Benefits and Risks of Technology in Accounting
“What impacts are emerging technologies such as the Internet of Things, Blockchain and Big Data having on the Accounting profession and IT departments of companies?”
The profession of accountancy faces significant amount of opportunities and risks from digital disruptions and rapidly evolving technology. The profession of accountancy is full of transparency of transaction and inbuilt validation may turn out to be difficult. It represents the varying focus of the accountants in business (Vasarhelyi et al., 2015). Development in the data analytics and block chain technologies create significant amount of impact on the accounting and finance.
Internationally, companies, accounting profession and professional bodies are increasingly placing their focus on the impact created by the technology. There are certain benefits that technology can provide from the operational efficiency as well as financial inclusion with greater insights (Warren et al., 2015). However, the benefits also come with the range of risks and many of those risks are yet to be addressed. The report provides an understanding of technological impact created on the financial functions and implications in the profession of accountants.
Technological news is considered as universal. The history of profession was based on adapting, leverage and utilizing the technology for the benefit of government, society and business. Technology brings into the changes the way through which business is conducted and data is analysed (McAfee et al., 2013). There is a large number of focus on the data management. Block chains, big data are regarded as the game changers for finance as well as accounting sector. The introduction of big data and cloud storage has introduced the possibilities of collecting and assessing the business to business data on the earlier unimaginable scale. Advancement in the technology is changing the daily business operations and transforming the business models.
Block chain is rare for its overvalued technological trend in which back-office solutions relating to transfer of ownership of assets and recording of data online is carried out. It is regarded as the platform for accountants and business instead of the novel application of the business model (Bhimani and Willcocks, 2014). Block chain not only refers to single technology but also regarded as protocol of doing things for recording of transactions. In contrast to internet in which sharing of information is carried on, Block chain represents the ownership that can be transferred from one party to another party. Block chain is regarded as the desirable model for numerous reasons. For instance, in a business to consumer market having several transacting parties, block chain can remove the need of reconciling the incongruent ledger.
Blockchain in Accounting
The profession of accounting is widely concerned with the measurement and communication of financial information along with the analysis of the correct financial information (Yoon et al., 2015). A large part of the profession is associated with measuring the rights and obligations better allocation of financial resources. For accountants the use of block chain offers transparency over the ownership of the assets and prevalence of obligations with dramatically improved cloud efficiency. Block chain possess the potential of improving the profession of accounting by lowering the cost involved in maintaining and reconciling the ledgers and offering absolute certainty over the ownership and history of assets.
According to Cao et al., (2015) the continuous globalization would generate more prospects and challenges for the accounting profession members. While globalization promotes more free flow of money from the capital market to another, it also improves the activities of overseas outsourcing. Transferring the technical and professional skills would simultaneously act as the threat in resolving the local problems. Additionally, the accountants would increasingly use the sophistically smart technologies to improve their traditional way of working and such technology may even improve their way of working and such technology may even substitute the traditional approach.
Smart systems of software such as big data and cloud computing would lend support towards outsourcing services that would gradually improve the business to business and business to consumer collaboration (Saxton, 2016). Apart from the other trends of automation such as big data and block chain it would result in more transactional level accounting. Successful accountant would be those that work on evaluating the real economic interpretation of block chain records by merging the record to economic reality and valuation.
By excluding the reconciliations and providing inevitability over the transaction history, block chain may enable the increase in the scope of accounting. This brings into the consideration more areas that are currently deemed to be difficult or unreliable to measure particularly the value of the data that is held by the company (Vasarhelyi et al., 2015). Block chain represents the replacement for bookkeeping and work reconciliation. This acts as the threat for the work of accountants in those areas, while adding strength to those it also places focus on providing value somewhere else.
Block chains provide greater degree of transparency than the traditional ledgers. This is regarded as appealing in circumstances where corruption or misappropriation of assets is at risks. Moving beyond the confines of the company data enables the accountants to collect and assess the wider industry data sets that were earlier inaccessible (Griffin and Wright, 2015). This enables the accountants to identify in better way the informational outliers and improve their ability of generating business insights by placing focus on the business and financial reporting risks.
