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Task
The topic is:
How automation will impact the accounting?
- It should have
a key argument, and have good strength/quality, make sure that you think about
how you will structure your argument (each main idea should support your
overarching argument) and support each section with appropriate references.
- It’s important
to be able to discuss social, political or ethical issues as part of this essay.
Making connections to e.g. fraud detection could be appropriate… is that what you
had in mind? You don’t need to cover every aspect of a topic – it’s better
to focus on a smaller number of points in more depth. You can lead with a
statement that identifies lots of issues, but then narrow your focus to just a
few specific ideas.
Solution
Impacts of Automation on Accounting
Abstract
This is
an essay evaluating the potential and current impacts of an automation process
on accounting. The essay develops a specific focus on the impact of an
automation process on the accountants and the entire profession. It
demonstrates that although there is indeed the elimination of duties such as in
data entry, the automation process does not affect the high-value chain
accounting activities in the market. This has created a division of both the positive
and the negative perceptions. Therefore, it concludes that organizations should
use a staff training approach to handle and eliminate the negative outlook
approach.
Keywords
Accounting
automation; job creation; value addition
Introduction
The global world is facing an increasing automation process.
In this case, in the last two decades, the development and evolution of
machines have increased. Unlike previously where the machines were used as
supportive components in business operations, they are currently used as an
integral part of business operations. Therefore, virtually all organizational
operations are pegged on an automation process. There is projected the increase
in the use of machines and the automation process in business operations. Sandberg,
Jonny and Lyytinen (2014) argued that through processes automations,
organizations have increased their operations effectiveness, reduced their
overall production and operational costs, as well as increased their profit
margins respectively. However, the automation process has not been without an impact
on the employment market.
Virtually, it has replaced some of the jobs required. This
has led to the general far that the projected advances in processes automation
will have a negative impact on some of the major profession today. This essay
develops a specific and unique focus on the potential impacts of an automation
process on the accounting profession. In this case, the essay evaluates three
main aspects of the issue (Korol, Kagan & Barabanova, 2015). They include
the projected automation areas in the accounting process in the foreseeable
future. This will offer a background basis on which the expected magnitude and
potentially affected areas will be investigated. Secondly, it evaluates the
extent to which the automation process will impact on the accounting profession
jobs both positively through opportunities reduction and positively
respectively. Finally, the essay offers strategic recommendations on how
professionals could best be trained and developed to cope with the projected
automation practices into the future.
Automation of Basic processes
One of
the core areas to explore in order to understand the impact of automation on
the accounting profession is to explore the key and specific areas that the
process of automation would impact and influence on. This can be explored
through a two stages approach, namely the impact presently and the forecasted
impact areas. On the one hand, in terms of the already presently impacted
areas, Brands and Smith (2016) applies.
The review noted that the role of accountants in data entry and basic
bookkeeping has been significantly reduced. In this context, traditionally, the
role of data entry was manual. This implied that any single business
transaction as an independent entry at the departmental levels. This implied
that transactions and data were entered at two main levels, namely the
departmental and the organizational levels. The first stage was the entry of
the raw data once a single transaction or accounting function was executed such
as a sales receipt entry. This was followed by frequent intervals such as
weekly or monthly collation of such data. The collated data was then entered
into an organizational bookkeeping process, where now the assembled data was
used in accounting functions and decision making. This traditional role of
accountants has since been reduced and eliminated through the automation
process. Currently, systems are developed with applications and software tools
that allow for the collection of such bookkeeping information. This has
lessened the data entry process for any organisation (Thomsett, 2002).
Currently,
accounting tools and software applications allow for the automatic recording of
accounting transactions into the organizational database. Additionally, based
on the setting applied, the systems effectively collate and offer analysis of
the data. For instance, it is possible for the existing accounting software to
develop financial ratios on a regular basis such as quarterly or yearly based
on the applied settings automatically. Thus, this has reduced the need for
accountants to manually and individually enter and calculate such basic
accounting data. This is with respect to organisations that have an internal
accounting system and HR experts. On the other hand, the developments have
equally impacted on entities that contracted an external firm and consultants’
to aid in the bookkeeping and development process (Porter & Norton, 2009).
As such, with the development of an improved ICT system and automation of the
accounting process, organizations are able to internally manage the basic
functions.
Therefore,
to an extent, this has reduced the need for hiring accounting firms for basic
data entry and bookkeeping respectively. To this effect, this has led to rapid
changes in the costing model for seeking such services in the market. As such,
Gelinas and Dull (2010) noted that in the traditional armlet context, the
accounting services such s data entries were charged on an hourly basis. Thus,
the hours of services offered over a specific period of time were charged on
the organisations. However, this has changed. Currently, consulting
organisations offering accounting service have already started shifting their
costing models. In this case, rather than on an hourly charge basis that was
applied for the basic accounting functions, organisations are now focusing on
the use of the fixed monthly or annual charges. This is because the nature of
the offered services has evolved to services that cannot be quantified and
measured on an hourly basis for charges.
