This research paper explored the future of accounting technology, and it focused on issues related to cloud computing, enterprise resource planning (ERP) systems, fraud accounting, and other related issues in the subject area. From the research findings based on a review of published materials, it is evident that technology has positively improved practices in the accounting industry. The ERP system has created an integrated platform that links all departments and business units in an organization, making data more readily accessible for decision-making.
Cloud computing facilitates the adoption of relatively affordable accounting tools without expensive investments. To this end, even small organizations and start-ups can now afford accounting services or outsource to virtual accountants. Finally, with the increase in fraud, accounting had to evolve and create forensic accounting to detect fraud that auditors could not. As highly robust technologies for accounting are developed, the accounting will definitely continue to get simpler, more efficient, and more effective. Thus, technology has transformed accounting positively.
The accounting practice is quickly changing somewhat because of new robust advanced technologies accessible to practitioners. Today’s accounting practice is no longer cumbersome, and routine tasks that consumed more and more time are now automated through cloud accounting packages and solutions, which make technology an important component of accounting and the accounting industry. Consequently, accountants are now becoming business advisors. In recent periods, innovation in the technology industry has gone further to introduce new short off-site consulting relative to the previous onsite practices.
Available software continues to provide solutions that were once not available, and obsolete financial, absence of real-time information, remote control sessions, and other contemporary practices show how technology advances improve the accounting profession. The capacity to use the most recent cloud-based technology platforms, for example, has totally changed accounting departments, firms, and even the whole industry. Technology, for instance, has changed the way business-to-business on-site engagement works by eliminating frequent visits. In any case, available technological solutions are robust and allow multiple functions, including viewing, editing, and adding information. Moreover, users can gain access to various files for their diverse uses. This research paper explores the future of accounting technology, and it focuses on issues related to cloud computing, enterprise resource planning (ERP) systems, fraud accounting, and other related issues in the subject area.
Accounting Technology Overview
It is imperative to note that accounting technology is not in any slightest way striving to replaces the need for accountants and is not a risk to their occupation, but rather provide them with the chance to be more productive and efficient. Technology offers accountants and firms the chance to exploit their optimal potential and revamp their practices as contemporary business advisors. Instead of replacing the accountants, it revamps their roles. There are various ways accountants can particularly rely on accounting technology platforms to improve and expand their services. Accountants now enjoy mobility, constant access, and readily accessible data for their work because of technology (Dimitriu & Matei, 2015).
Despite these developments, the 21st-century management accountant still faces challenges because of the changing practices in the industry. The current accounting industry standards require one to be a hybrid accountant rather than being the conventional one with limited skills (Zainuddin & Sulaiman, 2016). They are currently confronting serious challenges and relied upon to adjust to fast changes in the prevailing business environment. Organizations now require more proactive accountants, who are currently hoping for senior management positions and are prepared to accept the industry challenges. In this regard, the role, tasks, and factors responsible for massive changes in the accounting and accounting industry are seen as both organizational factors and environmental factors, and accountants are expected to adopt new solutions to revamp their works and realized meaningful outputs.
Environmental factors refer to factors market forces that shape the competitive landscape and other new non-financial performance drivers, which ultimately influence customers, and they have been linked to financial issues of companies. On the other hand, organizational factors reflect transformations in an organization with regard to merger and acquisition, restructuring, and changes in corporate governance practices, for example (Zainuddin & Sulaiman, 2016).
In this case, technology is an important environmental factor influences business accounting practices and results. Technology advancement is seen as a source of opportunity for enhanced data management across organizational functional units. The ERP system, for instance, makes it easier for multiple users to gain access to data at the same time. Fast advance of information technology acts as an indicator for management accountants to notice significant changes that would influence the industry practices in the future. The advancement of present-day technologies likewise implies that management accountants can abandon traditional accounting practices and adopt technology-driven solutions for their works.
