Ноw Аutоmаtiоn Will Imрасt Ассоunting

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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.

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Impacts of Automation on Accounting


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.


Accounting automation; job creation; value addition


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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