Big Data and the Gen­er­a­tion Gap

Mar­tin Boerger

Dr Cal­daro­la, author of Big Data and Law, speaks with audi­tor and tax expert, Mar­tin Boerg­er, on the gen­er­a­tional con­flict in the dig­i­tal age.

Peo­ple do not like to leave their com­fort zone. Every new devel­op­ment cre­ates feel­ings of fear and dis­tress and can sow seeds of con­flict. As we have already seen in a pre­vi­ous inter­view with Chris­t­ian Klein, the dig­i­tal rev­o­lu­tion is bring­ing a lot of change and inno­va­tion in the field of tax con­sult­ing and account­ing. Many pro­grams and data banks are to be linked, data from a vari­ety of sources are to be eval­u­at­ed, lots of rou­tine tasks are to be auto­mat­ed which are sup­posed to help accel­er­ate process­es, improve the qual­i­ty of the results, low­er the risks involved, meet com­pli­ance require­ments and-last but not least- low­er costs. How does an expe­ri­enced audi­tor feel about these sorts of changes? How do the sea­soned vet­er­ans and new­er mem­bers of the account­ing field react to these changes and do both groups com­mu­ni­cate with one anoth­er con­cern­ing these new devel­op­ments? What has been done to encour­age reci­procity between the two gen­er­a­tions of accountants?

Mr Mar­tin Boerg­er: Those are a lot of ques­tions which need to be answered.  It is absolute­ly true that the devel­op­ment of dig­i­tal­i­sa­tion can no longer be over­looked in my pro­fes­sion- and I assume in oth­er fields as well-and that this trend will con­tin­ue. And, yes, I admit to being a sea­soned vet­er­an, giv­en that I can look back on 30 years of pro­fes­sion­al expe­ri­ence, and I can also say that I have always had some­thing to do with “dig­i­tal­i­sa­tion” in my career as a char­tered accoun­tant. In the past, dig­i­tal­i­sa­tion meant that book­keep­ing went from being a man­u­al process to one involv­ing com­put­ers. Nowa­days, of course, the entire pro­fes­sion has been dig­i­talised. I have, how­ev­er, noticed that there are two areas: dig­i­tal­i­sa­tion of the tra­di­tion­al work and dig­i­tal­i­sa­tion of the audit­ing process­es of an audi­tor. The for­mer is a devel­op­ment which great­ly advances our field as well as result­ing in low­ered costs in terms of per­son­nel etc. At the same, how­ev­er, the costs of dig­i­tal­i­sa­tion are increas­ing because ele­ments, such as IT infra­struc­ture, data pro­tec­tion etc, are impli­cat­ed. All of which means I find myself feel­ing rather scep­ti­cal when some­one asserts that dig­i­tal­i­sa­tion saves on costs.  After all, what I have saved in one aspect, I have to spend in another.

In the more tra­di­tion­al aspects of my pro­fes­sion, few­er staff will become nec­es­sary and cer­tain pro­fes­sion­al seg­ments will prob­a­bly be done away, at least for a while. Nev­er­the­less, and it seems quite iron­ic real­ly, pre­cise­ly in those areas is where employ­ees are need­ed. I can already observe that many clients are quite advanced as far as dig­i­tal­i­sa­tion in that sec­ond area I men­tioned is con­cerned, while the audi­tors them­selves are, to a cer­tain extent at least, lag­ging behind. We can already see the gap between the old­er pro­fes­sion­als and the younger gen­er­a­tion. The dig­i­tal tools are being applied to vary­ing degrees, depend­ing on which group you belong to. In this regard, one can see that the younger gen­er­a­tion places their faith in the var­i­ous dig­i­tal pos­si­bil­i­ties and is quite com­fort­able with dig­i­tal tools and process­es. Con­verse­ly, the old­er gen­er­a­tion often still has a thor­ough knowl­edge of the var­i­ous process­es involved and knows how to shape and man­age them. I sup­pose the main dif­fer­ence is the lev­el of con­fi­dence each group has in these dig­i­tal tools and process­es. For me as a sea­soned vet­er­an, I am more con­cerned with achiev­ing a secure lev­el of qual­i­ty, which can be repro­duced using dig­i­tal process­es but also view­ing these same dig­i­tal process­es crit­i­cal­ly, mean­ing not just plac­ing a check­mark next to the dig­i­tal tools and process­es in ques­tion and not fol­low­ing them blind­ly either. I sup­pose I am con­cerned with this trend of being lulled into a false secu­ri­ty which will cer­tain­ly lead to prob­lems, espe­cial­ly if there are faults in these dig­i­tal tools and processes.