This claim is based on the way that innovation advancement in business enhances effectiveness and efficiency in business practices. Different other factors, for example, deregulation of the financial sector, execution of novel business practices, and growing relevance of a service sector that is a technology and knowledge-driven continue to shape accounting practices. The presentation of new assembling apparatuses and systems and inconvenience on new control made the administration bookkeeping calling to be all the more difficult. Moreover, changes in production methods, tools, and enactment of new industry regulations have introduced complexity in management accounting.
Enterprise Resource Planning (ERP) Systems
The modern accountants have key software platforms set up for the future, for example, enterprise resource planning (ERP) systems. ERP is a software platform that incorporates isolated divisions in a company onto a similar information technology (IT) system (Suhaimi, Nawawi, & Salin, 2016). As such, information is readily accessible in different ways and supports operations across diverse business units. The system makes information readily accessible via a typical primary database, and it is shared through functional departments, including finance and accounting, marketing, sales, human resource (HR), and manufacturing and production, for example.
Evidence suggests that the core ERP modules are mainly utilized primarily for accounting and financial purposes in most organizations (Pepe, 2011), and it was established that ERP worked best in the financial department. ERP enhances business performance since executives can receive a complete report of how the organization is performing at any given minute, which can assist with critical business decision-making.
Following the introduction of the ERP systems in the 1990s, numerous firms in different industries have begun using the systems to enhance their competitive edge in the corporate world, organizational proficiency, and effectiveness, and eventually performance (Suhaimi et al., 2016). An ERP framework is developed to integrate disparate business processes and to move information into a central database, implying that information is then made accessible to all employees in a company at all times. Several companies for, a considerable length of time, have utilized these systems and, these days, they are not limited to large firms, but rather have turned out to be common in small rapidly growing firms (Cao, Nicolaou, & Bhattacharya, 2013).
The present complex business environments likewise make the ERP system an essential component in the accounting profession as it importantly affects the role of accountants. For instance, ERP permits quick access to significant real-time information, management needs to facilitate decision-making and management control. In this manner, without involving accountants in the first place, management can instantly get the data required through the ERP framework for quick decision-making.
This ease of obtaining useful information fast has revolutionized the conventional ways, yet it likewise presented a challenge for accountants to stay focused in the industry, as the system has replaced interpretative and analytical roles. With a more sophisticated form of ERP, many tasks can be executed with no assistance from accountants, consequently enhancing the quality of management control and decision-making (Zainuddin & Sulaiman, 2016).
However, evidence demonstrates that the implementation of an ERP system always presents a myriad of challenges. It is shown that ERP systems are ordinarily the largest, most intricate, and most demanding applications installed by companies these days (Cao et al., 2013).
Thus, certain elements conceivably impact companies’ choices on the most proficient method to utilize their constrained resources and allocate resources into correct departments. These components may either have a positive effect or create more issues on the result or amid the execution of an ERP system. Implementation is typically a major undertaking frequently accompanied by considerable changes in the organizational structure and work strategies. Without solid support from the top executives and appropriate control, it will be a challenging initiative for the ERP framework to “go live”, implying that all departments, including the accounting department, may fail to benefit from the intended use of the system.
Nonetheless, earlier research has demonstrated that the usage of ERP systems can altogether influence a company’s business operations and procedures (Elbardan, Ali, & Ghoneim, 2016). Notably, once an organization implements an ERP system, the roles of accountants generally change. In the accounting research, the effect of ERP system on the role of an accountant has been perceived as a critical factor among the most important factors influencing the interest of accounting specialists, skills, aptitudes, and preparation for the future.
An ERP application ensures that knowledge, skills, and abilities are more vital, which are essentially stressed during accounting sessions. That is, the accounting industry strives to adapt to changes in the industry brought about by novel technologies. From a study focusing on the changes brought about by the ERP implementation in an organization, it was determined that organizations’ achievements in accounts were extended because of the ERP system, which permitted the performance measures to be more broad, institutionalized, and exhaustive too (Sánchez‐Rodríguez & Spraakman, 2012). What is more, non-financial indicators were extensively improved alongside financial related and non-financial data, which were equally imperative for decision-making. In short, the ERP system tends to expand accounting charts in an organization.
