Technology Changes And The Impact On Accounting Profession

TECHNOLOGY CHANGES AND THE IMPACT ON ACCOUNTING PROFESSION

Chapiter 1

Introduction

1.1 The Study’s Background

The measurement, processing, and sharing of financial data regarding economic entities like enterprises and corporations is known as accounting, often known as accountancy. The Italian mathematician Luca Pacioli established the current field in 1494. Accounting, commonly referred to as the “language of business,” quantifies the results of an organization’s economic activities and disseminates this data to a variety of customers, including investors, creditors, management, and regulators. Accounting is a profession practiced by accountants. Financial reporting and accounting are frequently used synonymously (Dillon, T. W., & Kruck, S. E. 2004).

Accounting is made simpler by organizations like standard-setters, accounting companies, and professional organisations. Financial statements prepared in line with generally accepted accounting standards (GAAP) are frequently audited by accounting firms. GAAP are established by the Financial Accounting Standards Board (FASB) in the US and the Financial Reporting Council in the UK (Torgerson, S. 2007). “All major economies” intended to adopt or converge on International Financial Reporting Standards (IFRS) as of 2012. On the other hand, accounting’s capabilities are numerous and mathematically connected, making it laborious and time-consuming. But as technology developed, this area advanced, giving rise to what is now referred to as “Computerized Accounting.”

Technology is a benefit to all organizations because it has increased communication skills. Technology developments that have boosted efficiency have benefited various industries, including accounting (Laudon, K. C., & Laudon, J. P. 2006). These technical instruments include, for instance, computer-integrated manufacturing, image processing, the Internet, and expert systems (Journal of Accountancy, 1996 quoted in Laudon et al. 2006). Accounting information can become dynamic and reflect the present situation as a result of greater business efficiency (Journal of Accountancy, 1994b cited in Laudon et al 2006). This helps management accountants achieve their objective of offering the most precise and current information.

Sadly, a technology advantage for a business could turn into a liability for the accountant. Technological instruments’ ability to give information that is more current and accurate frequently comes at the expense of business secrecy and accountability. There are a lot more potential for fraud because accountants typically have to deal with a fully electronic audit trail. Using these audit trails, many transactions cannot be traced back to where they came from. Concerns about secrecy arise with regard to transactions made via the internet and other channels. According to D. Schroeder, CPA, CITP, CISA (2006), accountants’ reliance on computers was a disadvantage in 2000. These are just a few drawbacks of technology for the accountant of today.

Overall, technology has had an impact on the accounting industry. Technology has changed the accounting profession in a number of ways, including hiring patterns, schooling requirements, and the growth of the accounting consultancy sector. These are not always capable of being categorized as benefits or drawbacks (Erikson 1995, cited in Dillon et al. 2004). But it is obvious that these effects, along with the advantages and disadvantages, are leading to a change in the accounting industry. Because of this, the accounting industry must reform or run the risk of being replaced by a fresh set of rivals. The accounting profession, in the words of Torgerson (2007), “needs to upgrade its practices and skills to reflect where the world is going, rather than where it has been.”

The majority of financial accounting was performed manually thirty years ago, which produced a significant amount of paperwork. The majority of accounting data is currently recorded using computers and wide area networks (The new finance. Journal of Accountancy 1994b referenced in Laudon et al 2006). Technology advancements unquestionably changed the landscape of accounting. Technology has undoubtedly had a significant impact on the accounting profession, even though it is uncertain whether this transformation has been for the better or worse. Technology advancements are frequently a business’s benefit but its accountant’s burden. As a result, the study aims to investigate how technology advancements have affected the accounting industry.

Situation Of The Problem

There is little doubt that the current onslaught of technology inside the sector has had an effect on the accounting profession. Some ‘business thinkers’ feel that the accounting industry has to be substantially restructured. It is true that many of the procedures used in accounting today are no longer relevant due to technological improvements. One illustration is the ledger account (Journal, 1994b). Prior to 2008, this account played a crucial role in the creation of financial statements as a historical record of transactions (Knapp, 1996, cited in Wailgum, T. 2008). The ledger account is losing importance in the age of instantaneous information. For this kind of information, computers are now the main repository. Knapp (1996) asserts that “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 of how information, analysis, and attest services should be provided.”

1.3 The Study’s Objective

This study’s main goal is to look into how technology advancements have affected the accounting industry. The precise goals consist of;

1. Examine how much technology has impacted the accounting industry.

2. List the advantages that technology has for the accounting industry.

3. Describe the difficulties presented by technology for accounting.

1.4 Questions For Research

The following inquiries have been created to direct this study:

1. How much has technology impacted the accounting industry?

2. What advantages does technology offer the accounting industry?

3. What technological issues does accounting face?

1.5 Relationship To Other Studies

In order to foster and develop new recruits into the accounting profession in accordance with the quality and new standards set by the field in light of widespread technological advancements, the study offers the new face of the accounting profession. Additionally, this research will contribute to the body of knowledge in the discipline of accounting, making it a valuable resource for academics, students, and researchers.

1.6 Analysis Of The Study

With an emphasis on the degree to which technology has impacted the accounting profession, the advantages of technology to the accounting profession, and the challenges of technology in accounting, the study investigates the influence of technology advancements on the accounting profession.

1.7 Limitations of the study:

Following this study, the researcher ran upon the following difficulties;

Inadequate funding: This issue prevented the researcher from visiting as many locations as possible during the research.

Time: Another restriction is that this research had to be completed while still fitting in with the deadlines for other academic assignments, making it hard to conduct a larger, more representative study.

1.8 Term Definitions

Financial management

The reporting of financial information about a business to external users, such as investors, regulators, and suppliers, is the emphasis of financial accounting. According to generally accepted accounting principles (GAAP), it computes and records company transactions and creates financial statements for external users.

Accounting for management

The focus of management accounting is on the measurement, analysis, and reporting of data that might assist managers in reaching organizational objectives.

Technology

This technology and apparatus was created via the use of scientific knowledge.