Abstract
The purpose of this research assignment is to explore the utilization of technology in accounting. The different technologies used in accounting were explored and examined thoroughly to understand the advantages that the different technologies will bring. The theoretical framework presented was that technology could create significant changes in different professions. This paper identified different technologies that impacted accounting as big data, artificial intelligence, blockchain, and cloud computing. The different technologies were identified to have multiple advantages in improving various accounting processes and transparency. The accounting profession was specifically impacted as it was expected to experience a job loss with the automation of some procedures and an increase in work that required utilization of technology. Several articles, scholarly journals, and theses were used to provide affirmation to the impact that technology has on the accounting profession.
Utilization of Modern Technology in Accounting
Over the past few decades, technology has been improving at an exponential rate. Technological developments have had a big impact on personal lives and the way people live every day and manage their work. One of the specific areas that have been impacted significantly is accounting. Modern technology has enhanced accounting and financial procedures, activities, and policies. There have been improved software that can perform complex functions and interconnected technology that has made accounting become more efficient and easier. This paper discusses the utilization of modern technology in accounting to show how some technologies like big data, blockchain, artificial intelligence, and accounting software have led to positive impacts in the recording of accounting data, transparency, and changed the skills required by accountants.
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Artificial Intelligence
The use of artificial intelligence (AI) has specifically impacted the analysis of financial data. AI has helped many organizations to detect fraudulent invoices improving the security of the overall system. AI technologies have also been applied in various accounting activities like performing tax returns, where they have led to positive effects like reducing the processing time for data from months to days. Other tasks performed by AI technologies involve conducting an internal control risk of a firm (Moll & Yigitbasioglu, 2019). The AI technologies can critically analyze collectible debts and bad debts to help the organization with managing its liabilities. Knowledge-based systems like machine learning have also been developed to automate various accounting procedures.
Big Data and Decision-Making
Big data involves large amounts of data from different sources that do not necessarily include financial data. According to Moll and Yigitbasioglu (2019), big data has a potential impact in improving the nature of decisions undertaken by accountants, the general company, and stakeholders. Big data helps an organization to undertake a critical evaluation of company assets by evaluating their features and conditions. The result of such analysis is that it will support a fair value in the accounting practices. Big data can also help in the valuation of intangible assets of an organization. Some intangible assets can add value to an add organization but may not be necessarily presented in a company’s financial statements. For instance, human resources, customer base, vendor base, and customer commitments are intangible assets that can be used to value a company. The measurement of such items can be tracked over some time, and the information is given to stakeholders to enable better decision-making. Big data can also advance the use of the Internet of Things (IoT) technology to further improve accounting practices and decision-making. For instance, sensors can be embedded on a company’s products like property and machinery, which can be automatically monitored and financial transactions made when a purchase is made. Big data presents several possibilities for accounting as it can enable companies to gather and use data that was previously not available to make better financial decisions.
Blockchain
Blockchain is a relatively new technology where transactions are stored in blocks and maintained across multiple computers linked to a peer-to-peer network where algorithms verify transactions. Blockchain technology is one of the most disruptive technologies that can impact the handling of different financial transactions. The advantage of blockchain technology is that it improves the accounting procedure by facilitating data security and transparency. According to Schmitz & Leoni (2019), blockchain technology presents a new form of presenting financial data. For instance, apart from recording the amounts of financial data transacted and the date of transactions, accountants may be required to further incorporate the cryptocurrency keys used for the different transactions. The use of blockchain technology can also improve the auditing process. Blockchains provide an instant validation of the transaction records. The instantaneous confirmation of financial transactions to the development of real-time auditing. The auditing process can change from an annual exercise to a continuous matter (Schmitz & Leoni, 2019). The result is that there will be an overall improvement in the general efficiency of the auditing process.
Accounting Software – Microsoft Tools
Microsoft tools have been increasingly developed over the years to facilitate the improved performance of various accounting procedures. According to Linda and Diana (2019), Microsoft Tools have been used to develop ERP systems that can analyze different financial data. Accountants currently have a spreadsheet that is utilized for various accounting calculations. The need and use for various equipment like calculators, pencils, ledgers, and machines were eliminated. The further development of software like excel allows for programming that can analyze large amounts of financial data and present the information in the form of financial statements. Accountants can interpret large amounts of financial data with ease and undertake different activities like forecasting the growth of a company and undertaking a qualitative analysis.
Cloud Computing
The development of cloud-based systems has facilitated a streamlining of information and better utilization of technology. Accountants can carry out their work remotely and log on to a company’s systems any time of the day. Cloud-computing technology provides a more robust analysis of data and facilitates a real-time data analysis as different people in an organization have access to the most recent financial data. The systems allow for a synchronization of files across different platforms, enabling better analysis of data. Having the records in a digital format means that one can manage and retrieve the files when necessary. Stakeholders that may want to monitor a company’s financial data can use cloud technologies to have instant access to financial data.
Advantages of Technology in Handling Financial Data
One of the ways that technology is increasingly being utilized in accounting is in the tracking and recording of financial data and transactions. Computer systems and IT networks have reduced the amount of time required by accountants to prepare financial information. New systems have been developed that allow accounts to generate reports quickly and easily, leading to an improvement in decision-making. The result is that there has been a general improvement in the accuracy, processing times, and functionality. The traditional accountant-client transaction has also changed as the accountants do not necessarily have to meet with the clients to discuss the financial situation. Financial data is usually stored online, allowing for remote and timely access to financial data. The accountant and client can thus have a simultaneous view, edit, and comment on the accounting data.
