Changes and Development of the Accounting Industry in the Digital Economy

• Introduction

Digital is an essential element of accounting. The advent of digital economy will inevitably have a certain impact on traditional accounting. AI, big data, cloud computing, and other technologies have developed rapidly. Accounting has seen an increasing dependency on technology in recent years, and specifically software, within their clients and the accounting firm (AccountingWEB, 2019). The digital economy brings about enterprises’ financial transformation and puts forward new requirements for accounting personnel’s professional ability.

• My Experience

Last year, I had an internship in an accounting firm. As far as the basic double-entry method of accounting is concerned, when I studied in school, we need to determine for ourselves which accounting subjects and entries should be put in this transaction. This step is very time-consuming and if classified wrong will have a great impact on subsequent preparation of financial reports. However, during my internship, I just inputting natural language into the system will form corresponding accounting subjects and entries, which will be used for subsequent management operations. Besides the financial sharing centre is also widely used, which can centrally handle accounting operations in different locations of the enterprise. And the input data will be saved automatically, you can call it up to view at any time, employees’ work is no longer geographically restricted. In doing so, not only relieve humans from this tedious work but also improve work efficiency and reduce the incidence of errors.

• Current Situation

It must be admitted that the digital economy has brought a lot of help to the accounting industry, improved work efficiency and accuracy. Nowadays, complex and cumbersome accounting work is gradually being replaced by financial robots. The focus of accounting will shift to management work that participates in forecasting and decision-making, provides strategic support, and creates value (Lawson, 2019). However, many grassroots accountants are worried about whether they will lose their jobs because of the development of technology. Actually if do not upgrade professional skills, it will eventually be eliminated by society. After all traditional professions have gradually disappeared, and new professions have been born.

As far as the accounting industry is concerned, the status quo is that some large companies have already begun to enjoy the convenience and high efficiency brought by the digital economy. For example, “Big Four” accounting firms already have their own financial robots (Iacone, 2019), while some small and medium-sized enterprises still maintain traditional accounting methods because of funding problems or fear that employees cannot adapt to the changes.

• Future Development

McKinsey & Co. Global Institute’s research on automation technology and its potential impact shows that 42% of the company’s financial activities (such as cash outflows, receivable management, taxation, risk management, etc.) can be fully automated through the use of mature technologies and 19% can be nearly fully automated (Plaschke, Seth and Whiteman, 2018).

Nowadays, digitalisation for professions has become a necessity rather than a choice. Therefore, companies that do not implement digitalisation in the future will eventually be eliminated. More software will be developed in the future to solve tedious and repetitive accounting tasks and more and more enterprises are using digital tools to enhance products or service quality and facilitate compliance that will help manage engagements more efficiently (Journal.isca.org.sg, 2019).

Future accounting work requires that accounting personnel be proficient in accounting, establish a business-finance integration thinking, strengthen the accumulation of corporate management capabilities, and be able to use financial data to support organizational budget forecasting, risk management, financial planning, and performance control. That is, accountants need to have the ability to management accounting.

• Conclusion

The accounting industry has gradually achieved digital management during the iterative upgrade. The basic accounting functions that are simple and highly repeatable in traditional accounting operations have gradually been replaced by intelligent machines. The positioning of the accountant has shifted from review and check to business, management, and strategy transformation of “value creators”, accounting talents face multiple opportunities and challenges for transformation training and capacity upgrading. With the development of the digital economy, the number of the low and middle-level financial accountant can be reduced, but high-end financial accountant and management accountant are still hard to be replaced for a long time, especially its strategic thinking and communication skills can play an irreplaceable role effect.

• Reference

AccountingWEB. (2019). How the digital age is changing accountancy. [online] Available at: https://www.accountingweb.co.uk/community/industry-insights/how-the-digital-age-is-changing-accountancy.

Iacone, A. (2019). Bots, Data, AI—Part of Retraining the Big Four’s Workforce (1). [online] News.bloombergtax.com. Available at: https://news.bloombergtax.com/financial-accounting/bots-data-ai-part-of-retraining-the-big-fours-workforce-1.

Journal.isca.org.sg. (2019). SERVICES 4.0 (PART 3): ACCOUNTANCY INDUSTRY DIGITAL PLAN BOOSTS DIGITALISATION EFFORTS OF SMPS. [online] Available at: https://journal.isca.org.sg/2019/08/29/services-4-0-part-3-accountancy-industry-digital-plan-boosts-digitalisation-efforts-of-smps/pugpig_index.html

Lawson, R. (2019). A look at the next 100 years of management accounting. [online] Accounting Today. Available at: https://www.accountingtoday.com/opinion/a-look-at-the-next-100-years-of-management-accounting.

Plaschke, F., Seth, I. and Whiteman, R. (2018). Bots, algorithms, and the future of the finance function. [online] McKinsey & Company. Available at: https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/bots-algorithms-and-the-future-of-the-finance-function.