AI can aid CAs, can't replace human mind: ICAI's Aniket Sunil Talati

The Institute of Chartered Accountants of India (ICAI) is planning to operationalise guidelines for multidisciplinary firms by October to make firms future-ready for both financial and non-financial reporting. In an interview with Ruchika Chitravanshi in New Delhi, ICAI President Aniket Sunil Talati talks about upskilling CAs for artificial intelligence (AI) and the need to improve the perception of auditors. Edited excerpts:

We have seen a lot of startups facing accounting lapses and there are governance issues. What is the ICAI’s role in ensuring there are enough checks and balances in place?

It is a little unfair to say that there are a lot of issues today. We have about 90,000 startups in the country. And you’re now building unicorns on an annual basis. There will always be certain issues with regards to certain startups, which may not do well because of business reasons or otherwise. There has to be some better corporate governance mechanism. We have a committee dedicated to MSME and startups. 

Since the ICAI is discussing its vision for the next 25 years, what role do you see AI playing in your profession and how are you preparing for it?

AI is going to impact everything that we do, not just auditing and accounting. At the Institute, we’re very mindful of the fact that this has been on the anvil for a few years. Therefore, we started talking about the new ABCD of technology, which is AI, blockchain cybersecurity, and data security. We have specific courses that we run on AI training them on upskilling themselves to use AI and also understand the perils of AI. It can give you more red flags because it will be looking at a more quantum of data than humans can. 

It has a huge impact in terms of assisting chartered accountants. However, I’m extremely confident that it cannot ever replace the human mind. Because there is a lot of judgement involved.

What do you think of issues of the big four versus the smaller firms?

We have never stacked one firm against the other. Prime Minister Narendra Modi has said we must aim to have large Indian firms. To that effect, a lot of changes have already been made at the institute. We have encouraged firms to network and given them the opportunity to do it easily. It is the council’s agenda to relook at some of the networking guidelines as well as the multidisciplinary practice (MDP), which is going to be the future. Today it is not just financial reporting, but non-financial reporting which is taking the centre stage. 

When will the MDP guidelines be implemented?

The rollout of implementation is happening in the next couple of months. 

What is the progress on including a non-ICAI member in your disciplinary committee?

We are in the process of finalising the regulations to give effect to this amendment to the (CA) Act. Once we get the public comments, we will share it with the government and notify these regulations. 

You have said in the past that there is a need to improve the perception of auditors. Why do you think so?

There is not a clear understanding of what is an audit and what is a forensic audit. The difference between the two gets blurred. People have to understand that when I’m doing a forensic audit I’m going with the perspective of unearthing a fraud. When I’m doing an audit, I’m issuing a reasonable assurance and an opinion on the financial statements. The timelines and scope for both are different and so are the terms of engagement. 

What are the three big challenges ahead of you? 

These are challenges as well as opportunities. The accounting profession is going to be truly global. Our accounting fraternity here will not be restricted to servicing Indian clients. So you will require multi jurisdiction knowledge. Second, is the advent of technology which has also given a lot of opportunity to Chartered Accountants. Going forward, people will need assurance on the systems, the processes, the data security and the cybersecurity aspect of data. Who better than CAs to give that assurance? Third aspect is going to be the growing need for non-financial information and investors seeking ESG disclosures.