This year holds particular significance with the mandatory introduction of IFRSs to all listed companies and Clarified ISAs. The journal deals with some of the issues the new standards could bring about. 2013.12.02
- Improvements in External Audit and Disclosure of Nonprofit Organization The KICPA commissioned the Korean Accounting Association to conduct research on the internal control, external audit and disclosure of nonprofit organizations that hold significance in their role to serve the public interest. 2013.11.01