Technology Changes And The Impact On Accounting Profession
First Part
Introduction
1.1 Context Of The Study
Accounting is the measurement, processing, and communication of financial data about economic entities such as enterprises and corporations. The modern discipline was established by the Italian mathematician Luca Pacioli in 1494. Accounting, also known as the “language of business,” assesses the outcomes of an organization’s economic activities and conveys this information to a variety of users, such as investors, creditors, management, and regulators. Accountants are practitioners of accountancy. Accounting and financial reporting are often used synonymously (Dillon, T. W., & Kruck, S. E., 2004.
Accounting is simplified by organizations such as standard-setters, accounting firms, and professional bodies. Financial statements prepared in accordance with generally accepted accounting principles (GAAP) are typically audited by accounting firms. GAAP are established by the Financial Accounting Standards Board (FASB) in the United States and the Financial Reporting Council in the United Kingdom (Torgerson, S., 2007). As of 2012, “all major economies” intended to adopt International Financial Reporting Standards (IFRS) or converge on them. Accounting’s numerous and mathematically related functionalities, on the other hand, make it laborious and time-consuming. However, technological advancement led to an improvement in this discipline, resulting in what is currently known as “Computerized Accounting.”
As a result of its contribution to enhanced communication skills, technology is an asset to all enterprises. Similar to many other industries, accounting has benefited from technological advancements that have increased efficiency (Laudon, K. C., & Laudon, J. P., 2006). These technological instruments include computer-integrated manufacturing, image processing, the Internet, and expert systems (Journal of Accountancy, 1996, cited in Laudon et al., 2006). Accounting information can become dynamic and reflect the current state as a result of increased business efficacy (Journal of Accountancy, 1994b, cited in Laudon et al., 2006). This helps management accountants achieve their objective of providing the most accurate and expeditious information.
Inadvertently, a company’s technological asset may become a liability for the company’s accountant. Information provided by technological tools that is more timely and accurate often comes at the expense of business accountability and confidentiality. Due to the solely electronic audit trail with which accountants are frequently confronted, there are a great deal more opportunities for fraud. Using these audit traces, many transactions cannot be traced back to their origins. Internet transactions, along with other methods, raise concerns regarding privacy. In the year 2000, accountants’ reliance on computers proved detrimental (Schroeder, D., CPA, CITP, CISA., 2006). These are only some of the negative effects of technology on the accountant of today.
In general, technology has impacted the accounting field. Technology has impacted the accounting profession in a number of ways, including hiring patterns, educational requirements, and the emergence of accounting consulting. These cannot always be categorized as benefits or drawbacks (Erikson 1995, cited in Dillon et al., 2004). Nonetheless, it is evident that these effects, along with the advantages and disadvantages, are causing a transition in the accounting profession. Consequently, the accounting profession must adapt to these changes or risk being replaced by a new generation of rivals. According to Torgerson (2007), the accounting profession “needs to upgrade its practices and skills to reflect where the world is going, rather than where it has been.”
Prior to 1980, the majority of financial accounting was performed manually, resulting in an abundance of documentation. Currently, computers and wide area networks are used to record the majority of accounting data (Laudon et al., 2006, citing The new finance. Journal of Accountancy, 1994b). The character of accounting has unquestionably changed due to technological advancements. Although it is unclear whether technology has had a positive or negative effect on accounting, it is undeniable that technology has significantly altered the accounting field. Frequently, a technological advancement is an asset for a business but a liability for the accountant. Consequently, the purpose of the study is to examine the impact of technological advancements on the accounting profession.
1.2 Description Of The Problem
Recent technological advancements have unquestionably had an impact on the accounting profession. Some ‘business thinkers’ believe that the accounting profession needs a comprehensive overhaul. It is true that technological advances have rendered obsolete a number of current accounting practices. An example is the ledger account (Journal, 1994b). Historically, this account was utilized to expedite the production of financial statements (Knapp, 1996, as cited by Wailgum, T., 2008). With the advent of instantaneous information, the ledger account is losing significance. Computers are now the primary record-keepers for this type of information. According to Knapp (1996), “if the accounting profession does not reinvent itself, it will be easily replaced by a profession that has yet to emerge with an entirely different vision for how information, analysis, and attest services should be provided.”
1.3 Purpose Of The Study
The purpose of this study is to examine the effects of technological advancements on the accounting profession. Among the specific objectives are:
1. Determine the impact that technology has had on the accounting profession.
Determine the advantages of technology for the accounting profession.
Identify the technological challenges in accounting.
1.4 Research Questions
These research will be guided by the following questions:
What impact has technology had on the accounting profession?
What advantages does technology offer the accounting profession?
What challenges does technology present in accounting?
1.5 Importance of the Research
The study presents the new face of the accounting profession in order to foster and cultivate new entrants in accordance with the quality and new standards established by the profession in response to global technological changes. In addition, this study will contribute to the existing accounting literature and will therefore serve as a useful resource for students, researchers, and other academics.
1.6 Dimensions Of The Study
The focus of the study is on the degree to which technology has affected the accounting profession, the benefits of technology to the accounting profession, and the challenges posed by technology in accounting.
1.7 Limitation Of The Study
As a result of conducting this investigation, the researcher encountered the following obstacles:
The research was hindered by insufficient funds, which prevented the researcher from visiting as many locations as feasible.
Time: time is another constraint, as this research had to be conducted concurrently with other academic work, making it impossible to conduct this study with a larger, more representative sample size.
1.8 Definition Of Terms
Financial accounting
Financial accounting emphasizes the communication of a company’s financial information to external consumers, such as investors, regulators, and suppliers. It computes and documents business transactions and prepares financial statements in conformance with generally accepted accounting principles (GAAP) for external users.
Administration accounts
Management accounting focuses on the measurement, analysis, and reporting of information that can assist managers in reaching the organization’s objectives.
Technology
This apparatus and machinery was created through the application of scientific knowledge.
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