Globalization and its Impact on the Accounting Profession
There are disruptive technologies that also have the thoughtful effect on the skills necessary for the auditors, financial and accounting professionals as well as the regulators that has implications on the educators, policies and staff development needed. Against the backdrop of the current evolution in technology Anderson, (2016) proposes that big data and data analytics is doing more than just the change of carrying out the work of bookkeeping. When clients undertake the new technology they look for wider assurance so that they can mitigate the business risks further than the focus of the historical information.
In spite of the growing benefit of technology in accounting, it has also disrupted the process of audit by increasing the process of automation to drive efficiencies (Shyshkova, 2018). The world generates around 2.5quintillion bytes of data as barcodes, digital images, transactional databases etc. The capability of organizing, managing and analysing can effectively result in better decision and produce a competitive advantage for business and technology in order to become more accessible and affordable.
Information technology companies such as Amazon, IBM and Google are some of the organizations that uses the big data to derive the business advantage by targeting the sales efforts and personalizing the products in order to drive the efficiency and quality (Dogru et al., 2018). It also aims at producing greater level of customer satisfaction and experience. The researchers are exploiting the big data in the areas of manufacturing and retail. The vendors of software for business intelligence is planning enterprise resources and sales management. They are also incorporating the ability of analysing the vast amount of data with cloud based platforms are emerging to offer on demand access to the tools which the organizations are required to include into the internet of things and unlocking the influence of big data (Mainelli and Smith, 2015). The professional trademark analysis and ability of problem solving skills can assist the accountants in managing the complexity of the vast sum of data that is being generated.
The technological advancement helps in understanding the conditions of market, forward planning and risks. It has the potential of increasing the business effectiveness and reducing the process costs (Dai and Vasarhelyi, 2017). The internet of things helps in transforming the audit and forensic accounting by enhancing the corporate functions. The technological impacts help in levelling the field for the small business and large companies. However, the technological advancement has also led in shortage of data mining and accountant’s interpretation skills. There may arise data security, privacy and other necessary legal issues with large number of data is not regarded as the ultimate answer.
Big Data and Cloud Computing in Accounting
The accountants have always exploited the emerging technologies as this would help in completing their tasks in more accurate, quick and in simple manner. However, all these technological developments are regarded as the simple proposition in comparison with the myriad technologies which is currently reshaping the business worlds and accountancy (Kokina, et al., 2017). Technological trends in big data and social collaboration is converging to change the way in which information technology consume resources, share knowledge, access products and services. At the same these trends are underpinning and influencing the developments in the digital service and artificial intelligence.
The accountants in practice in the functions of finance acts as the part of connected world. This changes the way through which communication and collaboration in business is conducted (Nguyen, 2016). It provides the accountants with the opportunity of automate and de-skill those work that are time consuming and repetitive in nature and emphasis on the higher value of work. This helps the accountant in consolidating their roles as the advisers on finance and business.
According to Kokina et al., (2017) predicting the future with any degree of certainty is not possible. Being informed regarding the technologies as and when they evolve, considering new technologies when they arise and then evaluating the implications for financial professional’s accountants can prepare themselves to reduce the burdens and increase the benefits. Financial professionals should take into the considerations the challenge and opportunity that is created by the new and emerging technologies. The accountants should then use their problem solving skills to evaluate their potential influence as this would help them in providing an insight that is required to guide any impacted strategic business decisions.
The accountants and the organization in which they work are exploiting the cloud in business. The system of accounting was the first software that became online which is joined by the increasing range of business software service. Using the cloud based infrastructure namely the computer storage and data storage helps in providing access to unlimited resources without the need for maintaining the Information Technology expertise (Shyshkova, 2018). Cloud possess the ability of delivering several business benefits but it can create opportunities and challenges for accountants. By remaining proactive accountants can make the better tactical and strategic decisions to gain the competitive advantage. The technological advancement helps in easing the accessibility, scalability, sharing of data and collaboration. The emerging technologies helps in reducing the costs and managing the overheads.