If we think about dig­i­tal­i­sa­tion from the per­spec­tive of a process matu­ri­ty mod­el, then we in the field of audit­ing are just at the begin­ning of this process. At the moment, we are using audit­ing tools which are descrip­tive and stan­dard­ised to the audit­ing process in ques­tion but not diag­nos­tic dig­i­tal appli­ca­tions which are based on AI. The stages of dig­i­tal pre­dic­tion (pre­dic­tive, that is, pre­dict­ing what could hap­pen in the future) and of dig­i­tal rec­om­men­da­tion (pre­scrip­tive, that is, a rec­om­men­da­tion for what should hap­pen), that is, involv­ing arti­fi­cial intel­li­gence still have not been attained. And if we go back to our process matu­ri­ty mod­el, we can clear­ly see that con­fi­dence in dig­i­tal tools and process­es owing to their com­plex­i­ty ris­es with increas­ing lev­els of matu­ri­ty just as the depen­dence on these tools increas­es and con­comi­tant­ly respon­si­bil­i­ty of the employ­ees vanishes.

In a pre­vi­ous Duet, Mr. Klein stat­ed that, on aver­age, 70% of an accountant’s time is being spent on prepar­ing data while only 30% is devot­ed to orig­i­nal duties. Does this imply that the statu­to­ry duties and require­ments of an audi­tor or an accoun­tant had not prop­er­ly ful­filled or are not being com­plete­ly car­ried out, as is legal­ly required?

I do find that dig­i­tal audit­ing process­es are being used in our field which can com­plete­ly repro­duce the rel­e­vant process at a dig­i­tal lev­el. How­ev­er, fill­ing out these dig­i­tal aids and using them (enter­ing data in check lists, cre­at­ing stan­dard­ised work­ing doc­u­ments, releas­ing restrict­ed access) takes up a lot of time which is then lack­ing for tra­di­tion­al duties. What I mean to say is that not only the prepa­ra­tion, but also the work with dig­i­tal aids in and of itself requires a seri­ous time com­mit­ment. Of course, once the process has been estab­lished and is up and run­ning, then our pro­fes­sion is bound to expe­ri­ence a reduc­tion in time need­ed for prepar­ing for dig­i­talised process­es and I sup­pose we will have more time to devote our­selves to our core work. The real ques­tion you need to ask is: How do we ver­i­fy the dig­i­tal process­es and tools which have been installed by the client in ques­tion? More to the point, are the rel­e­vant tools per­form­ing the cor­rect task, have the tools been prop­er­ly installed and are they being prop­er­ly used by the client’s employ­ees? In this regard, one can also clear­ly observe that the job of an audi­tor is chang­ing as a result of these dig­i­tal aids com­ing into play which of course means that audi­tors will need skills which have either changed or are sim­ply new. This new sit­u­a­tion is also reflect­ed in the fact that our pro­fes­sion now reg­u­lar­ly offers train­ing cours­es to this end. I sup­pose my fear is that we have come to rely increas­ing­ly on com­pa­ny process­es hav­ing been dig­i­talised and we have to assume that they are all func­tion­ing cor­rect­ly. This of course means that the prob­a­bil­i­ty of some sort of dam­age and, in par­tic­u­lar, the lev­el of dam­age incurred will be com­men­su­rate with our depen­dence on dig­i­tal tools and process­es and is bound to increase as a func­tion of greater lev­els of dig­i­tal­i­sa­tion. This sort of cause-and-effect can be seen when the elec­tric­i­ty is down, virus­es are detect­ed in pro­grams, cyber-attacks or oth­er prob­lems come up, to men­tion but a few. In this sort of sit­u­a­tion, we would be sim­ply lack­ing alter­na­tives, in part because local secu­ri­ty mea­sures have been elim­i­nat­ed or man­u­al files and ana­logue pro­ce­dures no longer exist. We are head­ing towards a depen­dence on dig­i­tal aids at the cost of flex­i­bil­i­ty and resilience. The best exam­ple for this is the recent hack­er attack on com­put­ers of the munic­i­pal gov­ern­ments of Schw­erin and Parchim where noth­ing could be put to use and the gov­ern­ment there came to a halt.

