Predominately in the short-run, accountants are expected to undergo major a shift by overhauling paperwork’s, spreadsheets and outdated software’s to new establish digital technology, (ICFR, 2018). Accountants are rapidly digitalizing sections of the organisation by implementing robotic process automation (RPA). This is identified as a software that can manipulate any repetitive procedures using interfaces that are conducted in the same manner as humans.
This software ensures organisations have optimal proceedings to develop efficiency and minimize possible human errors. Additionally, it will enhance productivity as robots are capable to function 24/7. (Duc, 2018) expresses that the implantation of RPA in accounting is expected to reduce one-third of the cost per labour. It uses computer-coded software by enforcing a rules-based system to automate human tasks, this includes internal and external controls over financial reporting. RPA technology has already been instituted as a beta server for certain organisations that have to acknowledge the benefits. For example, Jonson & Johnson has recognized a significant rise in efficiency and accuracy in their operations, this has facilitated to re-evaluate the organisations workforce, (ICAEW, 2018).
However, RPA still remains in the early stages of its innovation. It has been in advancement since 2015 overcoming major challenges to sustain potential malware. A recent study shows that between 30-50% of orgainsations have failed to conduct RPA schemes. Several enterprises have put RPA systems on hold due to the path from experimentation to implementation, (Srivastava, 2017). However, it is evident that RPA is significantly valuable as the four biggest accountancy firms PwX, KPMG, Deloitte and EY have all deployed RPA in their system. (PwC, 2016).
Moreover, the introduction of blockchain technology is expected to provide new approaches forward for accountants to record cash flows and reconciling accounts. Blockchain technology is a digital leger that efficiently records transactions in chronological order. A typical process involves relocating peer-to-peer notes when the transaction is requested. These nodes authorize the transaction with the use of computer algorithms. Once verified, a timestamped block is established and merged back to the blockchain which completes the transaction, (Sarkar, 2018). The application of blockchain accounting is recognised to reduce costs by erasing the use of central authority as the transaction will be recorded securely in blocks instead of maintaining physical records. Furthermore, the second form of block chain is known as World Wide Ledger (WWL).
This is identified as a completely peer-to-peer system that ensures all monetary transactions are verified and transferred to organisations. WWL is recognised as an ultimate verifiable blockchain system that facilitates all firms to publish their transactions in order to make it accessible to all regulators and potential investors, (Sarkar,2018). It is estimated that blockchain accounting will ensure banks to save $20 billion each year by reinventing the back office, (Adam-Kalfon, 2017). Upcoming transactions will be recorded on a real-time basis which automatically updates ledgers instantly, this will eliminate the use for reconciliation.
Additionally, the use of blockchain will help redefine cyber-security within accounting, it is no longer necessary to acquire trusted third parties and tempering the block will be extremely difficult. However, there are several limitations that can occur when conducting blockchain in accounting. For example, the current bitcoin blockchain can only carry out seven transactions per second which are significantly fewer than the transactions carried out by the Visa network, (Adam-Kalfon,2017).
In the long haul, AI is continuing to develop in order to conduct smart tasks and make necessary decisions that require human intelligence. It is sophisticated to become an integral part of everything we touch and do. Google recognises that robots will be able to match human intelligence levels by 2029, (Najjar 2019). The application of AI will support accountants to be more innovative in favour to add value to the accounting field. The process of digitalizing auditing will ensure a greater degree of security; accountants will be able to leverage digital files which will significantly improve the efficiency and accuracy of audits. (POST, 2016) states that ninety percent of the errors are caused by humans.
Advanced initiatives alike “making tax digital” is proposed by HMRC which is acknowledged to improve the profession of accounting. Firms are now obliged to submit their VAT returns digitally from 1 April 2019 onwards. This is expected to ensure credibility in order to reduce the tax gap of £33 billion from the previous year, (HMRC,2018). Although there are new rules and regulations taking place, accountants need to change their personal and adapt to these changes for their profession. Despite, the benefit of AI technology, it raises significant ethical and social issues as automation has already begin the displace jobs in other job sectors. However, at present AI technology is considered to be extensive; thus it is in a similar latitude as financial reporting.
Nevertheless, it is evident that there are many benefits arising from new technological advancements but the value of human intelligence is irreplaceable. There are certain unique human characteristics; this includes leadership, creativity, and empathy that should not be underestimated (ICAWE, 2018). Accountants are specialists in decision making, they conduct their knowledge of specific scenarios to make reasonable judgments and estimates based on their extensive experience.
The application of automation will not be able to function these solutions as they are only limited to repetitive tasks. Currently, clients are demanding more from the accounting field than they did ten years ago, (Skoulding, 2019). Accountants are discovering new methods that add value to their clients to build deeper relationships and enhance emotional understanding. Human resource management utilizes past knowledge and experience to identify anomalies that are present to help assist in decision making for clients. The principle of judgment in accounting is portrayed as a “dilemma” in accounting. For example, unlawfully estimating an asset useful life can significantly affect financial accounts. To portray a faithful image, financial reporting must conduct three characteristics; it is imperative to be neutral, complete and free of errors.
The revised framework recognizes the limitations of accomplishing faithful representation, (Vehmanen, 2009). The core purpose of financial reporting is to produce valuable financial information to potential investors to help support their decision-making. There are certain aspects of human behavior that degrade accounting, this includes inconsistencies within certain individuals that interpret bias judgment and unconscious thinking. The entire accounting system is designed in a form to ensure fraud is impossible to commit. However, it relies on mutual control mechanisms that enable them to achieve this. (Sherman, 2016) expresses that accountants can distinguish methods outside the revised framework to manipulate data in an effort to escalate profits for firms.
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