Effects of Technology on the Accounting Profession

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					Technology and Accounting Running Head: EFFECTS OF TECHNOLOGY ON ACCOUNTING

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Effects of Technology on the Accounting Profession Student Name August 2, 2009 University of Phoenix

Technology and Accounting The Effects of Technology on the Accounting Profession Accounting information systems have changed the way in which businesses conduct

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their accounting functions. Real time billing and processing allows the business to have a live accounting system where transactions are processed by operators, and these transactions are simultaneously integrated into a continuously updated financial/ management accounting system. Transactions and their impact and influence on the company’s profit and loss accounts are visible as they are processed. This means that there is no need to wait any more until month-end to see how the business is performing. The performance of the business can be monitored, transaction by transaction, and corrective or preventative action taken as a result of continued transaction updating. Data or values, once inputted, can be quickly analyzed and used to compile projections and reports that would normally form part of secondary operations. This would not be possible without functional AIS – some of the generated reports may be useful in detecting or predicting potential problem areas such as fraud or impending financial failure. Automatic financial audit trails are not only possible; they can become automatic, providing a fast, reliable and acceptable way of monitoring financial transactions within the business. Source documents have gone from purely paper based documents such as orders, invoices and delivery notes to, in many instances, completely digital documents. This enables order tracking, the processing of customer invoices and the automatic transferral of purchase and sales documents to statements. Traditional paper transactions have been replaced by digital transactions most often transmitted via e-mail in various secure forms, such as .PDF and encoded Striata documents. This represents not only a saving on the materials traditionally used to communicate these types of transactions, (paper, ink labor and postage) but cuts down on the in transit time of these types of documents, resulting in higher efficiencies and immediate notification of failure to deliver, when it does occur.

Technology and Accounting Further, traditional accounting systems may have required entire departments to process a large number of transactions such as a large telephone network operator, or a large utility company. Information systems have provided the facility to automate these functions with a high degree of accuracy, allowing the redeployment of valuable resources to other

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areas of the business. Information systems have made possible the automation of many of the previously manual operations in traditional accounting, eliminating wasted duplicated effort and increasing accuracy and efficiency. In most accounting software it is possible to track and trace transactions back to the individual operators, providing a reliable means of exercising checks and balances. With the advent of ever faster and more capable computers, the traditional lengthy month end process has been dramatically shortened and the previously stressful month-end has been replaced with a much more automated and controlled process, resulting in more efficient use of time and higher accuracy of results. As transactions are processed, ledger accounts, trial balances and financial statements are updated automatically. Increased efficiencies and accuracies translate into substantial savings after taking into account the high cost of labor. This also results in time and labor savings not available in past years using manual systems. This an important aspect of the current advantages offered by accounting software as the labor cost component of accounting time is high when compared to other high-skilled labor intensive tasks. Early error elimination due to cross checking using software programs make the results obtained more accurate and delivers these results in shorter time, contributing to cost reductions. These cost savings in part have to be offset against higher operator training costs, and on retention plans to prevent the loss of skilled operators. This would be seen as an operational issue in a typical large company with a high investment in personnel training.

Technology and Accounting Accounting reconciliations are made easier and more accurate with accounting information systems, as it is possible to process transactions and have the results of the transactions reflected in a number of different accounts such as bank, debtors, creditors and

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general ledger control accounts such as top 10 customers, age analysis and overdue accounts, from processing a single entry. Accounting information systems have changed the way in that accountants carry out their functions. Accountants are expected to embrace new technology to provide enhanced services to their clients, through use of information technology by providing peripheral services which compliment their services as accountants’. These services may include risk and business analysis based on financial performance metrics. These secondary activities may require the accountant to periodically update his or her qualifications in order to maintain a high level of value added service which would in turn keep them in high demand, for example the mastery of tax calculation software, such as turbo tax for example. In national and multinational businesses, it is possible for a company to use a common accounting system to collect aggregated data in real time across state and national borders and even in different currencies. This would make the job of date interpretation a lot faster and easier for reporting purposes. Therefore, the accountant has a higher degree of control of the data of the company, and no longer has to travel between sites to accomplish these tasks. Accountants now have instant access to information to assist them with decisionmaking and budgeting. Previously, the assembly and analysis of similar information may have taken days or even weeks to assemble, compile, analyze and react on. With the use of AIS, the accounting professional can even make use of preset alerts and reports to monitor preventable conditions, and save the company costs and limit risk.

Technology and Accounting References Bebbington, J., Gray, R., Laughlin, R. (2001), Financial Accounting Practice and Principles (3rd ed.) Retrieved August 2, 2009, from http://books.google.co.za/books?id=U-

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6PziODcx0C&pg=PA383&lpg=PA383&dq=how+accounting+information+systems+is+c hanging+aspects+of+the+accounting+profession&source=bl&ots=mTR9zTIEm_&sig=H7 ca8_EwPEHm2okMMZm29JRjbaI&hl=en&ei=un51SuvcKMirjAe63d2nBg&sa=X&oi=b ook_result&ct=result&resnum=4#v=onepage&q=accounting%20information%20systems &f=false O'Brien, J.A., (2004). Management Information Systems. Managing information Technology in the Business Enterprise (6th ed.) MCGraw Hill


				
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