Evolution in accounting software, web-enabled communication, mobility and the cloud, has left a mark and changed even the everyday activities of an accountant.
There’s no doubt the impact and pace of technology will only increase in the future. Tomorrow’s accountant may look very different thanks to advances in artificial intelligence (AI), the Internet of Things (IoT) and blockchain technology. Not to mention the technology that is yet to be developed.
Even if we look ahead just a few years, we can start to see some of the impacts technology is likely to have on the industry of accounting.
1. The cloud
While many accountants have already embraced the cloud, the use of the cloud will continue to expand and a larger portion of business operations and applications will be hosted in the cloud. This expansion is being driven by greater cost benefits, mobility, agility and simplified IT infrastructure.
Cloud-first firms are becoming more prevalent and with all of their IT hosted in the cloud, firms will no longer have to host, update, maintain or back up their IT environments.
There are also greater choices in cloud platforms, namely public, private and hybrid. Public cloud has been the fastest growing cloud segment to date and is dominated by providers such as Amazon, Google and Microsoft. With public cloud, the services provided are standardised and offered to many clients who all share the same infrastructure.
Private cloud providers are growing in number and offer an alternative to the large, impersonal public cloud providers. By using a private cloud provider, you take advantage of shared IT resources across multiple applications and/or locations. You also tend to get more personalised service with private cloud providers, making them more flexible and customisable to meet individual business requirements.
Hybrid cloud, as the name suggests, is a combination of public and private cloud platforms (in this case private referring to an on-premise private cloud built for an individual organisation). This option can expand capacity quickly, but it can be very complicated to set up and run, resulting in greater potential for things to go wrong, more downtime and more costs involved. The other element to consider is the on-premise equipment required can be expensive, and likewise, the ongoing maintenance.
2. Data security
With accountants holding sensitive data as well as increasing regulation around the security of customer data, maintaining data security will remain a growing priority and focus.
According to the 2016 Ponemon Institute Cost of Data Breach Study, the average cost of data breach to a company is $2.64 million, with the biggest consequence of data breach being lost business. The 2016 Ponemon Institute Data Protection Benchmark Study showed that organisations around the world deal with an average of 20 data loss incidents everyday.
Correspondingly, the Australian government is developing legislation to create a mandatory data breach notification scheme. Under this scheme, businesses would be required to report a “serious data breach” to the Australian Information Commissioner and notify individuals whose data is affected by the breach.
The accounting industry will need to look at maintaining and improving procedures around data security, as well as keep up with changing regulations in order to manage data security risk. Part of this may be assessing how critical information is stored – whether it’s in data centres or on-site servers – in terms of security, reliability and accessibility.
Automation has already begun to reshape the discipline of accounting and bookkeeping. Productivity and cost effectiveness will be the result of more business processes becoming automated, particularly in areas like data collection and data processing.
We have already seen this shift result in accountants starting to take more of a consultant role to clients – adding value in new ways, for instance, providing crucial financial and business advice.
This trend will be further driven by advances in AI and IoT. For instance, IoT is allowing accountants to see more of their clients’ financials and financial activities through data connectivity. Whether it’s information from tie-in accounting services from banks or cloud-based order and inventory management processes, this data can help an accountant get a better picture of a client and therefore offer the best advice.
Currently, AI has limited applications in the accounting field, but this will likely change soon. As AI can easily recognise patterns and accurately predict outcomes, it will likely be integrated into applications as a feature that can pinpoint patterns and anomalies automatically.
4. Optical character recognition (OCR) tools
OCR tools have been around for some time and have been allowing people to easily scan and upload receipts using their mobile device straight to accounting software. As the benefits of OCR tools become more widely accepted, this technology will become more mainstream.
The accounting profession has been leaning towards paperless processes for some time, and this is the next evolution of that. It results in less human error, records that are easily filed, stored and searched, less time spent on data entry and overall, more efficiency.
For instance, embedding OCR tools into expense reporting can help prevent expense management fraud. The capturing of receipts in real-time can add a layer of transparency that can dissuade fraudulent behaviour. It will also assist in the auditing of expense reports, allowing auditors to easily search expense documents for specific transaction details.
5. Blockchain technology
Blockchain technology shows some promising potential for the accounting industry. This technology will enable entities to share a common infrastructure for database retention. Instead of companies keeping and then reconciling records of the same transaction in their separate, privately managed databases or ledgers, both sides of the transaction can be recorded simultaneously in a shared ledger. It’s a process that is less prone to human error and fraudulent behaviour as it makes falsifying or destroying financial records practically impossible.
The benefits of this include standardisation and increased auditing efficiency. It will allow auditors to automatically verify a large portion of the most important data relating to financial statements.
While technology’s disruption to the accounting practice may not be as advanced as other industries, its impact on the future is more certain. These are just some of the ways technology is likely to impact the accounting industry. It will certainly be a space to watch out for.