Transforming the Profession

in the Digital Era

Andrew Ratcliffe

ICAEW President

Technology trends

Impact on profession Audit

Advisory

Tax

Finance functions

Small practices

Financial services

Financial reporting

Positioning for the future

• Remain relevant

• Innovate with new services Accounting tasks

and services

• Build higher-value skills

• Encourage flexibility and learning Skills

• Exploit new markets

• Respond to different competitors Organisations

ICAEW approach

Thank you

Cyber Resilience In the Digital Era

Kyra Mattar,

Director, PwC

What we will cover in this session

Opportunities and Threats

The New Dynamic- New Opportunities

The New Global Business Ecosystem

• Interconnected, integrated, and interdependent environments

• An ecosystem built around a model of open collaboration and trust

• Constant information flow is the lifeblood of the business ecosystem

• Adversaries are actively targeting critical assets

• Years of underinvestment

Evolving Threat Landscape

Emerging threats – Social engineering Building a profile by connecting the dots

All sectors and locations are targets

Cyber Attacks –

Who, What and How?

Who are we protecting against?

The Actors and What They Target

Cyber Attacks – Significant business impacts

• Financial loss

• Share price

• Regulatory

• Costs of remediation & investigation

• Brand & reputation

Profiles of Threat Actors

Putting cyber security

into perspective

Putting cybersecurity into perspective

Cybersecurity represents many things to many different people

Key characteristics and attributes of cybersecurity : • Broader than just information technology and not limited to just the enterprise

• Increasing attack surface due to technology connectivity and convergence

• An ‘outside-in view’ of the threats and potential impact facing an organization

• Shared responsibility that requires cross functional disciplines in order to plan, protect, detect and respond

Evolving perspectives Considerations for businesses adapting to the new reality

A holistic approach

Key success factors

6 steps to building cyber resiliency

What does all this mean for me?

Thank you

Enhancing

Assurance Through

Data & Analytics

By Lee Sze Yeng, Head of Quality

Agenda

•Why Data & Analytics?

•What is D&A?

•D&A in Audit

•Key challenges

•How to get started?

•Future state of audit

Evolving world, dynamic change

Changes in Technologies

Big data

Changes in Business

model

Social media

E-commerce

Respond to calls

Efficient

Stay relevant

Beyond basics

Audit quality

Share insights

DATA

• Structured data

• Unstructured data

• Internal data

• External data

ANALYTICS • Examine and model

• Make connections

• Draw conclusions

• Support decision making

Master records e.g. customer,

vendor, inventory,

price

Transactional Data e.g. purchase orders,

deliveries, billing

External sources e.g. vendor data, social media

What is D&A?

Tim

elin

ess o

f re

su

lts

Ad-hoc

Structured / Repeatable

Predictive

Level of Complexity

Continuous / Real-time

Data & Analytics journey

Leverage on technology and deploy D&A to:

Benefits:

Obtain Audit Evidence Enhance Audit Quality Provide Insights

• Greater assurance – coverage of larger data population

• Efficient – evidence gathering

• Risk focused – targeted sampling, investigation of outliers, more time for judgmental areas

• Insightful – trend analysis, identification of risks and opportunities

D&A in Audit

Payment

Good Receipts

Purchase Order

Purchases by status analysis

Purchases versus accrual analysis

Obtain audit evidence: example 3-Way Match

Automate vouching

Greater coverage

Check completeness

of accrual

Using advanced statistical

analytics

Identify outliers e.g different

vendors with same address,

unusual volume or frequency

Investigate outliers

Enhance audit quality: example anomaly detection

Benchmark

results

Study trends

Compare

compliance

Identify

opportunities

for process

improvement

Cost center: A B C

3-way

match

Matched 33% 35% 56%

Manual release 1% 10% 11%

Total 34% 45% 67%

2-way

match

Matched 45% 46% 9%

Manual release 7% 2% 2%

Total 52% 48% 11%

Direct

invoices

Auto release 2% 5% 6%

Manual release 12% 2% 16%

Total 14% 7% 22%

Total 100% 100% 100%

Credit notes 9% 3% 2%

Provide insights: example cost centers benchmark

Key Challenges

Mindset & skillset

Data availability & integrity

Data sources & flow

False positives

Analysis tools

Auditing standards

Stakeholder engagement

Data security

People Process Systems

How to get started?

Invest in people Rethink processes Invest in tools

Agree audit analytics scope

Procurement cycle

Human Resource cycle

Perform data walk-through

Finance team

IT team

Database administrator

Operational personnel

Extract data from IT system

ERP system (e.g. SAP)

In-house system

Validate and sanitise data

Test for accuracy

Data validation e.g. control total checking

Data sanitisation e.g. merging, consolidation

Execute audit analytics

Audit evidence

Actionable insights

Follow-up and clarify differences

Value analysis

Date analysis

User analysis

Outliers / Trends

Present results

Financial Reports

Visual presentation

Data & Analytics workflow

• Technology and D&A will play integral role

• Continuous and “automated”

• Demonstrate relevance

Future state of audit

How does data and analytics brings additional value and insight to the audit

process?

Combating Money Laundering

– The UK Experience

Anthony Harbinson Chairman, Anti Money Laundering Task Force,

UK Consultative Committee of Accountancy

Bodies, FCCA

Partner’s

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Money Laundering

• Proceeds of crime are siphoned successfully through the legitimate financial system; makes crime worthwhile.

• Associated financing of terrorism – significant consequences and very topical.

