The robot uprising has begun and Skynet is sending a T1000 to take your job.
With the rate of technological progress we are currently experiencing, there is building concern within the professional services sector over the potential impact these advances could have on people’s careers. And while a Terminator-style judgement day is not something we have to worry about just yet, it’s clear that recent and emerging technologies are set to shake up the business world and the way we work in general.
In the field of accounting, cloud computing and robotic process automation (RPA) are already becoming commonplace, and recent developments in blockchain technology and artificial intelligence (AI) look to propel advancement faster than ever before.
In this article, we’ll discuss how these technologies are transforming the accounting industry, what they mean for the future of accounting, and ultimately, whether the relationship between robots and accountants will be one of war or peace!
Robots in Accounting
For more than 40 years accountants have been leveraging technology to automate and streamline their tasks. When Microsoft Excel and Intuit were first launched in the early 1980s, they changed the face of accounting completely.
Since then, we’ve seen huge advancements in accounting and bookkeeping software that have steadily improved accuracy and efficiency across the industry. However, in recent years, a new wave of technology has emerged that has the ability to revolutionize accounting in the same way that Microsoft Excel and Intuit did all those years ago.
Cloud Computing and Accounting
Over the past decade, cloud computing has been widely integrated into most aspects of our professional (and personal) lives. Cloud computing broadly refers to the delivery of computing services over the internet, such as storage, servers, databases, software, and analytics. It has quickly become the industry standard, and in the accounting field, this shift has produced significant benefits in several key areas.
Cost savings – Making the move to cloud computing eliminates the need for purchasing and maintaining expensive hardware and software, as well as reducing energy consumption and IT staff costs. Accounting firms can pay only for the services they use, and scale up or down as needed.
Accessibility – With cloud computing, accounting professionals are able to access their data and applications from anywhere, at any time, and on any device. This improves collaboration, productivity, and customer service, as well as allowing for remote work and flexible schedules.
Security – Cloud computing providers offer high levels of security and protection, with data encryption, backup and recovery. Accounting firms can benefit from the expertise and resources of cloud providers, allowing them to focus on their core business functions.
Innovation – Accounting firms that utilize cloud computing are better positioned to leverage the latest technologies and tools, such as blockchain, big data analytics and artificial intelligence (more on those later).
While it may not be shiny and new, cloud computing’s evolution and worldwide integration have reshaped the accounting industry and paved the way for the next wave of technological innovation. Accounting firms that adopt cloud computing can gain a competitive edge, improve their performance, and meet the changing needs and expectations of their clients and stakeholders.
Robotic Process Automation (RPA) for Accounting
RPA refers to software technology that can automate certain repetitive, low-level tasks. It works by capturing a set of manual, computational steps such as keystrokes, mouse clicks, accessing various applications and transcribing data. RPA can combine these disparate actions into a smooth automated workflow, without requiring any changes to the underlying infrastructure or processes.
Optical character recognition (OCR) technology takes RPA a step further with its ability to extract relevant information from a variety of documents. For example, RPA with OCR can scan an enormous volume of invoices, copy the required information and transfer it to a spreadsheet or database without the need for any human intervention.
RPA is rapidly evolving to become commonplace in the accounting industry and the financial world as a whole with its ability to increase productivity, accuracy and consistency while reducing costs, errors and risks. CPA firms are utilizing this technology across a myriad of applications, including invoice processing for accounts receivable and payable, payroll management and expense reporting. By taking some of the repetitive, tedious tasks, RPA allows accountants to focus on more value-added activities that require human judgement, creativity and interaction.
Blockchain in Accounting
Blockchain is a technology that allows transactions to be recorded and verified on a network of computers without a central authority. Blockchain accounting works by creating a ledger of transactions that is shared and synchronized among multiple parties.
Each transaction is encrypted and linked to the previous one, forming a chain of blocks. The ledger is updated and validated by consensus among the network participants, making it difficult to tamper with or falsify.
Blockchain accounting can improve the way accountants perform tasks such as auditing, reporting, compliance and tax preparation. For example, blockchain accounting can:
- Reduce errors and fraud by providing a single source of truth for financial data
- Simplify reconciliation and verification by eliminating the need for intermediaries and third-party verification
- Enhance data security and privacy by using encryption and digital signatures
- Enable real-time reporting and analysis by providing access to up-to-date and accurate information
Blockchain accounting is still an emerging field that faces challenges such as regulatory uncertainty, technical complexity, scalability issues and adoption barriers. However, as this technology matures and becomes more widely adopted, it has the potential to transform the accounting profession and create new opportunities for accountants.
