عرض العناصر حسب علامة : PwC
الإثنين, 18 سبتمبر 2023 09:48
تقرير بي دبليو سي يسلّط الضوء على دور دول مجلس التعاون الخليجي في الاستدامة العالمية
وسط المناقشات الجارية حاليًا حول التمويل المستدام على مستوى العالم، يؤكّد أحدث تقرير صادر عن بي دبليو سي الشرق الأوسط على تزايد الإدراك في دول مجلس التعاون الخليجي
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الخميس, 22 سبتمبر 2022 09:14
القادة الناشئون: أين هم الآن؟
التدقيق الداخلي مهنة وجهة استثنائية. يعد الارتقاء من خلال الرتب الإدارية في المؤسسة إلى منصب الرئيس التنفيذي للتدقيق (CAE) أمرًا مجزيًا وصعبًا، والعمل ضروري للمؤسسة. في الوقت نفسه، تشير الأدلة القوية إلى أن مهارات التدقيق الداخلي تمكّن الممارسين من الإجابة حتى على أكثر الفرص غير المتوقعة والتفوق في المناصب القيادية خارج الحدود التقليدية للمهنة.
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المحتوى بالإنجليزية
Emerging Leaders: Where Are They Now?
Internal Auditor follows up with past Emerging Leaders to learn how their careers have progressed — from rising through the ranks to springboarding into other professions.
Russell A. JacksonNovember 08, 2021Comments
Internal audit is an exceptional destination profession. Rising through an organization’s departmental ranks toward a chief audit executive (CAE) post is rewarding and challenging, and the work is essential to the enterprise. At the same time, powerful evidence indicates that internal audit skills empower practitioners to answer even the most unexpected of opportunity’s knocks and excel in leadership posts far outside the traditional boundaries of the profession. Some of Internal Auditor’s past Emerging Leaders are climbing the ladder, some are at the top and exploring ways to expand their spheres of influence, and some use their internal audit skills in strikingly diverse careers.
ELEVATING CREDIBILITY
Thokozani Sihlangu is focused and ambitious. When he was named a 2020 Emerging Leader, he was senior audit manager, Quality Assurance, at Absa Group in Johannesburg. He took a job as senior audit manager with Standard Bank in December of that year, and is now head of Transactional Products and Services Audit. His role is at a strategic level, he says, allowing him to contribute to Group Internal Audit’s strategy formulation — and then customize a strategy for the business unit he leads and execute against that strategic direction.
Sihlangu heads a team of business auditors and data scientists, reporting key audit insights, material audit items, and audit themes to governance committees. Leading it well demands that he maintain excellent relationships with key executive stakeholders, too. His team also provides traditional audit assurance against the audit plan and modern modes of assurance in the form of strategic technology project assurance and data-led audit reviews.
As such, Sihlangu’s long-term career plans haven’t changed, and are right on track. “I am proud that I managed to achieve most of the plans I had for myself when I was in university, which was to attain an MBA and be head of an audit unit before age 35,” he says. “Being an Emerging Leaders honoree was a dream come true, and it has elevated my credibility in the profession.”
EXPANDING RESPONSIBILITIES
Nora Kelani, a 2017 Emerging Leaders honoree, has, as she puts it, “reached the top of the internal audit ladder” at her firm, so now she’s focused on expanding her responsibilities outside the traditional aspects of the profession. Indeed, the internal audit senior manager at Trust Holding–Nest Investments in Amman, Jordan, is working on a Certification in Risk Management Assurance and an MBA. After 2017, her position evolved, she notes, and now she reports directly to the board of directors of the holding company she works with. It owns and supports multiple insurance subsidiaries, a reinsurance company, a bank, and other large investments across Europe, the Middle East, and North Africa.
Kelani’s job involves working in, and traveling to, several of the company’s far-flung locations. She served on The IIA’s Global Advocacy Committee from 2018 to 2020 and this year was tapped to serve on The Institute’s Global Advocacy Advisory Council.
Expanding her scope has enabled Kelani to provide a variety of consultancy and advisory services — risk management, governance, information and communications technology, operations, and general business consultancy — to numerous stakeholders in different industries. That capability, she says, proves to her that internal auditors add value in advisory and consultancy functions just as much as in traditional audit tasks. “My career has flourished both vertically and horizontally just as I’d hoped it would and has exceeded my aspirations at certain points,” she says. Moving forward, she wants to seek positions where she empowers others, advocates for governance and internal controls, influences strategies, and participates in setting the vision of the organization.
IMPLEMENTING CHANGE
Derrick Li began his career in internal audit at a large accounting firm before signing on with Vancouver’s South Coast British Columbia Transportation Authority (TransLink) for his next career rung, a post as manager, Enterprise Risk and Capital, at subsidiary Coast Mountain Bus Co. (CMBC). Next, he was division manager, Business and Advisory Services, at Metro Vancouver, a separate entity. Li then moved to TransLink headquarters as director, Internal Audit and Performance Improvement. He was there when he received an Emerging Leaders honor in 2014.
Li then moved to a role as executive director, Finance and Corporate Services, at CMBC in 2018. Two years later, he jumped to his current job as chief operating officer (COO) at Lawson Lundell LLP, a large Vancouver law firm. He oversees business, administrative, and financial operations, and serves on the executive committee, focusing on the firm’s growth strategy and execution. “My career has far exceeded my expectations,” Li says. “Making the transition from CAE to an executive was always in the back of my mind, but I didn’t think I would transition this early in my career.”
He adds, “I can honestly say that I wouldn’t be where I am in my career without the tremendous experience I gained as an internal auditor.” In his last role at CMBC, he served additionally as chief financial officer (CFO) and corporate secretary, so he had the chance to interact with internal audit regularly — as an audit client and as part of quarterly internal audit/board interactions. That expanded his perspective: “Internal auditors have a unique opportunity to learn every facet of an organization,” Li says. “They can do a lot more, whether moving onto the management side of things or proactively providing advisory services to management.”
Li says he especially appreciated the variety and scope of his work as an internal auditor. “Every hour of your day could be spent on a different topic and dealing with all levels of an organization,” he says. As COO of a law firm, that’s still true, he adds — and now he can implement change directly.
SPRINGBOARD TO PARTNER
Joseph Harrington has moved from a staff position to partnership at PricewaterhouseCoopers (PwC) since his 2014 Emerging Leaders honor and from providing outsourced internal audit services to heading up artificial intelligence (AI)-related activities. As a principal at PwC Labs in New York, he says, his career has become more technical than anticipated, so his approach is a bit different. “It’s more about how I can leverage technology the best way possible, versus what I know myself and can teach to my team,” he says.
He’s a co-leader in his new post, providing AI and machine learning capabilities to help internal teams deliver services — including audit services — to clients more efficiently and to help clients that use PwC technology to accelerate internal processes on their own. Harrington likes helping clients embed security and control by design.
