CPA INSIDER

Drones set to invade accounting profession

New rules on drone use open up opportunities for firms of all sizes.
By Sarah Ovaska-Few

Accounting may seem an odd fit for drones, with attention more often focused on how the flying machines deliver packages or are used in war zones. But those tracking the new technology say unmanned flying devices have the potential to bring new ways of doing business to accounting firms big and small.

"Commercial drones are the way of the future, and it's going to make a big difference for any firm," said Julia Morriss, a coordinator on the AICPA State Regulatory and Legislative Affairs Team. Expect drone use in the commercial space to dramatically increase in coming years, including in the accounting profession, following the Federal Aviation Administration's issuance of new rules in summer 2016 on commercial drone usage, said Morriss, who follows drone regulations closely.

Though she doesn't expect use to be adopted overnight, Morriss anticipates small- and medium-size firms to adopt drone technology as an add-on service to enhance routine audits or asset assessments. Firms with clients in the construction, mining, or agriculture sectors will be well-poised to adopt the technology early on.

What the FAA did

The FAA's finalization of regulations for commercial use of drones last year was a major development for the devices' use in the United States, said Enrico Schaefer, an attorney specializing in the drone industry. The rules took effect Aug. 29, 2016, a date now being viewed as a milestone in what PwC estimates is a $127 billion global market.

Major innovations in all types of markets are expected now that the FAA has clarified how businesses can use drones, said Schaefer, who is the founding attorney of DroneLaw.Pro, based in Michigan.

Before the rules were in place, drones largely had to be operated by someone with a private pilot license when used in commercial ventures. That meant those who wanted to fly the remote-controlled devices often needed to have the same credentials as the pilot in the cockpit of a Cessna, putting drone use out of reach for all but the largest accounting firms, Morriss said. Now, operators will need to take a 60-question test administered by the FAA to obtain a license to fly the machines for business purposes.

Significant restrictions are still embedded in the rules, including requirements that the drones aren't flown over people. The unmanned devices also have to be within a pilot's sight at all times and can't exceed speeds of 100 mph, Morriss said. States may have additional restrictions in place regarding privacy rights and other issues, and drone pilots will need to make sure they abide by any state rules, she said, adding that the AICPA will continue to monitor any changes in state regulations.

Schaefer said the FAA is the final decider in regulating drone use in air space. He expects state legislation relating specifically to drones will eventually be negated by the federal agency's rules. "The FAA says it's the only one that can regulate the national air space," Schaefer said. "There has to be a single set of regulations for all aircraft."

Drones take off 

The new guidance on commercial use of drones will put drone use into the hands of all types of businesses, said Dick Zhang, founder and CEO of Identified Technologies Corp., a Pittsburgh-based company that sells specialized drones with computing and photographic abilities. "The barrier to entry has been reduced, so you're going to see folks doing a lot more things in the commercial space," Zhang said.

In the accounting profession, for example, firms working with clients that own large mineral deposits or mining operations can now use drones to fly over the area, taking thousands of pictures and measurements. CPAs can then use that data to provide exact estimates of holdings. "Their balance sheets and their assets are literally sitting on the ground," and drones can quickly calculate inventory estimates by flying over the area, Zhang said.

Drones also offer a new and more exact way of conducting risk assessment work, said Michal Mazur, who runs PwC's global shared service center for Drone Powered Solutions based in Poland. The accounting, audit, and consulting firm started a drone-focused division after the country passed laws in 2013 friendly to commercial operation of the machines. Images captured over large worksites can offer a new way of ensuring safety regulations are adhered to, from views that determine whether workers are wearing safety helmets to checking that cranes or other heavy construction machines are set up properly, Mazur said. 

PwC is pursuing a two-pronged approach for clients when it comes to drones, Mazur said. The company can serve in a consulting role to help clients incorporate drones into their operations, and also can use the devices to capture information and data for audits or to be used as third-party asset confirmation in litigation, Mazur said. "It's a new type of data assurance."

Next steps

Firms that want to incorporate drones into their practices can reach out to companies that specialize in drones to find out more about existing capabilities and opportunities, Zhang said. Those who seek to eventually pilot the flying devices can contact the FAA for information about licensing, including accessing a list of sites that administer the necessary pilot's tests.

Morriss, the AICPA staffer, said those interested in incorporating drones into their accounting practices can reach out to her team for advice on regulations. She also expects to see drones as a topic at upcoming conferences, with discussions focused on the advantages the technology can bring to a firm.

"Drones are really poised to disrupt the market," Morriss said. "It's going to be really interesting to see what happens."

Sarah Ovaska-Few is a freelance writer based in Chapel Hill, N.C. To contact Julia Morriss or others on AICPA's regulatory team about drones, email state@aicpa.org. To comment on this article, contact Chris Baysden, senior manager of newsletters at the AICPA.

SPONSORED REPORT

Revenue recognition: A complex effort

Implementing the new standard requires careful judgment. Learn how to make significant accounting judgments and document them and collaborate with peers for consistent application.

TECHNOLOGY Q&A

How to create maps in Excel 2016

Microsoft Excel 2016 has two new mapping capabilities. J. Carlton Collins, CPA, demonstrates how to make masterful 2D and 3D maps in Excel 2016.

QUIZ

News quiz: Economy and health care changes top CPAs’ list

CPA decision-makers’ economic outlook and the House Republicans’ proposed tax changes as part of replacing the Patient Protection and Affordable Care Act received attention recently. See how much you know with this short quiz.