The Accounting Profession and IT

As I prepare for my trip to the West Coast I am looking forward to seeing fellow EI, David Terrar and his presentation at Office 2.0 on the community IT Counts he helped develop for the Institute of Chartered Accountants of England and Wales (one of the oldest and most influential accounting bodies in the world). I am then staying over the weekend to participate in the CFO Technology Summit.

And it occurred to me that the accounting profession has in some ways influenced the IT industry (not always positively) more so than even the science and engineering professions.

 - The Big 8 (5,4) accounting firm impact on the systems integration market, particularly in the 1990s

- The reporting relationships of so many CIOs to their CFOs. Especially after the budget overruns in the late 90s related to Y2K, ERP and eBusiness, CFOs took tighter control over IT budgets 

- The recent SOX impact on compliance IT spend and the "crowding out" effect it had on other IT investments

- Revenue recognition rules and how they have impacted software vendor behavior in particular. On the flip side, capitalization rules and how they have impacted buyer staffing and sequencing of projects

- Business process scrutiny accountants brought to IT projects in the 80s and 90s, and more recently, security and business continuity focus through SAS70 reviews

- Feature/function influence they have had in many currency, taxation, costing, budgeting, reporting areas

Love them or hate them (on this blog I have been harsh about SOX and compliance spending waste), accountants have influenced IT quite a bit over the decades.  So it will be good to hear David talk about how they are leveraging technology to help themselves, and it will be good to hear CFOs at the second conference talk about their changing perspectives on IT.

Comments

[Paul Wallis]

Hi Vinnie,

In another blog you recently posed the question:

“about whether auditors are keeping up [with] newer issues coming up with SaaS and cloud computing - are the SAS 70 audits keeping up with unique multi-tenancy, virtualization, shared across customer asset issues?”

Hopefully there will be some recognition at the upcoming Technology Summit that, as I put it in my blog, “the problems in performing effective audits and risk assessments are only going to get worse, and there will be a rise in expensive litigations.”

If we are to properly audit a company’s reliance on IT it is essential that we have sight of how any third party assets through which the company’s data flows are managed. And we must clearly understand the controls the third party places upon the assets and the data flows.

There is more about “Auditing IT systems” here:

http://www.keystonesandrivets.com/kar/2008/08/auditing-it-sys.html#more

cheers

[David Terrar]

Hi Vinnie,
Thanks for the mention! Looking forward to see you and the other EIs again. Actually ICAEW have made a big jump in to the we 2.0 world with this community, and they haven't got nearly enough recognition for what they are trying to do in the UK. I'm looking forward to sharing what we and they have done so far.

[Krishna]

I see you getting naughty here man, or is it that you're just being nice to those wall street accountants that used ingenious financial modeling algorithms to meld junk credit with good, inventing the alphabet soup of CDO,CLO,ABS,MBS that crunched up banks they worked for - all must have influenced IT vendors (millions of $$ of software,ADM etc.) in a very, very positive way though! Haven't they?

[vinnie mirchandani]

Krishna, I did say they have influenced - in good and bad ways...

[gm]

Hi Vinnie,

Would you have a separate entry on IFRS? This sounds big and may go further than XBRL as it's mandated by the SEC. None other than SAP's CEO has a book out on it, too.