The
second level of impact of automation process on accounting is based on the
foreseeable future. One of the pertinent and most expected developments in the
automation process is the use of artificial intelligence. This is the process
through which computer-generated intelligence is used to help in an analysis
process. One of avenues and processes through which artificial intelligence is
through sorting out tasks priorities (Jackson, Sawyers & Jenkins, 2008). In
this case, this is mainly applicable to the accounting consulting firms. In
essence, the accounting firms handle and operate with a number of clients.
Naturally, it emerges that the client needs are different and emerge in
differing urgencies and timelines. In the business decision making process,
individuals are involved in the process of determining the nature of tasks and
client needs is based on a four scale matrix of important and urgent, Important
but not urgent, Urgent but not important, and not important and not urgent
tasks respectively. In this case, the process of analyzing all the available
tasks in accounting firms and prioritizing them on a daily basis for execution
often lead to delays in the execution of urgent and important tasks. This is an
accounting challenge that Osadchy
and Akhmetshin (2015) argue is bound to change. In this regard,
the authors stated that through the use of artificial intelligence will help in
analyzing the available pending accounting duties and prioritizing them for
execution. This will play a key role in creating efficiencies in the accounting
profession.
A major
impact issue question that emerges in every profession when the automation
process kicks in is with respect to the jobs. This classical challenge can be cited
back to the scientific evolution period. At this period, it was feared that the
automation of the manufacturing processes would have lead to the loss of jobs
in the factories. However, as Krahel
and Vasarhelyi (2014) demonstrated, although there was the loss
of jobs for some of the duties, the overall impact of the revolution was the
creation of new jobs in the factories. This historical discourse could be
applied in the case of the modern day automation process impact on the
accounting profession. There have been two clusters of perceptions, the negativists
and positivists respectively. On the one hand, the negative outlook perceptions
argue that the introduction of accounting has reduced job opportunities.
Practical examples are cited in the case of reduced employment opportunities in
accounting data entry process. As such, the negativists' perception argued that
increased automation of the process will reduce the role and rationale of
having accounting professionals in the market. On the other hand, the positive
outlook perception views the overall situation differently. In this case, Vasarhelyi, Kogan and Tuttle (2015) review
demonstrated that indeed in the long run period the automation process will
raise the value derived from the accounting process. In this case, the authors
noted that through an elimination of the basic role duties, accountants acquire
more time to concentrate on other value-adding services to the organisations.
For instance, although the use of an automated accounting software application
would generate organizational financial ratios, it has no capability in
developing strategic decisions (Wynn,
Low, Hofstede & Nauta, 2014). Therefore, this means that the
accounting profession will be involved in the strategic decision making levels
and platforms in an organisation.
Consequently, the impact of automation will be the reduction of the role
of accounting in basic functions and the increment of the accounting
professionals in strategic decision making.
How to Overcome the Negative outlook Perception
Based
on the critical analysis above, it is clear that the automation of the
accounting practices despite reducing the role and need for the basic functions
has a positive value and impact on the profession. Unfortunately, the negative
perception has reduced the willingness of the accounting professionals to
embrace the automation process. Therefore, a core aspect of the essay included
exploring alternative methods through which this could be addressed and
mitigated. One of the avenues through which to address this challenge is a
training process. This can be explained through an application of the change
resistance theories. For instance, Osadchy
and Akhmetshin (2015) noted that one of the core reasons as to
why individuals are resistant to change is that they are reluctant due to the
fear of the unknown in the market. The authors noted that through an
understanding of the unknown future leads to resistant to change. This is the
main scenario with the case of the negative outlook approach. On their part,
they view the process as uncertain and as such are hesitant to accept its
potential positive implications. One of the avenues to erase this uncertainty
and job insecurity among accounting personnel in organisations is through the
establishment of a training process. In this case, most of the accounting
professionals have the required basic understanding and skills in managing such
related technical issues in accounting. However, they lack the requisite ICT
skills. This means that with the increased automation process, a majority feel
that they will be left out of the job market as there will skills and market
needs gap. This is a challenge that can be easily remedied through training (Bradford & Gerard, 2015).
Training
can be actualized through two main methods. The first approach is through
changing the professional training system. In this regard, while as emphasizing
on the need for technical accounting skills, the curriculums should be revised
to incorporate automation projected market needs. This would ensure that the
new professional graduates are equipped and conversant with the automation
potential changes and have the requisite ICT skills to adapt to such automation
expected changes (Frey &
Osborne, 2017).
Secondly, the training process should be included in staff training and
development programs. In this regard, through a process of employee
development, it would be possible to align the current professionals' skills
with the market needs. This should be applied through a continuous improvement
strategy. A countionous improvement strategy is an approach through which
organizational learning is actualized and perceived as a long-term project to
be implemented on a frequent basis (Guthrie
& Parker, 2016). This application of continuous improvement based
learning process in training employees would eliminate the potential for
employee and accounting professionals resistance to the process automation due
to the risk and the fear of the unknown in the market.
A
second approach through which the negative outlook approach would be addressed
is through creating an employee value addition process. Evidently, it is clear
that the main functions at risk are the basic accounting function. However, it
is clear that the activities and functions high end in the accounting process
value chain is secure. The ideal process would be shifting the professionals
training process from the basic skills to the business value addition
professional skills in accounting.
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