Using machines presents risks, but they don’t tire or have bad days, he explains. Rather, “they provide consistency, which is difficult to measure when it’s just humans performing vouching or tracing.” And while some biases are unique to machine learning models, he adds, his team can help control for them with an approach that includes humans and technology. “It’s not about a person versus a machine,” he says. “It’s about a person versus a person with a machine.” The latter is more efficient. For example, full population testing — not just sampling — is only possible using machines to kick out anomalies for a person to substantiate or refute.
Harrington joined PwC from a small boutique consulting and internal audit firm, where he provided outsourced internal audit services to banks and credit unions. At PwC, he initially worked in a risk and compliance analytics group that primarily provided U.S. Bank Secrecy Act and anti-money-laundering analytics.
But his career quickly pivoted when the Financial Accounting Standards Board announced not-yet-effective lease-related standards updates in 2018. “When that occurred, I worked with another partner at PwC to build out a natural language processing platform to help read and understand lease documents for our clients, helping them save time and money on properly recording them on financial statements,” Harrington says. That change was a springboard to his PwC partnership offer in 2019.
LEVERAGING INTERNAL AUDIT KNOWLEDGE
Since her 2013 Emerging Leaders honor, Kayla Carter has moved from providing internal audit services to external clients to an internal role focused on driving digital transformation — and from Kansas City to San Francisco. Now senior director, Business Process and Technology, at Protiviti, Carter supports the executive team in executing the firm’s global internal digitalization and business transformation strategy, including streamlining processes across all areas of the worldwide enterprise. She’s responsible for organizational change management for the executives’ initiatives, project governance, and ongoing support of production environments.
“My job is challenging, but in a good way,” Carter says, adding that she enjoys working with colleagues across the globe to make day-to-day tasks easier and reporting and analytics better. Her job is different these days, she notes, but she leverages the knowledge she gained from internal audit every day. “My goal is to help improve and streamline the same business processes I used to audit,” she says. “There is always room to improve and make things better.”
MAKING ORGANIZATIONS STRONGER
Embracing Leadership Individually
The Emerging Leaders honor means something different to each person who receives it, just as leadership itself is a personal trait that each individual understands and expresses in a unique way. Some base it on their daily tasks; leaders lead, in other words. Carter says she feels like a leader because she formerly led teams on internal audit client engagements and now helps lead her company through its transformation journey. Sihlangu leads a team of seven in his job and recently joined the IIA–South Africa Chapter’s board of directors.
Others grapple with the nuances of what it means to lead, though; moreover, their examples show that the traits that make a leader may be lasting, but confidence in expressing them may come and go. Harrington didn’t feel like a leader at the time of his honor because he was one of many performing traditional internal audit services. Now, though, he’s filed two patents and helped lead a global team of 300 professionals, many of them deep technologists. “It’s in that pivot to exploiting technology that I now feel like a leader in my profession,” he says; indeed, he’s “one of the world’s leading experts on leveraging data science to deliver business value.”
Li says he felt like a leader seven years ago as CAE, when he managed the internal audit group and was a leader in his local professional community. But being an executive is quite different, he finds. “There is more of a spokesperson or brand ambassador component that I didn’t realize,” he notes. Zitting says he felt like a leader in 2013, but isn’t sure he does anymore, even though his leadership responsibility is bigger. “I find that the further my career advances, and the closer to the top of an organization I get, the easier it becomes to doubt my own leadership or believe I am not good enough,” he says. “I’m sure that feeling only makes us stronger as leaders.”
Dan Zitting, a 2013 Emerging Leaders honoree, is now CEO at Vancouver’s Galvanize — recently acquired by Diligent Corp. — and he says he believes in internal audit as much as ever. “From the minute I started building technology for use in audit, risk, and compliance rather than focusing on being a practitioner, I was in love,” he says. “I am exactly where I would like to be, running a technology business focused on making organizations stronger through technology.”
Zitting started his career at EY in Denver providing internal audit, risk analytics, and U.S. Sarbanes-Oxley Act of 2002 compliance services, then co-founded and helped run Linford & Co. LLC, a New York IT risk advisory professional services firm. In 2010, he founded New York’s Workpapers.com, a software-as-a-service internal audit and compliance management platform that was acquired by the company that became Galvanize.
“Organizations are waking up to realize that their purpose is every bit as important to today’s employees, customers, and investors as their profits,” Zitting stresses. “We should build people, processes, and technology that are as strong in measuring and managing strategy and governance as in managing financial results.” He has never wavered in his belief, he adds, that internal audit has the most responsibility of any part of an organization for building and overseeing those capabilities.
A BRIDGE TO BROADER HORIZONS
Hui Jing, a senior finance manager at HP Inc. in Singapore, extols the benefits of using internal audit experience as a bridge to broadening professional horizons. “I would have never imagined having the opportunity to move across so many different roles and, best of all, to leverage my previous experience in risk, controls, and governance the way I do today,” she says.
When Jing was an Emerging Leaders honoree in 2013, she was an internal audit lead at HP, where she’s since taken on multiple roles in finance — implementing accounting and governance frameworks for new business models, managing unprecedented foreign exchange market volatility, driving profitable business growth, and guiding investment decisions. Now the Greater Asia senior finance manager, she’s responsible for the financial performance of developed and emerging markets in the region.
“Effective data analytics and an increasing reliance on IT systems and controls will shape the future of internal audit,” Jing says. “A great example is the focus many audit functions have today on data analytics and digital transformation.” Because business dynamics evolve so rapidly, she adds, internal audit plays an important role both in preempting business, financial, IT system, and compliance risks and in helping shape the organization’s responses to those that emerge.
A RISK GO-TO PERSON
“Having seen many people come and go, I would say that internal audit is not everyone’s calling,” Jing says. “But having personally embarked on this journey, I feel it is a great way to be exposed to different businesses, processes, and systems.” The profession demands thinking with an open mind and making assessments objectively, systematically, and logically, she adds. Success, she stresses, comes from being viewed by stakeholders as a trusted partner and a go-to person on all matters involving risk.
“I believe a leader should be ambitious, yet authentic and influential, to take other people along on his or her vision and strategy,” Jing says, emphasizing her company’s talent development program and the benefits she’s received from it. “They enabled me to grow from a young talent into the leader that I am today,” she says. Acknowledgment from The IIA doesn’t hurt. “Being an Emerging Leaders honoree indeed opened my eyes,” Kelani says. “While I avoided acknowledging my leadership traits before, perhaps as a way to champion humility, today I totally embrace being a leader with all my heart.”
The key, she adds, is understanding that leadership is a responsibility, and not just more stripes on a uniform or certifications after a name. It comes from inside and must be wielded wisely to be wielded well.
