Digital Competency Maturity Model or DCMM 2.0 – ICAI’s Push Towards New-age Accounting Software
February 1, 2023
Digital Competency Maturity Model or DCMM 2.0 is a step towards fortifying accounting and accountants leveraging modern technology. DCMM guideline is a judicious move for CA firms to drive them to reach optimal efficiency and realize tangible gains with reduced time, resource, and labor.
Accounting firms have advanced significantly since the days of manual accounting and bookkeeping when reconciling and finalizing accounts required tedious work that drained resources and time. While extensive paperwork was kept up to date, it lacked real-time data presentation, which widened the scope of error. Then appeared, a wave of digital and online accounting software products that completely revolutionized accounting.
The Digital competency maturity model Version 2.0 (DCMM) and its implementation guide for Chartered Accountants and professional accounting firms have been approved by ICAI.
As per DCMM 2.0, the adoption of new-age technologies by professionals and CA firms is the need of the hour.
The ICAI wants CA firms to adopt the essential cloud, big data, and AI technologies to streamline accounting and financial operations. DCMM 2.0 assists CA firms in tracking the level of automation, quantifying performance, and filling in performance gaps with corrective action in the following domains:
|Internal processes: Automation would increase efficiency, particularly in routine but crucial tasks like billing, document management, workflow status, cyber security measures, and compliance with data protection regulations.||Audit Processes: The assurance function primarily entails oversight, where automation can result in increased productivity and speed. Red-flagged exceptions can be used to automate the maintenance of digital evidence, IT systems audit, review of controls, audit planning, selection of sample size, audit focus areas, and risk mitigation.|
|Tax and compliance services: Due to inadequate document maintenance and a lack of knowledge of the most recent tax provisions, tax litigation is frequently prolonged. The ICAI has urged CA members to advise clients to automate appropriately, ensure internal access to the most recent automation tools with customization as needed, and provide digital updates on the most recent amendments.||Accounting function: The use of digital accounting software platforms ensures that adequate quality control procedures are included in every step of the accounting process, from the preliminary bookkeeping stage to the end financial reporting stage, to reduce errors.|
“Automation of accounting process saves not just time, but also delivers greater value and reduces risk. It reduces the likelihood of user error and opens up the possibility of real-time reporting. Automation can also reduce mistakes and inconsistencies by placing many basic transactions in the hands of computers.”
— DCMM 2.0
With automation, DigitalCFO is changing the accounting industry. Chartered accountants who built and designed the DigitalCFO software are familiar with the problems faced by CA firms, particularly small and medium-sized firms with tight budgets.
The automated workflow tools provided by DigitalCFO make sure the CA firm is dependent on processes rather than people, which ensures cost savings as well as the accuracy and completeness of accounting transactions, tax computations, financial records, and audit documentation.
All of the above-mentioned key focus areas that ICAI has advised automating are managed by customized modules from DigitalCFO:
|Internal processes Internal control tools built into DigitalCFO, such as maker checker controls, detailed audit log maintenance, data segregation with pre-defined approval limits, work allocation of work and sensitivity, are used to confirm adherence. Additionally, the data can be accessed remotely from the cloud after valid credentials have been verified.||Audit processes Through DigitalCFO, the auditor has access to the financial records of various legal entities using just one login ID. Additionally, DigitalCFO keeps a complete record of every transaction with each customer for up to 10 years, including all relevant information such as who processed the transaction, who approved it, any supporting documentation, and any exceptions. The processing of pre-dated transactions is restricted and requires mandatory approval before accounting. In addition, DigitalCFO automatically limits further transaction processing in certain high-value and sensitive information unless relevant supporting documents are loaded. As a result, DigitalCFO offers a real-time audit trail that can be stored and quickly retrieved.|
|Tax and compliance services To avoid getting into legal trouble, regulations must be strictly followed. DigitalCFO makes it possible to upload statutory returns, ensures accurate tax computation, such as TDS and GST automatically for each transaction, and includes payroll functionality with eligible statutory deductions for each employee. It also has alert mechanisms that are seamlessly integrated and send reminders before the deadlines for filing taxes, among other crucial tasks.||Accounting function Innovative accounting software like DigitalCFO offers a number of benefits and data analytics potential. Demand patterns, supply hubs, pockets of industrial superiority, tax adherence patterns, purchase and sales patterns, salary patterns, and much more are all reported by DigitalCFO. Analytics and reports on project-based, , department-wise, and branch-wise, such as sales trends, expense, claims, exception report on lengthy outstanding advances, receivables, staff advances, routine balance sheets and profit and loss accounts, and even analytics related to audit processes, due diligence processes, and forensics, can be generated down to the micro-level.|
Features that make DigitalCFO unique
DigitalCFO empowers accounting professionals with simple to use, yet powerful technology platform that prepares them with ammunition to overcome all the challenges that come with the accounting process.
Check out Digital Competency Maturity Model or DCMM 2.0 videos here.
To Know More Read the complete e-book here.