• Serious consequences for society - transfers economic power from market, government, and citizens to criminals, increases law enforcement and health care costs, economic power that accrues to criminals has a corrupting effect on all elements of society.

• Impact on the individual – people smuggling, bribery and corruption, slavery, drug trafficking.

CCAB

• Five UK chartered accountancy bodies – ICAEW, ACCA, CIPFA, ICAS and Chartered Accountants Ireland.

• 245,000 professional accountants in the UK and the Republic of Ireland; 354,000 worldwide.

• Represented in all sectors – business, practice, public sector – money laundering impacts on all.

Coming Out in the Wash

June 2014 - Coming Out in the Wash Views on the UK’s Anti Money-Money Laundering Regime published by CCAB, http://www.ccab.org.uk/documents/AMLFinalReport.pdf.

Key Outputs:

• Current UK AML regime is seen as amongst the best and a good deterrent

• But work to be done to maintain effectiveness, optimise resources and communicate evidence of impact

• Sharing information between key players to facilitate a more joined-up and informed approach seen as critical

This issue continues to be a focus for CCAB.

Partner’s

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Regulatory Regime

• Transparency International – lack of powers available to law enforcement agencies in the UK.

• Accountants cannot work in isolation – lawyers, Government and others all need to pull together.

• Accountants legally obligated in the UK to report suspicions of laundering to the National Crime Agency to enable them to disrupt terrorist funding.

• Internationally we need to see co-ordinated efforts

The Role of the Profession

Accountants seen as:

• The gatekeepers of financial probity

• Champions of ethical business conduct

• Key contributors and influencing the future development of national regimes that recognise the international dimensions.

So how can it be done? Exercising professional scepticism

Professional scepticism is the first line of defence in tackling money laundering and terrorist financing

Look out for red flags such as : • wire transfers following cash deposits • negative media coverage about the client or company • “low level” or “low risk” activities that fund crime and terrorism - DVD pirating,

counterfeiting, cigarette smuggling or credit card fraud • Cash mules, pre-paid gift cards, pre-paid credit cards and diversion of funds • Use of Massive Multi-Player Online Role Playing Games (MMORPG) • Being unable to ascertain sources of funds • Transfers of money where there is no apparent business relationships

Questions and Answers

Visit us at http://www.ccab.org.uk/ and follow

us on twitter @UKCCAB for future news.

Thank you

Managing Risk in An

Evolving Business World:

Accountants’ Value

Andrew Harding

Managing Director, CIMA

Partner’s

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Today’s agenda • What is risk management and why is it important?

• Key messages from our report: Global state of enterprise risk oversight

• The need for effective risk leadership - and how the CGMA Global Management Accounting Principles can help

• How the business model can lay the right foundations

• Any questions?

Partner’s

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What is risk management?

• The process of identifying, assessing and responding to uncertainty

arising from the organisation’s activities to support the delivery of its

strategic objectives.

• External pressures include:

• A fast-changing world - globalisation, digitisation, acceleration.

• Corporate disasters - exacerbated by the power of social media

• Regulatory pressure

Global State of Enterprise Risk Oversight

In other words – how are organisations managing risk?

We summarise key findings

from a recent survey of over

1,300 executives in

organisations across the world

and provides insights on the

current state of enterprise risk

oversight.

What’s the report about?

CGMAs and business leaders will find the report of interest because it: • Encourages them to review their current risk oversight

• Helps them to benchmark their own risk management programmes

• Highlights opportunities for improvement.

The changing business environment:

But most organisations aren’t

prepared..

…and don’t have mature systems in

place…

And senior management is not

receiving the right information…

And few are embedding risk into

strategic planning…

And few organisations are investing in

training…

Opportunity can be missed to drive

competitive advantage:

What does it take to manage

risk effectively?

?

GMAPs: the four core principles

Principle 1: Communication

When the right people have

the right information at the

right time, they are better

placed to take decisions that

will drive long-term value

generation.

Principle 2: Information is Relevant

Management accounting scans

the best available resources for

information that is relevant to the

decision that needs to be taken,

the person making the decision

and the decision style or process

being used.

Principle 3: Impact on Value

Management accounting

provides a thorough

understanding of the

organisation’s strategic aims,

stakeholder needs and agreed

targets - ensuring that actions

are prioritised by value rather

than cost.

Principle 4: Stewardship

People who

consistently adhere to

good values and best

practice become

trusted guardians of an

organisation’s value.

How do the GMAPs support risk

management?

• Identifying risks and advising on appropriate responses

• Embedding risk management within an organisation’s thinking

• Supporting non-finance colleagues to assess the likelihood and

impact of all risks

Case

study:

MassMutual

The virtual world: challenges from

big data and cyber attacks

The business model:

‘An organisation’s system of

transforming inputs, through its

business activities, into outputs

and outcomes that aim to fulfil

the organisation’s strategic

purposes and create value

over the short, medium and

long term’.

Source: International Integrated Reporting Council

The ‘six capitals’:

• Financial

• Manufactured

• Intellectual

• Human

• Natural

• Social

Further reading:

Our report, ‘From insight to impact unlocking opportunities in big data’ can

be found at:

cgma.org/Resources/Reports/Pages/insight-to-impact-big-data.aspx

The IRM Cyber Risk Report can be found at:

cgma.org/Resources/Reports/Pages/irm-cyber-risk-report.aspx

For other reports on risk management visit:

cgma.org/riskoversight

Thank you