P1: IML/FFX P2: IML/FFX QC: IML/FFX T1: IML
PublicAcc WL040/Bidgolio-Vol I WL040-Sample.cls June 19, 2003 16:55 Char Count= 0
154 PUBLICACCOUNTINGFIRMStax to e-commerce transactions. CPA firms advising busi-
nesses setting up e-commerce operations need to be aware
of the existing rules governing e-commerce taxation to en-
sure that their clients have proper procedures in place to
collect any tax owed and can structure their e-commerce
operations to obtain the best tax planning results. Given
the complexity of some of the issues and their often global
nature, CPAs will need to stay current on developments in
this area so they can properly advise their clients.FUTURE POTENTIAL—TRENDS AND
OPPORTUNITIES
The rapid development of IT has significantly changed
the business environment and business models and pro-
cesses; hence, the accounting profession must respond to
the new challenges and take the opportunities to broaden
its service spectrum. Because assurance services are crit-
ical to all business reporting and the Internet has made
continuous reporting possible, CPA firms now have many
opportunities to perform continuous audit and assurance.
Continuous reporting is real-time reporting, meaning that
digitized information becomes available through elec-
tronic channels simultaneously with its creation (Elliott,
2002). Many issues are involved with such a practice. Be-
cause various types of information often flow to creditors,
investors, trading partners, government agencies, and em-
ployees, it is vital that the systems provide reliable infor-
mation (e.g., SysTrust assurance service), that a company
maintains its Web sites in a way that the external users
of the information can trust it (e.g., WebTrust assurance
service), and that the information provided is easy to be
downloaded for analysis purposes (i.e, XBRL). Therefore,
continuous audit and assurance will be the trend for the
accounting profession (both external and internal audit
practices).
In addition, the Internet leads to a more global reach of
CPA firms, which may cause concern over national or in-
ternational licensing standards. For this reason, CPA firms
may want to encourage more staff to obtain the CISA (Cer-
tified Information Systems Auditor) certification because
it is recognized internationally. Most important, the busi-
ness world is moving toward a paperless, or even a virtual,
office in which all records are stored on the Web and ac-
cessible anywhere and anytime. Because the information
is so easily accessed, CPA firms must be especially care-
ful to make their staff aware of all the related legal and
regulatory issues, such as privacy and confidentiality of
clients’ online information, when the firm is using that
information for audit or consulting engagements.
Finally, we will likely see CPA firms continue to find
innovative ways to use the Internet and e-business oppor-
tunities to further expand and enhance their services and
enable companies to provide more information and ser-
vices to their clients.GLOSSARY
Certified public accountant (CPA) Accountants li-
censed by a state agency to perform certified finan-
cial audits of businesses and other organizations. CPAs
typically must have a certain number of university- orcollege-level courses in accounting and related busi-
ness subjects and a number of hours of experience. In
addition, they must pass a national examination.
Encryption The conversion of data into a secret code
for transmission over a public network. The original
text, or “plaintext,” is converted into a coded equivalent
called “ciphertext” via an encryption algorithm. The
ciphertext is decoded (decrypted) at the receiving end
and turned back into plaintext.
Extensible markup language (XML) An open stan-
dard for describing and defining data elements on a
Web page and business-to-business documents. It uses
a similar tag structure as HTML; however, whereas
HTML defines how elements are displayed, XML de-
fines what those elements contain. HTML uses prede-
fined tags, but XML allows tags to be defined by the de-
veloper of the page. Thus, virtually any data items, such
as products, sales representative’s name, and amount
due, can be identified, allowing Web pages to func-
tion like database records. By providing a common
method for identifying data, XML supports business-
to-business transactions and is expected to become the
dominant format for electronic data interchange.
Electronic data gathering analysis and retrieval
(EDGAR) A reporting system that public companies
must use to send financial data to the Securities and
Exchange Commission. In late 1990s, EDGAR was re-
vamped to accept HTML and PDF files.CROSS REFERENCES
SeeExtensible Markup Language (XML); Taxation Issues;
XBRL (Extensible Business Reporting Language): Business
Reporting with XML.REFERENCES
AICPA CPA2Biz information. Retrieved March 3, 2003,
from http://www.cpa2biz.com/
AICPA Information Technology Section. Retrieved May
17, 2002, from http://www.aicpa.org/members/div/
infotech/index.htm
AICPA Top Tech Issues. Retrieved May 17, 2002, from
http://www.toptentechs.com/
Alles, M., Kogan, G. A., & Vasarhelyi, M. A. (2002). Feasi-
bility and economics of continuous assurance.Audit-
ing: A Journal of Practice & Theory, 21,125–138.
Awad, E. M. (2002).Electronic commerce: From vision to
fulfillment. Upper Saddle River, NJ: Prentice Hall.
Bagranoff, N. A., & Vendrzyk, V. P. (2000). The changing
role of IS audit among the Big Five US-based account-
ing firms.Information Systems Control Journal, 5,33–
37.
Boritz, E., Mackler, E., & McPhie, D. (1999). Reporting on
systems reliability.Journal of Accountancy, 186,75–87.
Deitel, H. M., Deitel, P. J., & Steinhuhler, K. (2001).
E-business and e-commerce for managers. Upper Saddle
River, NJ: Prentice Hall.
EDGAR Online. (2002). XBRL: How it can improve
today’s business environment. In XBRL Express.
Retrieved May 23, 2002, from http://www.EDGAR-
online.com/XBRL/XBLRtoday.asp