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الثلاثاء, 14 سبتمبر 2021 20:53
ابدأ بأتمتة العمليات الروبوتية
يقدم الخبراء نصائحهم حول تدريس هذه التكنولوجيا الناشئة.
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المحتوى بالإنجليزية
February 9, 2021
What faculty should know about Alteryx
November 10, 2020
Bring the remote work trend into your accounting classroom
TOPICS
Accounting Education
Technology
Emerging Technologies
Accounting firms are using up-and-coming technologies with the potential to change the business landscape forever. One technology gaining interest is robotic process automation (RPA), a tool that computerizes mundane, repetitive tasks and completes them far faster than humans could do manually.
Greg Fritsky, practice director – intelligent automation solutions at EisnerAmper LLP, spends much of his time evaluating clients’ processes and introducing them to emerging technologies, including RPA, which is already used extensively by his firm. In one case, he said, RPA automated a client's process that previously took 160 human hours a month to achieve but now takes minutes to complete.
Other large public accounting firms have also adopted RPA. Deloitte and PwC, for instance, use RPA software internally and within clients' organizations.
RPA "is something people should be learning and teaching," said Fritsky, who is based in New Jersey. "Accounting is changing and it is changing fast, and this is a tool worth more than a conversation."
Accounting faculty have taken notice, and many now believe that students should learn RPA, or at the very least, be familiar with what the technology can do. Students adept at RPA get "special opportunities to work in special groups" within accounting firms, particularly the Big Four, said David Wood, Ph.D., an accounting professor at Brigham Young University (BYU) in Provo, Utah. "Firms want technical skills, and RPA right now is one that is in particular demand."
BYU's School of Accountancy advisory board, made up of representatives from large public accounting firms, "encouraged us to put RPA into the curriculum," he added.
Get to know RPA
By handling boring, repetitive tasks once conducted by people, RPA allows staff to work on tasks that require higher-level critical thinking and analysis. While there's always the fear that technology will replace humans, RPA frees up time for more challenging work for intelligent professionals, especially new recruits, who are often asked to carry out more humdrum duties.
RPA also eliminates manual errors and offers faster, more accurate outcomes. "RPA is absolutely going to change the role of accountants for the better," Fritsky said.
RPA tools like UiPath, Blue Prism, and Automation Anywhere also allow CPAs and accounting students with little to no coding knowledge to build bots, using a drag-and-drop process. A "bot,” a set of instructions one can build within an RPA software program, tells a computer system to perform various tasks, usually in response to certain triggers. For instance, bots can be created to reformat data or copy data from one computer system to another, Wood said.
RPA can also help with onboarding by sending automated yet sophisticated replies to job seekers, noted Asher Curtis, Ph.D., associate professor and faculty director of the Master of Professional Accounting Program at the University of Washington in Seattle.
Bots can be programmed to gather tax data from clients and move that data into spreadsheets, said Richard Walstra, CPA (inactive), DBA, assistant professor of accounting at Dominican University in River Forest, Ill.
And, as Fritsky explained, RPA can help with audits by extracting data from client systems and then performing tests on 100% of the population of that data, making it an invaluable, accurate tool.
Walstra, who learned about RPA on YouTube, noted that other data analytics programs, such as Alteryx, Tableau, and Power BI, analyze data, whereas RPA mechanizes a routine task. The term “robotic process automation” may sound futuristic, bringing up visions of robots, he said, but “it’s really just a machine function.”
So far only a handful of software producers sell RPA licenses. These companies, including UiPath and Blue Prism, often provide online tutorials, training, certifications, and free software to universities, making it fairly easy for faculty to get up to speed. EisnerAmper uses UiPath for its easy-to-learn aspect, Fritsky said, and the accounting departments at BYU, the University of Washington, and Dominican University chose UiPath as well for similar reasons.
Fritsky, Curtis, Wood, and Walstra offer the following advice for incorporating RPA into your classes:
Keep it simple. When Fritsky tries to explain RPA to people and goes "too technical,” they lose interest, he said. He advised starting with this clear-cut description: RPA is simply a tool that can eliminate manual activities currently performed by people. "
Students will find it easier to comprehend RPA if they have some foundational knowledge first, he said. "If the students are really good at Excel and have some advanced understanding, they will understand RPA a lot faster,” he said.
Dive in. The best way to get up to speed with RPA is to simply find the time to learn about it. Jump in with both feet," Wood said. "You've got to start somewhere and students will respect you for trying."
To get started, view tutorials on various vendor sites, or join sites such as UiPath's Academic Alliance, or watch videos online. Just start to explore some videos, and become familiar with the basic structure and flow of RPA, Walstra advised. This video, for example, offers a clear overview of RPA. Another provides a simple example of RPA. And this one, from KPMG, “shows a quick walk-through of a full business process," he said.
Review some RPA cases in the EY Academic Resource Center (EYARC), stated Curtis, who has helped lead an RPA workshop for faculty at the EYARC Colloquium.
Learn from more experienced faculty. Many accounting professors, such as Walstra, Curtis, and Wood, are ahead of the curve in teaching students about RPA, so learn from their expertise or the knowledge of other academics who are immersed in this technology. "Don't re-create the wheel," Wood said. "Talk with faculty who have done this before, by piggybacking on what they do."
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الأحد, 12 سبتمبر 2021 14:27
برايس ووترهاوس PwC تتصدر قائمة أفضل شركات المحاسبة Vault لعام 2022
أصدر موقع Vault.com الخاص بالوظائف عبر الإنترنت قائمته لعام 2022 المحاسبة 50، وهو تصنيف سنوي لأفضل شركات المحاسبة للعمل بناءً على ملاحظات محترفي المحاسبة، مع تصدر شركة PwC.
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المحتوى بالإنجليزية
PwC tops Vault's 2022 'Accounting 50' list
By Sean McCabe
April 16, 2021, 3:35 p.m. EDT
1 Min Read
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Online career resource Vault.com released its 2022 Accounting 50 list, an annual ranking of the best accounting firms to work for based on accounting professionals' feedback, with Big Four firm PricewaterhouseCoopers topping the list.
Rankings were based on feedback from some 11,400 accounting professionals, who were asked to rate the firms on categories such as compensation, culture, training, work-life balance and overall prestige. The Accounting 50 list was then compiled using a weighted formula based on the internal and external rankings.
Vault’s survey also took special note of last year's events to determine their rankings, asking professionals about their firms’ responses to the COVID-19 pandemic and the Black Lives Matter movement.
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Big Four firms PwC, Deloitte and KPMG placed first through third, respectively. Their fellow Big Four firm Ernst & Young placed No. 29 out of 50.
The top 10 firms of the 2022 Vault Accounting 50 are:
1. PwC
2. Deloitte
3. KPMG
4. BDO USA
5. Plante Moran
6. RSM US
7. Baker Tilly US
8. Moss Adams
9. CohnReznick
10. CBIZ MHM
For the full list, head to Vault's site here.
