The Fourth Industrial Revolution (4IR) has brought about remarkable changes to our lives and work, as digital and physical manufacturing systems collaborate across the globe. This revolution has enabled remote working and attending virtual business meetings through platforms like Zoom and Microsoft Teams. The COVID-19 pandemic has only accelerated the integration and use of such technologies, as people sought ways to remain connected during lockdowns. The impact of 4IR is widespread across all disciplines and industries, and the accounting profession is not an exception. Accountants should be aware of the opportunities, challenges, and threats that the 4IR presents to their profession, in order to remain relevant. This report aims to explore the various aspects of 4IR, its effect on accounting, leadership in a 4IR era, and how future accountants can prepare themselves to thrive in a 4IR world. Moreover, we will highlight and discuss a business that leveraged technology to disrupt its industry.

Impact of 4IR on the Accounting Profession

Before the advent of computers and Excel, accountants used pen and paper to maintain records. However, with the arrival of computers, they started using computerized bookkeeping systems. Now, with the Fourth Industrial Revolution, accountants can do away with reliance on Excel. Automation is one feature of 4IR that is currently affecting the accounting profession. This technology automates repetitive tasks, freeing up workers for higher value work. Through automation, finance professionals and tax consultants can focus more on analysis, strategy, and collaboration with stakeholders. For instance, tax consultants can leverage automation to extract data from tax records and import it directly into tax returns, while finance professionals can use it to extract information from leases and contracts required by IFRS Standards. Additionally, invoices can be automatically matched with relevant supporting documents, and bank reconciliations can be automated through Robotic Process Automation. Automation benefits include eliminating human errors and improving data quality.

Blockchain technology is another revolutionary aspect of 4IR with a disruptive impact on the accounting profession. Accenture defines blockchain as a distributed ledger that retains and documents information in a way that permits multiple organizations and individuals to confidently share access to the same data in real time across a network of computers. There are three types of blockchain: public, private, and consortium blockchains, each with unique characteristics and applications.

Impact of 4IR on the South African Automotive Industry

The automotive industry is a key contributor to the South African economy, accounting for 4.3% of the GDP in 2021. However, global supply chain issues are negatively impacting this industry's growth. Supply chain management is crucial for any business, ensuring timely delivery of raw materials, production processes, and availability of products to customers, among other benefits. The second part of this report focuses on identifying risks faced by the South African automotive industry, how global supply chain issues could worsen these risks, and how 4IR can be leveraged to address these risks. With the use of 4IR technology, South African companies can improve their ESG rating.

Conclusion

To survive and thrive in a 4IR world, accountants need to be aware of the potential opportunities, challenges, and threats that they face. Automation, artificial intelligence, and blockchain technology are revolutionizing the accounting profession. They offer tremendous opportunities for accountants to add greater value to the entities they service. Global supply chain issues are major challenges for companies in the automotive industry, but the use of 4IR technology can help to mitigate these risks. By embracing the 4IR era, accountants and businesses can adapt and innovate in response to the ever-changing business environment.

One of the primary weaknesses of traditional auditing is the significant delay in completing audits, which can take months after the end of the client's financial year. This lag time does not align with the expectations of clients and other stakeholders, who require timely and accurate information about their financial performance. Blockchain technology offers a solution to this issue by enabling auditors to provide real-time auditing, moving away from year-end assessments and toward continuous online assessments throughout the year (Barandi et al., 2020). This not only reduces the time difference between transactions and verification dates but also allows auditors to focus on more complex transactions that present a higher risk of material misstatement while automating routine auditing tasks, which saves time spent on manual data extraction and preparation activities (Barandi et al., 2020).

Another limitation of the traditional auditing process is the use of sample-based substantive testing, which draws conclusions from testing only samples of transactions and account balances to keep audit costs low. However, samples may not be an accurate representation of the larger population, which means that material misstatements could go undiscovered. Blockchain technology enables auditors to test the entire population of transactions and account balances during the period under observation, increasing the level of assurance given by auditors and improving the profession's reputation (Barandi et al., 2020).

Sandro Psaila (2017) suggests that publicly available blockchain ledgers could be used to verify reported transactions, eliminating the need for bank statements or third-party confirmations.

Artificial intelligence is also being utilized to enhance the accounting profession, with PricewaterhouseCoopers using it to improve their tax practice. They combine artificial intelligence with Robotic Process Automation to conduct income tax compliance activities, including collecting trial balance information from source systems, completing forms, and recording tax accounting entries. PwC also has tax chatbots and leverages artificial intelligence to comprehend natural language tax questions and direct the user to the correct answer based on the intent of the question.

The Fourth Industrial Revolution presents opportunities for the accounting profession to improve and enhance their services to clients. Embracing these technologies and acquiring digital literacy skills is essential for professionals to remain relevant in an era where routine tasks will be automated. However, while robots may take over many routine tasks, human accountants will always be necessary to exercise critical thinking skills and make informed decisions.