Modern technology systems can impact the auditing process. According to Dowling and Leech (2014), technology has facilitated the creation of auditing systems that have better features and are easier to manage. The authors established that auditors found the use of new technology to be quite enabling. The systems enabled auditors to be more accountable, and it promoted an improvement in their knowledge and skills. Auditors have also been involved in the further development of technology systems by being encouraged to challenge the system by making various recommendations to the system. The new auditing systems are also more efficient as they facilitate faster retrieval of information and can thus save a lot of time. Auditors also preferred using the new system as it was more detailed and it improved their confidence.
One of the main ways that technology is applied in accounting is to improve transparency. New technology systems have multiple features that can inform the reviewers and prepares about how the system is progressing and whether there could be errors in the system. Technology has also facilitated improved transparency by incorporating more features that improve the compliance of a firm with various accounting standards. The use of various technologies like blockchain facilitates better management of transactions that allows for improved transparency. Manipulating and destroying transaction entries to falsify information and to eliminate them is essentially impossible as they are cryptographically sealed, and the information can be distributed to stakeholders. The use of technology facilitates better monitoring of various financial endeavors of an organization.
Impact on Accounting Profession
The increased application of technology in accounting has led to significant changes in the nature of skills required by accountants. Linda and Diana (2019) observed that some of the critical skills required by accountants include soft skills like listening responsiveness, emotional intelligence, flexibility, and attentiveness. Most accounting students were found to lack some skills like critical thinking skills, problem-solving skills, and communication and writing skills. The authors observed that most of these skills are hardly learned in schools but are usually learned when students engage in an internship. Employers were also found to prefer new accounting graduates that showed confidence, ability to work independently, working with others, time management, understanding different aspects of the profession, analyzing data, and using Excel and computer software.
The increased utilization of technology can impact the accounting profession by causing a decrease in some roles and an increase in other roles. Previous accounting and auditing activities have increasingly become automated, making some job roles become unnecessary and replaced by technology. In the past, tax planning and the preparation of tax returns were represented as important activities for accountants. The advancement of technology has led to an improvement in an easy, inexpensive, and powerful software that can reduce the need for tax preparation services. Different types of software are increasingly being developed in the form of tax packages to reduce the demand for accountants in the tax profession. The result is some accounting professionals have lost their jobs and will likely lead to losing more jobs in the future.
There has been an increase in the need for accountants that can handle various transactions online. For instance, the incorporation of new technology like blockchains has led to a demand for companies to handle cryptocurrency transactions. Accountants are thus required to have both a knowledge of accounting and the know-how to check various cryptocurrencies (Boulianne, 2014). Therefore, there is an increase in the demand for accountants that work with different technology systems. The incorporation of technology in accounting will not necessarily replace all accounting practices and job roles. Instead, there will be new roles created that involve the increased use of technology.
Accounting education has also gone through considerable changes to reflect the transformation in the accounting profession. Al-Htaybat et al. (2018) observed that accounting education should reflect the new accounting technology like big data analytics, cloud computing, blockchains, and the Internet of Things. Accountants need to learn different types of technologies to remain relevant. As technology continues to grow, the software and algorithms continue to become sophisticated, and accounting practices are expected to change. There is a need for the current accounting education system to change to ensure that graduates have the technological expertise to handle various technologies effectively. IT skills like the ability to use electronic spreadsheets are indispensable, and accounting education institutions should ensure that candidates possess critical IT skills.
Conclusion
The analysis showed that there is an increased utilization of technology to handle various accounting processes. The future expectation is that technology will increasingly be utilized to automate various accounting practices. The different technologies that have been used in accounting include big data, artificial intelligence, blockchain, and cloud computing. The advantages of incorporating the different technologies are that it can lead to better management of financial transactions through the recording and analysis of financial data. Technology also facilitates improved auditing processes and transparency in the handling of financial data. The utilization of technology is expected to change the nature of the accounting profession. Graduates may be required to acquire new skills like the ability to work with various software and computer systems. The recommendation for accounting educational institutions is to teach soft skills and to ensure that students have knowledge on the utilization of different technologies. Accountants should also learn how to increase the use of different software to perform their work, or they are likely to face job losses as their work becomes increasingly automated.
References
Al-Htaybat, K., von Alberti-Alhtaybat, L., & Alhatabat, Z. (2018). Educating digital natives for the future: accounting educators’ evaluation of the accounting curriculum. Accounting Education , 27 (4), 333-357. https://doi.org/10.1080/09639284.2018.1437758
Boulianne, E. (2014). Impact of accounting software utilization on students’ knowledge acquisition: An important change in accounting education. Journal of Accounting & Organizational Change, 10(1), 22–48. https://doi.org/10.1108/JAOC-12-2011-0064
Dowling, C., & Leech, S. (2014). A Big 4 Firm’s Use of Information Technology to Control the Audit Process: How an Audit Support System is Changing Auditor Behavior. Contemporary Accounting Research, 31(1), 230–252. https://doi.org/10.1111/1911-3846.12010
Linda Bressler, & Diana Pence. (2019). Skills Needed by New Accounting Graduates in a Rapidly Changing Technological Environment. Journal of Organizational Psychology, 19(2), 50–59. https://doi.org/10.33423/jop.v19i2.2043
Moll, J., & Yigitbasioglu, O. (2019). The role of internet-related technologies in shaping the work of accountants: New directions for accounting research. The British Accounting Review, 51(6), 100833–. https://doi.org/10.1016/j.bar.2019.04.002
Schmitz, J., & Leoni, G. (2019). Accounting and auditing at the time of blockchain technology: a research agenda. Australian Accounting Review , 29 (2), 331-342. https://doi.org/10.1111/auar.12286