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الأحد, 12 سبتمبر 2021 14:24
دفع أموال إضافية للموظفين مقابل أخذ إجازة
تدفع برايس ووترهاوس كوبرز للموظفين مقابل أخذ إجازة
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المحتوى بالإنجليزية
PwC is paying employees to take vacation
By Michael Cohn
April 09, 2021, 4:28 p.m. EDT
2 Min Read
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PricewaterhouseCoopers is encouraging its employees to use their vacation days by actually paying them additional money to do it, while also giving them salary increases and bonuses across the board.
The firm announced base salary increases for employees Friday, along with an expanded bonus pool. The firm is also giving a special “thank you” bonus this month to employees equivalent to one week’s pay to recognize employees’ efforts to keep working during the pandemic.
The efforts are part of the Big Four firm’s efforts to retain employees, who have largely worked from home since the outbreak of the pandemic last year. Like many people around the world who have worried about travel since last year, many PwC employees didn’t take their vacation days, letting them build up in the hopes of taking them this year.
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“Our people are the heartbeat of our organization, and their well-being is the most important thing for us to look out for," wrote PwC U.S. chair and senior partner Tim Ryan in a LinkedIn blog post. “Because it is so important to take breaks, unplug, and experience new things (especially post-pandemic!), we will be giving $250 to employees each time they take a full week’s vacation for the next year, with the potential to continue this program into the future if we see wide adoption.”
The firm is also launching an initiative to discourage calls and meetings on Friday afternoons in the summer.
PwC U.S. chair and senior partner Tim RyanRob Tannenbaum
PwC plans to transition to a hybrid model of work starting in September while giving out bonuses. “This will allow us to continue to serve our clients while balancing remote work and preserving the elements of our peoples’ experience that they prefer,” said Ryan. “And as we safely open offices, we are doubling the funding for our 'Real-Time Recognition' (spot bonuses) pool so colleagues can say thank you with financial rewards to one another for caring for each other and living our values.”
In addition to offering digital skills training during the pandemic, PwC also plans to offer more training in diversity and inclusion, a cause that Ryan has championed as chair of the steering committee of a group called CEO Action for Diversity and Inclusion. “We started with digital skills training and encouraged the majority adoption of a badging system, and our next step will be to offer a Diversity and Inclusion badge so we can continue to inspire our people to learn and foster a culture of belonging,” he wrote.
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الثلاثاء, 24 أغسطس 2021 14:40
تقارير برايس ووترهاوس كوبرز حول أحدث جهود جودة التدقيق
أصدرت شركة برايس ووترهاوس كوبرز تقرير جودة التدقيق لعام 2021 يوم أمس الإثنين، مشيرة إلى التقدم الذي حققته الشركة فيما يتعلق باستقلالية المدقق، إلى جانب قضايا مثل التنوع والشمول.
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المحتوى بالإنجليزية
PwC reports on its latest audit quality efforts
By Michael Cohn
August 23, 2021, 3:55 p.m. EDT
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PricewaterhouseCoopers issued its 2021 audit quality report Monday, pointing to progress that the Big Four firm has been making on auditor independence, along with issues such as diversity and inclusion.
PwC reported that 98% of its assurance professionals received consistent messaging on the importance of audit quality, and 97% understand the firm’s audit quality objectives. The Public Company Accounting Oversight Board inspected 58 of PwC’s audits in the most recent inspection cycle, and the firm anticipates that only one of the audits will be singled out in Part 1.A of the report, which spotlights significant deficiencies. In the most recent PCAOB report for 2019 inspections, 18 audits out of 60 inspected were included in Part 1.A (see story).
PwC also pointed to a 96% compliance rate of issuer audit engagements selected for internal inspection by the firm. The number of issuer audit engagements selected for internal inspection was also 96. Audit partners’ average years of experience at PwC is 23 years.
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The report comes at a time when large audit firms have come under fire for lapses in quality. In response, PwC has begun offering regular reports on its progress on audit quality, issuing an updated report earlier this year in January (see story).
PwC has also been contending with the other challenges brought by the pandemic over the past year and a half, which has forced many auditing firms to operate remotely.
“It’s been well over a year since the onset of the COVID-19 pandemic,” said PwC U.S. trust solutions co-leader Wes Bricker in a video accompanying the report. “We’re pleased with how, in an unprecedented circumstance, our audit teams have continued to deliver and to meet the needs of our clients and of our stakeholders. The pandemic highlighted for us just how vital the forward-thinking aspects of our strategy are to the continued success of our people and of our firm.”
PwC building on Park Avenue in New York.
The firm has also been making efforts to increase diversity, equity and inclusion under U.S. chairman and senior partner Tim Ryan. The percentage of women partners is 24% while the percentage of racially and ethnically diverse partners is 17%. In terms of employees, 49% are women and 36% are racially and ethnically diverse. The report also noted that PwC has become increasingly focused on environmental, social and governance reporting, working with other organizations and regulators to develop or improve ESG-related metrics and disclosures.
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الإثنين, 23 أغسطس 2021 14:31
برايس ووتر هاوس تؤخر العودة إلى المكاتب وسط انتشار دلتا
قررت شركة PricewaterhouseCoopers تأجيل عودة موظفيها إلى مكاتبها حتى نوفمبر حيث يستمر انتشار نوع دلتا شديد العدوى من COVID-19.
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المحتوى بالإنجليزية
PwC delays return to offices amid Delta spread
By Michael Cohn
August 19, 2021, 2:44 p.m. EDT
4 Min Read
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PricewaterhouseCoopers has decided to postpone the return of its U.S. employees to its offices until November as the highly transmissible Delta variant of COVID-19 continues to proliferate.
The Big Four firm is finding that many of its clients are also delaying their return-to-work plans well past Labor Day, while encouraging more employees to vaccinate. The firm’s Next in Work Pulse Survey found that both two-thirds of the 752 U.S. executives and two-thirds of the 1,007 employees polled are in favor of a vaccine mandate as a condition of returning in person to the office, while one-third of each group is opposed. In addition, 44% of executives said in the August survey that they will take a leadership role in encouraging employees to get vaccinated over the next 12 months.
PwC and many other businesses are delaying their reopening plans, fearing the risk of the Delta variant, especially for unvaccinated employees. As reports of breakthrough infections among even fully vaccinated people cause the Centers for Disease Control and Prevention to revise the guidance for masking and social distancing, companies are struggling with the safest way to do business during the ongoing pandemic.
PwC building on Park Avenue in New York.
