CA PROFESSION IN THE POST-COVID ERA: DOOM OR BOOM?

The digital world has changed everything around us – the way we live, the way we work and, indeed, the way we think. If there was any reluctance in the minds of any professional in embracing the digital world, the Covid pandemic has ensured that this gets dissipated. Digital is no longer on the periphery, it has now become mainstream. Importantly, these changes are permanent. So, is it time to write the obituary for the analogue world?

These profound changes will impact all professions, including CAs. But is it ‘doomsday’ for the CA profession, or will this herald a new way of working and throw up some new opportunities?

REDEFINE IDENTITY & MODALITIES OF DELIVERY

A quick dive into the history of digital adoption shows that the BFSI sector (banking, financial services and insurance) has been quick off the block to rapidly implement digitisation, not just in its peripheral functions but also in its core activities. Banking business has gone through a churn and progressive bankers now say that they are in the technology business, with banking services slapped on technology. As a general rule, professions have been reluctant digital adopters. However, now that they are left with no other option, all professionals are rapidly implementing technology in their work. The scenario for CAs is also changing swiftly. Like banks, will CAs need to make a paradigm shift in their outlook and embrace a narrative of ‘being in the technology business with their professional services slapped on the technology backbone’? If this happens, will it herald a paradigm shift in the way in which services are offered by CAs to their clients?Models

The recent lockdowns and travel restrictions have altered the way of working for all professionals. From heading to office on Monday mornings, CAs now head to their workstations. ‘Work from home’ is the new reality and in fact, has now evolved into ‘work from anywhere’. All future homes of CAs will need to be designed to accommodate some space to allow work from home. Commuting for hours within the city and also travelling for work will come down dramatically, leading to an improvement in productivity. Even after the restrictions are removed, it is unlikely that CAs will go back to the normal routine of going to office every day. Eventually, a hybrid model will evolve, where CAs will go to office only when required. In fact, some CAs have sold their offices or given up high rent offices situated at prime locations. There are anecdotes of some CAs from industry, unable to work from home, who have decided after the end of the first lockdown to hire shared space nearer to home instead of travelling again. And they are doing this by individually bearing the cost of renting the space. Will this continue as a strong trend? Will a new model emerge of comparing per square foot rent with digital assets provided to teams? Will a 100 square feet / person average multiplied by Rs. 100 make the hybrid model more economical?New taxonomy

‘Face to face’ meeting has a new meaning – it does not require a physical meeting and a digital video meeting is now considered as a ‘face to face’ meeting in the new taxonomy. Audits are now done remotely and will continue to evolve with greater use of data analytics, robotics process automation (RPA) and artificial intelligence (AI). Faceless assessments will become de facto standard and the demand for knowledge-based professionals will increase. It is a moot question as to whether the quantum of disputes will reduce.Court hearings are also now on video and there is a renewed thrust from the government to go entirely digital in all their interactions with the taxpayers, citizens and their representatives. Most of the compliances like accounting, filing of returns, registrations could be fully automated and software solutions would enable reasonable level of service at a minimal cost. It is likely that government may provide utilities for common compliances free of cost. This trend will only exacerbate and the new breed of CAs who now qualify will treat this as the ‘new normal’.

It would be important to be able to track the tasks being done and the time spent by the employees in a central online workspace collaboration. Other tools which can be implemented are in the space of improving productivity, employee monitoring and online signing of documents.

All these will be useful in improving productivity for routine and quantitative work. As AI begins to create self-learning systems which are then integrated into accounting tasks, technology will take on the repetitive and time-consuming jobs, leaving the analytical and managerial tasks to humans.

What are the implications of all these tectonic changes?

CAs who do not adapt to this new reality will find it extremely challenging. ‘I am a tech illiterate’, romantic as it may have sounded once, this phrase will now mean that any CA who says or believes in this is taking the road that has a dead-end. On the other hand, this new world will throw up many more opportunities. With less travel and commuting, productivity will be on the rise and with that a chance to grow the profession. Since the digital world has no physical boundaries, it will open up new vistas for CAs to provide service and represent clients from across India and probably anywhere in the world. Technologies that are available to an SMP are increasingly affordable. The collapse of geographical boundaries could be used advantageously by CAs in Tier II and III cities. With rapid improvement in the quality of internet connectivity, this advantage will only increase. The inherent lower cost of operations and people cost along with time to learn will put them at a comparative advantage if they quickly upgrade themselves with the relevant skills.

Productivity increase, clients across the globe, new avenues for services outside the Indian geography – the list of the opportunities that will open up is endless. The pandemic has brought the idea of ‘professional of the future’ into the present – an eternal learner, constantly up-skilling, actively involved in automation and use of big data, and adaptable to disruption.

So, what are the likely changes that will continue in some of the traditional areas of work in the post-Covid era?

