INTHEBLACK February 2022 - Magazine - Page 14
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ACCOUNTING
DISRUPTED
Brad Stone
Faisal Sheikh
Al Bhimani
Amazon has become so embedded in
the global economy that it is hard to
remember the world before it.
In his 2013 book The Everything Store,
Brad Stone, a senior executive editor at
Bloomberg News, examined the evolution
of Amazon from an online bookseller to
a dominant player in retail. In Amazon
Unbound, Stone continues the story
to trace how the company became a
trillion dollar behemoth. The company
has made plenty of missteps, from
attempts to introduce its own phone to
its mixed-results forays into China and
India. However, Amazon’s successes – the
integration of artificial intelligence, and the
expansion into digital streaming among
them – have outweighed its less successful
ventures.
Amazon tenaciously adheres to its
principles of technological innovation,
operational frugality and customer service
focus. It also analyses its mistakes, and
founder Jeff Bezos accepts that some
experiments will inevitably fail.
Amazon has become so wealthy and
powerful that it seems able to shrug off
almost any setback, even with a growing
number of critics and rivals. Yet Stone
wonders if this can continue, especially
with Bezos stepping out of the CEO role to
become executive chairman.
Faisal Sheikh, a senior accounting and
auditing consultant and expert in accounting
fraud, brings a great deal of academic and
practitioner experience to bear in this book,
as he examines the problem of accounting
fraud from operational, technological and
psychological perspectives.
The incidence of accounting fraud, either
for direct personal gain or to misrepresent the
financial situation of a company, is growing,
and the development of big data and digital
currencies is worsening the problem. Oversight
practices have not kept up, and auditors are in
danger of being overwhelmed by the flood of
granular, non-financial information, Sheikh says.
Analysing recent cases, the book provides
important frameworks to detect fraud. Sheikh
looks at the type of personality commonly
associated with accounting fraud and at
the interaction of pressure, motivation and
rationalisation. He also provides a list of
red flags such as dubious valuations, the
proliferation of unexplained bank accounts
and personal connections in the ranks of
senior executives and board members.
As a remedy, Sheikh proposes the adoption
of an “Ethical Triangle” he has developed, and
he notes that the training of auditors has to be
revised and broadened. An appendix provides
a compendium of the literature, making the
book a useful resource for students as well as
practising finance professionals.
Digitalisation is an upheaval in business
practice, and the finance profession will
need to redesign itself to survive. Al
Bhimani, a professor of management
accounting at the London School of
Economics and Political Science, argues
that accounting information must begin
to describe what will take place rather
than what has occurred.
At the same time, new technologies such
as blockchain and artificial intelligence point
to a move away from traditional reporting
as real-time transparency increases and
improves.
Bhimani looks at examples of successful
reporting using digital tools, and is adept
at drawing out the lessons.
The key point is a change of thinking.
Accountants must be able to put aside
some old skills and take up new ones,
and managers must reconsider their
recruitment and retention strategies.
Senior executives must develop some
fresh ideas about how to utilise the
company’s finance function, working
out what questions they need to ask.
Bhimani emphasises that this is not
simply about adapting to a new normal,
but also about dealing with continuing
disruption. For finance professionals, the
critical task will be to see and explain what
is coming down the road.
Simon & Schuster
14 ITB February 2022
Business Expert Press
Wiley