Accountancy has changed a lot in recent years, and technological innovation has driven the most significant developments. From strategic software to artificial intelligence and even the decentralization of Web 3.0, many new concepts and solutions promise to upend the accounting profession.
Deserved or not, accountancy once had a reputation for being a methodical and largely manual pursuit that called for exceptional number-crunching skills and a lot of attention to detail. These skills remain important, but how they are leveraged has changed, with cutting-edge accounting technologies taking over many of the most time-consuming processes.
These days, accountants work closely with technology to drive more efficient, accurate and innovative outcomes. Top solutions run the gamut from payroll processing to auditing and compliance.
The promise of tech-first accounting is considerable, but distinct challenges accompany these changes. We will uncover these issues below while also revealing how today’s accountants can leverage emerging tech.
How Has Accounting Changed with Technology?
The relationship between accounting and technology is far from new, but recently, they have become closely linked across all areas of accountancy. With so many developments occurring or about to take place, aspiring accountancy professionals now need to understand: How does technology affect accounting?
Unfortunately, there is no simple answer, yet it is clear that technology has heightened expectations. While accounting errors and efficiencies have never been acceptable, these are even more unforgivable when accounting software and AI solutions are readily available.
The implications for accounting job prospects must also be considered. As manual tasks are increasingly automated, there may be fewer job opportunities dedicated to rote tasks, with accounting instead emphasizing critical thinking and problem-solving.
This shift reflects predictions from the World Economic Forum’s 2023 Future of Jobs Report, which indicates that tomorrow’s jobs are less likely to be taken over by AI if they call for “human skills such as judgment, creativity… and emotional intelligence.”
How Is Technology Revolutionizing Accounting?
In the last few years, advanced tech has had an outsized impact on several areas of accounting, bringing a variety of unexpected challenges and opportunities to the table. New solutions impact how standard accounting processes are approached, delivering the potential for vast improvements in efficiency and accuracy.
Accounting analytics, in particular, promises to deliver more actionable insights, while other strategies may enhance security or even scalability. We’ve provided a deep dive into these opportunities below:
Provides Enhanced Security Measures
Cybersecurity and data privacy are major concerns within the accounting industry, and while these issues have been partially brought about by the very technological advances we so often praise, technology also promises to offer much-needed solutions.
Experts at Accounting Today explain that today’s accounting firms and departments “must not only implement tech tools to protect their data, but they must train their workforces to recognize and mitigate security risks, and if worse comes to worst, know how to clean up the damage when an attack does happen.” Thankfully, tech solutions are in abundant supply, with standard practices such as data encryption and authentication providing a strong baseline of protection.
Beyond this, there are many resources specific to the accounting world that benefit both accounting firms and the organizations they serve. For example, the American Institute of Certified Public Accountants (AICPA) highlights a cybersecurity risk management reporting framework within the System and Organization Controls (SOC), which can provide valuable insight into “enterprise-wide cybersecurity risk management.”
Data Security and Compliance
As cybersecurity concerns escalate, accountants must implement solutions to boost data security for the sake of clients and customers, as well as to maintain full regulatory compliance. This is a tall order, but the failure to comply could result in steep fines and reputational damage.
Today’s accountants must navigate an increasingly vast network of regulations aiming to safeguard sensitive financial information, including everything from the General Data Protection Regulation (GDPR) to the California Consumer Privacy Act (CCPA) and the Payment Card Industry Data Security Standard (PCI DSS). The very technologies that these efforts aim to regulate can also be leveraged to boost compliance efforts, with AI, for example, reducing the potential for human error.
Integration With Financial Systems
Fintech integration represents a considerable area of opportunity throughout the fields of finance and accounting. Designed to help both organizations and individuals manage a variety of financial processes and solutions, this rapidly evolving niche encompasses back-end systems and many consumer-driven services. Organizations that rely on these integrations “have expanded financial inclusion and use technology to cut down on operational costs.”
Customization and Scalability
New AI and Internet of Things (IoT) opportunities promise to deliver ever-increasing volumes of financial data. Leveraged properly, these can deliver actionable insights. Without scalable solutions, however, it can be easy to get lost in a sea of transaction data and financial statements. As such, strategic software selection and utilization is essential.
The right systems can grow alongside accounting departments, allowing for seamless workflows no matter the scope of accounting requirements. Accounting Today points out that, when teams are stuck handling redundant tasks, it becomes increasingly difficult to scale. The solution? “Find ways to automate or streamline these tasks so that your team can focus on high-value tasks,” including customized services.
Allows for Remote Work and Collaboration
While many aspiring accountants worry that new software will prompt job losses, experts believe that this is unlikely; however, as we’ve discussed, rote or manual tasks may be replaced. The more notable change to the structure of accounting jobs may involve increased opportunities for remote work.
This approach exploded in response to the pandemic, but while workers in other fields have largely returned to the office, insights from Thomson Reuters indicate that remote accounting positions remain plentiful. Even senior accountants and accounting managers can often work on a remote basis or take on hybrid arrangements that limit the need to commute, boosting flexibility and autonomy.