In any case, concerning changes to accounting methods and practices, Sánchez‐Rodríguez and Spraakman (2012) found that management accountants took less time in recording and processing information. Their role turned out to be more about analysis and consulting because more exact and real-time data from the ERP system offered the chance for more verifiable, exact, and significant data for decision-making.
The job of accountants as the key figure in managing transactions and financial related report providers have been further extended because of the ERP system. For instance, it was determined that after an ERP deployment, the variations in the functions of financial accountants and management accountants became noticeably, more extensive, and more self-evident (Suhaimi et al., 2016). Notably, no significant changes were observed between the functions of financial accountants and management accountants. In fact, management accountants now handle more managerial roles, for example, training and development, education, and financial assessments.
Further, evidence suggests that effective ERP implementation and usage enhance information quality, decision-making, and automated processes through many auto-generated reports contrasted with conventional accounting practices (Suhaimi et al., 2016). Hence, apart from skills acquired from data compilation and financial statement preparation, accountants additionally need to enhance their capacities to communicate effectively and use available ERP platforms to perform reliable analyses. As such, the role of management accountants continues to evolve with the implementation of the ERP system.
It is imperative to recognize that the ERP system does not change accounting procedures and techniques. Instead, it leads to more precise and detailed information that could be acquired quicker from the system. Subsequently, the accounting strategy does not have any effect on the execution of ERP systems, which has made it less demanding for non-accounting professionals to perform other accounting roles that do not require specialized knowledge and skills. Hence, the ERP system deployment forces accountants to re-evaluate their expertise, aptitudes, and functions. They have to assess and examine how the platforms ought to function inside their organizations and how they are effective with their new functions.
Moreover, accountants really do not have several alternatives. Hence, they need to adjust and align their functions to the ERP system in light of the fact that the organization has invested substantial resources to install and implement a new ERP system. Consequently, the organization needs to see tangible benefits as fast as could reasonably be expected. With respect to user change in perception following the implementation of the ERP system, accountants understand that the system would not change their functions and responsibilities, but it actually eases the tasks associated with preparing data for presentation every month end, for instance. In the ERP system, all bookkeeping functions, for example, general ledger, accounts payable, accounts receivable, and cash management among others, are completely integrated and coordinated.
Continuous updates and changes should be possible whenever required because all functions are superbly incorporated in the ERP system to serve all business units sufficiently. In this manner, real-time data is accessible for accountants for successful and effective decision-making. Moreover, more streamlined procedures and work processes and seamless integration across different business units and departments provide better accounting trail. Accordingly, it is significantly less demanding for accountants to conduct reviews and checks of the trustworthiness of the financial-related figures and, at last, prepare financial statements.
To demonstrate technology advancement, cloud computing is getting prominent today in modern organizations. This computing technology derived its name from the cloud symbols used in the diagrammatical representation (Pepe, 2011). For one to comprehend completely the relevance of cloud accounting, it is necessary to understand the capability of cloud computing in the business scene. Cloud computing is no longer another rapid shift in technology advancements. Instead, it largely alludes to business performed over the Web, without the utilization of computer equipment or programming license (Dimitriu & Matei, 2014).
Cloud computing is regarded ‘a kind of parallel and disseminated systems comprising of a collection of interlinked and virtualized computers, which are progressively provisioned and offered as at least one or many linked computing processing resources as clarified on service-level agreements. Cloud computing can really be viewed as the next frontier in computing technology. That is, cloud computing reflects the provision of computer hardware and programming applications as services delivered via the Web or Internet (Dimitriu & Matei, 2014). It permits clients to store information and utilize software via various gadgets situated in different areas. After the installation of cloud computing in various types of organizations, at one point, it has likewise found its way in the accounting industry (Dimitriu & Matei, 2014; Pepe, 2011).
An organization’s accounting should not be separated from the business itself, but rather it should be an integrated constituent with a primary function in the business processes. With a specific goal to accomplish this objective, the accounting model development should be a collaborative process and, hence, accounting for both the financial elements and for the business itself (Dimitriu & Matei, 2014).