Accounting and attest functions (evidence-based certification / opinion)

The demand for mandatory ‘attest function’ is likely to considerably come down, with a trend of limits for such functions being raised on a regular basis and also exclusion of some categories. The pandemic has forced the adoption of ‘virtual audit’ with reliance on scanned documents and video calls with clients’ personnel. It has extended the ‘desk review’ substantially. Post-pandemic, the need for visits will reduce dramatically. The audit process would continue to evolve with greater use of data analytics, automated means to corroborate evidence, robotic process automation (bots culture) [RPA], artificial intelligence [AI] and internet of things [IOT]. More data-driven audit work is already a reality, perhaps large volumes of data as compared to samples end up delivering better results. Due to the pandemic, technology is used to perform routine, rule-based tasks and searches that would enable professionals to focus on exceptions and anomalies to evaluate risk as well as value creation.In the recent past, audit firms have been working on risk assessment tools that layer machine-based learning – which is a subset of artificial intelligence – on top of rules-based algorithms. Once the system ingests massive data sets, it can flag additional anomalies or risky transactions based on parameters that it ‘learns’ on its own. This technology can also provide insights into a company’s processes, possibly in real time, and flag outliers that might not be caught otherwise.

Businesses have already recast their internal controls considering remote work arrangements with increased data sharing for employees and other stakeholders. This has made them more vulnerable to fraud and cyber-attacks and therefore hunt for increased data protection and disaster recovery plans.

Major software vendors now offer automated data entry and reconciliation options using AI and machine learning technologies.

Tax functions (litigation, advisory, compliance)

On the litigation front, there is a tectonic shift. Faceless assessments and appeals will change everything. The era of extensive travel to tax offices, waste of time in seeking appointments and the need for personal meetings and connect will be buried soon. It is expected that going forward, litigation, except the ones in the pipeline (last two years), would decrease. Possibly, only high-value issues on law and its interpretation would continue after seven years or so. Implementation of technology in e-governance invariably leads to more transparency and the scope for dispute resolution practice will reduce over the longer term.For advisory services, CAs are already using audio and video calls extensively now, thereby saving time and cost. Personal meetings are now done only in exceptional cases. This trend is irreversible and would ensure greater productivity at work and better quality of life.

THE KNOWLEDGE EXPERT IN THE NEW SCENARIO

Over time, a ‘knowledge expert’ located in any place will be preferred. Taxation reforms done over a period would slowly reduce the number of doubts as complexities will be ironed out.Rapid implementation of technology will increase compliance and reduction of the grey economy. The increased collection in GST as well as income-tax in the middle of the pandemic (April-June, 21) indicates this new reality. A new orientation towards tax compliance is likely to reduce the need for traditional compliance advisory services.

For filing of tax returns, there is a clear direction of the government to provide facilities for uploading with ease and in the next couple of years, the need for professional services by a taxpayer to file the tax returns will greatly reduce. One can expect this trend to further accelerate where a lot more data will be available with the Tax Department and dependency on assessee and professional will be reduced.

Technology is already supporting in identifying the errors and omissions and with AI, even frauds are being located. The fact that the speed of collection of information would be in minutes compared to the earlier months / years, would enable the tech-savvy CA as well as the Tax Department to identify exceptions early and accurately.

The focus will be more on value addition and merging of the review audits in tax to a comprehensive operations and financial audit, including tax.

Digital systems and practices are driving and forcing changes in the CAs’ Business Models, Skills and Operations:

• IT-driven tools and systems for regulatory / statutory compliances are already in use. All taxes, submissions, responses and work-tracking are progressively IT-driven.
• Operations are based on collaborative tools such as video conferences and shared systems with centralised IT systems driven through cloud-based IT environments as well as technologies like blockchain.
• Increasing dependency on fluency and in-depth knowledge in the usage of office work product tools such as emails, document writers, spreadsheets, presentations, etc.
• Collaborative sessions using IT tools, organising and structuring workloads as well as assignments. In case of history files, using IT Systems, Management Information Systems being entirely IT-driven.
• Increasing dependency on documentation vs. oral communications and face-to-face communications.

Intellectual Property and Confidential Information storage systems means moving away from having things in physical form to virtual and software-defined formats. Clear organisation of information in digital formats is the new norm. Building processes and security for both IT infrastructure as well as access and user credential systems, as against maintenance of physical document libraries and safe rooms, has happened during the last year.

Changing skillsets of CAs will include experience and knowledge in Data Analytics, use of Workflow Application tools, proficiency in usage of spreadsheet tools and presentation tools like macros, executive communication skills and articulation, ability to search for information from the internet landscape in an effective manner and socialising skills with social media tools. Building relationships through social media and collaborative tools rather than in-person meetings and gatherings alone has already been accomplished.

NEW NORMAL TO STAY

Centrally manage and securely share audit and tax files, track audit-consultancy, dispute resolution related activities and communicate using chat, voice and video meetings. This new normal is not likely to get reversed. Clients, even the reluctant ones, have had to securely share data in a digital format and share platforms.In this maelstrom of changes, is it also a ripe time to make BCAS truly global and relook at dropping ‘Bombay’ and embracing a more global name?