2. The Auditor of Tomorrow : the Case for New Competencies and Broader Qualifications Christopher LEACH Senior Vice-President, CTO-Technology Risk Management, Bank One Corporation United States

3. The Auditor or Tomorrow: The Case for New Competencies & Broader Qualifications. By Christopher J. Leach, CPA CTO, Bank One

4. In some ways accounting hasn't changed much since Pacioli wrote the first "textbook" in 1494. On the other hand, accounting has been a leader of the Information Revolution. Many aspects of 21st century accounting will be unrecognizable by today's professional leaders. Understanding the role of financial and managerial needs today and in the future requires an understanding of the past. Luca Pacioli, Father of Accounting Accounting

5. The Auditor - A Historic Prospective  Reporting on financial results of an enterprise & validating the results of operations  Reporting on compliance to accounting standards (GAAP, GAAS)  Reporting on compliance to 3 rd party requirements (Regulatory, contractual)  Reporting on adequacy of internal controls

6. The Auditor - Yesterday’s Tools of the Trade  Calculators  Columnar pads  Integrity  Objectivity  Independence

7. The Changing Environment of Today’s Business Environment  New threats to electronic business practices  Emerging technologies  “Business at the speed of thought”  Global competition  Rapid globalization

8. Today’s Business Needs  Knowledge in the area of the audit (i.e.; IT, systems, networks, etc).  Real time information & real time audits  Continual audits  Identification of new areas of revenue or areas that may present risk.  Business assessments beyond simply validating the numbers.

9. 1494 1887 1890 1996- present 1984 1973 1938 1933 1934 1914 Accounting – an historical prospective Pacioli Writes Accounting theory ICC Created & Shermant Antitrust Act Federal Reserve Created Assurance Service Audits Required /SEC Created AIA (AICPA) Issues 1st Standards EITF/GASB Created FASB Created

10. New Attestation Services  Other reports  SysTrust  WebTrust

11. Today’s Challenges New technology will not solve an old challenge: determining which information meaningfully reflects the true state of the enterprise's health. In the long run, enterprises that can solve this challenge will win a competitive advantage. Better measurement will foster greater control and operational efficiency. In turn, achieving these gains will increase enterprises' access to capital. Source: Gartner Group August 2002

12. Today’s Challenges  The auditing process presents one of the most- significant barriers to the rapid deployment of more- frequent and more-timely financial reporting. Most of the delay in releasing annual closing numbers to the market stems from the time needed to audit those numbers. Source: Gartner Group August 2002

13. The “New” Audit Professional Services Firm  The People — Real time decision processes and tools — Understanding of today’s control environments — Ability to calculate accruals and provisions in real time  Methodology — Market expertise and applicability — Global view — Operational view

14. Re-engineering Needed  Networks/Internet capabilities and limitations  Software strengths/weaknesses  Hardware & operating systems proficiencies  Business risk assessments  Systems concepts understanding  Global impact and regulations  Professional Standards changing

15. The Auditor - Today’s Tools of the Trade  Calculators  Computers  Integrity  Objectivity  Independence  Telecommunication tools  3 rd Party Data  3 rd party experts  Software

16. Today’s Challenges Keeping up with Change If we don’t – just ask him what may happen

17. The Auditor or Tomorrow: The Case for New Competencies & Broader Qualifications. By Christopher J. Leach, CPA CTO, Bank One