Current Technology in Accounting
Today’s accountants rely on a variety of high-tech solutions to streamline everyday tasks and better connect with clients. The industry’s most utilized technologies include:
Accounting Software
What is accounting software? Any program that assists accountants with reporting financial transactions qualifies as accounting software. As Investopedia points out, this software makes “accounting calculations easier to perform, understand, and analyze.” It can also make it easier to retrieve historical accounting data, thereby proving valuable during internal and external audits.
Data Analytics Tools
Many accountants and accounting analysts rely on advanced data analytics tools to help them navigate and disseminate vast data sets. Many smaller firms still utilize Excel, although targeted solutions such as Tableau or SAS may prove far more versatile. Accountants need to be well-versed in multiple tools and capable of using them to extract accurate insights.
Cloud Computing
Today’s accounting software solutions are often hosted on remote servers, lending greater flexibility to accounting firms while limiting the need to maintain physical data. Offering increased accessibility and efficiency, cloud solutions can automate input processes and can also shape risk control measures and reporting processes.
Electronic Document Management
Electronic document management is critical for storing and retrieving a growing volume of client files. According to Thomson Reuters, these can serve many functions, such as “facilitat[ing] staff and client collaboration, monitor[ing] and control[ing] document access, and manage[ing] document retention.” These solutions are increasingly cloud-based, often due to the accessibility and efficiency advantages highlighted above.
Machine Learning and AI
The age of AI-backed accounting has arrived. Many firms and departments now rely on AI-driven solutions to optimize everyday processes, including manual tasks that prevent accountants from focusing on dynamic problem-solving initiatives. These AI solutions may include real-time extraction of data from invoices or receipts, along with automatic transaction categorization and even automated reconciliation. The best systems blend AI with human knowledge and creativity.
Blockchain Technology
Blockchain solutions incorporate a distributed ledger and strong cryptographic functions designed to produce a trustless environment and impressive security. The blockchain can be leveraged to avoid both data errors and fraud while boosting efficiency via automated transactions.
While Forbes explains that “the use of blockchain in the financial field is still largely in an investigative stage,” it’s already having an impact on some accountants via smart contracts in auditing, not to mention, the expansion of cryptocurrency.
E-Filing and Tax Software
Consumers have long relied on e-filing solutions to expedite their annual tax returns, but now, advanced solutions make e-filing a realistic solution for a greater share of individuals and organizations. E-filing does not eliminate the need for professional accounting services, however, as accountants are still available for troubleshooting and tax planning. A proactive approach could facilitate long-term tax savings while still enabling consumers to enjoy the convenience of tax software.
Financial Modeling Software
Financial modeling software helps accountants develop abstract representations of critical data, a key component of modern financial forecasting. Unlike Excel and other traditional spreadsheet solutions, this approach bypasses manual processes and instead uses machine learning to pull data while providing valuable opportunities to visualize trends for decision-making purposes.
Digital Payment Invoicing Solutions
Digital payment invoice solutions allow for increased efficiency in otherwise time-consuming invoicing processes while delivering robust record-keeping for compliance purposes. Today’s digital solutions keep processing time to a minimum, boosting customer and client satisfaction while encouraging these individuals to pay at their convenience. Automatically generated invoices are now available, producing faster payment cycles and improving productivity.
Tax Planning and Compliance Software
E-filing software has prompted a significant shift toward accountant-driven tax planning supported by tax planning and compliance software, helping accountants develop customized tax plans and facilitate strategic tax decision-making. The most exciting new solutions open the door for high-level tax planning and compliance among small businesses and sole proprietors.
The Future of Accounting Technology
Accounting technology has come a long way in a few short years, but the tech revolution is just beginning. As AICPA experts point out, blockchain technology, in particular, will prompt significant changes, and moving forward, may be available to a greater variety of organizations and individuals.
Other emerging technologies may also come into play. For example, the role of virtual reality (VR) and augmented reality (AR) may extend beyond the possibility of further collaboration during remote meetings. Eventually, useful components (including tax code essentials) may be projected onto smart glasses or other screens while discussing issues with clients.
As we’ve discussed, the role of AI cannot be discounted. Moving forward, AI-powered solutions such as optical character recognition (OCR) will make it easier to extract information, while integrations with payment gateways will help drive real-time processing. From a business perspective, this will provide a major competitive edge, as it will be easier to promptly identify and respond to market changes.
Prepare for a Career in Tech-Enhanced Accounting at UTC
By now, you should have a basic understanding of accountancy tech and may even be able to answer the question: How do accountants use technology? There is no denying that technology and accountancy are deeply enmeshed, impacting expectations from employers and accountants alike. With the right training, you can rise to the occasion and make the most of today’s most exciting technological opportunities.UTC’s Master of Accountancy (MAcc) provides a valuable introduction to high-level tools and technologies, including those utilized in the growing field of forensic accounting. Courses in data analytics and information systems will have you feeling fully prepared to embrace the technological solutions of tomorrow. Reach out today for more information or to apply to our MAcc program.
