1. Culture
22. Forger programming – the best skill to teach
children is reinvention
The author of Sapiens reveals what
2050 has in store for humankind and in his part one it has dealt – Change is
the only constant.
Humankind is facing unprecedented
revolutions, all our old stories are crumbling and no new story has so far
emerged to replace them. How can we prepare ourselves and our children for a
world of such unprecedented transformations and radical uncertainties? A baby
born today will be thirty-something in 2050. If all goes well, that baby will
still be around in 2100, and might even be an active citizen of the 22nd
century. What should we teach that baby that will help him or her survive and
flourish in the world of 2050 or of the 22nd century? What kind of skills will
he or she need in order to get a job, understand what is happening around them
and navigate the maze of life?
Unfortunately, since nobody knows
how the world will look in 2050 – not to mention 2100 – we don’t know the
answer to these questions. Of course, humans have never been able to predict
the future with accuracy. But today it is more difficult than ever before,
because once technology enables us to engineer bodies, brains and minds, we can
no longer be certain about anything – including things that previously seemed
fixed and eternal.
A thousand years ago, in 1018,
there were many things people didn’t know about the future, but they were
nevertheless convinced that the basic features of human society were not going
to change. If you lived in China in 1018, you knew that by 1050 the Song Empire
might collapse, the Khitans might invade from the north, and plagues might kill
millions. However, it was clear to you that even in 1050 most people would
still work as farmers and weavers, rulers would still rely on humans to staff
their armies and bureaucracies, men would still dominate women, life expectancy
would still be about 40, and the human body would be exactly the same. Hence in
1018, poor Chinese parents taught their children how to plant rice or weave
silk, and wealthier parents taught their boys how to read the Confucian
classics, write calligraphy or fight on horseback – and taught their girls to
be modest and obedient housewives. It was obvious these skills would still be
needed in 1050.
In contrast, today we have no idea
how China or the rest of the world will look in 2050. We don’t know what people
will do for a living, we don’t know how armies or bureaucracies will function,
and we don’t know what gender relations will be like. Some people will probably
live much longer than today, and the human body itself might undergo an
unprecedented revolution thanks to bioengineering and direct brain-computer
interfaces. Much of what kids learn today will likely be irrelevant by 2050.
At present, too many schools focus
on cramming information. In the past this made sense, because information was
scarce, and even the slow trickle of existing information was repeatedly
blocked by censorship. If you lived, say, in a small provincial town in Mexico
in 1800, it was difficult for you to know much about the wider world. There was
no radio, television, daily newspapers or public libraries. Even if you were
literate and had access to a private library, there was not much to read other
than novels and religious tracts. The Spanish Empire heavily censored all texts
printed locally, and allowed only a dribble of vetted publications to be
imported from outside. Much the same was true if you lived in some provincial
town in Russia, India, Turkey or China. When modern schools came along,
teaching every child to read and write and imparting the basic facts of
geography, history and biology, they represented an immense improvement.
In contrast, in the 21st century we
are flooded by enormous amounts of information, and even the censors don’t try
to block it. Instead, they are busy spreading misinformation or distracting us
with irrelevancies. If you live in some provincial Mexican town and you have a
smartphone, you can spend many lifetimes just reading Wikipedia, watching TED
talks, and taking free online courses. No government can hope to conceal all
the information it doesn’t like. On the other hand, it is alarmingly easy to
inundate the public with conflicting reports and red herrings.
People all over the world are but a
click away from the latest accounts of the bombardment of Aleppo or of melting
ice caps in the Arctic, but there are so many contradictory accounts that it is
hard to know what to believe. Besides, countless other things are just a click
away, making it difficult to focus, and when politics or science look too
complicated it is tempting to switch to funny cat videos, celebrity gossip or
porn.
In such a world, the last thing a
teacher needs to give her pupils is more information. They already have far too
much of it. Instead, people need the ability to make sense of information, to
tell the difference between what is important and what is unimportant, and
above all to combine many bits of information into a broad picture of the
world.
In truth, this has been the ideal
of western liberal education for centuries, but up till now even many western
schools have been rather slack in fulfilling it. Teachers allowed themselves to
focus on shoving data while encouraging pupils “to think for themselves”.
Due to their fear of
authoritarianism, liberal schools had a particular horror of grand narratives.
They assumed that as long as we give students lots of data and a modicum of
freedom, the students will create their own picture of the world, and even if
this generation fails to synthesise all the data into a coherent and meaningful
story of the world, there will be plenty of time to construct a good synthesis
in the future. We have now run out of time. The decisions we will take in the
next few decades will shape the future of life itself, and we can take these
decisions based only on our present world view. If this generation lacks a
comprehensive view of the cosmos, the future of life will be decided at random.
(Source: WIRED – By Yuval Noah
Harari, 12 August 2018)
2.
