Technology brings us new levels of interconnectivity, providing real-time updates from news to social networks to sports. The ability to seamlessly collect information will also have a significant impact on the field of accounting. Three emerging technologies in particular — blockchain, automation, and cloud software — will shake up some traditional accounting practices and streamline others. These new processes have the potential to drastically simplify some of the most labor-intensive parts of accounting and tax work and allow both company and accountant more bandwidth to focus on strategic planning.
The technology that makes cryptocurrencies possible could also make bookkeeping significantly easier. Blockchain is a secure, electronic ledger that tracks and encrypts transactions. Transactions, once entered, cannot be modified, which dramatically cuts down on the risk of fraud or other inaccuracies that accountants often look for when reviewing financial records. If a company uses Blockchain or another similar type of technology, its accountants can focus more on inputs and outputs to make sure everything entered is accurate, rather than comparing financial reporting to corresponding bank statements. It also could reduce the use of redundant systems and save accountants from inputting transactions, which inherently raises the risk of error.
Another advantage to Blockchain is that companies can set up rules on how money from transactions is spent. They can also get real-time access to valuable financial data through automated reports. Accountants can provide advice on what type of rules to put into place and also assist with interpreting data from Blockchain reports. The future accountant may be able to devote more resources to strategic, data-driven planning, to help manage cash flows and assets.
From tax software to bookkeeping, technology has helped to automate many of the processes that used to be manual. Artificial intelligence (AI) helps automation become more intuitive and efficient, and allows it to spread past basic bookkeeping to other accounting functions, such as audit work papers.
AI could help lower fees related to the technical accounting and tax preparation, but it will not replace the accountant completely. Many accounting provisions, such as treatment of assets and tax liabilities, have gray areas that require some interpretation. Accountants of the future will continue to play a vital role in examining a company's unique circumstances and applying accounting principles to that situation to address a client's concern.
Cloud technology is quickly replacing the need for physical storage of key information. It allows client and accountant a secure platform to share information from their respective locations, cutting down on the time and expense of travel. Storing information on the cloud also has the potential to be more secure than traditional methods, because if something were to happen to one user—such as the loss of equipment, unexpected power outage or property destruction—financial information is still secure and available for review.
That being said, cloud technology is not quite developed enough to completely integrate into existing accounting software. Many cloud-based platforms also do not have the same sophistication in their functionality as applications that are location-based. As a relatively new technology, the cloud has the potential to drive up the price of an accounting platform.
The gap between legacy accounting software and cloud-based platforms will likely close in the future, which may change the shape of client-accountant meetings and communications. It should benefit both client and accountant, however, by allowing for more responsiveness and real-time communication.
Automation, artificial intelligence, and the ability to remotely access secure information will only become more prevalent. Companies and accountants both will be evaluating best practices for the changing world of accounting. If companies have any questions about incorporating a new technology into existing accounting functions, they should meet with their accounting and audit teams.
Published on July 10, 2018