Introduction
The invention and development of computers have changed many aspects of human society. Most of these changes were too revolutionary, that it is often hard to imagine a life without computers. This increasing reliance of the society towards computing technology is referred to by scholars as ‘internet of things’, a term they use to describe the interconnectedness of people and computing technologies (Gubbi, Buyya, Marusic & Palaniswami, 2013, p.1646). One of the most impacted professions in the advancement of computers is the accounting profession. In fact, computing and accounting are so related that they are often used interchangeably. For accountants, computers are an indispensable tool in performing their task. Computers help accountants perform their work efficiently. The first programmable computers such as the one invented by Charles Baggage, for example, was made in order to assist people with more complex and taxing calculations. But along with the rapid development of computers and its related technologies, the business environment has also become more dynamic and competitive. With the use of new computing technologies, some businesses can accommodate many transactions while some aggressively expand their operation in a global scale. This scenario creates new challenges to the accounting profession. With the ever increasing demands of businesses, the reliance of accounting professionals towards computing technologies is becoming more apparent. For the same reason, accountants today are required to have computer and information technology skill sets in order to keep up with the current business trends. These new skill sets also set the modern accountant apart from the accountants of the past who rely on manual accounting methods. As the years progress, this reliance of accounting professionals towards computer technologies will continue to grow as accountants take advantage of computing technologies in the practice of their profession.
The Importance of Computing Technologies in Accounting
Accounting is defined as “the analysis and interpretation of book keeping records” (Basic Accounting Principles, n.d., p.60). The accounting profession, however, has branched into different types of specializations. Some accountants, for instance, specialize in finance, management, public accounting or tax accounting. An accountant’s task can be broadly categorized into two; the recording of financial transactions and the preparation of financial statements (Basic Accounting Principles, n.d., p.60). These two basic tasks of an accounting professional require not only individual skills and capabilities, but also the utilization of existing tools or computing technologies in the performance of their duties (Baldvinsdottir, Burns, Nørreklit & Scapens, 2010). In accounting, the recording and reporting of financial transactions can be extremely tedious, especially in huge companies where there are many clients and stakeholders. If done manually, the accounting processes in large business can be prone to errors. The use of computers, on the other hand, highly increases the efficiency of recording of transactions as well as the financial reporting of organizations, thereby significantly increasing the accountant’s productivity. Quick and accurate financial record keeping and reporting are also crucial, particularly in terms of management decision making. Under the perspective of management accounting, the ability to make crucial decisions, which pertains to costing, resource allocation, expense, budget, and inventory controls is easily conducted with the aid of computers and its related technologies. The impact of a computer and its related technologies to the accounting profession and its branches could not be undermined. The advent of the computer technology demands an incorporation of new skill sets in the accounting profession that is in line with the current accounting trends. According to a survey in the United Kingdom, one of the technical abilities required by employers in hiring an accountant is their knowledge of computer and information systems (Parker, 2002, p.5).
The Evolution of Accounting With Respect to Computing Technology
When the Venetian monk, Luca Pacioli, developed the double entry bookkeeping in the late 15th century, computers were not yet around (Alexander, 2002, p.9). In this primitive accounting era, it can be assumed that accountants may have utilized computing tools that were available during the time. Constrained by the availability of modern computing devices, early accountants rely heavily on manual calculation and book keeping. This means that accountants would have to record and report financial transactions using the traditional pen and paper. For the same reason, their task is considered as book keeping primarily because they would have to literally make journals, ledgers and financial statements and bind them into books. Since entries would have to be done manually, accounting records are prone to errors. The errors are difficult to find and often requires many hours of tedious work. Later on, mechanical computing devices began to emerge; the first of which was the Napier’s bones, which was invented by the Scottish mathematician, John Napier. The Napier’s bones are set of graduate rods and is based on the principles of logarithms. Many mathematicians and scientists followed suit, which led to the invention of the mechanical calculators in the 17th century, such as the calculating machines of Blaise Pascal and Gottfried Wilhelm von Leibniz. These calculating machines, however, are too complex relative to the existing technology for mass production. With its intricate clockwork, these calculating devices must be extremely expensive for an ordinary accountant. Computing devices did not become an integral part of the accounting profession until the 20th century when mechanical calculators were mass produced.