“The safety and well-being of our people really continues to be our No. 1 priority,” said Kathryn Kaminsky, vice chair and U.S. trust solutions co-leader at PwC, during a press conference Thursday. “With that in mind, we have made the decision to delay the official reopening of our U.S. offices until November 1. With that, though, we will continue to monitor the situation based on the latest information and of course the data, and we’re prepared to adjust our plans as needed. We always remain focused on balancing the safety, well-being and flexibility needs of our workforce, and of course our clients. As of now, we’re not requiring our people to receive the COVID-19 vaccine to return to the office, but similarly to what I said about returning to the office, we are going to continue to monitor the data and reevaluate our position as we get closer to our November 1 official office reopening date. All of this will be done by continuing to adhere to federal and local health guidelines. ... These tough decisions aren’t unique to our firm. All organizations are facing similar challenges.”
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ACCOUNTING TODAY
The survey found that employees want the flexibility to work remotely, although executives remain wary about the challenges. Nearly one-fifth (19%) of all employees would like to be fully remote today even if COVID-19 were no longer a concern. The majority prefer a hybrid model with a variation of in-office and remote days of work.
“A key theme we continue to see is business executives are keen to rebuild revenue and begin applying the lessons learned from the pandemic as they redesign how work gets done,” said Neil Dhar, vice chair and chief clients officer at PwC. “With the surging Delta variant, the great reopening for many that was scheduled to be post-Labor Day has been delayed for many businesses we’re seeing. A growing number of companies are mandating vaccines for employees, with others pushing out their return dates further into the year, some even into the New Year.”
While executives have been setting up hybrid work plans, they are finding corporate culture has become their biggest challenge. Employees are willing to look for new job opportunities if they can’t get the flexibility they desire. Among employees who are seeking new jobs, nearly one in 10 said that it’s because they moved away from the office while working remotely and don’t want to go back to onsite work.
“As we reviewed our survey, we really saw that hybrid work is going to be a reality for many organizations,” said Bhushan Sethi, global people and organization co-leader at PwC. “Over half of the employees are actually expecting people to have some time in the office over the next three to six months. Even though some companies have pushed out their broad-based reopening dates, hybrid work is going to become a reality. With that comes the challenges people have.”
Employees are looking for new job opportunities not only for more flexibility, but also for improved benefits and compensation. Nearly two-third (65%) of the employees surveyed in August said they’re looking for a new job, up from 36% in May. Among the executives polled by PwC, 88% said they’re seeing higher turnover than normal.
The top reason employees cite for looking for a new job is a better salary, followed by benefits. When executives were asked about why employees are leaving, however, only 23% believed benefits were a reason. For the employees who were seeking new opportunities, flexibility, expanded benefits and compensation were the top incentives.
Many employees also perceive job changes as a way to close pay gaps, with 46% of women seeking higher salaries compared to 34% of men. More Latino (82%) and Black (67%) employees see job changes as a way to close the salary gap, compared to white and non-Latino employees (57%).
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الأربعاء, 18 أغسطس 2021 11:06
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يمكن أن يكون اختبار كشوف المرتبات أثناء التدقيق عملية يدوية مملة، وهو نوع من العمل الشاق الذي لطالما كان يُنظر إليه على أنه "مستحقات" يدفعها المدققون الشباب قبل أن يتقدموا في حياتهم المهنية
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المحتوى بالإنجليزية
A new eye on audit quality
By Daniel Hood
March 29, 2021, 9:00 a.m. EDT
18 Min Read
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Testing payroll during an audit can be a tedious manual process, the kind of grunt work that has long been viewed as the “dues” paid by young auditors before they advance in their careers. Recently, however, one computer-savvy associate at PwC decided not to pay those dues.
Instead, the associate — “someone at the most junior levels of an audit team,” according to vice chair and assurance leader Wes Bricker — built their own computer model to quickly evaluate the reasonableness and appropriateness of any given payroll expense. And rather than hand out a stern warning against deviating from long-established audit processes, PwC sent the associate’s data workflow and visualization tool to its Digital Lab for vetting, and then rolled it out for use by all of its audit teams. To date, the Digital Lab has shared approximately 7,500 of these “citizen-led” digital assets across the firm.
Welcome to the new world of auditing, where people and technology are inextricably intertwined, leading to audits that are faster and more efficient and, perhaps most important, creating the opportunity for major improvements in audit quality.
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Faster first, then better?
The last decade has seen a significant increase in the audit profession’s adoption of a range of software and hardware solutions that have reduced or eliminated a great many manual tasks, streamlined data collection and other audit processes, and given auditors a new level of flexibility. Whether intentional or not, the primary result of this increased adoption has been efficiency gains, with firms able to conduct audits more quickly and with fewer people.
“Firms have been investing heavily over the past several years in several different advanced technologies to enable both remote work and automation of basic tasks, much of which goes to efficiency,” said Julie Bell Lindsay, the executive director of the Center for Audit Quality.
Besides producing general efficiency gains, the investment also paid off in allowing auditors to switch to working remotely during the COVID-19 pandemic, and spurred even further adoption of new technologies. “The rapid acceleration to remote work in the past year due to the pandemic has also led to increasing creativity by firms, such as using cameras and livestream technology to test inventory without a site visit,” said Erik Asgeirsson, the president and CEO of CPA.com.
Using drones or smart glasses to check inventory without visiting a client’s warehouse, or using APIs to gather their financial data more quickly, or building a bespoke tool to automate payroll testing are all great examples of using technology to streamline an audit, and they’re certainly valuable.
But do they make an audit better?
Experts in the field are quick to point out that they create the possibility of making the audit better. “The more we can make mundane processes automated,” explained Tim Landry, an assurance services partner in the national quality control group and assurance applications technology leader at Top 100 Firm Marcum, “the more we’ll free our teams up to use their brainpower and knowledge.”
Time, energy and expertise once spent on rote tasks can be redirected toward higher-value work on the audit — and many people assume that it will — but it can also simply allow firms to take on more audits, or to get by with fewer staff.
There are some ways, though, that efficiency gains do contribute directly to audit quality. “The increasing automation of inputs enabled by the cloud and intelligent workflows reduces redundant, manual data entry, which can introduce error,” noted Asgeirsson. Fewer fat-finger errors is a clear plus, as is the consistency of calculation, tabulation and so on that comes with taking tasks like that out of human hands.
And at their best, efficiency technologies empower audit staff and augment their capabilities, which can only have positive results for quality. As Bricker puts it, “Automation is how technology can harness points in the audit process to achieve synergy between our people and the machines that they use, so that the sum is greater than those individual parts.”
While the boost to audit quality from technologies that are primarily efficiency-related is — or can be — real, it’s not where the biggest potential gains lie.
“I think there’s no single area in the audit that can’t be improved by technology,” said Christian Peo, national managing partner of audit quality and professional practice at Big Four firm KPMG. “The field is ripe; it is ready for further incremental improvements.”