Technology
23. Blockchain, machine learning, and a future
accounting
The inventor of bitcoin and
blockchain technology goes by the name Satoshi Nakamoto. Though Nakamoto claims
to be a Japanese man born in 1975, most experts believe Nakamoto is a
pseudonym. Some have gone so far as to theorize that Nakamoto isn’t a single
person at all, but rather a collective of people. The mystery persists to this
day, despite the efforts of many of the world’s best journalists.
As fascinating as this story is,
the wide-ranging application of blockchain technology is even more compelling.
In a world where disruption is a buzzword, it’s still rare for a technology to
radically alter the face of an industry. For accountants and auditors, however,
blockchain has the potential do just that, especially when combined with other
innovations such as machine learning. Because accounting records contain highly
structured sets of data, this technology is perfectly suited for our profession.
Professionals who aren’t at the forefront of learning and testing ways to adopt
these technologies risk getting left behind.
Blockchain: Way more than bitcoin
While blockchain was created to
facilitate bitcoin, the technology now extends far beyond the world of
cryptocurrency. An important facet of blockchain technology is that it is
decentralized, eliminating the middleman. Rather than storing data in one
location, blockchain technology shares data across a massive peer-to-peer
network. Until now, we have relied on institutions or trusted third parties,
such as banks, government registries, and other intermediaries, to be in the
middle of our transactions to create validity.
The way blockchain technology is
structured is said to make it nearly impossible for records to be falsified or
corrupted. This is because as transactions are permanently added to the ledger
(like blocks in a chain), information is transparently presented to all parties
involved and one block is then linked to the next in the chain. Files can also
be time-stamped and marked with a virtual fingerprint known as a “hash
string” to ensure they remain unmodified. Because hackers cannot access
data through a central point of vulnerability, blockchain networks are nearly
impenetrable.
How blockchain could alter accounting
Blockchain adoption is still in its
infancy, but that hasn’t stopped experts from speculating on the vast changes
the technology may bring. In a white paper published by Deloitte, the firm
hypothesizes that blockchain could “shapeshift the nature of today’s
accounting.” No wonder, then, that all of the Big Four accounting firms
are spending a great deal of time and money investigating blockchain
applications. For example, Deloitte has established a blockchain consulting business
and EY accepts bitcoin for settling invoices.
What might a blockchain-based
accounting system look like? Theoretically, it would allow secure, verified
information to be stored and accessed by multiple parties across multiple
locations. Because a blockchain is encrypted and consensus verified, it
essentially notarizes itself. All of this adds up to the possibility of a
replacement for the double-entry accounting method that has been commonplace
since the Renaissance.
“Imagine a world where
accounting was not double entry, but maintained in ledgers simultaneously
recording the same item in multiple locations on multiple computers, all
self-balancing and checking every few minutes,” wrote Tony Hobrow, CEO of
VenturesOne Asia and NexAssure Group, in a LinkedIn article. “No
middlemen, no reconciliation, no corrupt date, no need for month-end cycles, no
need to bring together all the different books and records of departments and
counter-parties.”
That, in short, is the promise of
blockchain accounting.
Combining blockchain with artificial intelligence
Blockchain may transform the
accounting world as we know it, but other technological advances are already
making waves. Chief among them are innovations from the world of artificial
intelligence (AI). A 2018 analysis by International Data Corp. predicts AI
spending will reach $46 billion by 2020.
Machine learning is a subfield
within AI that should be of particular interest to accounting professionals.
Arthur Samuel, who coined the term, defines machine learning as giving
“computers the ability to learn without having to be explicitly
programmed.” With machine learning, tasks that have traditionally required
human intervention can be automated. This technology increases efficiency
within the accounting profession to an unprecedented degree, which in turn will
affect our future workflow process and how we interact with clients.
When you combine machine learning
and blockchain, you get nothing short of a technological revolution. It’s
possible to envision a world where accounting and auditing happen in real time,
with all relevant parties being informed every step of the way — a true
continuous audit. That future may still be a ways off, but now is the time to
start assessing which processes in your firm could be amenable to AI
technology. Accounting firms and corporate accounting departments should start
not only learning how to take advantage of the technology, but also testing new
ways of working internally with their teams and externally with clients. Starting
small with expense reporting or document collection applications can be a way
to gain confidence in the benefits of utilizing technology like this before
taking on larger applications like general ledger systems.
Visions of the future
What does this mean for accountants
and auditors? The short answer is change is on the horizon. While even the most
forward-thinking thought leaders don’t foresee a world where accounting
processes can exist without humans, there’s no denying that roles and workflows
will look radically different in the next few years.
