1.4: Challenges and Opportunities in the Accounting Profession Flashcards
What are some challenges and opportunities for the accounting profession due to the COVID-19 pandemic?
The COVID-19 pandemic brought challenges such as a significant economic downturn, bankruptcies, and a shift to remote work.
However, it also accelerated the adoption of digital technology, automation, and artificial intelligence in accounting, creating opportunities for increased efficiency and adaptation to new business models.
How has digitization and automation changed during the pandemic?
According to McKinsey’s Global Business Executive Survey (2020):
- 85% of companies accelerated digitization of employee interaction and collaboration.
- 67% accelerated automation and AI.
- Many companies significantly increased the use of digital technologies in supply chains, customer channels, and internal operations.
What is data analytics in the context of accounting?
Data analytics refers to the process of **identifying, measuring, and communicating useful information to users. **
It involves using technologies like artificial intelligence and machine learning to process and analyze vast amounts of data (often referred to as “big data”) to aid in decision-making and financial reporting.
How does big data impact decision-making in accounting?
Big data allows accountants to base decisions on larger datasets with more comprehensive insights.
However, challenges include:
determining which data are relevant and reliable, how much data is sufficient, and how to ensure accuracy in the context of increasing automation and AI.
What role does artificial intelligence (AI) play in accounting?
AI enables the automation of complex tasks such as **data processing, pattern recognition, and decision-making. **
It allows for the analysis of large datasets (big data) more efficiently than humans, transforming roles within the accounting profession.
What are some emerging jobs and skills in accounting due to the rise of data and AI?
Emerging Jobs:
AI Specialist
Data Scientist
Data Engineer
Big Data Developer
Data Analyst
Top Skills:
Data Science
Data Storage Technologies
Development Tools
Artificial Intelligence
Software Development Life Cycle (SDLC)
What is data governance?
Data governance refers to the collection of processes, roles, policies, standards, and metrics that ensure the effective and efficient use of data within an organization.
It helps accountants ensure that data is used correctly, with the necessary controls in place for privacy, security, and accuracy.
How does sustainability reporting relate to accounting?
Sustainability reporting involves disclosing how a company creates or destroys economic value while addressing environmental, social, and governance (ESG) factors.
This reporting helps stakeholders assess a company’s long-term viability, risk management, and contribution to positive societal impacts.
What is value creation in accounting, and how is it connected to sustainability?
Value creation refers to the process by which an organization generates revenue and net income that can be realized in the future.
It is increasingly linked to a company’s ability to manage ESG issues, as these factors directly impact financial performance and stakeholder value.
What are some examples of environmental and social issues affecting sustainability?
Environmental Issues:
Greenhouse gas emissions
Climate change impacts
Energy management
Biodiversity and ecosystems impacts
Social Issues:
Human capital management
Health and safety
Product quality and safety
Cybersecurity and data privacy
Bribery and corruption
What is the Sarbanes-Oxley Act (SOX)?
The Sarbanes-Oxley Act (SOX), enacted in 2002, introduced major reforms to corporate governance and financial practices in the U.S.
It gave more resources to the SEC to fight fraud and poor business practices, and introduced stricter oversight for auditing and financial disclosures.
What is the Public Company Accounting Oversight Board (PCAOB)?
The PCAOB is an accounting oversight board created by the Sarbanes-Oxley Act.
It is responsible for establishing auditing, quality control, and independence standards, and has oversight and enforcement authority over auditors of public companies.
What are some key provisions of the Sarbanes-Oxley Act?
Key provisions include:
Establishing the Public Company Accounting Oversight Board (PCAOB).
Stronger independence rules for auditors.
CEOs and CFOs must certify the accuracy of financial statements.
Management must report on the effectiveness of internal control systems.
Audit committees must consist of independent members.
What is the Canadian Public Accountability Board (CPAB)?
The CPAB is the Canadian equivalent to the PCAOB.
It looks after similar issues such as ensuring the quality of audits of public companies in Canada and enforcing regulations around financial reporting and audit quality.
What is ethical sensitivity in accounting?
Ethical sensitivity involves being aware of the ethical dilemmas that arise in decision-making, particularly in high-pressure environments.
It requires balancing self-interest with the interests of stakeholders and adhering to professional standards of transparency and honesty.
