CPAs will play an important role with businesses who buy or sell goods with digital currencies in the metaverse (Getty / Westend61)
The evolution of the metaverse — and how to monetize it — is driving many strategic discussions these days. While the metaverse is not likely to be fully embraced by the business world just yet, expectations are that it will become an integral part of doing business in the near future. In the meantime, CPAs can start to prepare by understanding this next evolution of the digital economy.
WHAT IS THE METAVERSE?
Encompassing virtual reality, augmented reality, elements of artificial intelligence and some blockchain thrown in for good measure, the metaverse — and what we can do in it — is an evolving space.
“In simple terms, it’s a world of mixed reality environments where users can seamlessly transition between the real and virtual world and everything in between,” says Michael Wong, CPA, senior product manager, Oyster® HR in Toronto. The metaverse also supports the buying and selling of goods with digital currencies, he adds.
“Think of it as a 3D internet,” says Will Xiang, CPA, vice-president, cybersecurity, data analytics and privacy for Richter, a business advisory services provider in Toronto. “It was designed as an immersive experience for entertainment such as video games, as well as being a part of a live event like NBA games or concerts. But, for businesses, it is becoming another avenue to engage with users; for example, interacting with customers in a 3D environment such as a retail showroom or entertainment venue. ”
WHY THERE’S A ROLE FOR FORWARD-THINKING CPAS
The metaverse represents a major shift for the accounting profession, says Garrett Wasny, CPA, a Vancouver-based digital skills adviser to CPAs.
“It represents something exponentially greater than taxes and audit,” he says. “Accountants could and should lead in the development of generally accepted metaverse accounting principles.” He points to the PwC Hong Kong office’s recent entry into the metaverse as a telling sign of what is to come.
For organizations moving to the metaverse, accountants are now in a position where they can tell clients what they can do for them, explains Wasny.
“Every transaction [that’s] set up, we can help establish processes and systems, and data and control because that’s exactly what accountants do, ”says Wasny. “For example, Schellman in Tampa, Fla., Is an accounting professional firm that provides accounting, audit and assurance services for people in the metaverse and digital [industries]. Its digital trust services include everything from privacy assessments, ISO certifications and cloud configuration assessments, to penetration testing and federal regulatory assessments. ”
CPAs also have the potential to oversee and test every financial interaction a client engages in within the metaverse. They can help determine if it’s illegal, fraudulent or unauthorized, and verify the parties involved, explains Wasny. Despite the transactions taking place in the non-traditional realm, “Core compliance will never go away. There are also the traditional tasks, such as making sure any financial transaction is correctly classified. On the administration side, bills will have to be paid, payroll will have to be met and suppliers must be engaged, ”says Wasny.
WHAT CPAS NEED TO KNOW
Expertise will be in demand as the metaverse evolves.
“One question to consider is: have we built a comprehensive framework that addresses risk in the metaverse and how do we tie that back to our business objectives and truly quantify what that risk might be?” says Xiang.
“Do we have the right expertise to fully understand and mitigate those risks? This includes how we plan to collect, use, process and retain customer data as compared to privacy legislation, and how we plan to secure our metaverse platform against threats such as account takeovers or vulnerability and security loopholes. Failure to do so may impair a company’s brand reputation not only in the metaverse, but in the real world as well. ”
CPAs will also have to stay up to date with changes to regulations, infrastructure and operations, he adds. “In addition, CPAs will need knowledge of digital currencies and the digital payment ecosystem, and how to link that to real financial dollars. That will require very specialized skillsets. ” [To learn more about the skills and knowledge that will keep CPAs on the cutting edge, read Leading the Way: Competency Map 2.0.]
Overall, CPAs will require skills that intersect the business, technology and legal aspects of the metaverse, notes Wasny. “This is not going to be business as usual.”
WHEN WILL THE METAVERSE GO MAINSTREAM?
There’s a lot of talk and speculation so far but is the metaverse ready for prime time?
“I don’t see it yet,” says Xiang. “With very few exceptions, businesses are not jumping in full throttle. They need to wrap their heads and arms around the fact there is not a whole lot of regulation governing the metaverse. ”
“It’s still very early days for the metaverse,” agrees Wong. “There are a lot of potential implications around privacy and other issues that need to be figured out. I suspect more clarity around governance and regulations will be needed before we see more widespread adoption. ”
Although the metaverse isn’t expected to be widespread until 2030, it will be part of the future, making this an exciting journey for forward-thinking CPAs.
Read about the role for CPAs in digital transformation. Plus, tap into CPA Canada’s resources for financial reporting of cryptocurrencies, blockchain technology basics and the ways automation and AI could change the CPA’s role.