Doron Rozenblum

Managing Partner, Kreston-Ezra Yehuda-Rozenblum, Israel, Kreston Global Internal Audit Group Chair

https://www.kreston.co.il

Doron is the Managing Partner of Kreston-Ezra Yehuda-Rozenblum in Israel, leading the Risk Advisory Services division. With over two decades of experience in risk management and internal auditing, he excels in identifying operational risks and enhancing internal audit efficiency. Doron is also the Vice President of The Institute of Internal Auditors in Israel. He has a broad experience in all aspects of accounting, auditing and financial management. Direct experience with oil & gas, real estate, financial consulting and venture capital.

Herb Chain

Shareholder, Mayer Hoffman McCann P.C. Deputy Technical Director, Global Audit Group, Kreston Global.

www.mhmcpa.com

Herb is a highly experienced auditor and is a financial expert with over 45 years of experience in business, accounting, and audit, having served as a Senior Audit Partner at Deloitte. He holds certifications from the National Association of Corporate Directors and the Private Directors Association, with knowledge of private company governance and effective risk management. He has extensive knowledge in the financial services sector, including asset management and insurance.

Contact Herb here

Cloud technology, digital assets and the future of accounting

June 28, 2023

In an article recently published by the International Accounting Bulletin, Doron Rozenblum and Herbert M. Chain, elaborate on the profound changes sweeping across the profession. These changes are primarily driven by the adoption of cloud technology and the emergence of digital assets such as cryptocurrencies. To read the full article, read the latest audit and assurance supplement by the International Accounting Bulletin (paywall), or read the summary below.

Cloud technology changing accounting practices

As the authors point out, the widespread adoption of cloud technology in recent years has significantly transformed the accounting landscape. Businesses are capitalising on the numerous benefits offered by cloud-based accounting systems, including improved accessibility, cost-efficiency, and scalability. Real-time collaboration, streamlined workflow, and faster financial reporting have been made possible due to this technology.

Nonetheless, this digital transformation also introduces challenges in maintaining data integrity, security, and privacy. With financial data being stored on remote servers, it’s imperative that stringent security measures are employed by cloud service providers. Moreover, accountants need to acquire the necessary technical skills to effectively navigate and integrate these cloud platforms.

The rise of digital assets

Cryptocurrencies, a notable example of digital assets, are also playing a significant role in reshaping the future of accounting and attestation. While they provide alternative forms of digital currency offering transparency, security, and efficiency, their volatile nature poses challenges in valuation and recognition. Furthermore, concerns surrounding the ownership and control of cryptocurrencies necessitate the development of enhanced attestation services.

Blockchain technology, which underpins most cryptocurrencies, presents unique opportunities for accountants. It can facilitate the auditing of smart contracts and cryptocurrency transactions for accuracy and compliance. However, this also necessitates the development of an understanding of blockchain protocols, and the skills needed to audit clients engaged in the digital asset space.

The future of accounting and attestation

The convergence of cloud technology and digital assets signifies a shift in the accounting and attestation landscape. While it offers enhanced capabilities, it also requires professionals to equip themselves with new skill sets, knowledge, and a proactive approach to addressing concerns related to data security and regulatory compliance. The opportunities these technological advancements present for accountants to position themselves as trusted advisors in the digital age of finance are significant.

Opportunities for accountants; a case study

In a case study discussed in the article, a digital asset technology firm required Service Organisation Control (SOC) 1 Type II and SOC 2 Type II examinations. These examinations provide opportunities for accountants to engage in attest work. Specifically, these opportunities arise in the independent evaluation of a client’s controls and processes that may impact its customers’ financial reporting (SOC 1), and the assessment of the client’s security controls and availability of their platform (SOC 2).

Moreover, the readiness assessment stage involves accountants assessing the client’s current operations and determining its preparedness to maintain an annual SOC. This involves identifying existing controls, determining which controls should be in place, and identifying gaps for remediation.

During the examination phase, accountants verify the scope of the SOC examinations, confirm changes to control areas, and identify the client’s controls through walk-throughs, observations, and inspections of evidence. They then test the suitability of the design and operational effectiveness of controls.

Overall, these processes highlight significant opportunities for accountants in attest work, offering them a chance to play a crucial role in evaluating and enhancing the effectiveness of clients’ controls and processes.

*The original article was authored by Doron Rozenblum, Chair of Kreston’s Global Internal Audit and Risk Group and Managing Partner at Kreston EYR, Israel, and Herbert M. Chain, Assistant Technical Director for Kreston’s Global Audit Group and Director at CBIZ MHM, USA.