For the present, the biggest potential seems to lie in four areas, where audit firms have already begun applying technology to good effect: consistency and standardization, initial risk assessment, better and deeper use of data analytics capabilities, and the use of artificial intelligence.
Really SALY
“Same As Last Year” has become something of a euphemism for the thoughtless repetition in audit processes, but standardization and consistency in repetition can actually contribute to audit quality.
“Robotic process automation software is often associated with driving efficiencies, but is also used to drive consistency and ensure a higher volume of work is done accurately, from the perspective that repetitive tasks that were previously done by humans can be automated, thereby eliminating the potential for human error,” said Tammy Mooney, senior director of audit innovation at the American Institute of CPAs.
At an even higher level, establishing high-quality procedures and then ensuring their regular application through audit systems can make sure that all audit work is done at the highest level.
“Standardization is about taking a look at where we can work at scale on a centralized basis,” explained PwC’s Bricker. “It’s not a cost decision — it’s about consistency of execution, which contributes to quality.”
A prime example of this kind of higher-level standardization pushing audit work to a higher level is KPMG’s centralized audit platform, KPMG Clara (based on the Latin “clarus” for “bright” or “clear”). “Clara is probably our most important technology, and that’s because it not only is the workflow and drives the auditor to apply the methodology that is consistent with the standards, but it also is the platform to allow for other technologies to be embedded in and incorporated into our audit methodology,” said Peo. “You can create all kinds of technology, but if they’re not really embedded in your audit methodology and they’re just sitting on a shelf waiting for an audit team to pull them off the shelf and use them, then it won’t be consistently used, and it actually might not be used quite correctly if it’s not incorporated into your audit methodology.”
In a similar vein, the professionwide Dynamic Audit Solution project led by the American Institute of CPAs, CPA.com and CaseWare International aims to embed a brand-new audit methodology into a software application that will, among other things, make sure the methodology is consistently applied from one audit to another, while not succumbing to the mindless repetition of SALY. The project aims to release its first iteration this year; the three partners have already released a number of attest tools that offer the same type of consistency of approach in their OnPoint A&A Suite.
A focus on risk
The risk assessment phase that helps kick off every audit needs all the improvement it can get, according to Cathy Rowe, vice president of product management at Wolters Kluwer Tax & Accounting US, thanks in part to changes three years ago in the peer review process for audit firms that place it under heavy scrutiny.
“What firms did before is no longer going to be good enough,” she warned. “Firms had to adopt the right methodology to drive assessing risk and doing that linkage, and assessing risk at the assertion level, and making sure that every audit had a specific risk. Now we’re nearing the end of that three-year period this fall, and I think the real call to action for firm is, are they following the risk assessment standards, and if they’re not, they need to, because it will have a direct impact on their audit quality and on the success of their future peer review.”
Top 100 Firm Baker Newman Noyes has implemented technology in part to help it systematize and deepen its approach to risk, according to Patrick Morin, principal of information systems and risk assurance. “We rolled out a new methodology that we subscribe to, and what the solution does is require the auditor to more formally document all of the risks for the engagement, based on the nature of the client and the industry they’re in and the type of accounting activities, and integrate that risk assessment with the all of the underlying software applications and their databases as well as their operating systems. Then you need to brainstorm what the risks are, enumerate the controls, and then, based on all that, test it.”
“Basically, it forces the auditor to make sure that they’ve looked at everything from the controls side, from the business process as well as the IT process, and where those intersect,” he explained. “The tool allows us to ensure that we’ve been thorough and by default have a much more effective audit, and it makes us prioritize where we put the most effort on our jobs.”
A risk-based audit methodology backed by technology is critical for improving the quality of risk assessments, according to Rowe, “so that you have a higher emphasis in the planning process and having that understanding of your client to identify the risks that are unique for that client based on the data that you’re getting in, and being able to then tailor your engagement for that client for the risks that you have identified, being able to have that linkage between the steps that you do and the risk — really having a purpose for what you’re doing and why.”
Cloud storage, better data pipelines and related technologies are enabling earlier and more complete data acquisition for audit teams, contributing significantly to better risk assessment. “This capability, along with expanded data analysis capabilities, can significantly improve the auditor’s understanding of the entity and provide for an enhanced risk assessment process,” said the AICPA’s Mooney. “In other words, the tools can assist the auditor in gaining a deeper understanding of the entity, better identify risks (or transactions that occurred due to the risk) and focus on what matters most in the audit.”
But risk assessment isn’t the only area where improvements to auditors’ ability to acquire and manipulate data can make a difference to quality.
Big on data
At Marcum, data analytics are so important that the firm has set up a standalone group, the Data Solutions Center, which specializes in data analysis tools and testing.
“We’ve built this team and bolted it on as a service to the audit group,” explained partner and chief information and digital officer Peter Scavuzzo. “The audit group sends over data, and the team is doing hundreds and hundreds of analytics for all these audits, with pure data analytic competency – and they give it back to the auditors, consistently at the same level of quality.”
The DSC has a library of test templates, and if an auditor on an engagement wants a new test run, it gets sent to the firm’s audit transformation team for review before getting added as a template for all audit teams to use. “As someone comes up with a new test, 900 other people may have an interest in it, and they can look at the list and say, ‘I love that test,’” said Scavuzzo.
Its sole focus on data analytics gives the DSC a level of expertise that the average auditor can’t hope to match; it has been so successful that Marcum has made its capabilities available to its advisory and tax departments, and is considering offering its services to clients. “We have even had a couple of accounting firms that have approached us about sending their audit work to our solution center,” Scavuzzo noted. “Maybe it’s not a terrible idea.”
According to Peo, KPMG is in the pilot stages of getting transaction-level detail and doing transaction-level scoring on it — “really taking a look at detailed transactions, so you’ll get all of the ledger detail of, say, revenue transactions, and instead of having an individual look at revenue at a top level and come up with, ‘Well, this is what I think from a complexity standpoint,’ and all the factors that are in the standard that tell you this is how you think about the level of risk and how you respond to it, the routines that we run that data through can spit out an answer that is then consistent across all of the audits.”
“Analytics is a clear example of what you can do now,” added Wolters Kluwer’s Rowe. “Being able to get comfortable with working your clients’ data so that you can really validate the estimates that you’re making; you can do your sampling much faster; you can have a consistent process for your entire firm in terms of running the analytics and executing the steps much faster, and being able to work with 100 percent of the data, so that you are moving away from looking for a needle in a haystack to having the data kind of tell the story for the auditor.”
Besides testing, there are opportunities in bringing together disparate sets of data. “You’ll see things you never thought you’d see from multiple data sets,” said Scavuzzo. “Auditors can take AP by itself or cash by itself, but there are aspects of relationships between all those when they are aggregated all together, and a different rule set could surface other, different insights.”
