Education

Although Mark Twain once said, "It's okay to make predictions, as long as they are not about the future," I would like to make some obvious predictions and suggest some other possibilities. The accounting profession is clearly changing and will undergo even more change in the coming years. Bob Elliott, head of the AICPA's task force on assurance services, has delivered a number of speeches to AICPA gatherings, state societies and academic groups. The world that he depicts is quite different from today environment. This article explores some of those changes and their implications for auditing/accounting education.

Customer-Driven Assurance Services

Today's information technology delivers highly reliable information. Elliott suggests that the auditor's role will shift from focusing on reliability to relevance. To be relevant, information must be timely. Elliott sees a world of customer-driven real-time responses from auditors. The year-end audit of historical financial statements may become a thing of the past. Customers have never really "wanted" audited historical data three months after the year is over. Ideally, customers would like relevant, audited information on demand. This relevant information may very well include forecasts and projections. Will CPAs provide the desired services, or will other information professionals step in to meet users' needs?

Information Technology

Information technology is having a dramatic impact upon the timeliness, accuracy and availability of financial information, which in turn impacts the nature of assurance services. Information technology may be the enabler for the customer-driven world envisioned by Elliott.

We don't have to look to the future to see the benefits of information technology on accounting systems. For example, many large companies can close their books for the year-end audit in six to 14 days, compared with 30-60 days just a short time ago. Companies want to close the fiscal year, complete the audit and announce earnings as soon as possible. The window of time to complete the traditional year-end audit has shrunk. CPAs must be adept with technology to meet client's needs for faster service.

Another trend improving the timeliness and reliability of accounting data is Electronic Data Interchange (EDI). EDI is pervasive in some industries and is projected to become widespread. EDI should improve data reliability as transaction data will be captured electronically, and error-prone rekeying of data will be avoided. The Internet, it appears, will also increase the level of electronic commerce. While the Internet may provide more timely information, its reliability is questionable--hence an opportunity for assurance providers.

How will more timely and reliable information translate to economic value? Client/server technology and data warehousing (vast databases containing internal accounting, operating, sales and production data, as well as relevant external data) have dramatically improved the information systems for decision makers. But these decision makers need assurance that the database contains reliable (accurate and up-to-date) information. That's where CPAs, or perhaps other information professionals, will step in.

Meeting Customers' Needs

Auditors have to meet customer needs to remain competitive. Some accounting firms are moving in the direction of the paperless audit. The large accounting firms and some smaller ones have used electronic accounting and audit information services (e.g. NAARS) for years. Several firms have automated their audit workpapers. Coopers & Lybrand LLP has recently implemented its CLASS paperless audit system. In its Philadelphia office, all workpapers will be eliminated by December 31, 1996. Exchange of information among audit teams and the client is done via Lotus Notes in virtually real time. Access to workpapers by managers and partners at any time, from any location provides the ability to quickly respond to the client's questions.

Audit Education

The main implication of all this is not really technological. Certainly auditors will have to be technologically "literate," but only a small subset of auditors will be technical specialists. Auditors will have to be better business advisors. The mundane, non-value-added audit work (e.g. photocopying, re-entering data) will be eliminated. Audits will be increasingly geared toward adding value, with auditors asked to suggest system improvements, assist with difficult accounting issues, provide tax advice, and look for opportunities to help clients improve their businesses.

Part of the traditional audit course must remain. Auditors will always need to understand how to gather and evaluate evidence to validate client assertions. Business (not just accounting) education must emphasize on-line information search skills. Difficult accounting judgment issues require research and interpretation. Several accounting courses should require students to perform on-line accounting research. Furthermore, students should be asked to research and analyze accounting judgment issues in a realistic, contentious setting. In other words, classroom cases should be conducted with some students playing the auditor role and other students playing the client role. Such exercises improve three important skills: information seeking, information analysis, and written and oral communication. Finally, it will be imperative that students understand the business setting of a transaction and the risks facing the client company. Auditing courses have become more analytic for some time. This trend must continue.

If the entire business/accounting curriculum helps develop the skills mentioned above, the auditing class can be a true capstone course in which students can demonstrate mastery of these skills. Many schools are looking for external validation of their education. By having audit managers and partners sit in and evaluate the role-playing exercises, we could facilitate such feedback.

For some time, predictions have been made that technology will have a radical impact on accounting and auditing, and therefore on education. Those predictions are now coming true. Mark Twain asked that we not make predictions about the future. Frankly, the future is now]

Robert N. West, CPA, is an assistant professor of accountancy at Villanova University.