Conventional uses for financial accounting are occasionally intricate and excessively costly, particularly for a small or a start-up business. They likewise need storage capacity for data, stable Internet bandwidth, and a qualified IT staff to design, set up, and update accounting applications. Current accounting practices reflect straightforward access, customization, cooperation, and eventually, the utilization of the Internet via cloud computing. The fundamental rules that facilitate cloud computing, joined with the activities performed by accounting software firms, have prompted the development of cloud accounting.
This idea, likewise referred to as ‘Internet accounting, includes similar functionalities from accounting programs set up in the users’ computers, but which generally operates on the cloud service provider (CSP) servers (Dimitriu & Matei, 2014). Essentially, it offers accounting services by methods cloud computing tools. Actually, there is no endorsed definition for ‘cloud accounting’, but rather it is fairly defined through its benefits and functionalities. The fundamental feature of cloud accounting is the utilization of the accounting services without the need to set up any accounting software in the end user’s computer, and this is where the name is derived.
The platform is accessed via the Web browser, over the Internet. The client’s information is safely stored and processed on the vendor’s servers found ‘in the cloud’. In this way, the cloud service provider claims the ownership of the intellectual property while the customer can only use, but not claim ownership of the application. All that is required is a connection to the Internet, and organizations can gain access to their financial information from any gadget and area. A cloud-driven accounting platform ensures that multiple, complex requests and activities can be handled using a coordinated on-line framework and, therefore, lessening labor required by the accounting unit (Dimitriu & Matei, 2014).
Some major accounting tasks performed through cloud accounting include automated generation of accounting notes and accounting reviews for various forms of transactions and activities, automated accounts reconciliations, preparation of periodical financial statements, the use of alternative accounting standards for reporting, and generation of ratios and reports using accounting formulas and rules (Dimitriu & Matei, 2014).
While technology in accounting is not meant to replace accountants, it is noteworthy that a cloud accounting service vendors can actually eliminate the need to have an accountant because they can offer any financial transaction and operations needed as ‘virtual’ financial consultants or managers (Dimitriu & Matei, 2014). Obviously, the provision of cloud accounting services is a role that ensures that most services required by organizations are available on the platform (Dimitriu & Matei, 2015). By relying on similar standards as any other cloud services, cloud accounting platforms can be offered in a similar way, and by focusing on the specific needs of a customer, clouding accounting can deliver a diverse range of services.
The scientific area of forensic largely relies on technology, and it is significantly influenced by rapid technological developments. Specifically, the area of digital forensics needs technology and, therefore, there is always a race to deliver the best software programs that are more effective in data analysis and delivering the best-expected results.
In the period of the 2000s, the major corporate fraud involving Enron, Tyco, and World Corn, for instance, generally influenced public perception about the effectiveness of corporate governance. Consequently, new control measures and regulations were developed and enacted, and investigation into corporate fraud was mostly genuinely investigated. These corporate scandals led to new opportunities for accountants specializing in forensic accounting and investigation.
Expertise, skills, and knowledge in accounting and finance alongside investigative techniques and knowledge in laws resulted in a perfect practice for investigating fraud in both private and public institutions. Forensic accountants assist with interpreting whether certain practices are unlawful, for instance, in financial statement misrepresentation, illegal tax avoidance, theft, insolvencies, contract disputes, claims, and securities fraud. Forensic accountants collaborate with other specialists, such as lawyers, law enforcement professionals, and act as expert witnesses. Further, the increased utilization of IT has escalated cases of computer crimes, for example, fraud, email phishing, computer hacking, program piracy, malicious uploading of viruses, theft of files and information, and e-commerce sales fraud among others. Therefore, forensic accountants have become highly sought-after professionals in the financial industry.
