Drones may still sound a little ‘science fiction’, but their use is rapidly becoming mainstream. The practical applications of drones are multiplying – from energy generation (see box) to protecting birds of prey. While much of the media reporting of drone technology has focused on how Amazon and other retailers may use drones to deliver parcels, these applications are still at trial stage. But for accountants, especially auditors, drones are relevant and useable today.
“Drones are becoming a valuable tool for professional accountants by enhancing their capabilities to accurately calculate the numbers of assets, evaluate their condition, as well as improve managerial risk accounting,” explains Magdalena Czernicka, a manager at PwC’s Drone Powered Solutions division in Poland. According to a PwC study, drones – or Uncrewed Autonomous Vehicles, UAVs, as they are more correctly called – have the potential to radically reshape much of modern commerce, while turning it into a $127bn global market.
“Data gathered by UAVs can be also applied for due diligence purposes in order to minimise the risk of frauds or hiding actual state of assets,” continues Czernicka in an email to AB. “On the other hand, UAVs are currently used by tax offices from countries all around the globe – Spain, Indonesia, Hungary, Argentina, Nepal, China – to inspect correctness of tax returns or catch smugglers. It is worth to mention that data capture from drones can be used as evidence in case of litigation as well as properly value assets during insurance processes.”
Those tax inspections are often looking to determine whether property owners have correctly valued their homes for the purposes of property taxation. In several jurisdictions taxes can increase if a swimming pool is constructed – but owners do not always declare them. Drones are a simple way for tax inspectors to check the truth. In Buenos Aires tax inspectors have used drones to identify a hundred swimming pools and two hundred luxury mansions that had not been properly declared, leading to a significant increase in local tax collection.
PwC predicts the largest commercial application for drone technology will be in infrastructure, with an estimated global market value of $45.2 bn. Ciarán Kelly, advisory leader PwC Ireland, explains: “Drones and the data they provide are a game changer over the entire lifecycle of a transport infrastructure investment. Provision of real-time, accurate and comparable 3D modelling data is crucial during the pre-construction, construction and operational phases of an investment project, and all of this data can be acquired by intelligent and cost-effective drone powered solutions.”
Research by Deloitte has found that investment rates in the drone sector are increasing exponentially, with venture investment in software-based drone start-ups exceeding $335m last year, which was double the level of 2015. Deloitte’s EMEA Maximo Centre of Excellence is based in Dublin, from where it supports clients in 28 countries around the world, based on the IBM Maximo asset management system. Its director Nigel Sylvester says that while drone technology itself is mature, what is new is its integration with other technologies, such as automation, cloud computing, cognitive learning and the Internet of Things. It is this technological integration that has taken drone application a long way in a short period of time.
Deloitte is supporting wind turbine company Energia to enable the company to improve the efficiency of its wind turbine inspections ten-fold. Sylvester explains: “A very big driver is health and safety. Asset inspections in many environments carry health and safety risk. You have to work at height inspecting wind turbines and there is the risk of ‘ice throw’. Drones use removes the need for inspections to be undertaken in that environment.” Other asset inspection and operational maintenance applications that Deloitte’s Maximo CoE is engaged with include oil and gas pipelines and rooftop inspections. This use of drones not only directly cuts clients’ costs, but also improves the quality of their asset management and so positively impacts companies’ bottom line.
Deloitte points out that vastly enhanced software is also extending the ways in which drones can be relied upon. New software can better interpret data provided by drones, including the recognition of cars and people, the counting of individual plants in a field, and identifying metal corrosion of infrastructure, for instance. The need for human participation in the analysis of drone provided information is reducing.
Drones are now commonly used for safety risk assessments at construction sites and to inspect the condition of pipelines in regions where it can be very difficult or expensive to undertake a physical check. The technology can also be extremely useful for asset valuations, for example in due diligence exercises and in the preparation of legal proceedings. RICS – the Royal Institution of Chartered Surveyors – reports that there has been a big increase in the use of drones by commercial surveyors, including for the valuation of agricultural land.
PwC operates a commercial surveyor drone service from its Polish division. This was used by Polish State Railways to monitor the construction of a new railway bridge as part of a high speed network between Warsaw and Katowice. The drones were supported by data analytics to provide visual updates on progress that the client could track on smartphones. Another PwC supported construction project achieved savings of $2.94m in claims settlement litigation, because of the quality of the drone provided evidence. A study by the firm found that the number of life threatening accidents on construction sites monitored by drones has been cut by as much as 91%.
Ireland has established itself as a leader in the development of drone technology, with about 60 commercial drone companies operating in the country. One of the oldest is Versadrones, which is based in Skibbereen, Co. Cork, and designs and manufactures drones. Founder Tomasz Firek says that the most common uses are ‘videography’ (‘the capturing of moving images on electronic media’, according to Wikipedia) and ‘orthophotography’ (‘an aerial image that is geometrically corrected so that the scale is uniform, with the same lack of distortion as a map and which can be used to measure true distances’, Wikipedia).
Versadrones’ clients’ applications include search and rescue, security, 3D mapping and the surveying of agricultural land. But, concedes Firek, drones are not universally popular. “When I developed the drones about eight or nine years ago as one of first three companies in the world, people had no ideas that this technology will invade so far in their privacy,” he says. Deloitte has meanwhile warned companies deploying drones to ensure they take adequate cybersecurity steps to protect their data and systems.
It is also essential to recognise that the use of drones is regulated – in Ireland by the Irish Aviation Authority. All drones over 1kg must be registered with the authority, which also controls their use. In addition, there are strict regulations over the use of private information and breaches of privacy, which are subject to regulation by the Data Protection Commissioner. Even with the strict regulation, though, it seems inevitable that accountants will find drone technology an increasingly important part of their professional life.
Box
Drones have far more applications that merely being ‘eyes in the sky’. Drones that operate like tethered kites can harvest high level wind power and convert this into electricity. And Ireland is at the forefront of applying the technology. Dutch company Ampyx Power is currently working with energy company E.ON to commercialise the technology, using a site in County Mayo as a test bed. Theoretical advantages for electricity production are the lower costs and higher generation capacity of airborne wind technology. “Airborne wind supports one of our overall targets to drive down cost for renewable energy,” explains Anja-Isabel Dotzenrath, chief executive of E.ON climate and renewables. “In addition to making airborne wind competitive to conventional wind power, we would like to work with authorities and legislators to pave the way for introducing this exciting technology and eventually make it eligible to participate in tendering processes [for renewable energy subsidies].”
The Ampyx AP-3 model will be trialled in Mayo from late 2018. It will be a 350kg drone with a 12 metre wingspan, generating 250kw of electricity, operating 24 hours a day, seven days a week, with fully automated responses to wind drop or system failure, to bring it safely back to earth on its small landing platform. Once fully developed, it should be able to withstand extreme weather events.
Paul Gosling, journalist