By CPA Mutitu Dennis
Tech Boosts Efficiency, Accuracy, Risk Management, and Cost Savings`
Technology plays a major role in various industries, such as medicine, marketing, education, hospitality, accounting, and finance. It is vital to embrace new technological advancements while taking all precautions to ensure and enhance privacy and confidentiality. Accounting is a critical aspect since it involves the financials of business enterprises. Therefore, it is important to exercise caution when using technology to prepare financial statements and reports.
Due to technology, the accounting industry has amazing levels of access and the ability to enhance the exchange of data. The most effective part is that accountants can access data from their clients without reaching out to them. As a result, there has been an increased number of clients working off-site.
Information Technology Accounting
Information technology accounting combines information systems and accounting concepts with software to establish a centralized space for storing an entity’s financial data. Additionally, digitization simplifies data analysis, making it easier for institutions to identify and correct inefficiencies or errors while recording financial transactions and making financial reports.
Moreover, information technology accounting is a suitable career option. Technological advancements such as data mining, blockchain, cloud computing, and machine learning have emerged in the accounting sector and have dramatically revolutionized how the accounting and finance sectors work. Technology has enhanced human efficiency, data accuracy, risk management, and exchange of financial data in real time and reduced the cost of operations. Nevertheless, there are also instances where we encounter and face the adverse effects of embracing technology, such as enhanced threats to data security, redundancy of the primary roles in accounting, increased training costs, and enhanced costs for setting up new systems.
Positive Effects of New Technology on the Accounting Industry
• Minimized Fraud
The new technology concepts and practicalities are incorporated fully into the business through compliance and risk management. Making computers do the bulk of the work reduced the capacity for human resource involvement and thus reduced fraud. The configured software determines the various prices of the services and goods and, therefore, enhances the competitiveness of the purchasing process. Additionally, the emergence of new technology has improved data analytics and thus enhances visualization, making it possible to identify the signs and patterns of dishonest acts in handling transactions. Also, data mining has made it possible to identify fraud patterns, misleading data, and dispositions when making important financial and risk management conclusions.
• Auditing
The use of new technology has made it possible to facilitate and provide essential data for external and internal audits. Auditors can easily access systems and, thus, clients’ accounting records and conduct various tests to make decisions and judgments. Using automated devices has effectively enhanced the accuracy levels and efficiency of audits.
• Enhanced Accuracy in Accounting
Automating the various transactions has made it possible to record transactions with minimum mistakes. The various accounting software makes it easy and possible to create quick entries with very minimal chance of manipulating the data. The users are only required to feed the software the information, and as a result, the software prepares all the required financial statements or reports. This is an advancement in the sector since the traditional system of accounting requires one to prepare the reports manually, enhancing the chances of making errors and manipulating data.
Negative Impacts of New Technology on The Accounting Industry
Incorporating the new technology has greatly changed how accounting tasks are undertaken. As much as the new technology has improved the sector, the new use of technology also has key setbacks.
• Security Threats
Data security is a major concern for each entity, and as a result, most companies are reluctant to change with the changes in technology constantly. The various accounting systems are vulnerable to cybercriminals if the safety of their network is insufficient, thus resulting in the leak of sensitive financial information and secrets. Additionally, accessing accounting data during the exchange of information may expose the client and have their information out that can be used by their competitors to gain a competitive advantage over them.
• Redundancy Of Earlier Technology
The rapid changes in technology and technological advancements render most systems in use obsolete. The new systems perform better than the outdated systems. As a result, the entities face the challenge of constantly training their staff on using, data migration, and customizing the systems to suit the needs and efficiencies of the companies. The constant upgrading is costly and, hence, reduces profitability due to increased expenses. Also, keeping up with the new technological advancements is a major challenge and enhances the chances of exposing financial information to the wrong persons.
• Effects On Accounting Jobs
Incorporating advanced technology has drastically transformed accounting tasks. Most of the roles conducted by entry-level accountants have been fully automated. These roles include reporting on costs, billing, purchasing, accounts receivables, accounts payable, order entry, and purchasing. As a result, entry-level accountants risk not having jobs since such tasks are automated, hence the increased need for graduates.
The emergence and use of new technology by various entities has enhanced efficacy, reduced cost and task, and, above all, has resulted in a major transformation in how the different accounting tasks are conducted. Although there are setbacks, the positive effects are more and worth banking on. As a result, people need to ensure that they enhance their skills with the changes that are taking place in the industry by constantly upgrading their skills, enhancing their knowledge in cyber security, and learning how to operate the different systems available.
The world and the accounting industry constantly change; embracing new technology is a major achievement. Documentation and storage of financial data have become more accessible since bulk data can be stored safely with limited access to such information.
The writer is a Tax Expert at Dennykins and Associates, KRA-authorized tax Agents and Tax consultants in Kenya.