Nontraditional data sources also offer opportunities for better-quality audits. According to the CAQ’s Lindsay, auditors are now using machine learning tools to scan third-party-verified reviews of a company’s products to assess whether the company’s warranty reserve liabilities are accurate and sufficient. “In other words,” she said, “is what the company is saying they need from a warranty reserve liability accurate with how customers are perceiving the product? It’s allowing a broader review of information that only further improves the overall quality of the audit.”
Mention of machine learning naturally leads to its cousin, artificial intelligence, the fourth major area where audit quality is likely to see major gains.
Just the beginning
AI and machine learning is being applied all across the accounting profession, not just in auditing, but in many ways they are still in their early days.
“One of the future aspects that firms are going to need to start looking into — and we’ve done this to some degree — is cognitive computing, the simulation of human thought and the use of human models, like AI,” said Marcum’s Landry. “If we can train a program that is AI-based to read documents and summarize them based on parameters we establish, you can take the time away from our associates and run it through this system and have them spend more time looking at the accounting aspects of what is found through the AI technology, rather than having them sit there and read 600 pages.” He noted, though, the cognitive systems require a lot of training, and must be continuously fed new examples until they understand what they’re looking for.
KPMG actually has a tool in a pilot phase to read contracts and business agreements, looking for audit-relevant information. “A two-page contract is easier for someone to read through, but when you get to a thousand-page contract, a loan agreement, a debt agreement — those are hard to go through, and very labor-intensive,” said Peo. “Having technology read through those documents much faster than a human could and identify key terms — it’s a great tool for us.”
It’s important to remember that in many cases auditors won’t just use a technology — they may need to audit them, as well. All sorts of organizations are or will soon be using AI in business-critical functions, according to Brian Fox, the founder of Confirmation and vice president of strategic partnerships in the tax & accounting business of Thomson Reuters, and an emerging company called Monitaur aims to give auditors the ability to audit an AI-based system, he said.
Most algorithms are static, so an auditor can test them and be comfortable that they’re operating as they would have earlier in the year, but artificial intelligence changes over time, so that an AI tool at a bank might make different lending decisions in December than it did in June.
“AI decision-making changes and is updated as it learns over time,” Fox said. “Therefore, the auditor needs the ability to verify at the end of the year whether the AI made the correct decision in the middle of the year, even though it might have made a different decision now given what it has learned since the historical point in time.”
Into the future
As important as these four areas are, they are hardly the only ones where technology can improve the quality of audits. Staff and client collaboration tools, for instance, are already beginning to allow firms to better deploy their human capital, making sure that the right auditor is assigned to the right engagement.
Nor have they taken their final shape; as technologies of all kind advance, their ability to improve the quality of audits will advance as well.
In some cases, this will be a matter of combining two different developing solutions. “With data analytics powered by machine learning, we’ll eventually see the development of more precise risk assessment and benchmarking to spot anomalies that may require further confirmation or exploration,” noted CPA.com’s Asgeirsson.
“What’s coming down the line is how we can augment the auditor with artificial intelligence,” added Wolters Kluwer’s Rowe, “taking the story with our data, and layering on artificial intelligence to be predictive in terms of what risks you may want to consider or similar clients may have had similar risks in that industry, and also being more predictive in terms of what are the best steps to address those risks.”
PwC’s Bricker, meanwhile, sees potential in enhancements to the structuring and formatting of financial data at earlier stages in the process. “I think the next step change is really framed around digitization of corporate reporting and business reporting,” he said. “We’ve had digital representations of financial statements and audit reports for years, but over the last 15 years, we’ve increasingly structured that content. We’ve structured that content at the point of disclosure — that’s the XBRL and 10-K filings and so forth — there’s more and more opportunity to structure it at earlier points in the process, from point of entry in accounting systems to flow the whole way through reporting. Those innovations impact the preparation of information, which then impacts the auditing of that information.”
Looking further down the road, many experts believe that blockchain has the potential to have a major impact on auditing — just not yet. The distributed ledger technology includes features that make it practically impossible to change or falsify earlier information, or to disguise who is adding records to the system, which has obvious benefits for auditors, but it’s still far from widespread adoption in the broad corporate world.
“When distributed ledger hits mainstream, we will perhaps see a seismic shift in audit quality, and to some degree, some audit needs will go away and the emphasis of audit will change,” said Baker Newman Noyes’ Morin. “We’ll be looking more at the ethical application of the tools that leverage distributed ledger, as well as maybe audit compliance to other attributes other than just the numbers themselves.”
Marcum’s Scavuzzo similarly feels that blockchain may be a game changer, but that its impact isn’t likely to be felt in the next three to five years.
More immediate potential for improvement to audit quality, though, is seen in the ability to move closer and closer to a real-time audit, as finance and accounting systems get faster, and auditors gain access to them on a more regular basis.
“We really only audit at the end of the year, but we know the financial markets move substantially every quarter that a company releases its earning statements,” said Thomson Reuters’ Fox. “For the first time, technology is going to allow us to do full quarterly audits or semiannual audits. You could do monthly, you could go to weekly and daily; you get into the continuous audit.”
That ability to see where a company stands at any point, and what mistakes it may be making in reporting or new activities it may be undertaking, can let an auditor intervene earlier or being to prepare for new challenges; as a window into what’s going on, it also gives the auditor ever-greater opportunities for catching fraud at all levels, and adding value to an audit.
“Right now, we clearly have to tackle material misstatements due to fraud; we’re missing those in droves and we’re getting a black eye,” said Fox. “If and when we get to the point where we’re really good at finding material misstatements due to fraud, then the next layer is, let’s cut out employee theft, let’s cut out those types of fraud, and hopefully continue to get smaller and smaller and drive it out. That’s the ultimate goal.”
That goal may be far down the road, but it’s never too early to start preparing for it.
“We have to think ahead for the next 10 to 15 years,” said Marcum’s Landry. “The way we audit now is going to be completely different from how we audit in the future. Now is the time to find efficiencies and improve audit quality by implementing new techniques and new approaches.”
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الإثنين, 16 أغسطس 2021 14:53
المشاورة العامة لمنهجية موحدة لمحاسبة رأس المال الطبيعي للأعمال
المشاورات العامة حول منهجية محاسبة رأس المال الطبيعي الموحدة الشفافة مفتوحة الآن من 28 يوليو إلى 30 سبتمبر.
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المحتوى بالإنجليزية
Transparent is an EU LIFE funded project that will develop standardized natural capital accounting and valuation principles for business in line with the ambition of the European Green Deal.
The public consultation on the Transparent Standardized Natural Capital Accounting methodology is now open and will run from July 28 to September 30. Participate in the consultation and help to shape European legislation.
Only a tiny fraction of the current global economy can be considered to be sustainable according to leading financial institutions and multinational agencies, but the EU has set out an ambition to achieve a sustainable financial system and economy by 2050.
