Attestation Update – A&A for CPAs

Technical stuff for CPAs providing attestation services

Good reads for accountants: Twelve minute CPE courses. Big data AI taking over audit work?

with 2 comments

Image courtesy of Adobe Stock.

Image courtesy of Adobe Stock.

In the near term, your CPE options will include twelve-minute courses.

In the long-term, ponder how much of your audit work could be replaced by artificial intelligence. I can grasp the idea of automating a large portion of detail testing. I can’t see the possibility of replacing the entire audit function. Stretch your brain with two articles from Jim Peterson.

8/11 – Journal of Accountancy – CPE standards update accommodates new forms of learning – It will be a while before you see this in a CPE class, but the AICPA and NASBA changed the CPE rules to allow for nano-learning and blended learning.

Nano-learning is a short course, say 12 minutes that will allow CPE credit in 0.2 hour increments. Picture a 24 or 36 minute course on how to conduct an inventory observation. Or a 12 minute class on how to prepare the planning materiality worksheet.

Blended learning allows mixing the format of classes, say a part of the class live and a part on-line. I’m thinking, just for starters, of a short self-study in preparation for a class and then the live lecture extending the discussion.

As someone who occasionally writes on-line courses, I don’t know how the economics of nano-courses would work because of the time needed to get a course prepared. Seems to me it would take almost as much effort and time to get a 12 minute course ready for market as it would for a one-hour course.

8/11 – Jim Peterson at Going Concern – “Rise of the Robots” – And They’ll Audit Better, Smarter, Cheaper – Stretch your brain pondering how many audit tasks could be performed better and faster with artificial intelligence. Ponder what parts of the audit would be left over when AI can do 100% observations or 100% recalculations.

Down side is not much would be left. Upside is all the fun, brain-stretching, interesting work would remain.

8/24 – Jim Peterson at Going Concern – “Rise of the Robots” – Cognitive Technology Threatens Us All – I think the point of the article is that AI, advancing at the still-operable speed of Moore’s Law, will someday replace what is currently a Big 4 audit, and that day is sooner than we could imagine.

Cheaply automating certain tasks at high quality I get. Picture a 100% recalculation of accrued interest receivable or interest earned in a financial institution. Or a 100% recalculation of payroll with simultaneous check that the pay rate was approved by the appropriate manager and HR, along with simultaneous match of all addresses in an employee’s file with all other addresses in a company’s database to look for duplicate addresses which suggest a ghost.

The downside is handling exceptions. You know, the employee whose pay rate was documented in a different way in a different system and not entered on the standard line in the standard file in the standard way. Or the employees and small vendors who live in the same apartment complex. Or the customers and vendors whose mailing addresses are at the same UPS Store mail drop.

My little brain can picture big data replacing a large volume of the testing on an audit. I can’t make the stretch to see how all the work could be replaced by AI. Perhaps that is merely because my brain can’t stretch that far, which is more a reflection on my imagination that the likelihood of AI making that much progress.

Written by Jim Ulvog

August 25, 2016, 8:08 am at 8:08 am

2 Responses

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  1. Jim, I am considering creating short online classes, but I agree with you. The creating, billing and collecting may cost more than it’s worth. But still, I like the idea, especially from the consumer’s side.

    Charles B. Hall

    August 25, 2016, 17:26 pm at 5:26 pm

    • Hi Charles:
      In some respects, the economics are sort of like an audit. Providing an audit of a $1M charity can’t be done for half of the cost of an audit for a $2M charity. Get down to some smaller size and further reduction in size doesn’t change the cost of the audit.
      Jim

      Jim Ulvog

      August 25, 2016, 17:30 pm at 5:30 pm


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