How Technology Has Changed the Accounting Profession

Topics: Accountancy, Accountant, Computer Pages: 9 (3024 words) Published: March 6, 2013
1. Introduction
Thirty years ago, most financial accounting was done manually, leading to a great deal of paperwork. Currently, most accounting information is recorded via computers and wide area networks (Journal of Accountancy, 1994a). Technology has certainly changed the face of accounting over the years. While it is unclear whether technology’s impact on accounting has been positive or negative, it is clear that technology has drastically changed the accounting profession. Often a technological advance may be an asset to a business, but a liability to the firm’s accountant. For example, information can be provided in a timely and more accurate manner, but at the price of confidentiality. Some of the impacts of technology are neither positive or negative; they are simply changes. So in essence, the impacts of technology on accounting have been positive, negative, and neutral, but each impact results in a demand on the profession to conform to the changes.

The obvious advantage of technology is in the various tools that it has provided. Examples of these tools include computer-integrated manufacturing, communications technology, image processing, the Internet, and expert systems. These are a few examples of the many tools of technology whose purpose is to provide more detailed and accurate information in a timely manner. Computer-integrated manufacturing has had a significant positive impact on the financial world and especially on cost accountants. With automated manufacturing, computers collect and report information almost simultaneously. This results in ‘an operational information system that fully integrates manufacturing with marketing and accounting data’, increasing both the quantity and timeliness of the information (Hansen & Mowen, 1997, p. 8). This detailed information has been significant in cost accounting, allowing accountants to develop activity-based costing systems. These new costing systems allow accountants to allocate overhead more efficiently. These systems can also distinguish non-value added costs providing cost accountants the opportunity to convert them to value added costs (Hansen, p. 8). Technological tools work to promote efficiency in the transferring of data between corporations and their different divisions, offices, customers, and even their accounting firms. Communications technology utilizes a combination of technologies to transmit data in a variety of forms to each of these recipients. This particular form of technology is of considerable importance for large accounting firms, because its enhanced communications capabilities allow for easier expansion into the worldwide market. This global aspect of technology is necessary for accounting firms to maintain their international competitiveness (Journal of Accountancy, 1996). The Internet, or World Wide Web (WWW), has become the newest location for conducting business (Journal of Accountancy, 1995). Internet transactions are a prime example of how to obtain timely, accurate information. Electronic commerce leads the way in providing the information for Internet transactions by linking multiple firms through both computers and communications technology ( Journal of Accountancy, 1996). This speeds up the transfer of information between an entity and its accounting firm. For accountants, this means getting the most current information to work with. According to the Journal of Accountancy, this electronic commerce ‘will become a prime link between a business and its CPA’s for exchanging data’ (1995). For the smaller business, services provided by the Internet include on-line banking and automatic bill paying which eliminate many clerical duties of today’s accountant ( Byte, 1995). Technology is progressively working to eliminate paper work almost entirely. Paper work slows down transaction time and burdens entities with maintenance needs. Image processing was voted by the Journal of Accountancy as the top technology affecting accountants in...
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