Industrial revolution 4.0 – Opportunities and challenges

Nội dung text: Industrial revolution 4.0 – Opportunities and challenges

1. INDUSTRIAL REVOLUTION 4.0 – OPPORTUNITIES AND CHALLENGES Le Thi Huong*1 ABSTRACT: The Industrial Revolution 4.0 has been going on since the 1960s of the past century, but its current impact on our society shows that its scale, scope and complexity is unprecedented compared to any previous Industrial Revolution. On a global scale, it not only creates new developmental trends but also poses challenges and opportunities unprecedented in many areas. Keywords: Industrial Revolution 4.0, opportunities, challenges, accounting, auditing 1. INDUSTRIAL REVOLUTION 4.0 CHARACTERISTICS Before the concept of industrial revolution 4.0 emerged, our world has undergone three industrial revolutions, marking development milestones and making fundamental changes in production and society. The first Industrial Revolution - Mechanization (since 1784) occurred when steam engine was invented, which directly affected a number of industries such as textiles, mechanical manufacturing, and transporta- tion. The second I.R - Electrification (from 1870) happened when electric motors were invented, making contribution to increase people’s life standards as well as productivity several times higher compared to what steam engines had brought about. The third I.R was Automation (since 1969), which appeared when transistors, electronics were invented, and when people around the world were connected through com- munication. In addition, satellites, planes, computers, telephones, the Internet also emerged as the fruits from this revolution. The fourth I.R (I.R 4.0) began to appear in 2000 as the Digitalization revolution and the connection of real and virtual systems. The distinguishing feature of I.R 4.0 is that values ​created on cyberspace are increasing in proportion, eroding the distance between the real world and the virtual world through advanced technologies and non-stop innovation. I.R 4.0 is based on digital technology and it inte- grates all smart technologies to optimize production processes and methods with technologies that are and will have major impacts such as 3D printing, biology, new materials, automation, robots, etc,. The first feature of I.R 4.0, built on the foundation of the third I.R, is the integration of technologies, which blurs the boundaries between the physical, digital and biological fields. The I.R 4.0 facilitates the creation of intelligent plants in which virtual space physics systems monitor the physical processes, creat- ing a virtual copy of the physical world. With the development of the Internet of Things, these virtual phys- ics systems interact with each other and with people in real time, serving people through Internet services. Current technology has enabled billions of people to connect to the Internet anytime, anywhere through mobile devices, allowing for unlimited processing, storage and access to knowledge. These capabilities will be multiplied by innovative technologies in other areas, particularly due to the computing power and the availability of large amounts of data. Meanwhile, digital manufacturing technologies are interacting with the biological world. With ability of digital manufacturing technologies to interact with the biological world, designers and architects combinecomputer design, additive manufacturing, material engineering, * Academy of Finance, Hanoi, Vietnam
2. 124 HỘI THẢO KHOA HỌC QUỐC TẾ KHỞI NGHIỆP ĐỔI MỚI SÁNG TẠO QUỐC GIA and synthetic biology for pioneering systems that involve the interaction of microorganisms, the human body, human consumption, and even human living buildings. Secondly, I.R 4.0 can open a new era of investment, productivity and increased living standards. Suc- cessful application in the field of robotic science, the Internet, large data, mobile phones and 3D printing technology will boost global productivity just like the way personal computers and the Internet has done to our world in the late 1990s. For investors, this I.R 4.0 will open opportunities for huge profits, similar to what the previous CMCN brought. Thirdly, the I.R 4.0 is not merely a prolongation of the third I.R, but there is a big difference in its speed, scope and extent. The pace of breakthroughs is unprecedented in history. Compared to previous industrial revolutions, this I.R 4.0 is growing at a multiplier rather than an additive level. Moreover, it is transforming a large number of the industry in every country in terms of breadth and depth in all production, management and administration systems. Any business can participate in the revolution whose speed and scale of development are amazing. Let’s compare Detroit in 1990 (a major hub of traditional industries) to Silicon Valley in 2014. In 1990, the three largest companies in Detroit own adequate capital of $36 billion and revenue of $250 billion and had 1.2 million employees. In 2014, the three largest companies in Silicon Valley owned a significantly higher equity capital ($1.09 trillion) and generated similar revenues to ones in Detroit (about $247 billion), but the number of employees is 10 times smaller (137,000 employees). It is a fact that a unit of material wealth created today can require fewer laborers than 10 or 15 years ago because the marginal cost of digital-based businesses is approximately zero. Additionally, in the digital age, many new businesses offer “information goods” with almost no storage cost, transportation cost and replication cost. Some companies with breakthrough technology seem to require less capital to grow. For example, some companies (such as Instagram or WhatsApp) do not need a lot of capital to start up, which shows a change in the role of capital and scale of operation in the Fourth Industrial Revolution. Fourthly, thanks to the I.R 4.0, new sources/forms of energy and technologies used to exploit them are found. There are some technologies aimed at using existing resourceseffectively such as embedded technol- ogy and derivative technology. Based on outstanding achievements in the fields of natural sciences such as mathematics, physics, chemistry, social sciences and humanities and the fields of science and technology such as information technology, materials technology, biotechnology, agricultural technology and medi- cine, humanbeings have made many innovations to serve their interests. The nature of the I.R 4.0 is optimal utilization of such resources in an interactive relationship. Fifthly, the I.R 4.0 led to changes in the concept of innovation of technology and production equipment. At present, the added value of manufacturing industry depends primarily on turning raw materials into finished products involving soft-wares or control systems. However, in the future, based on customer demand through the Internet system, the manufacturer will only update the software and selling other hardware is unnecessary. Moreover, not only the product but also the equipment in the production is updated to add new features without replacing any parts. 