Some of the major functions of finance include accounting, auditing, financial planning, risk, treasury management, mergers, and acquisitions amongst a few other functions. We are going to find out in detail what the future looks like for accounting and auditing.
Future of accounting
The COVID-19 crisis has had an unprecedented financial impact on businesses be it large, medium or small. While some sectors haven’t really been impacted, some of them are desperately seeking financial assistance from governments and are close to bankruptcy. CEOs are increasingly turning to their finance counterparts to help them stabilise and strategise for the future. However, that will not be possible if finance as a whole continues to be a support function, it needs to transform into a strategic function and it has to happen quickly. Let’s understand how accounting as a key function of finance is said to change, allowing finance professionals to focus on strategy.
1. Accounting automated
Accounting is filled with time-consuming, repetitive, monotonous tasks. Robotic Process Automation (RPA) can automate many of these tasks thereby allowing humans to focus on much more complex tasks that involve critical thinking and decision making. RPA will also reduce the margin for human error significantly although verification by a human still may be needed.
2. Artificial intelligence
Artificial intelligence (AI) just like RPA makes life easier for accountants. AI can provide real time status and updates on financial matters thanks to its far reaching abilities to process documents using natural language processing and computer vision. This not only makes accounting inexpensive but such deep insights help finance leaders forecast trends and adjust course accordingly. Furthermore, AI backed systems can help with the auditing and compliance process through automatic detection of discrepancies in documentation or proof of transaction. Lastly, machine learning algorithms can go through massive amounts of data quickly and flag any unusual or suspicious activity that otherwise would be missed by humans. Thereby preventing fraud and money laundering.
3. Big Data
For finance leaders data is everything. It’s the basis on which most of the biggest business decisions are made. Gone are the days when data would be spread across spreadsheets and statements, through natural language processing even unstructured data can be turned into actionable insights. This helps business leaders identify new opportunities for business, additional revenue streams and scope for business diversification.
Blockchain as a technology is very complex. We are still yet to figure out it’s full scope and how exactly it can work for us. Amongst the accounting fraternity, blockchain is certainly gaining momentum. It can no longer be ignored or dismissed as just another fad. Blockchain is a digital ledger of transactions, provides full transparency and is almost impossible to hack. It functions by maintaining a continuous record of blocks along with timestamps. Once the information is stored, blockchain does not allow modification or any sort of alteration. While a few professionals feel that this might eradicate accounting and audit jobs, it is essential to note that this will change the role of the accountant into a strategic role rather than making it redundant.
5. Remote working and virtual communication
Whether accountants enjoy it or not, remote working and virtual communication tools are here to stay. It will be the new normal and accountants should rethink the ways they would like to work. In such a scenario, where there is an absence of physical interaction, an effective communication strategy must be inplace that clearly defines deadlines, expectations, whom to communicate with for what etc. Employers must also support their staff with the right tools and technology to collaborate and communicate remotely. This will help them organise workflows and help senior management track their progress and communicate with them as and when needed.
6. Outsourcing - the new norm?
Outsourcing isn’t new for accounting, in fact even prior to IT outsourcing, it was accounting that was outsourced. This allowed employees and leaders to devote more of their time towards core strategic tasks. But outsourcing of accounting normally took place in smaller or medium scale organisations with large scale companies and MNCs preferring to have their in-house accounting professionals along with other finance executives. However, the impact of the COVID-19 crisis on financials of large enterprises coupled with the advent of frontier technologies and remote working has made outsourcing of accounting lucrative. Outsourcing helps reduce employee turnover, generate additional insight from existing reports and statements and also increases security and confidentiality of finance-related information.
Accounting as a finance function is moving rapidly towards the adoption of technology. While the role of technology is pivotal in accounting and finance, we need to understand the challenges that technology comes with. If overlooked and not set right, it might bring us back to the basics.