Imagine the death of audit as we know it today.
That is the futuristic prediction of the impact of emerging technology on the accounting profession.
As a discipline, accounting has a come a long way from the days of manual spreadsheets to the current migration to cloud accounting.
Technology trends in big data, cloud, mobile applications, robotics, virtual reality, and artificial intelligence are having a massive impact on the way accountants do their work, share information, and provide services.
This has created new working patterns for accountants. It has freed them from manual, repetitive, and time-consuming jobs and shifted the focus to more value-adding tasks. The new expectation is for accountants to play a more strategic role as analysts, advisers, and problem solvers on finance and business matters.
Technology is redefining what it means to be an accountant. It is creating a “new normal” in the profession, and all indications are that the pace of innovation won’t slow down anytime soon.
Let’s take a look at four technology trends that will have a big impact on the accounting profession in 2019.
1. Increasing Dominance of Cloud Accounting
According to Accounting Today, “More and more firms and their clients are moving from in-house to the cloud, and this trend shows no signs of slowing down.”
“Cloud accounting solutions” refers to software hosted on remote servers which can be accessed from any device through the internet. The increasing adoption of cloud computing can be attributed to some of its benefits when compared to desktop accounting software.
For one, it allows access to financial information from anywhere and at any time. Users can work on the same files simultaneously.
It is a cheaper option since it does not require installation costs or periodic updates. It also allows for automatic backup in secure, fail-safe locations.
Overall, cloud accounting has made financial management to be more efficient by eliminating manual processes, less time-consuming by doing away with manual documents, and more effective by allowing easy, real-time access to financial information.
2. Artificial Intelligence, Robotics, and Accelerating Automation
Accenture’s Finance 2020 Workforce report states that automation, minibots, machine learning, and A.I. are rapidly becoming part of the financial process.
Increasingly, tedious and repetitive accounting tasks are being automated. A.I. is now performing processes such as accounts payable and accounts receivable. Automation in accounting involves the use of A.I. and robotics to mimic human tasks and complete repetitive jobs more accurately, with greater speed, within less time, and without the need to rest.
Automation frees up finance teams from repetitive work and can transform the way accountants and finance professionals bring real value to the organization..
The rapid manner in which accounting tasks are being automated has created a lot of uncertainty on the future of finance as a profession. Some have even predicted the extinction of accountants.
However, according to research done by Accounting Today via LinkedIn, the role of the finance function is expanding dramatically. The research found that skills that accountants possess can be applied to many fields, both in and out of finance.
This means that the role of the accountant is shifting to one of analytics and value addition. Jamie Lyon, interim director at ACCA, states that automation frees up finance teams from the repetitive work and can transform the way accountants and finance professionals bring real value to the organization.
3. Blockchain and Distributed Ledger Technologies (DLT)
If current predictions are to be believed, the technology behind blockchain will change the very fundamentals of accounting. It is predicted that blockchain will do away with the need for audits and eliminate the double entry accounting system.
First emerging in 2008, blockchain created the platform for the first digital currency: the bitcoin. However, with time, the use of the technology has grown well beyond cryptocurrency.
Blockchain is the most widely known distributed ledger technology (DLT). KPMG defines DLT as a single ledger technology comprising shared, replicated, and synchronized databases spread across multiple locations. DLT enables the secure sharing of data in near-real time.
In other words, blockchain and other DLTs are open, distributed ledgers that allow several users to own and access the same information in real time with no central authority.
The impact of blockchain technology has such a huge ramification on the accounting profession that the “big four” audit firms have started to pay attention.
ICAEW in their report, “Blockchain and the Future of Accountancy,” describes blockchain as an accounting technology concerned with the transfer of ownership of assets and maintaining a ledger of accurate financial information. The technology affects how financial transactions are initiated, processed, approved, verified, and audited.
Through the use of inbuilt mechanisms such as cryptography, the integrity of transactions can be authenticated, and it prevents unauthorized changes to records. This not only provides transparency but ensures the integrity of financial data.
What does this mean for performing audits?
According to PwC, traditional audits cannot work with blockchain technology. Blockchain renders the current audit methodologies ineffective and impractical. With increased adoption of DLT, there will be the need to redesign the whole audit approach and create new auditing standards; yet, in the long term, the structure of DLTs has led to speculation that there will be no need for organizations to do audits in the future.
4. Growing Use of Mobile Accounting Applications
Mobile devices have become a convenient and reliable tool to work on the go. Many mobile applications assist in performing various functions including editing documents, managing emails, and carrying out financial transactions.
Mobile accounting apps have functionalities that enable the accountant to manage finances from any location. They assist in sending invoices, approving expenditures, managing budgets, tracking cash flow, making bank payments, and running financial reports.
The key consideration in the use of mobile accounting apps is to ensure that the organization has in place a robust mobile device management plan. This will put in place proper security that will prevent unauthorized access to the organization’s financial data.
Although it is difficult to predict the future with absolute certainty, what is clear is that the role of the accountant is changing. The use of technology to streamline the accounting processes continues to expand, and as a profession, accountants must learn to collaborate with machines and technologies.
Going forward, there will be a need to re-examine current skillsets and understand the skills that will be required in the coming future. In this way, the profession can exploit these emerging and expanding technologies and fit into the new role of analysts and strategic business advisors.
Are You Prepared for the New World of Possibilities?
At JMARK, we work with accountants to help them do just that: prepare and take advantage of new and emerging technology. We offer a full suite of services customized for accounting practices. Our tailored approach combined with three decades of providing innovative I.T. solutions to accounting firms makes us the right business partner to help you navigate the coming I.T. revolution.
Contact us or give us a call at 844-44-JMARK to learn more about how our services and experience can benefit your firm.