AI and Big Data: A Powerful Combination
Artificial intelligence (AI) is the ability of machines to perform tasks such as learning, reasoning, problem-solving, decision-making, and communication. Where RPA mimics human actions, AI mimics human intelligence.
Big data is the term used to describe the vast amounts of structured, semi-structured and unstructured data that are generated and collected by organizations across all industries. These data sets grow at an exponential rate and can only be mined for information by machines, as they are too gargantuan to be usable by humans.
The convergence of AI and big data is creating unprecedented possibilities for the accounting profession. AI can analyze large volumes of data faster and more accurately than humans, identifying patterns and anomalies. It can interact with humans through natural language, generating insights and recommendations that can improve decision-making, efficiency and quality. AI also has the ability to improve itself over time by learning from feedback and new data.
Big data AI may only be in its infancy, but it is gaining power and momentum at an extremely fast rate. We are already seeing the enormous potential this technology has to transform a wide range of accounting processes:
Audit – AI can enhance the audit process by performing risk assessment, sampling, testing and anomaly detection on large datasets. This allows it to provide audit evidence and assurance while helping auditors identify compliance issues and provide suggestions for improvement.
Real-time data processing – AI accounting software has the capability to integrate with a variety of data sources, allowing it to analyze financial information in real-time. This continuous analysis provides business managers with timely, up-to-date insights, which can be used to make informed decisions and respond to situations as they arise.
Fraud detection – By analyzing transactions and financial statements, AI can predict patterns in order to detect errors and irregularities. Processing this information in real-time allows it to flag suspicious activities and catch fraudulent spending before expense reimbursement.
Financial reporting – AI improves the quality and timeliness of financial reporting by automating data collection, validation, consolidation, analysis and presentation. It can communicate this information effectively with stakeholders, and even help accountants stay up-to-date with ever-evolving reporting standards and regulations.
Budget forecasting – Through automated examination of a company’s historical data, AI can create detailed budget forecasts by identifying patterns that allow it to predict future financial performance.
Tax – AI can assist in the automation of tax preparation, filing and compliance tasks. With its capacity to quickly and accurately analyze a company’s financial records, it’s even able to provide data-driven insights and suggest tax planning strategies. Also, by monitoring the latest updates to tax laws and regulations, AI has the ability to help accountants and their clients identify tax opportunities and risks.
Optimization – The potential for AI to optimize work processes is almost limitless. By automating and streamlining complicated workflows that have multiple variables and constraints, it will drastically increase productivity and efficiency in just about every area of the accounting industry.
Innovation – AI’s capacity to mine huge datasets that are inaccessible to humans allows it to generate unique accounting insights and solutions, such as identifying new market opportunities, creating new business models, or discovering new patterns or trends.
AI is proving to be an extremely powerful tool with far-reaching benefits that will only increase as the technology develops. However, it also presents some challenges that should be considered.
Accountants must be able to understand the logic and outcomes of AI systems, as well as verify and validate their accuracy and reliability. They must adapt to balance the human and machine aspects of their work while maintaining and upholding ethical and professional standards. This will require accountants to adapt the way they work, learn new AI-specific skills and evolve their knowledge base to keep pace with advancements in AI.
The Future of Accounting
There’s no doubt that this new wave of technological advancement will have far-reaching impacts throughout the business landscape. We’ve seen how cloud computing, RPA and blockchain technology are already revolutionizing the accounting industry, and recent developments in big data AI are set to change the game entirely.
While this unprecedented rate of change can understandably cause uncertainty, it is essential to recognize that these technologies are not a threat to the accounting profession, but an opportunity for accountants to evolve their roles and add even more value to their clients and organizations.
When Microsoft Excel was first launched back in the 1980s, there was widespread speculation that it could spell the beginning of the end for the accounting profession.
And yet, it did exactly the opposite, the field of accounting grew exponentially.
The same is true today. Accountants will embrace these emerging technologies and adapt to the changing environment by developing new skills and competencies.
Technological advancement will allow accountants to increase productivity, enhance quality and even expand their capabilities. Machines will help provide greater insights from the massive volumes of data that we collect, and allow for more timely business decisions with their real-time data processing capabilities.
And as computers take on more repetitive, mundane tasks, accountants will be able to shift their focus to helping clients with higher-level functions that provide even greater value.
The future of accounting then is not battle-hardened CPAs fighting against robots in a post-apocalyptic war for numerical supremacy, but instead an era of peace, with humans and machines working side-by-side for the betterment of businesses everywhere.
