BACKGROUND OF THE STUDY
Accounting, also known as accountancy, is the measurement, processing, and communication of financial data about economic entities such as businesses and corporations. The modern field was founded in 1494 by the Italian mathematician Luca Pacioli. Accounting, also known as the “language of business,” measures the outcomes of an organization’s economic activities and communicates this information to a wide range of users, including investors, creditors, management, and regulators. Accountants are those who practice accounting. Accounting and financial reporting are frequently used interchangeably (Dillon, T. W., & Kruck, S. E. 2004.
Accounting organizations such as standard-setters, accounting firms, and professional bodies make accounting easier. Accounting firms typically audit financial statements, which are prepared in accordance with generally accepted accounting principles (GAAP). The Financial Accounting Standards Board (FASB) in the United States and the Financial Reporting Council in the United Kingdom set GAAP (Torgerson, S. 2007). As of 2012, “all major economies” planned to converge on or adopt International Financial Reporting Standards (IFRS). Accounting’s functionalities, on the other hand, are numerous and mathematically related, making it tedious and time consuming. However, the advancement of technology brought about an advancement in this field, resulting in what is now known as “Computerized Accounting.”
Because of the improved communication skills it has provided, technology is an asset to all businesses. Accounting, like many other businesses, has benefited from technological advancements that have increased efficiency (Laudon, K. C., & Laudon, J. P. 2006). Computer-integrated manufacturing, image processing, the Internet, and expert systems are examples of these technological tools (Journal of Accountancy, 1996 cited in Laudon et al 2006). Because of the increased efficiency within businesses, accounting information can become dynamic, reflecting the current state (Journal of Accountancy, 1994b cited in Laudon et al 2006). This contributes to management accountants’ goal of providing the most accurate and timely information.
Unfortunately, a technological asset to a company may result in a liability for the company’s accountant. The more timely and accurate information provided by technological tools frequently comes at the expense of business accountability and confidentiality. Due to the purely electronic audit trail that accountants are frequently forced to deal with, there are many more opportunities for fraudulent activities. Many transactions cannot be traced back to their origins using these audit trails. Internet transactions, as well as other methods, raise concerns about confidentiality. In the year 2000, accountants’ reliance on computers proved to be a disadvantage (Schroeder, D., CPA, CITP, CISA. 2006). These are just a few of the negative effects of technology on today’s accountant.
Overall, technology has influenced the accounting profession. Hiring trends, educational needs, and the rise of the accounting consulting side are just a few of the effects that technology has had on the accounting profession. These cannot always be classified as advantages or disadvantages (Erikson 1995 cited in Dillon et al 2004). However, it is clear that these impacts, as well as the benefits and drawbacks, are causing a shift in the accounting profession. As a result, the accounting profession must adapt to these changes or risk being supplanted by a new generation of competitors. According to Torgerson (2007), the accounting profession “needs to upgrade its practices and skills to reflect where the world is going, rather than where it has been.”
Thirty years ago, most financial accounting was done manually, which resulted in a large amount of paperwork. Currently, computers and wide area networks are used to record the majority of accounting data (The new finance. Journal of Accountancy 1994b cited in Laudon et al 2006). Accounting’s face has undoubtedly changed as a result of technological advancements. While it is unclear whether technology has had a positive or negative impact on accounting, it is clear that technology has drastically changed the accounting profession. A technological advancement is frequently an asset to a business but a liability to the firm’s accountant. As a result, the study intends to look into the impact of technological changes on the accounting profession.
STATEMENT OF THE PROBLEM
The recent barrage of technology within the industry has undoubtedly had an impact on the accounting profession. Some ‘business thinkers’ believe that the accounting profession should be completely overhauled. It is true that technological advancements have rendered many current accounting practices obsolete. The ledger account is one example (Journal, 1994b). This account was previously very important as a historical record of transactions and was used to speed up the preparation of financial statements (Knapp, 1996, cited in Wailgum, T. 2008). With today’s instantaneous information, the ledger account is becoming less important. Computers have taken over as the primary record keeper for this type of data. According to Knapp (1996), “if the accounting profession does not reinvent itself, it will be easily replaced by a profession that has yet to emerge with an entirely different vision of how information, analysis, and attest services should be provided.”
OBJECTIVE OF THE STUDY
The general objective of this study is to investigate the impact of technological changes on the accounting profession. The specific objectives include;
1. Investigate the extent to which technology has affected the accounting profession
2. Identify the benefits of technology to the accounting profession.
3. Identify the challenges of technology in accounting.
The following questions have been developed to guide this research;
1. To what extent has technology affected the accounting profession?
2. What are the benefits of technology to the accounting profession?
3. What are the challenges of technology in accounting?
SIGNIFICANCE OF THE STUDY
The study proffers the new face of the accounting profession so as to nurture and build new entrants in the Accounting profession according to quality and new standards set by the profession in the face of global technological changes. More so, this study will add to existing literature in the field of accounting and hence will serve as a resourceful source of information for students, researchers and other academia.
SCOPE OF THE STUDY
The study examines the impact of technology changes on the Accounting Profession with a particular focus on the extent to which technology has affected the accounting profession, the benefits of technology to the accounting profession and the challenges of technology in accounting.
LIMITATION OF THE STUDY
As a result of this study, the researcher encountered the following challenges;
Inadequate finance: the research was face with problem of inadequate fund which hinder the researcher from covering as much location as possible.
Time: time factor pose another constraint since having to cope in this research which went simultaneously within the time schedule of other academic work making it impossible to undertake this study in large more representative skill.
DEFINITION OF TERMS
Financial accounting focuses on the reporting of an organization’s financial information to external users of the information, such as investors, regulators and suppliers. It calculates and records business transactions and prepares financial statements for the external users in accordance with generally accepted accounting principles (GAAP).
Management accounting focuses on the measurement, analysis and reporting of information that can help managers in making decisions to fulfil the goals of an organization.
This is a machinery and equipment developed from the application of scientific knowledge.