Technology

1. Technology IESBA Meeting New York, USA September 17-20, 2018 Patricia Mulvaney, IESBA Member, Technology Working Group Chair

2. Objectives of the Session • To receive a presentation on the role and work of IFAC’s Technology Advisory Group • To share views about respondents’ comments to the SWP on the topic of technology • To provide input on the focus and approach of the Technology Working Group

3. Technology Advisory Group IESBA Sylvia TsenExecutive Director New YorkSeptember 17th, 2018

4. Purpose and Objective • Identify key technology trends that are/will impact the global accountancy profession; • Raise awareness, speak out, and demonstrate the profession’s expertise* • Provide input to IFAC’s comments and submissions to external stakeholder groups (G-20) • 7 members (IFAC Board reps and member body reps) * Aims to assist PAOs / the profession with access to tools, information; advocate and speak out on behalf of the profession; produce 1-2 unique thought pieces. Monitor work of IFAC Committees and standard-setting boards.

5. Which technology trends and why? • Artificial intelligence and robotics • Blockchain (distributed ledgers) • Cybercrime and cybersecurity • Data (big data, data analytics) Impact on audit process, auditor and CFO / finance manager role

6. Input to policy • G-20 • “Create a secure and digital-ready investment environment across G20 countries” • “Building trust in the digital environment demands assurance and security that citizens can understand and have confidence in. The global accountancy profession stands ready as a partner with government and business to enable this future”

7. Education, skills and competencies: IFAC Board and TAG • “TAG: It’s About Tech!” (Council session >100 attendees) • Most boards don’t have cyber knowledge • Future of “teams” (there will be a robot) • Skills to germinate & grow vs destruct • IFRS knowledge needed? • Routine for robotics… • IAESB Survey on ICT Skills • Next steps: Thought leadership paper and virtual panel session

8. Understanding complex technologies • IBM Senior Team engagement & Watson demo • Machine learning and big data • Cybersecurity lack of experts and lack of spending • Wearables • Wall Street Blockchain Alliance • Accountants needed, especially for smart contract process • Microsoft Artificial Intelligence (and Ethics)

9. Supporting professional accountancy organizations Reaching the Francophone and Spanish profession • Collaboration with Forum of Firms and PAOs • 46 Gateway video segments • AI/Robotics; Audit Technology; Blockchain; Cybercrime; Data / Predictive Analysis; HR perspectives Powerpoint Templates for PAOs • Blockchain & Data Analytics

10. Supporting professional accountancy organizations • Launch of “TAG Virtual Technology Series” • October 17 Data Analytics webinar (Robert Harris, Chair) • Data analytics firm, behavioral expert, Deloitte partner, IAASB data analytics TF chair • Aim for 3 a year • Skills and competency, Future of Audit, Cyber • Blockchain – save for later • Ethics and trust?

11. Global Knowledge Gateway 1,000,000+ Unique Visitors 210,234 technology pageviews

12. IFAC TAG Questions or view?

13. Key Comments to SWP CP • The topic of technology and related services should be given priority • Strong support for principles based approach • The CF and FPs are sufficiently robust to apply to changing developments in technology • CF and FPs can be applied nimbly as change occurs, keeping the Code relevant into the future • Timeline should be accelerated • Opportunity to be responsive by developing “interim” non-authoritative material such as guidance and thought leadership piece in advance of more formal authoritative changes to the Code

14. Key Comments to SWP CP • Consider reviewing existing requirements in Code to determine if they remain relevant and fit for purpose after considering the impacts of evolving trends and developments in technology • Consider focusing on identifying two or three emerging issues each year and providing timely, relevant and practical guidance • Consider using advisory groups or panels and external experts in developing informed, credible guidance • Coordinate efforts among IESBA work streams in considering the impact of technology

15. Key Comments to SWP CP • Potential ethics issues cited: • Need for/opportunity to revisit terminology, definitions and examples in the Code to reflect more closely the digital transformation business and society are undergoing. For example: • Does the definition of “professional activities” need to be re-examined? • Is clarity needed in defining whether licensing arrangements for technology based solutions constitute a professional service or a business relationship? • What is the definition of “office” in a virtual work environment? • What is the meaning of “routine and mechanical” in a highly digital environment?

16. Key Comments to SWP CP • Potential ethics issues cited (continued): • Threats to confidentiality should be a focus due to the quantities of data being collected and used • Threats to professional competence and due care due to lack of technical knowledge • Professional judgement may be impaired due to information overload or questionable quality; also potential challenges to effective professional judgment if audit trail of machine-based decisions is not transparent. • There may be bias caused by use of AI

17. Key Comments to SWP CP Question for IESBA View and reaction to the key comments?

18. Potential Areas of Focus

19. Potential Areas of Focus Any particular technology development that should be treated as priority by the WG?

20. Approach of the Working Group

21. Approach of the Working Group Questions for IESBA Board’s view is sought on the following: • Suggestion of professional organizations/NSS that WG can work with • Effectiveness of advisory group/expert panel in light of PC comment • Outputs (e.g. staff publication, thought pieces) • Other comment

22. Next Steps