Technology and Auditing
The technological advancement has changed the profession of accounting and the access of software has made the work of accountant easier. Findings from the analysis suggest that the technological advancement has reduced the margin of error for accountants. This is particularly beneficial for the business and IT companies as errors can result in taxation penalties or uninformed decision makers. Findings suggests that technologies are constantly improving and accountants require the skills prior to landing in a position with the reputable firms and organizations. The development in accounting software and applications have now provided accountants with more diversified and strategic roles.
Following the analysis below stated are some of the recommendations that are relevant to the study are as follows;
- Recommendation can be provided to introduce better controls and educations to enforce governance. This can be only done by developing the new skills and to meet the need of changing anticipations.
- The accountants require IT skills and business skills. It is recommended that professional accountant should possess the necessary job skill to discharge the accounting practices.
- It is recommended that accountants should plan tactically and strategically to render the competitive advantage.
- It is recommended that accountants should explore and administer the ways through which increasing volume of data can be managed and complexity of data can be assessed.
Conclusion:
On a concluding note the accountants increasingly remain dependent on the knowledge of the expert built into the software for a range of scenarios. The internet and cloud based technological resources is presently reshaping the countless aspects of business. The report was based on stimulating the discussion regarding the wide range of emerging and converging technologies have potential influence on the financial professionals. The study provides that the accountants may be faced with unforeseen interactions with the technologies can be viewed as interesting and challenging. The big four have explored the ways of managing the increasing amount of complexity in data and are helping the other parts of the business to better analyse and exploit the data
References:
Anderson, N., 2016. Blockchain Technology A game-changer in accounting?. Deloitte, March.
Bhimani, A. and Willcocks, L., 2014. Digitisation,‘Big Data’and the transformation of accounting information. Accounting and Business Research, 44(4), pp.469-490.
Cao, M., Chychyla, R. and Stewart, T., 2015. Big Data analytics in financial statement audits. Accounting Horizons, 29(2), pp.423-429.
Dai, J. and Vasarhelyi, M.A., 2017. Toward blockchain-based accounting and assurance. Journal of Information Systems, 31(3), pp.5-21.
Dogru, T., Mody, M. and Leonardi, C., 2018. Blockchain Technology & its Implications for the Hospitality Industry.
Griffin, P.A. and Wright, A.M., 2015. Commentaries on Big Data’s importance for accounting and auditing. Accounting Horizons, 29(2), pp.377-379.
Kokina, J., Mancha, R. and Pachamanova, D., 2017. Blockchain: Emergent industry adoption and implications for accounting. Journal of Emerging Technologies in Accounting, 14(2), pp.91-100.
Mainelli, M. and Smith, M., 2015. Sharing ledgers for sharing economies: an exploration of mutual distributed ledgers (aka blockchain technology).
McAfee, A., Brynjolfsson, E., Davenport, T.H., Patil, D.J. and Barton, D., 2013. Big data: the management revolution. Harvard business review, 90(10), pp.60-68.
Nguyen, Q.K., 2016, November. Blockchain-a financial technology for future sustainable development. In Green Technology and Sustainable Development (GTSD), International Conference on (pp. 51-54). IEEE.
Saxton, G.D., 2016. CSR, Big Data, and Accounting: Firms’ Use of Social Media for CSR-Focused Reporting, Accountability, and Reputation Gain.
Shyshkova, N., 2018. Prospects for the Implementation of Blockchain in Accounting. Accounting and Finance, (2), pp.61-68.
Vasarhelyi, M.A., Kogan, A. and Tuttle, B.M., 2015. Big Data in accounting: An overview. Accounting Horizons, 29(2), pp.381-396.
Vasarhelyi, M.A., Kogan, A. and Tuttle, B.M., 2015. Big Data in accounting: An overview. Accounting Horizons, 29(2), pp.381-396.
Warren Jr, J.D., Moffitt, K.C. and Byrnes, P., 2015. How Big Data will change accounting. Accounting Horizons, 29(2), pp.397-407.
Yoon, K., Hoogduin, L. and Zhang, L., 2015. Big Data as complementary audit evidence. Accounting Horizons, 29(2), pp.431-438
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