With all man­ner of doc­u­men­ta­tion becom­ing auto­mat­ed, cor­rup­tion is sup­posed to be reduced or pos­si­bly elim­i­nat­ed. What sorts of cor­rup­tion or tax eva­sion cas­es do you have to face in your pro­fes­sion and how like­ly is their reduction?

An impor­tant tool in fight­ing cor­rup­tion is mak­ing process­es trans­par­ent via dig­i­tal­i­sa­tion. We only have to think of land reg­istry in Greece, for exam­ple. If appli­ca­tions, deci­sions etc. have been dig­i­talised, then it will become more dif­fi­cult for doc­u­ments to dis­ap­pear and for insid­er rela­tion­ships and favours to flourish.

I am remind­ed of a quo­ta­tion:

“What is rob­bing a bank com­pared to found­ing a bank?”

Bertolt Brecht

So, if I real­ly want­ed to do some large-scale dam­age, then I have to do the unthink­able. As I have already men­tioned, we are lulled by dig­i­tal aids and feel secure and we are for­get­ting how to think crit­i­cal­ly and do not seem to even ques­tion these sorts of aids. And this holds true for the next gen­er­a­tion to an even greater degree. Per­haps a sim­ple exam­ple will clar­i­fy my point: How many sim­ply assume that the Excel table they have been giv­en is cor­rect and sim­ply begin using it with­out first con­sid­er­ing what it is exact­ly, how the num­bers have been gen­er­at­ed, how the table has been struc­tured, who did what and in what way, do the cor­re­la­tions make sense and so on and so forth? View­ing the mate­r­i­al in ques­tion crit­i­cal­ly in terms of it being cor­rect and com­plete is some­thing that is hap­pen­ing less and less. Con­se­quent­ly, we leave our­selves open to cor­rup­tion, forg­eries, sab­o­tage, fraud, mis­takes and so on. We are now dis­cov­er­ing the advan­tages but also the dis­ad­van­tages of dig­i­tal tech­nol­o­gy. We have to find a bal­ance: How much dig­i­tal­i­sa­tion is pos­si­ble and use­ful and how much is not? We have to iden­ti­fy the trou­ble spots and per­haps crises like the cur­rent pan­dem­ic are exact­ly the sort of cri­sis which makes us focus on the tricky areas. There has to be a weigh­ing out between the max­i­mum amount of pos­si­ble dam­age and max­i­mum lev­el of effi­cien­cy which can be achieved as well as of the amount of mon­i­tor­ing need­ed. And exact­ly these sorts of del­i­cate issues require expe­ri­ence. The new gen­er­a­tion doesn’t know how to be scep­ti­cal of the dig­i­tal tools they are using because they are the very prod­uct of the dig­i­tal revolution.

Automa­tion leads to stan­dard­i­s­a­tion and uni­for­mi­ty. Is that a goal we all have to achieve? If so, what is going to hap­pen to indi­vid­ual solu­tions? What will hap­pen to indi­vid­ual respon­si­bil­i­ty if all that is need­ed is plac­ing a check­mark next to a box for cer­tain process­es to take place? Is hav­ing a gut feel­ing still appro­pri­ate or what about the instinct of a sea­soned vet­er­an? What is going to hap­pen to indi­vid­ual judge­ment and assess­ment of risks? Will audi­tors and accoun­tants no longer be able to pass their own judg­ments if every­thing is to be automated?

