The Tsunami of Change in India and the Global Landscape

Our members have achieved success globally and are leveraging their training and learnings in various ways across multiple industries. They have demonstrated the depth of governance, deep accounting expertise of process & procedures, financial expertise, and overall sense of interpreting & applying number to support entrepreneurs to achieve business objectives and goals. Our profession trains us to be effective in the “language of numbers and accounting” so that the story of a business can be articulated, assessed, audited, and trusted.

We are now, in a Tsunami of change in India – new asset class, disruptive technologies, digital assets - that will change everything like what engines did to horses & buggies. This time, the change will happen in 5 years instead of 5 decades. The change is disruptive and not waiting for anyone. Under our current leadership and torch bearers of ICAI, we will establish the foundation to adjust and prosper in the ever-changing world of “Disruption is the new norm.”

Five Key Realities Reshaping the Profession over the Next 5 Years

The next 5 years will require our profession to evolve to support the following realities in India and globally:

1. Rapid Digitization of Processes and Exception-Based Auditing:
   The ability to dynamically configure rules and workflows to manage exceptions. This may result in the elimination of “sampling” methods and move to “exception-based” methods driven by configurable rules. The ability to write rules to mine the data to identify exceptions, detect errors and frauds will be an essential skill.
2. Data as the New Oil and Fiduciary Relevancy:
   Data and the “use of data” is the new oil. How do we leverage data to execute our fiduciary responsibility by identifying the right and relevant data? What data do we trust and when, especially when data is in a distributed environment? The ability to assess relevancy amongst the sea of data will be an essential skill in addition to deep analytical skills.
3. Growth of Digital Assets as a $4 Trillion Asset Class:
   The growth of Digital Assets (not crypto but real assets), as a new asset class – expected to reach 4 trillion USD by 2030 based on various research reports by Citi and others – requiring establishment of new standards for this new asset class that is estimated to be 10X the Public Markets.
   • Private / Unlisted Assets: Private assets – aka “Unlisted Assets” – will require to be audited frequently and will require the same diligence and rigor as listed companies.
   • Regulatory Standards: Regulators and accounting bodies will set guidelines and define the guard rails that this asset class must adhere to. Accounting standards that are specific to these types of assets will have to be developed and the institute will have to play a leading role in the design and execution of the same.
   • Cross-Jurisdiction Adoption: These assets have no borders as it relates to adoption. So, policies and standards need to support cross jurisdiction.
   • Auditor Governance: The ongoing governance of the accounting standards will fall on the shoulders of the auditors, amongst others, requiring frequent monitoring to ensure that the statements are fair and accurate.
   • Investor Reliance: Investors will rely on the audited financial reports to make investment decisions in these unlisted assets. The lack of reliable, frequency of information & quality of information of private assets will provide for greater reliance on the audited statements.
4. Technology Revolution – Blockchain, DeFi, and AI:
   Ability to adapt to these technologies, understanding the power of it and adapting them incrementally & appropriately in carrying out fiduciary responsibility.
   • Blockchain & Smart Contracts: The evolution of Blockchain is known to all of us and the role it plays in ensuring immutability. Familiarity and ability to leverage blockchain and the ability to audit “Smart Contracts”, will be an essential skill that our profession will have to develop for us to test the results and outputs.
   • The DeFi World: Data will be scattered and distributed; how do we trust the data that is on the edge? How does one provide fiduciary and financial reports based on data that is not centralized but with data owners stored on their environment? The unique skill and ability to identify the appropriate techniques that assist in continuous monitoring and in detecting changes to source data and documents will be essential.
   • The AI Phenomena: The AI phenomena has gained momentum over the recent months. How do we leverage this technology – where and how do we use it and for what purpose? Can an audit report be produced by “Chat GPT”? The answer is probably no, but the point is how do we leverage it in the generation of financial reports, while ensuring sound governance. Clear guidelines of what is acceptable and continuously updating of these as technology and trust develops is essential.
5. Continuous Monitoring of Financial Statements:
   Move from “periodic reporting” to “event based”. Updating financial statements as soon as a material event occurs, i.e., moving to an “era of real time financial statements” and “Continuous Disclosure.” This is made possible today because of technologies as there is and will be continuous access to information and data in a digitized form, and rules that will identify material changes when it happens so that statements and disclosures reflect current state of the company / asset.

“The CA and students of tomorrow will be spending more than 80%+ of their time on applying their ‘Knowledge & Expertise’ to solving exceptions and analyzing changes.”

The DNA of a Future Chartered Accountant

The DNA of a future CA must possess two blended core pillars:

• Deep Accounting Capabilities: Mastery over governance, accounting standards, and business storytelling.
• A Technology “Power User”: Knowing how to orchestrate and deploy advanced technology to execute professional responsibilities.

Continuous education will be the theme as these technologies evolve. The process of generating financial statements will be automated, digitized, better and faster. Applying technologies in carrying out their responsibility will be as critical as applying accounting knowledge and processes.

The CA and students of tomorrow will be spending more than 80%+ of their time on applying their “Knowledge & Expertise” to solving exceptions and analyzing changes. Our basic expertise with the blend of technology shall be the key to the thriving journey ahead of the profession.

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Author may be reached at: eboard@icai.in