2. OPPORTUNITIES Firstly, the I.R 4.0 as well as the Internet helps accounting- auditing work is not limited by geographic distance. An accountant –an auditor in Vietnam can do accounting and auditing work in any country in the world, if hemeets the requirements to do that. In contrast, any accountant - auditor in any country that is allowed to practice in Vietnam can carry out the accounting and auditing work of Vietnamese enterprise or organization. This creates both opportunities and challenges for those practicing accounting – auditing in Vietnam. It is necessary to improve their
3. INTERNATIONAL CONFERENCE STARTUP AND INNOVATION NATION 125 abilities so that they can meet the requirements of international practice, improve their position and expand their scope of practice. Secondly, large data gives people access to an infinite source of knowledge, which helps them learn anything they need to know. But there is a disadvantage that information may be informal. That means we need to be cautious when accessing toand using information. With artificial intelligence, economists predict that many industries will be at risk of disappearing due to automation. Artificial Intelligence can replace manual works of accounting - auditing such as collecting, processing, calculating data but the stages such as analysing, finding the cause of solutions to each situation or even extraordinary situations involve human beings. Artificial Intelligence is not a replacement for human, but it is changing working condition of an accountant–an auditor. 3. CHALLENGES Firstly, information and data leakage through the Internet connection is an important issue that management agencies and businesses should pay attention to. Audit information and results may be leaked from sending emails to the audited entities or outside organizations and individuals and exchanged via shared network. Bad opponents can take advantage of unofficial audit information and results to carry out destructive or pervasive purposes, which can adversely affect the image of audit enterprises. Whereas, the quality of IT infrastructure in the accounting and auditing industry generally does not meet the requirements and needs better preparation, especially on network security issues. Secondly, in the FourthI.R, competition is between not only companies providing traditional accounting and auditing services but also between non-traditional firms and technology firms. There have been some warnings that once blockchain technology is widely used in the financial sector, there is a danger of shrinking traditional auditing services. In fact, at present, technology companies in the world such as Google and Alibaba also provide financial consulting services and tax consulting. 4. SUGGESTIONS In order to take advantage of chances and overcome the challenges of the Fourth I.R, in the coming time, the accounting and auditing sector should focus on the following issues: As for management agency - The Fourth Industrial Revolution requiresregulatory agencies to prepare their IT infrastructure better to keep pace with the development of technology. Officials, civil servants, accountants and auditors must also improve theirapplied IT skills in time to meet the requirements of their job. In the field of auditing, auditing activities in general and the State Audit of Vietnam in particular perform the function of checking, assessing and certifying the reliability level of economic and financial information processed and provided by accountants. Therefore, changes in procedures of handling and synthesizing information as well as making the financial statement in the context of the Industrial Revolution 4.0 also require the State Audit to innovate fundamentally the audit process as well as the application of audit methods. In addition, it is necessary to study and apply methods of auditing effectively and appropriately, including basic methods and technical methods, in the context of the impact of the I.R 4.0, especially methods of collecting, evaluating audit evidence, technical analysis methods in the context of accounting using electronic documents, blockchain technology, cloud computing, - Training courses should be organized so that auditors can catch up and adapt to IT applications timely with modern auditing tools and meet the increasing demands of their work. They need to be trained so as to have thorough knowledge of the new auditing cycle and programs set up on the basis of digital technology,
4. 126 HỘI THẢO KHOA HỌC QUỐC TẾ KHỞI NGHIỆP ĐỔI MỚI SÁNG TẠO QUỐC GIA use auditing softwares proficiently, understand the process and synthesis of accounting information as well as the preparation and presentation financial statements in accordance with financial reporting standards in the context of digital technology. - Focus on developing IT human resources with sufficient quantity and quality to meet the requirements of the management and use of IT systems and IT audit work. Raise the expertise of IT staffs to ensure the capability of managing, operating and developing the IT system of the State Audit. - Ensure the safety in the management of network security. The Industrial Revolution 4.0 has pushed up the level of information sharing and created a huge need for cybersecurity. The accounting and auditing authorities should pay attention to building a data center; upgrade security system with high level security and multi-layer, ensure the expansion of operation range is stable, safe and long-term efficient - It is necessary to continue promoting international cooperation, researching and applying international accounting and auditing standards which are being used by many countries in the world, thereby learning and exchanging experiences in coping with the Industrial Revolution 4.0. As for audit companies - In the near future, auditing and accounting companieswill face many challenges in enhancing the confidence of public, businesses and investors in the quality of auditing services, the maintenance and improvement of the quality of human resources and meeting the