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A new cycle: optimism and much work ahead

The end of a cycle is an opportunity for renewal. We have a time for prosperity, then comes recession, depression and finally recovery, bringing us back to prosperity. It seems that a new cycle is beginning in Brazil.

It is not different for organisations. A cycle begins when everything is going well and everyone is winning. Then comes the recession: interest and wages are still high, contrasting with a drop in demand. It is the beginning of depression, characterised by idleness and unemployment. Then comes rock-bottom. The point is that this is not mathematics, it is a subjective matter – no one knows how long each cycle will last, until growth returns.

We have been through difficult times in recent years in Brazil, contributing to important changes that we are experiencing today. It started with the dismantling of bad practices that eroded the richness produced by large public organisations. We have made progress in strengthening governance practices, highlighting the importance of factors such as free access to information by stakeholders; transparency, ensuring equal treatment for these parties; equity, public disclosure of its acts and full acceptance of its consequences; accountability and ultimately ensuring the economic viability of organisations, and corporate responsibility.

We have experienced moments of renewal, with the strength of internal audit structures, internal controls, risk management, compliance, and fraud-prevention and investigation mechanisms. We also had the introduction of Law 13303/2016, covering public companies, which came to dictate rules to strengthen the governance of these organisations, protecting these companies against political interference. We must remain vigilant and not allow any setback in this regard.

Last but not least, a few recent changes: first, we had the general data protection regulation, introduced in Brazil by law 13709/2018, which deals with the protection of digital data by natural persons or by public or private legal entities. This regulation protects individuals with regard to the processing of personal data and its free movement.

In addition organisations are going through an intense process of digital transformation. Following this evolution is crucial for accounting and auditing professionals. In accounting, in addition to new IFRSs that land every year, blockchain is causing important changes. Instead of the old way of accounting, we will have blocks connected by a unique identifier, in a continuous chain. Robotisation, artificial intelligence, data mining, predictive analysis and continuous auditing have left traditional auditing methods behind.

Professionals with knowledge in technology and statistics, who understand the cultural environment of the organisation and who are intensely connected with the business will become increasingly necessary. The figure of the police auditor, who was formed in the head of our managers, should definitely stay in the past. This is how we will move forward, no longer just protecting the value of organisations, but adding value, helping them achieve their strategic objectives and extending their life cycles.

By Rene Andrich, Chair of the Board of Directors, IIA Brasil

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