The following article discusses session three in the IR Global Virtual Series on 'The Advent of AI: Embracing Technology in Accountancy'
Ireland – (DM) While no doubt there are challenges which have to be acknowledged, we would also see the opportunities for practice growth in keeping pace with technology and AI enhancements because we tend to find that good clients will always appreciate sound guidance that can enhance their business models and processes.
The sooner that firms become more accustomed and au fait with which changes that are critical to their clients’ own specific business needs they can then identify and direct the client as to how to maximise their opportunities.
We see significant opportunity in many different sectors and industries such as retail, e-commerce and financial to name a few as to how we can continue to grow and acquire new clients by providing a modernised service offering that is based around focusing on value adding areas for clients.
India – (AR) My company, August Consulting, serves multinational clients here in India, but you may be surprised to learn that in India none of them really use technology that could be called Artificial Intelligence in any form.
The focus here is on the cost of labour, which is very cheap and companies like to keep their costs low. Bringing in these technologies has its own challenges, so, although many companies have development centres here in Bangalore and Hyderabad serving clients other countries, smaller companies in India, even if they are multinational companies, do not focus on the use of Artificial Intelligence for their day-to-day activities.
We have to wait and watch how things unfold in the times to come.
Oklahoma, U.S. – (JC) We see client challenges as an opportunity for us, because of our focus on the strategic consulting side of things.
I’ll give you two really quick examples of that;
One is in the e-commerce industry, in which we worked with several IR global members in other countries. A client wanted to set up an e-commerce platform in the US, which, from a purely e-commerce standpoint, was relatively straightforward.
The problem, that we were able to help the client with, is interfacing that e-commerce platform with the compliance and regulatory side of things. As Bruce said earlier, some vendors are slow, and the regulatory side of things still requires a lot of paperwork that has a tendency to slow things down. I think this is a challenge that will soon be overcome, but it's also an opportunity for us to help identify how to do that.
Another example comes from a client who has a non-profit organisation. His challenge came from a potential donor that wanted to donate to his non-profit organisation using the cryptocurrency Bitcoin. The donor was from another country, so it led us to helping their client, deal with not only the cross-border impact but also how to accept the currency and the requirements were.
We were able to share the knowledge we have gained with our client and work through some of those issues. We are educating not only our own staff but also our clients on these matters, which is the most value we can give in the near term.
Switzerland – (FD) My office is in the Canton of Zug, which is now called the Crypto Valley of Switzerland and is a world home for blockchain companies.
Around my office, there are more than 250 companies just dealing with blockchain based technology, and 550 in Switzerland overall.
You definitely have a problem when companies want your advice, because if they are running an initial coin offering (ICO) you need to explain how they are accounting for security or utility tokens. Those young small start-up companies have much of their capital in cryptocurrencies and they want to post it on the balance sheet.
As an accounting firm, you have to have to find the right answer and have to help and support their goals.
Switzerland borders on Germany, Austria, Italy and France, so geographically we have a lot of cross- border transactions. This involves customs handling, tax advice, cross-border social security and other things. There are a lot of accounting challenges that are becoming more frequent in Switzerland.
Spain – (JLH) It’s still very early to understand how AI will be fully adopted by our clients and how it will be treated by the regulatory bodies and, especially, the tax administration in Spain.
The Spanish National Securities Market Commission (Comisión Nacional del Mercado de Valores) considers cryptocurrencies and ICOs (Initial Coin Offering) like issuance of trading securities in certain scenarios. As of today, both this Commission and the Bank of Spain have confirmed that no cryptocurrency issues or ICOs have been registered in Spain yet.
A different thing is how the tax authorities consider these cryptocurrencies in Spain. They need to be tagged, but, at the moment, this is not clear enough. The General Directorate of Taxes (Direccion General de Tributos) has issued binding consultations with different criteria when considering Bitcoins and other cryptocurrencies.
The Spanish Institute of Accounting and Accounts Auditing (ICAC) considers them an intangible asset but also considers them as inventory if the company usually trades with them.
In conclusion, we feel there is a lack of legislation that generates legal uncertainty, and we urgently need clearer regulation, at least from an accountancy and tax point of view.
Australia – (BS) In our own client base, we're not seeing AI being embraced at a rapid rate. I think in Australia, generally, we are not at the leading edge of the cryptocurrency phenomenon.
I see this linked to the issue of globalisation. So, for example, in order to protect the tax base, Australia has now introduced GST (VAT tax) on low-value online sales where these used to be tax exempt.
It’s these types of globalisation issues that are actually going to impact on us from a tax and accounting point of view. This could be dealing with cryptocurrencies or multi-currency accounting or taxing issues when clients are trading online and delivering goods and services in a global world.
That’s the real challenge for us, in terms of how we deal with that.
Netherlands – (RR) I think the biggest challenge, is not so much accounting technology as such.
I'm more concerned about regulatory requirements and legislation lagging behind, both from financial supervisory bodies, but also from tax authorities. I think the fact that those organisations are typically followers of changes in business and technology, rather than leaders, they will cause us the biggest challenges.
This will manifest itself for example in questions relating to the valuation of assets, how certain activities are allowed and how to monitor changes. This represents substantial challenges while advising clients on what the exact requirements of the different authorities such as tax authorities, financial market supervisors etc are, especially when working internationally on Fintech initiatives.
That's one of the challenges I see to be honest.
Florian Diener (FD) Diener Advisory GmbH – Switzerland www.irglobal.com/advisor/florian-diener
John Curzon (JC) CCK Strategies, PLLC – U.S. – Oklahoma www.irglobal.com/advisor/john-curzon
Damien Malone (DM) Malone & Co.– Ireland www.irglobal.com/advisor/damien-malone
Bruce Saward (BS) Saward Dawson Chartered Accountants. – Australia www.irglobal.com/advisor/bruce-saward
Joan Lluís Hereter (JLH) HyC Consulting Empresarial SL – Spain www.irglobal.com/advisor/joan-lluis-hereter
Arvind Rao (AR) August Consulting Private Limited – India www.irglobal.com/advisor/arvind-rao
Roland Rompelberg (RR) Maprima – Netherlands www.irglobal.com/advisor/roland-rompelberg