Modern Accounting Technologies and Its Impact on Work
The use of calculating machines greatly improved the efficiency of the accountant’s tasks. Realizing the enormous potential of computing machines, a rapid development in computing technology occurred. Today, modern accounting utilizes computing hardwares and softwares in performing bookkeeping and reporting. These computing hardwares include computer devices and its peripherals, such as printers, scanners and faxes. Aside from personal computers, modern accountants also utilize mobile devices such as laptops, phones and tablets. Equally important in the development of computers is the accounting softwares or programs that were designed specifically for accounting applications. One of the first of such programs is the VisiCalc, a spreadsheet program that was initially designed for the Apple II. In 1983, IBM introduced the Lotus 1-2-3, an integrated spreadsheet program that dominated the accounting profession for several years until it was outperformed by Microsoft’s Excel program. Today, a lot of accounting programs have already been created and developed. The development of these computing technologies revolutionized the way people work. Aside from making the accountant’s work very much efficient, computer and information technology has also significantly changed how accountants work. Today, accountants do not necessarily have to go to their work stations or offices since the advancement of technology, particularly in telecommunications, have allowed them to work anytime, anywhere; even at the comforts of their own homes. Mobile work-from-home has become a growing trend among the modern workforce. This work approach has become more possible for accountants because of current communication technologies that allows collaboration between individuals and teams regardless of the distance. With the use of modern communication devices, such as video conferencing, texting, emails, social media, etc., management and their workers can remotely collaborate with each other and perform work related tasks without being physically present in their respective workplaces.
Cloud Computing
Cloud computing is defined as a model for enabling an ever-present, “convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction” (Mell & Grance, 2011). Many accounting experts, for instance, prefer an accounting program that is compatible with different operating systems and can be accessed online. Most predict that in the future, industries will “transition to a Cloud-enabled world where work can be accomplished anywhere, anytime”. For the same reason, modern software developers focus more on making cloud-based accounting applications in order to keep up with the increasing computing demands. Intuit’s Quickbooks is one of the modern accounting softwares with such features. Cloud computing offers many advantages to the accounting profession as it can provide solution to many pressing problems experienced by accountants as well as eliminate many accounting obstacles. Prior to cloud computing, accountants need to be on their work computers where their accounting software is installed in order to access their books. Work, therefore, is limited to the workplace alone. With cloud computing, accountants are able to access their work anytime, anywhere, for as long as there is internet connectivity. Cloud computing also makes it possible for accounting professionals to bring their own device in their work place, which, according to experts, provides more flexibility towards accounting employees. Evidently, cloud computing relies on the internet infrastructure and platform in order to work. With the rapid development of the internet technology, particularly when it comes to speed and networking capabilities, cloud computing has become a rising trend among accounting firms. Security, on the other hand, is one of the major concerns of using cloud computing technologies. Since cloud computing applications can be accessed online, the organization that uses this platform also exposes themselves to many online security threats such as malwares and computer viruses.
Advantages and Disadvantages of Computerized Accounting
The preference of accountants towards computerized accounting as opposed to manual accounting is quite obvious. Apparently, computerized accounting offers many benefits, especially when it comes to having faster and more accurate bookkeeping and financial reporting. One of the many advantages of using an accounting software or an electronic spreadsheet, for example, is in the software’s ability to identify errors and correct them without making major revisions resulting in dirty paper work. In computerized accounting, an accountant can directly input data or delete them and the system will automatically adjust to the changes made. Computerized accounting is also more comprehensive as compared to manual accounting. As observed by one accounting expert, “The ability to have information linked, together with a permanently maintained database, improved our ability to test and facilitated analysis based on more consistent information” (Attolini & Thompson, 2014). With these increased abilities and skill set, accountants would be able to serve their organizations better by providing a timely and accurate economic reporting resulting to a more effective decision making. With the use of computers and its related technologies, accountants can serve their clients better. There are, however, drawbacks in relying heavily on computing technologies. One of the most common threat in using computing technology in accounting is the possibility of technical glitches that can wipe out accounting data. Computerized accounting systems are also vulnerable to online security threats. Malwares, spywares and other computer security threats are among the most common concerns that may compromise the integrity of accounting information. Most accounting professionals, however, keep a back-up for their files by replicating it electronically or by keeping a manual record of their business transactions and financial records so that in cases wherein electronic glitches or security issues occur, they can still retrieve the lost data or information.
Conclusion
Computers and its related technologies have become effective accounting tools that modern accountants could not do without. With the increasing challenges and demands towards the accounting profession, it is unimaginable how accountants would be able to perform their work and provide timely and reliable accounting information to their clients without the aid of computing technologies. There are, however, security threats associated with computerized accounting. However, these threats can be managed through good online security practices as well as by good backup systems. Emerging computing technologies such as the internet and cloud computing are game changers and are expected to revolutionize the future of accounting. It is, therefore, important for the modern accountant to familiarize with these technologies in order to gain skill sets, which would make them competitive in the accounting field.
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