How technology is disrupting finance and accounting professionals

Technology has advanced many segments in recent years and made the taxi services, travel, banking, and shopping industries unrecognisable from what they were. These sectors have been revolutionised in a matter of years by the accelerated rate of introducing new technologies, displacing incumbent modes of practice.

The accounting industry is not an exception to increased competition, as more players venture into it.

What is the need for automating accounting?

Introducing technology in accounting is now considered a new-age approach to automating accounting tasks and offering new perspectives to accountants. This enables professionals to aid various organisations in making better decisions. As the accounting landscape is rapidly changing, accountants should follow the change to stay relevant in the market.

Let us evaluate the effects of disruptive innovation on the accounting profession, which includes information technology, new technologies, data analytics, and artificial intelligence.

Understanding disruption in accounting

Disruptive innovation means innovation that overhauls the market. In the accounting profession, disruptive innovation has been prompted by the technological development of information technology. 

The use of cloud computing, mobile applications, and other online accounting software has enhanced how accountants engage with their clients and handle data.

According to an IAFA study, over 80% of Irish accounting firms have adopted cloud-based software in the past five years. This has considerably improved their efficiency and reduced costs for firms and clients. This shift has enabled accountants to focus on higher-value tasks, such as strategic advisory services.

Impact of information technology on the accounting profession

The influence of information technology on accounting professionals in Ireland has been invaluable. Integrated cloud accounting software has allowed for real-time reporting, better teamwork, and less paperwork. 

Such a change has facilitated the evolutionary process of changing the accountant’s job description from a number cruncher to a business consultant.

Over 60% of Irish accountants think their occupation is no longer primarily compliance based. A more significant shift has been noticed toward advisory roles, which focus on analysis and decision-making, evaluating the present financial picture.

Emerging technologies and their impact on accounting

The accounting profession is experiencing radical changes due to implementing new technologies. These technologies provide great opportunities to transfer accounting and financial information analysis to a new level, providing more efficient and effective client services.

A more recent report from the Irish Government’s Department of Business, Enterprise, and Innovation revealed that big data analytics is expected to grow by 30% over the next five years.

Here are some of the key emerging technologies in accounting and their impact on the profession:

• Data Analytics

Analytics helps the accountant analyse the financial data more effectively so that the correct conclusions are made and the probability of errors is minimised. It employs elaborate analysis of historical data and probabilities to arrive at tendencies and variations likely to occur in the future to assist accountants in better managing their clients’ affairs. 

Thus, data analytics can be helpful in controlling, reviewing, and enhancing areas within an organisation and facilitating more precise decision-making by the accountant.

A study done by Chartered Accountants Ireland established that 78% of the various accounting firms in Ireland have integrated cloud solutions. Not only does this adoption enhance the disclosure and protection of data, but it also allows integration and timely decision-making.

• Artificial Intelligence (AI)

Artificial intelligence reduces tedious work like data input, invoice checks, and tax computations; as such, accountants can recollect more analytical functions. This is because, through analysis of a large amount of data, pattern recognition, and prediction-making, AI can significantly assist the accountant in producing frequent and accurate client results. 

Other areas include numerous clerical tasks, bookkeeping, and financial reporting, where AI can assist accountants while ensuring compliance with set standards.

• Blockchain Technology

Blockchain technology thus creates greater accountability and security in financial transactions, therefore eliminating fraud and compliance issues. 

Blockchain is an open-sourced ledger that enables storing information regarding transactions, whereby all transactions are legalised with the approval of all the performers involved. 

This technology can significantly assist accountants with tasks like audits, preparations of financial statements, and compliance with various standards, thereby eliminating errors.

• Cloud Computing

Cloud computing provides real-time data sharing and collaboration, improving efficiency and reducing costs for both the firm and its clients. Cloud-based accounting software allows access to financial data from anywhere, anytime. It also facilitates collaboration with clients and other stakeholders in real-time. 

This technology can help accountants with tasks such as financial reporting, compliance, and auditing, reducing the risk of errors and improving efficiency.

• Machine Learning

Machine learning helps accountants to make better analyses of the data for accurate forecasts and decision-making. Most algorithms can handle large volumes of data, look for patterns, and make relevant predictions independently to assist accountants in adding value to their clients. 

With the help of machine learning, accountants can support their actions with data while forecasting financial revenues and expenses, risk assessment, and compliance issues. Thus, the accuracy of the machine decreases the probability of mistakes.

• Robotic Process Automation (RPA)

RPA stands for Robotic Process Automation and refers to leveraging computer applications to simulate human interactions with digital systems. 

Regarding accounting applications, RPA can address some functions like invoice processing, data extraction, payroll management, etc. Besides, it also enhances usability and enables accountants to provide more value-added services.

Shift from traditional accounting to disruptive technologies

The shift from traditional accounting to innovative solutions is in no way easy. This is because the accounting profession’s skills are dynamic and harmonised with new tools and methodologies used in other occupations. 

It also requires a change in the attitude of accountants now that they are graduates, not anymore number-juggling clerks but strategic business partners.

However, many positive outcomes exist from adopting disruptive technologies, as discussed below. The advancements in the tools make accountants more valuable players offering strategic inputs regarding financial planning and advisory services. This change is crucial to remaining relevant in today’s ever-changing business environment. 

Education and training

While the changes towards a more technologically driven accounting profession are still unfolding, educational institutions and professional bodies in Ireland are already cognisant of the need to integrate technology-driven curricula and training programs for future accountants. 

For example, the Institute of Certified Public Accountants in Ireland (CPA Ireland) has made changes to implement technological competency upgrades for its members.

Conclusion

The impact of disruptive innovation on the accounting profession in Ireland is felt to the core since it alters and redefines conventional business models while creating new areas for development and innovation. 

These changes include business analytics, AI, and blockchain as methods of change that enhance the delivery of new services beyond number crunching. 

Expert accountants from Experlu are well-skilled in technologies like cloud computing and data analytics, enabling them to perform their tasks faster, more efficiently, and with the least human intervention.