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Effects of Technology on the Accounting Profession Essay

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Technological innovations over the past 30 to 40 years have greatly enhanced accounting and finance activities, procedures, and policies. Although technology is certainly not new to accounting, recent advances have altered all aspects of the accounting function, including: economic measurement, financial reporting, managerial planning and control, and auditing. The role of technology and computers within the organization also has changed.

Local area (LAN) and wide area (WAN) network activities, including the Internet and the many forms of Electronic Commerce and Electronic Data Interchange (EDI), in addition to Enterprise Resource Planning (ERP) and other applications, have transformed the way accounting is done, calling into question the importance of traditionally valued accounting functions and skills (Lewis, 2003).

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Technology will be an integral component and vehicle for that change, serving as a knowledge-based repository. Intranet and Web-based software and applications will be the foundation for this technology.Technology allows many more highly diverse, geographically dispersed, intellectually specialized talents to be capitalized as resources of an information-age organization.

Network systems provide a common language and database for communications, capturing critical factual data about external environments, and helping individuals find knowledge sources and solve problems. As soon as a firm takes its first steps from data to information, its decision processes and management structure are transformed. As professional service firms, accounting practices are in the forefront of this nowledge management. Accountants exploit their personal knowledge and training, codify that knowledge into explicit knowledge to be shared by other members of their firms, and use that collective knowledge to provide value-added services to clients.

The codification, storage, and communication of that knowledge rely heavily on innovative technologies. Although accounting has used technology for decades, the impact of knowledge management on today’s organizations has elevated the role and application of technology to preeminence.Technology is essential to support the creation and dissemination of knowledge within members of global organizations as well as provide essential tools for decision support. This has created a transformation in the tasks done by accountants, the way information is processed, stored, and communicated, and ultimately the skills needed by accounting professionals.

Educators and professionals according to Lewis (2003) have long identified areas such as communication and analytical skills as necessary for success in the accounting profession.With technology’s strong penetration into the profession, other skills and qualities have become essential. Specifically, technological proficiency will be required of all entrants into the profession and will be positively related with professional success. Thus, the generally accepted attributes assumed to lead to professional success (technical proficiency in the field of accounting) must be supplemented to include those attributes required to achieve technological proficiency.

The new post-industrial or information paradigm of wealth creation is profoundly changing the way business is being conducted, making traditional accounting concepts and methods inadequate to service this new model. The choices of the profession are, therefore, either to adapt to the new demands or to become irrelevant. The role of the accountant within the organization will be significantly different from what it has been in the past and other professional bodies have identified several transformative aspects of the accounting profession.One large component of this change will be due to innovative technological applications in the field and in our society in general and others have identified the impact of technology on various aspects of our professional and personal lives.

In 2001, The International Federation of Accountant issued a paper entitled Information Technology for Professional Accountants. The paper states that due to technological advancement accounting profession face many challenges: Information technologies are affecting the way in which organizations are structured, managed and operated. One of the most dramatic developments affecting organizations is the fusion of business and IT strategy. Entities can no longer develop business strategy separate from IT strategy and vice versa.

Accordingly, there is a need for the integration of sound business and information technology planning and the incorporation of effective financial and management controls within new systems.Traditionally, professional accountants have been entrusted with the tasks of evaluating investments in business systems, evaluating business system designs and reporting on potential weaknesses. Increasingly, information technology deployments are supported by extensive organizational restructuring around such technologies. To maintain both the accountancy profession’s credibility and capability in supporting new, strategic information technology initiatives and the public’s trust and confidence, the competence of professional accountants in IT strategy must be preserved and enhanced.

Information technologies are changing the nature and economics of accounting activity. The career plans of professional accountants and related training systems must be based on a realistic view of the changing nature of accounting, the accountancy profession’s changing role in providing services to business, government and the community at large, and the knowledge and skills required for future success as a professional accountant.Some IT skills, such as the ability to use an electronic spreadsheet, are now indispensable, and professional accounting bodies must ensure that candidates possess core IT skills before they qualify as members of those bodies. In addition, since an increasing number of professional accountants are engaged in providing IT-related advisory and evaluative services, it is important that professional accountancy bodies maintain the quality and credibility of these services through both prequalification and post qualification education requirements.

Information technologies are changing the competitive environment in which professional accountants participate. Information technologies are either eliminating some areas of practice that were once the exclusive domain of professional accountants or reducing their economic attractiveness. For example: – Accounting and accounting system developments was once the virtually exclusive domain of professional accountants. Today, inexpensive, easy-to-use and powerful prepackaged ccounting software is reducing the demand for those activities or enabling non-accountants to offer those services.

At the same time, there is an increasing demand for professionals with a combination of business and IT skills to help organizations structure their systems to provide effective and efficient support for their primary objectives and activities. – Tax planning and tax return preparation have traditionally represented important activities for many professional accountants.Today, inexpensive, easy-to-use and powerful prepackaged software is reducing the demand for tax return preparation services. The professional tax planning expertise that was once the exclusive domain of individual practitioners is increasingly being embedded within these same tax packages, reducing the demand for such services as well.

In the past, accountants with internal and external auditing expertise were needed in great numbers to vouch and trace documents, to perform a variety of analyses and to document audit work.Today, the computerization of business records and the availability of computer-assisted auditing tools mean these activities can be performed faster and more thoroughly, again reducing the demand for such activities.Reference:Shaw, L. (2003).

The Impact of Knowledge Management and Technology on the Accounting Profession and Accounting Education: A Cognitive Styles Assessment Study. SUFFOLK University, Accounting Department. December 3, 2005, from http://www. suffolkacct.

org/lshaw/acct865/Technology%20and%20Accounting. doc

Cite this Effects of Technology on the Accounting Profession Essay

Effects of Technology on the Accounting Profession Essay. (2017, Mar 05). Retrieved from https://graduateway.com/effects-of-technology-on-the-accounting-profession/

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