Auditors will spend much less time
performing audits, and more time designing, reviewing, and verifying how
information flows between systems. Rather than audits being performed at
regular intervals, blockchain and machine learning present the possibility of a
true continuous audit. All of this technology adds up to more time for human
connection with your internal teams, as well as your external clients, with
soft skills, analytical abilities, and advisory services becoming important in
delivering value to an organization. With continuous audit, trends and missing
data could be identified much earlier, allowing for problems to be proactively
addressed, rather than reactively reported. Continuous auditing also would give
peace of mind to businesses and their investors while also, hopefully, reducing
many of the tasks that accounting firms often have written off or not charged
for.
A similar shift could also occur
for accountants. Everyday data-entry tasks are poised to become much easier,
freeing up time for accountants to focus on analysis and insights. Accountants
and firms that develop these skills now will be able to differentiate
themselves as the technology becomes widespread. The days of offering value
simply through accurate data entry and calculations are numbered, so taking the
time to retool now and work on your advisory skills is an investment in the
future of our work.
There’s no getting around the fact
that technologies like blockchain and machine learning are no longer a tiny dot
on the horizon. The future is here, and accounting professionals must be
willing to adapt.
(Source: Newsletter/CPA Insider –
By Amy Vetter, CPA/CITP, CGMA – 20 August 2018)
3. News –
24. The Isolated error
BT blames human error as it reveals £500m pension deficit gaffe
Mistake by actuary comes after
accounting scandal last year that wiped £8bn off its value. BT has revealed
another accounting error after its pension deficit was underestimated by £500m.
The telecommunications company,
which had £8bn wiped off its stock market value in 2017 after admitting to an
accounting scandal at its Italian unit, blamed the latest gaffe on an “isolated
human error”.
The error was made by BT’s
independent actuary, Willis Towers Watson, in its calculation of the company’s
pension deficit at 31 March. The restated pension deficit stands at £3.9bn as
at the end of June.
Simon Lowth, BT’s chief financial
officer, said: “We have received assurances from Willis Towers Watson that
there are no other errors. As you would expect, we are undertaking further
review procedures around that calculation.
“We spent a lot of time with WTW
making sure we understand what created the error. It was an isolated human
error that they identified. We are also working on what they need to do to
strengthen their controls.”
Following the £530m Italian
accounting scandal, which cost the outgoing BT chief executive, Gavin
Patterson, £4m in bonus payouts, the company’s accountant, PWC, was eventually
fired. BT would not comment on its future relationship with WTW.
Lowth pointed out the error had no
impact on the company’s profits, cashflow, the triennial valuation of its
pension deficit conducted last year, or any members of the BT pension scheme.
Nevertheless, another financial error was the last thing BT needed.
Laith Khalaf, a senior analyst at
Hargreaves Lansdown, said: “Clearly this slip doesn’t inspire confidence.”
BT said the correction amounted to
less than 1% of its total pension liabilities of just over £57bn.
WTW said the error was due to “an
actuarial assumption not being accurately reflected in our actuarial
calculations”.
“Willis Towers Watson has stringent
controls in place to confirm the accuracy of the calculations that we provide
to clients, and the error has now been corrected,” a spokesman said. “We are
working closely with BT to support their review of the matter.”
Patterson, who said he would still
be in place in November to deliver the company’s half-year results, said BT had
made a good start to the year. “We are making positive progress against our
strategy,” he said.
In the first quarter, Patterson
said, it had made the first 900 of a planned 13,000 job cuts over the next
three years to save £1.5bn.
BT’s financial performance for the
second quarter was slightly ahead of forecasts, and the company reaffirmed its
guidance for full-year revenue and profit.
This prompted
a 4% share price rise as investors responded positively after a string of
negative news that had left its share price down more than one-quarter in the
past year.
Total revenue for the quarter was
down 2% to £5.7bn. Reported profit before tax was up 68% to £704m, due to the
hit the company took relating to the Italian accounting scandal. Adjusted
profit was up 3% at £816m. Net debt increased to £11.2bn from £8.8bn.
The company has stopped reporting
broadband and TV subscriber numbers, which fell in the past two quarters, as it
focuses on increasing average revenue per customer rather than the number of
sign-ups.
Paolo Pescatore, an independent
telecoms analyst, said: “All providers will be seeking to lure households with
attractive offers ahead of the new Premier League season. BT must do a better
job of signing up TV subscribers and maximise BT Sport across its base.”
(Source: The
Guardian (International edition) – 27 July 2018)
25. PWC doing double duty as auditor and tax
lobbyist
PwC billed $10.74 million since
2013 as the exclusive registered lobbyist on tax reform for a coalition that
includes several audit clients.
The largest audit firm in the
world, PricewaterhouseCoopers LLP, is a registered tax lobbyist for a coalition
of some of the largest multinationals that includes a large number of its audit
clients.
PwC has earned $10.74 million since
2013, according to the Senate’s lobbying disclosure database, as the exclusive
registered lobbyist for the Alliance for Competitive Taxation, on a single
issue: tax reform.
(Source:
www.marketwatch.com, 30 July 2018)
