Considering how technology has taken over the accounting profession, one major skill required for accountants to prepare for the future is adaptability, a report has stated.
This was the viewpoint of David Lyford-Smith, Technical Manager in the Tech Faculty of the Institute of Chartered Accountants in England and Wales (ICAEW), at the 49th annual accountants conference organised by the Institute of Chartered Accountants in Nigeria (ICAN).
The conference, which had the theme: ‘Building Nigeria for Sustainable Growth and Development’, took place in Abuja, recently.
David Lyford-Smith, who presented a paper at the plenary session titled: ‘Disruptive Innovations: Challenges and Opportunities in the Accounting Profession,’ explained that professionals needed to adapt to changing standards in the industry, especially as it adjusts to emerging technology.
He noted that the accounting profession was already reacting by creating exams and learning materials to produce knowledgeable newly-qualified accountants.
He added: “Nigeria has a young and growing accountancy profession and this means there is a huge opportunity for students and current accountants to be trained today for the needs of the near future.
“In the very near future, the number one skill for accounting will be adaptability. Accountants won’t have to be technologists but must be able to talk to them; they need to be able to meet in the middle.
“These effects are already being felt. The Big four – KPMG, Ernst & Young (EY), Deloitte and PwC- are already struggling to keep their juniors occupied while teaching them the basics.”
Lyford-Smith, added that other skills that would be required were statistical thinking and understanding data.
According to him, “Understanding statistical thinking is a key skill for auditors interpreting analytics data. Software may be able to process huge amounts of information, but interpreting the results correctly means taking a skeptical interpretation and understanding concepts such as margins of error, outliers, sampling bias, and so on. “Accountants still need to be able to prioritise useful tests above interesting ones and be able to tell the difference.”
Speaking on the transformational trends in accounting aptly referred to as the ‘ABCDs of accounting technology’, Lyford-Smith explained that these have been the focus of the ICAEW’s tech work over the last couple of years.
The ABCDs of accounting technology are artificial intelligence (AI), blockchain, cybersecurity and data.
He said: “Once accountants adapt to changing trends, they will realise how much time and resources can be saved. For instance, AI involves automating even non-repetitive tasks, replicating accountants’ intuition and turbo-charging accountants’ judgment.
“With blockchain, there is no need to reconcile books, although the accountant will still need to assess the economic value of assets.”
Lyford-Smith, however noted that cyber risk was high but explained that there was a need for new controls around detection, response and resilience.
With the recent focus on big data, new sources of non-financial data were available to provide hard evidence for decisions, identify how data supports specific decisions and provides value, as well as check the integrity and quality of new sources of data.
The Excel specialist who has strong interest in digitalisation of taxes, emphasised that technology was important for audit and taxation, saying it provided simplification and could be tailored according to each country’s specific circumstances.
He disclosed that the ICAEW’s Digital Tax report looked at how tax authorities in 12 countries – including Nigeria – were making use of the opportunities to improve efficiency and reduce compliance costs.
Nigerian Breweries to Continue Paying out all Profit as Dividend
Nigerian Breweries Plc has no plan to change its dividend policy of paying out all profit to shareholders, indications have emerged.
The leading brewing firm, which is owned 53.23 per cent by Heineken N.V Group, has a policy of paying out all its profit as dividend to shareholders. While Nigerian Breweries most times resort to bank borrowings to fund its operations after paying out all profit as dividend, it had always explained there was no need to plough back its earnings into the business, hence its robust dividend policy.
Although some analysts have picked holes in the company’s decision to always pay out all profit as dividend then go for bank borrowings at high interest rate, the company does not have immediate plans to change that dividend policy. This indication came from a financial forum organised by the brewery firm recently.
Also, the company does not have plan for any capital expenditure for now, saying spare capacity is more than enough to accommodate demand growth.
However, the company said it sourced 57 per cent of raw materials locally in 2018, while its target is it to increase this to 60 per cent in 2020.
The company’s sales for the half year ended June 30, 2019 was driven by premium lager Heineken, which grew by double-digit. The company explained that the one per cent decline in sales was by caused by the higher excise tax.
However, the company has confirmed that market share in the economy segment was under competitive pressure from International Breweries, which discouraged it from price increases implementation for fear of further market share losses.
Also, Nigerian Breweries Plc took Stella (premium lager brand introduced in 2017) and Maltex (malt drink) off brand portfolio because their performance did not meet expectations, while Malt brands like Maltina and Amstel Malta are said to be facing stiff competition from other malt brands as well as soft drinks.
Nigerian Breweries Plc ended the H1 of 2019 with profit after tax (PAT) of N13.3 billion showing a decline of 27.9 per cent compared with N18.4 billion recorded in the corresponding period of 2018.
The recorded a revenue of N170.2 billion as against N172.659 billion in 2018.
While administrative expenses fell from N10.34 billion to N9.44 billion, financing cost rose from N4.287 billion to N5.252 billion.
Analysts at WSTC Securities Limited, said Nigerian Breweries reported a weak H1’19 performance, particularly in the second quarter (Q2) of the year.
The analysts said that beyond the increased excise duties charged on Nigerian Breweries Plc’s products, the decline in revenue to the fiercely competitive landscape in the industry, especially from International Breweries Plc.
“While NB reported a decrease in revenue in H1’19, International Breweries grew its top line by 29 per cent year-on-year, which asseverates that the latter has increased market share during the period,” they explained.
According to them, they expect weak revenue growth in the near to medium term, owing to increased competition and continued effect of excise duty imposed; amid weak consumer demand due to lower purchasing power.