The EU has recognized that in order to achieve this ambition, a shift is required in the way that businesses understand and account for their relationships with nature and people, and that accounting for the value of nature in decision making is crucial to achieve this shift.
The lack of a comprehensive sustainable management system and standardization across corporate environmental assessment methods – including natural capital standards and practices – continues to hamper the mainstreaming of sustainable economic activity across Europe and the rest of the world.
In order to enable this shift, the business community is calling for holistic datasets and standardized methodologies that allow them to include the value of nature and people in their internal decision making and their external disclosure. Integrated datasets will also enable businesses to better understand how best to align their organizations with broad societal ambitions such as the European Green Deal and the Sustainable Development Goals.
Through the Transparent Project, the Value Balancing Alliance – consisting of international companies and supported by pro bono consultants from the four largest professional services firms (Deloitte, EY, KPMG & PwC) – and the Capitals Coalition – a global collaboration of more than 370 organizations – have joined forces with the World Business Council for Sustainable Development (WBCSD) to develop a set of natural capital accounting principles to business to empower the private sector and to enable a shift towards a more sustainable financial and economic system.
In line with the European Green Deal, we will develop a standardized natural capital accounting and valuation methodology that provides decision-makers with the information necessary to generate long-term value and to improve business resilience while providing a clear picture of the overall impacts and dependencies of businesses on the environment, communities and broader society.
The Transparent methodology will achieve this by integrating financial and environmental information and accounts. It will encourage companies to better manage environmental risks and opportunities and apply best practice in order to establish a prescriptive industry standard that generates widely comparable results.
The model will build on international accepted and harmonized principles and frameworks such as the Natural Capital Protocol, and other approaches used by international companies, such as those highlighted by the Value Balancing Alliance.
The Transparent project is targeting a widespread adoption by companies worldwide.
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الأربعاء, 21 سبتمبر 2022 12:11
استشارات الميزانية للمحاسبين لعام 2021
نظرًا لاضطرابات العام الماضي، يجب أن يكون أصحاب الأعمال مستعدين للتغلب على حالة عدم اليقين المستمرة
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المحتوى بالإنجليزية
Budgeting advice for accountants for 2021
By Helen Braswell Kakouris
Given the turbulence of the past year, agility should be at the forefront of our minds when building a budget and strategy for 2021. Business owners need to be prepared to navigate the continued uncertainty. The ability to pivot in an unpredictable business environment will be essential this year, and with revenue assumptions changed across all industries by the events of 2020, a fresh approach is needed.
The industry can look to PwC’s advice: “Protect growth and profitability through actions such as scenario planning [and] more frequent financial modeling exercises to improve resiliency.” It is time to shift the approach to the new environment, with small and medium-sized companies now requiring quarterly or monthly strategic advice. This will transform the way that the industry offers its services, with strategy and consulting services offered as a monthly retainer, pushing away from the traditional per hour format. With the software advances of recent years, switching accounting pricing models can be a near seamless transition.
Historically, only large enterprise companies had the means to invest in quality software to enhance their decision-making capabilities for strategy and budgeting. Small and medium-sized enterprises in contrast often relied on a semi-annual conversation with their CPA. In the last few years, countless new software products have come to the market geared toward SMEs. There has never been a more important time for accountants to look ahead and prepare themselves for strategy-based budgeting conversations rather than historical budgeting.
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First, let’s run through the ground rules for forming a budget, before looking more specifically at how the 2021 budget should differ.
The basics
When forming a budget, it has to align with the company’s vision and goals. Are the vision and goals specific, measurable, achievable, time-based and relevant? This is the S.M.A.R.T. acronym from a paper published by George Doron almost four decades ago. A well-formulated goal could be something like, “I want to increase company sales by 30 percent by the end of 2021.”
Understand the executive team: What is their management style? Are they aggressive or conservative? That will ultimately decide whether they are willing to absorb losses in order to achieve their growth goals and thus will shape the budget and give a clear picture on raising or securing necessary capital. Understanding management style and the decision-making approach is really a personal question for every business owner, which must be reflected on individually.
Get specific with the industry. Think about the industry and economic factors that will affect the company’s operations in the coming year. Naturally the whole business world has been radically changed by the events of 2020, but its effects will be distinct across different industries.
Consider the company’s overall revenue goal. Is it hoping to offer new products or services? If management wants to increase sales, perhaps it needs new sales personnel, and the budgeted payroll expense will likely depend on their level of experience.
Consider the company’s costs: Do they need greater inventory to satisfy orders? What is the staffing cost required for increased sales, or even the cost of outsourcing some tasks? Also, try to predict upcoming costs, like any equipment purchases that could be beneficial.
The last ground rule for forming a budget is to choose a budget framework — a historical budget or a zero-based budget. In normal times, a hybrid budget would be recommended, with historical data as a base to develop revenue and payroll, and all other expenses using the zeroed-out approach. However, the 2021 approach to budgeting is going to challenge the traditional ways.
The 2021 approach
A new business environment demands a fresh approach to budgeting. Zero-based budgeting should be the preferred framework, prioritized over the historical data approach. In fact, McKinsey even echoed this point in a recent study.
The historical data approach could be misleading this year. 2020 may have been a statistically anomalous year, meaning the data produced in the most recent year, which would usually carry the most weight, is difficult to utilize.
In building a budget, assumptions are one of the most important components because those will drive total annual budgeted revenue and expenses, and thus shape the entire report. For 2021, those assumptions are even more important and should be afforded greater scrutiny. Geographical and seasonal variables also require particular attention. With greater market fluctuations expected amid an unpredictable political and economic environment, accountants must make themselves available for up-to-the-minute advice. Businesses will need them to be on hand to review and adjust budgets throughout the year, to help adapt to environmental changes as they come.
The accountants who build that trust are likely to have a profitable 2021 and beyond. They should consider changing their own pricing model to a monthly retainer, rather than a by-the-hour model, so their company involvement can be more consistent and available for pivoting throughout the year.
In addition, the increase in automation is compounding the need for the new pricing model. Much of the traditional bread and butter work of accountants is being automated, meaning the professional role is becoming increasingly advisory, with trust key to the relationship. Accountants should realize where the industry is headed, and get ahead of the game.
Those professionals should consider acting as a strategic partner to businesses rather than a professional who gets called in for projects or regulatory requirements. While the ground rules remain an important point of reference, the 2021 budget demands the industry adapt to an unfamiliar economic environment. Being in such unchartered waters heightens the importance of the zero-based budgeting framework and requires deep thought on every single assumption included in the budget.
Accountants will be trusted with a weighty responsibility as their clients navigate and profit from an unpredictable 2021. Those who are on hand to course a way through choppy waters are sure to develop great relationships with their clients and gain a solid reputation in the industry.
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