Accounting is the process through which a business keeps track of its financial health by recording and categorizing its financial transactions, including purchases, assets, sales, and assets in accordance with generally accepted accounting principles. It’s useful for assessing the history, current state, and potential of a company.
On the other hand, auditing is a subfield of accounting. An independent audit is a thorough inspection of a company’s books and records. This is done to see if the corporation or enterprise in question has followed GAAP and other applicable regulations.
The introduction of modern technologies like artificial intelligence (AI), cyber security, blockchain, cloud computing in accounting, social media, and robotics in the finance world is contributing to the swift evolution of the accounting profession. The role of the management accountant is less task-focused. Accounting software is getting more automated and the function of the accountant is evolving to that of a business counselor.
So, what are the impacts of financial technologies on accounting and auditing?
Impact Of Technology On Accounting
Careers in accounting and finance have been growing at an astounding rate due to the introduction of smart technologies. It is no longer one of the most mundane and boring professions.
- With the help of AI in accounting and finance, previously laborious tasks may now be completed with just a few clicks of the mouse and a corresponding improvement in accuracy, efficiency, and cost savings.
- Software now performs the math for us when it comes to figuring out profits and taxes. Right now, the accountant is moving on to more advanced tasks.
- Bookkeeping is performed in real-time as transactions occur, giving the business timely financial information. As a result, accountants are devoting more effort to determining how best to present the accounting information instead of wasting their time on calculation work.
- Technology has taught accountants to use the information they collect to analyze financial data, spot opportunities for growth, and refine their businesses’ financial strategies. Now, the role of the management accountant is expected to take on a greater managerial role.
- AI in accounting and finance has also increased the timeliness of accounting information. By enhancing the timeliness of financial data, accountants may provide management with insightful reports and assessments of business activities. Cash flow statements, departmental profit and loss, and market share data are all made easier to view because of the rise of computerized systems.
- Reducing the number of accountants with access to sensitive financial data also increases accuracy. A restricted accountant access level helps to ensure that only authorized managers make changes to financial data.
However, there are also certain restrictions. In the event of a system outage, all current tasks are halted. The reason for this is that a manual solution does not exist or is ineffective when needed. People either don’t know how to implement the workaround or are unwilling to put in the time and effort required.
Impact Of Technology On Auditing
The auditing industry has also been digitized by the advancement in IT. When auditors must execute auditing tasks manually, the process becomes lengthy. However, auditors can now choose from a variety of audit software programs, like trial balance software that allows auditors to submit the trial balance, deal with all sorts of adjusting entries, and have the modified trial balance computed for them automatically. These are indicative of the widespread and ever-increasing usage of IT in auditing.
Cognitive technologies like speech recognition, machine learning, artificial intelligence, and natural language processing have made auditing a much easier task.
Collection of important data from non-financial sources, such as the client’s social media accounts, radio listening habits, internet history, and television viewing habits, and comparing these to the client’s financial information has also become easier with the introduction of AI in accounting and auditing. Because of this, auditors will be able to gather data from a variety of sources and provide a definitive judgment on the financial statements’ accuracy and reliability.
However, e-auditing comes with certain limitations. In certain government agencies, paperwork is a must, along with storing information in electronic audits. At such times, business owners must adhere to those rules. Another problematic aspect of e-auditing includes switching the entire previous paper audits into the electronic system, which may take months or years. The security of e-auditing is also a downside, considering audits are often confidential information.
Technology is growing fast in all industries, and financial and accounting professionals can upgrade their skills with the latest technology and trends which will help to grow in careers as well as keep you updated with the industry.
Technological progress sparks discussion about the current and future skill sets needed in careers in accounting and finance. Lower-level accounting and auditing abilities are clearly replaceable by technology, but human business acumen and communication skills remain vital. Human capital resources, which include both technical accounting and audit expertise, as well as professional qualities like communication, leadership, and commercial acumen, are an integral part of the essential mix.