Audit­ing cor­rect­ly is always going to be impor­tant regard­less of what­ev­er lev­el of stan­dard­i­s­a­tion comes about owing to dig­i­tal­i­sa­tion. It is impor­tant to fill out stan­dard screen forms and put in stan­dard check­marks. There are many areas in our pro­fes­sion where stan­dard­i­s­a­tion makes sense. That hav­ing been said, I must also empha­sise that trou­ble spots are always going to require tai­lor-made solu­tions and flex­i­bil­i­ty, a point I made ear­li­er. Whether these tricky areas can also be stan­dard­ised using AI is an open ques­tion as far as I am con­cerned. I myself do not see it hap­pen­ing. But who knows? Per­haps the providers will become too pow­er­ful in the dig­i­tal world and per­haps they will have to be destroyed as we have seen in the past, Stan­dard Oil, for exam­ple. Per­haps the pen­du­lum will swing in the oth­er direc­tion, if dam­age cas­es con­tin­ue to rise. I do not think we are ready to yield com­plete­ly to any one thing, but I do believe we will expe­ri­ence the dan­gers and when that hap­pens, I hope we will have the ways and means to rem­e­dy the sit­u­a­tion. It is like a sail­boat list­ing on one side which we then steer too much in the oth­er direc­tion and the boat has to bal­ance itself. The sheer speed of the changes is new but there too there are dif­fer­ent lev­els of veloc­i­ty. The for­ward direc­tion towards dig­i­tal­i­sa­tion is prob­a­bly faster than the back­wards pace should we expe­ri­ence unfore­seen devel­op­ments or dam­age at the trou­ble spots.

Final­ly, we must not for­get that speed is dif­fer­ent for peo­ple com­pared to machines. To be sure, a machine is capa­ble of analysing com­plex activ­i­ties and gen­er­at­ing a result based on that analy­sis with­in a few moments, where­as a per­son, in par­tic­u­lar should s/he not have the ben­e­fit of years of expe­ri­ence, needs much more time to eval­u­ate the result in ques­tion. Regard­less of how quick­ly a result, eval­u­a­tion or inter­pre­ta­tion has been gen­er­at­ed by a soft­ware pro­gram or by AI, a human being will always need more time to decide what needs to be done with that infor­ma­tion. It is that time gap which ensures that the years ahead will remain chal­leng­ing ‑but also excit­ing ‑for gen­er­a­tions to come.

Mar­tin, thank you for shar­ing your insights on the chal­lenges on the gen­er­a­tional con­flict in the dig­i­tal age

Thank you, Cristi­na, and I look for­ward to read­ing your upcom­ing inter­views with rec­og­nized experts, delv­ing even deep­er into this fas­ci­nat­ing topic.

About me and my guest

Dr Maria Cristina Caldarola

Dr Maria Cristina Caldarola, LL.M., MBA is the host of “Duet Interviews”, co-founder and CEO of CU³IC UG, a consultancy specialising in systematic approaches to innovation, such as algorithmic IP data analysis and cross-industry search for innovation solutions.

Cristina is a well-regarded legal expert in licensing, patents, trademarks, domains, software, data protection, cloud, big data, digital eco-systems and industry 4.0.

A TRIUM MBA, Cristina is also a frequent keynote speaker, a lecturer at St. Gallen, and the co-author of the recently published Big Data and Law now available in English, German and Mandarin editions.

Martin Boerger

With over 25 years’ experience in tax consulting and auditing, chartered accountant Martin Boerger has been working independently for the last 12 years, most recently as partner and managing director of a mid-sized firm employing 40 employees.
Mr. Boerger has experience in all areas of the accounting field, from the Big Four to individual consulting and has been active in almost all areas of the field, from IFRS accounting to income tax. This experienced and able accountant currently focuses on advising and coaching in complex situations involving successors of accounting offices as well as the auditing of large international family corporations.
Since Mr. Boerger views intercommunication as key element in the field of accounting, he has also been active in forming a network of chartered accountants across Germany.

Dr Maria Cristina Caldarola

Dr Maria Cristina Caldarola, LL.M., MBA is the host of “Duet Interviews”, co-founder and CEO of CU³IC UG, a consultancy specialising in systematic approaches to innovation, such as algorithmic IP data analysis and cross-industry search for innovation solutions.

Cristina is a well-regarded legal expert in licensing, patents, trademarks, domains, software, data protection, cloud, big data, digital eco-systems and industry 4.0.

A TRIUM MBA, Cristina is also a frequent keynote speaker, a lecturer at St. Gallen, and the co-author of the recently published Big Data and Law now available in English, German and Mandarin editions.