The Internet of Things is Already Here. Are You Ready For It?

By 2020, my house will have a smart refrigerator that will alert me when I am out of eggs or cheese. It will ‘talk’ to my phone and ping me a list of items that I still need to buy as I’m leaving work and headed to the grocery store. On a macro level, cities will collect data on pedestrian flows and use big data to optimize energy use and traffic patterns. These are just a few of the 50 billion smart devices that we’ll have by 2020.

AICPA staff recently gathered over coffee and discussed ideas and insights on the Internet of Things (IoT), a term you may start to hear being used more frequently. It refers to everyday wireless objects that communicate with each other over the internet and send useful information to consumers and businesses.

Truth is, many of these smart devices are already everywhere– and they are not just for the tech-savvy. You may already benefit from this technology without realizing it, like when you receive your online shopping purchases ahead of schedule. Retailers and distributors are employing smarter freight management systems that improve the efficiency of the shipping process.

While my AICPA colleagues quickly agreed that our future wearable health monitors– with their ability to tell our electronics to power off until we power up the treadmill– would become the ultimate personal fitness assistant, they also recognized the implications of the IoT on organizational business models, information security and privacy and the role of the CPA. With newer, smarter mobile devices and the cloud, a CPA’s daily duties will become even more seamlessly integrated with technology, impacting every aspect of their job. Some key opportunities for practitioners are outlined below:

Increasing importance of risk management and cybersecurity

With more real-time data flowing in, and more decentralized devices connecting to the internet and transmitting data, the risks of hacks and data breaches are even greater. A study by Hewlett Packard found that 70% of the most commonly used IoT devices contain vulnerabilities. A global survey by EY found that 56% of C-suite leaders and executives say that it is “unlikely or highly unlikely that their organization would be able to detect a sophisticated attack.”

As firms embed the IoT into their operating systems, CPAs are needed more than ever to demonstrate their risk management expertise. CPAs can play an integral role by making sure that their own company’s cybersecurity policies and procedures are up-to-date. CPAs can provide value-added assurance and advisory services to help clients protect information and systems from breaches, and to detect, respond to, mitigate and recover from security events. Learn more about the role CPAs can play in helping organizations and clients address cybersecurity risks by visiting the AICPA’s Cybersecurity Resource Center webpage.

Improvements through automated audit and Peer Review

Human error can be minimized in the audit and Peer Review process with the help of radio-frequency identification tags, which replace the need for physical inventory counts. Additionally, automated systems can detect, predict and prevent potential errors.

The AICPA is in the process of developing a new technology-based quality monitoring tool that will push data automatically from various systems to internal dashboards. By capturing a real-time snapshot of the firm’s quality control measures, firms will be able to quickly remediate problems before even engaging an external monitor. The AICPA will continue its work to provide technology solutions, tools and services to help members perform audits more efficiently. For information on the AICPA’s efforts, visit the Enhancing Audit Quality, Peer Review and Assurance and Advisory Services webpages.

Changing role of the CPA

Disruption means change. The new data flowing in as a result of the IoT presents opportunities for CPAs. Firms can embrace technological advancements such as cloud computing by storing their information in the cloud. CPAs can also advise their clients on ways to use cloud technology to increase their efficiency. To prepare for what is to come, CPAs need to educate themselves on the potential impacts of IoT on processes and systems, client interactions, business models and entire firms.

There’s no doubt the IoT will be one of the most disruptive technology trends, yet we firmly believe that with disruption comes opportunity. New product and service opportunities will provide the biggest benefit to practitioners. To put it into perspective, McKinsey estimates that the economic impact of IoT technologies could range from $4 trillion to $11 trillion a year in 2025. 63% of C-level executives believe that companies slow to integrate the IoT will fall behind the competition.

All organizations need to continue to invest in new technologies, innovation capabilities, talent, policies and security measures to ensure that they are sufficiently prepared to capture the opportunities and address the challenges brought about by the IoT.

So where do we begin? We don’t have all the answers, but we on the AICPA Innovation Team believe that starting the conversation about IoT internally is the first step to preparing for an IoT future. What we are seeing is a change in mindset as staff integrate considerations for the IoT, the cloud, big data and related technologies into their conversations. We encourage you to discuss the IoT at work, especially if your organization is not already taking action.

What has your experience been with the IoT? How have you or your firm been preparing for the IoT? We’d love to hear your ideas.

Janet Ng, Senior Analyst- Innovation, American Institute of CPAs.

Internet of Things image courtesy of Shutterstock

The Internet of Things is Already Here. Are You Ready For It?

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