requirements of national and international markets. In the context of economic development, the legal environment is increasingly demanding and the impact of the 4.0 Industrial Revolution requires enterprises to continue increasing in quantity, scale and quality of audit services. - The competition for high-quality human resources in the accounting and auditing sector will be more drastic because human resources are not only well-knowledge but also excellent at using technology and language. Auditing companies will have the difficulty in retaining the key employees who have been trained and experienced, especially those who have international certificates and meet the requirements of large organizations and groups inside and outside due to the competition from other countries. - Risk prevention measures should be strengthened. Businesses need to establish internal control to prevent the risk of compromising professional accounting - auditing ethics, which helps accountants and businesses protect themselves against the intervention of external forces. As for universities - The integration and the Industrial Revolution 4.0 require that the curricula, content and methods of training about accounting - auditing at university must have a basic innovation. Training institutions should study and analyze the characteristics of this revolution so as to propose innovations in all aspects, especially the training methods. It is necessary to continue improving the quality of curriculum with the knowledge associated with the development trend of the Industrial Revolution 4.0. - Apply virtual accounting - auditing model of economic activities, which is both imitating and useful for students to practice. When electronic softwares and documents, electronic signatures, calculations, rotation and recordings of information have been programmed and automated, the accounting – auditing teaching methods are abandoned step by step according to the regime and manual transaction processing. As for individuals - The digital age is bringing a lot of new opportunities and new challenges for individuals and organizations in the field of accounting and auditing. Forindividuals who have worked and will work in the field of accounting - auditing, there are two features in the digital age that every person must be aware of to change. They are technology ability and discrimination ability. Besides professional qualification, a core elementis professional ethics.
5. INTERNATIONAL CONFERENCE STARTUP AND INNOVATION NATION 127 - When all the work can be handled by technology, professional ethics become more necessary than ever before, so it is possible to build and define the true image of the enterprise. Only ethical accountants respecting the truth have the ability to create real value for shareholders so that they will continue to invest in businesses. Only ethical auditors can help investors determine the direction with less risks and more opportunities, and help protect the equitable interest of public. - In order to make the most of many opportunities in the digital age, first of all each accountant – auditor is forced to understand the basic principles of behaviors in the professional field, therebylearningwhetheror not the behavior is right and concordant with the principles established.The most common knowledge must be understood, thenthe higher knowledge level in the process of becomingprofessional accountants – auditors can be reached. - To do this, people in the field of accounting - auditing must understand fundamental knowledge well, get experiences and frequently update the changes. Besides, it is essential for them to maintain professional ethics and put the public interest higher than their benefits. This will form and develop their professional skills, ethics, experiences and visions. - Moreover, the accounting and management accounting sector is also playing a growing role in the new trend, helping enterprises regulate their business at present and in the future. Thus, at the basic level, accounting work can be automated. Businesses also need people to examine, analyze and even make assessments for current and future financial situation. The employer will pay for his employees depending on the level they contribute to their work. - An accountant - an auditor should avail himself of every opportunity to foster his professional skills, use technology for his work and have visions and career ethics as well as his creativity, sensitivity and intelligence. - At this time, everypresent and future accountant - auditor needs to cultivate the use of artificial intelligence (technology) for his work, such as from the application of excel function to accounting softwares, management softwares, analysis and the way to secure information for business and its customers, thereby exploiting the customer market thoroughly. In addition, he also needs cultivate the knowledge and havethe ability to recognize the management accounting problem in enterprises, besides the trend of financial accounting as today. This is the field that helps increase the investment interests for businesses. - Indispensable means of helpingcurrent and future accountants - auditors reach beyond their range of activities is international language. Particularly in the area of accounting and auditing, it provides added value both in language and in international professional knowledge. - Therefore, the opportunity will be expanded for accounting - auditing staffsof international standards recognized in many countries around the world such as ACCA, CMA, CIA, etc,. These certificates can help Vietnamese accountants and auditors maximize their scope of activities and raise the competitiveness of human resources in the field of accounting and auditing in Vietnam. REFERENCES: Parliament (2015), Accountancy Law; Standing Committee of the National Assembly (2010), Resolution No. 927/2010/UBTVQH12 adopted on 19/4/2010 about Development Strategy of State Audit to 2020; Government (2013), Decision No. 480/QĐ-TTg adopted about Auditing and AccountingStrategy to2020, vision 2030; Pho Hien (2018), Expand the market of accounting and auditing services: Enhancing the quality of human resources is given top priority, Audit Newspaper, 2018 New Year Edition; The Association of Chartered Certified Accountants (11/2017), Professional accountant – the future (Generation next): Managing talent in small and medium sized practices; The Association of Chartered Certified Accountants (8/2017), Professional accountant – the future (Generation next): Ethics and trust in a digital age;