The necessity for forensic accountants emerged due to the dissatisfaction with the audit systems in firms, as both external and internal auditors could not sufficiently figure out certain issues in the managerial work involving fraud (Asuquo, 2012). The transformation in IT has fundamentally changed the way of business and created a competitive edge for firms that value its application. The development of IT applications has influenced the form and quality of data, accounting included. As previously noted, the use of technologies in accounting systems transformed the way information was stored, retrieved, and managed. It is believed that General Electric performed the first known application of a computerized accounting system in 1954 (Asuquo, 2012).
Between 1954 and 1960s, the accounting profession had not fully embraced technology, and only centralized server computers were utilized and few individuals had the right skills and qualifications to operate computers. This started to change in the mid-1960s with the introduction of new, portable, and less costly systems. This encouraged the application of computers in organizations and with it emerged the requirement for auditors to understand auditing and technology relevance in organizations. Technologies also led to specialized accounting practices.
Multiple technological products are now available to support forensic accounting, and forensic accountants now increasingly apply them to detect fraud (Simeunović, Grubor, & Ristić, 2016). Notably, computer applications have become the major tools for committing fraud in an organization, especially software manipulation (Asuquo, 2012). Operating systems (OSs) software comprises programs, which automatically run computers without human interventions. Additionally, other specialized software applications have been developed to meet the specific needs of end-users. When these software applications are manipulated for fraud, it is usually difficult for accountants or auditors to detect such fraud.
Thus, forensic accountants must rely on highly sophisticated facilities and software devices to detect any fraud. Fundamentally, most criminals involved have superior skills in accounting and modern technologies. Therefore, for forensic accountants, there is a need then to go further into an organization’s computer systems using the most sophisticated tools available. If forensic accountants like the best tools, then such efforts could be futile. Suitable software applications could assist forensic auditors to preserve, gather, assess, and documentation evidence.
Numerous new technologies that assist and allow forensic accounts to recoup erased fields, crack encryption or codes, retrieve and classify information. KPMG Forensic Accounting, for instance, is among the recently developed tools, which help in identifying how the fraud was executed. The solution is equipped with applications that can trace all processes involved in fraud by generating diagrammatical representations that are more reliable. This diagram additionally shows information in its simplified form to facilitate understanding with the goal of mapping the path of assets through the fraud’s privately owned businesses/accounts, as well as associated individuals involved.
Additionally, Gargoyle is another package that can identify steganography, a technique used to conceal data in other files. Prior to the introduction of Gargoyle, it was not possible to detect any hidden files. The software simply checked if a file has been altered. Besides, its toolkits are sophisticated with capabilities to crack user passwords and encrypted files (Asuquo, 2012). Other programs have also been introduced with capabilities to reconstruct shredded documents electronically, thereby providing an effective means to find the necessary information with minimal efforts. The technique relies on the use of exclusive digitizing methods to scan the destroyed documents and then reconstruct them using other specialized applications. The software equally helps in reconstructing documents destroyed into tiny pieces.
Accountants understand the importance of their profession to organizations. Accounting practices have changed over the years tremendously. Nevertheless, through every one of these changes, accounting technology has constantly played a major role in making the role of accountants somewhat less demanding. New sophisticated technologies alongside the right skills and experiences have allowed accountants to perform accounting functions that are more specialized. Further innovation progressions have improved accountants’ abilities to comprehend information proficiently and adequately.
They now can interpret huge volumes of data extracted from ERP systems, conduct accounting functions using cloud computing platforms, and use fraud accounting software to detect instances of corporate fraud. Overall, technology has made accounting simpler and more trusted, and accountants that are more qualified are now sought-after in the industry. While these developments are positive, accountants are expected to improve their knowledge and skills to use these tools because developments that are more robust are expected in the future to transfer the industry further.
Technology has resulted in efficiency and effectiveness in the accounting industry and based on these observations, the following recommendations are made. First, accountants should acquire the right qualifications and skills to use accounting technologies. Second, more organizations, including small and start-ups, should consider embracing accounting technologies, for example, cloud computing because they are now relatively affordable. Third, the accounting industry should prepare for further technological disruptions as new sophisticated tools emerge.
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