The Impact of Emerging Technologies on Accounting

THE IMPACT OF EMERGING TECHNOLOGIES ON ACCOUNTING

The world of accounting is on the cusp of a revolution and this transformation is driven by the rapid rise of emerging technologies. Emerging technologies like artificial intelligence (AI), blockchain, robotic process automation (RPA) and cloud computing, are reshaping how accountants work, the services they offer, and the value they provide to businesses. Hence, highlighting the skills they need to succeed. But how exactly are these technologies changing the game and what does it mean for the future of the accounting profession? 

In this article, we’ll explore the impact of emerging technologies on accounting, provide real-world examples, and offer insights into how accounting professionals can adapt and thrive in this new era.

1. ARTIFICIAL INTELLIGENCE (AI) AND MACHINE LEARNING

AI and machine learning (ML) are at the forefront of technological disruption in accounting. Traditionally, accountants spend countless hours manually reviewing financial statements, reconciling accounts, and identifying discrepancies. But AI is changing all that.

How AI is Transforming Accounting?

• Automated Data Entry and Processing: AI-driven tools like QuickBooks, ZohoBooks and Xero can automatically extract and categorize financial data from invoices, receipts, and bank statements. This reduces human error and allows accountants to focus on higher-value tasks.
• Predictive Analysis: Machine learning algorithms can analyze historical financial data to identify patterns and predict future trends. This allows businesses to make informed decisions about budgeting, cash flow, and investments.
• Fraud Detection: AI can also scan large volumes of transactions in real time to identify suspicious activity and anomalies. For example, Deloitte’s AI-based fraud detection system has been shown to detect irregularities faster and more accurately than traditional methods.

Real-World Example: It has been discovered that PwC’s AI tool, GL.ai, scans billions of transactions to identify high-risk entries in financial statements. This has enabled PwC to reduce the time they spend on audits by 30% while improving accuracy.

Also, a study by McKinsey found that automation can reduce the time spent on accounting tasks by up to 80% [1]. This means that accountants can focus on higher-value tasks like advisory and consulting services.

2. BLOCKCHAIN TECHNOLOGY

Blockchain technology is the technology behind cryptocurrencies like Bitcoin. It is revolutionizing the way financial data is recorded and verified. At its core, blockchain is a decentralized ledger that records transactions in a secure and immutable manner.

How Is Blockchain Impacting Accounting?

• Transparency and Accuracy: Blockchain creates a tamper-proof record of financial transactions, thus, reducing the risk of fraud and errors.
• Smart Contracts: Blockchain-based smart contracts automatically execute terms once specific conditions are met, reducing the need for manual processing.
• Audit Efficiency: Since blockchain provides a complete and verifiable transaction history, auditors can quickly access and validate financial records without relying on multiple intermediaries.

Real-World Example: EY (Ernst & Young) developed a blockchain-based platform for managing global tax compliance. The platform allows companies to track cross-border transactions in real-time, ensuring accurate tax reporting and compliance.

3. ROBOTIC PROCESS AUTOMATION (RPA)

RPA involves the use of software robots to perform repetitive, rule-based tasks. Especially the kind of work that accountants have traditionally done manually.

How Is RPA Changing the Accounting Landscape?:

• Data Reconciliation: RPA bots can reconcile bank statements, identify discrepancies, and correct them automatically.
• Invoice Processing: Automated bots can extract data from invoices and match it with purchase orders, reducing processing time and errors.
• Regulatory Compliance: RPA can be programmed to monitor changes in financial regulations and update internal processes accordingly.

Real-World Example: KPMG’s use of RPA for tax preparation and compliance has reduced processing times by up to 60%, freeing up human accountants to focus on advisory services.

4. CLOUD COMPUTING

Cloud-based accounting software has made it easier than ever for businesses to manage their finances from anywhere in the world. Tools like QuickBooks Online, ZohoBooks, FreshBooks, and Xero provide real-time access to financial data and enable seamless collaboration between accountants and clients.

How Is Cloud Computing Changing Accounting?:

• Accessibility and Flexibility: Cloud-based platforms allow accountants to work remotely and access client data from any location and from any technological device.
• Real-Time Collaboration: Accountants and clients can work on the same set of financial data simultaneously, thereby, reducing the risk of version conflicts.
• Scalability: Cloud-based solutions can be scaled up or down depending on the size and complexity of the business.

Real-World Example: Intuit’s QuickBooks Online has over 4.5 million users worldwide. The platform allows small businesses to integrate with third-party apps, generate reports, and automate tax filings, all from a single dashboard.

5. DATA ANALYTICS AND BUSINESS INTELLIGENCE

Data is the new gold, and accountants are uniquely positioned to turn raw financial data into valuable business insights.

How Is Data Analytics Impacting Accounting?:

• Financial Forecasting: Advanced data analytics tools can analyze past financial performance to generate future forecasts and identify potential risks.
• Cost Optimization: Accountants can use data to identify areas where businesses are overspending and recommend cost-cutting strategies.
• Performance Benchmarking: Businesses can compare their financial performance against industry standards and adjust their strategies accordingly.

Real-World Example: Deloitte’s use of data analytics in audits has improved accuracy and allowed clients to identify underperforming assets and hidden liabilities.

6. CYBERSECURITY CHALLENGES

With increased reliance on digital systems comes a greater risk of cyberattacks and data breaches. Accountants are now tasked with not only managing financial data but also safeguarding it.

Key Cybersecurity Threats:

• Phishing Attacks: Cybercriminals often target accountants with fake emails to steal login credentials.
• Ransomware: Malicious software that locks access to financial data until a ransom is paid.
• Data Leaks: Improper handling of financial data can lead to leaks and regulatory penalties.

Real-World Example: In 2020, the Big Four accounting firms (Deloitte, PwC, EY, and KPMG) collectively faced over 500 attempted cyberattacks, highlighting the growing need for robust cybersecurity measures.

THE FUTURE OF ACCOUNTING: EVOLVING ROLES AND NEW OPPORTUNITIES

As emerging technologies continue to reshape accounting, the role of accountants is evolving from number-crunchers to strategic advisors.

New Skills Accountants Will Need Include:

✅ Data analysis and interpretation

✅ Proficiency in AI and automation tools

✅ Understanding of blockchain and cybersecurity

✅ Strong communication and advisory skills

Accountants who embrace these changes will find themselves well-positioned to offer greater value to clients and organizations. Instead of being replaced by technology, accountants will use it to enhance their expertise and provide deeper insights.

Conclusion

Emerging technologies are not just changing how accounting is done, they are redefining the value that accountants bring to the table. AI, blockchain, RPA, cloud computing, and data analytics are automating routine tasks, improving accuracy, and providing deeper financial insights. However, with these advancements come new challenges, particularly around cybersecurity and the need for upskilling.

The future of accounting lies in the hands of professionals who are willing to adapt, learn, and leverage technology to become strategic business partners. Are you ready to take that step?