Trends in Accounting and Emerging Technology
Dr. Miklos Vasarhelyi, a professor at Rutgers University and head of the Rutgers CARlab, an accounting research center which furthers research and creative teaching methods in accounting and information systems, and Abigail Zhang, a PhD Candidate in Accounting Information Systems at Rutgers Business School, shared their perspectives on various technology related to accounting including robotics process automation (RPA), artificial intelligence (AI), blockchain and smart contracts at EisnerAmper’s recent Process Risk and Technology Solutions Summit “Adapting to Change in a World of Evolving Technology.”
The duo said RPA can run application software in the same way that a person works with that software. It can replace manual, repetitive, rules-based tasks and allow the human to spend more time analyzing the data. Further, it can increase productivity and morale in the workplace. Dr. Vasarhelyi and Ms. Zhang said 47% of accounts payable professionals in finance and accounting companies consider manual data entry and inefficient processes their biggest challenge. Overall, RPA improves processes throughout the whole company.
Common functions in finance and accounting that can benefit from RPA include accounts payable, accounts receivable, Accounting and reporting, budgeting and forecasting, expense management, internal audit and compliance, tax, treasury management and payroll. Bots can take over tasks in these departments to make jobs more efficient for the persons that are overseeing the bots. For example, an RPA bot can automatically reconcile current period data and compare it to another file multiple times a day. The bot can recognize any exceptions during reconciling, which the human can then review. The duo concluded that RPA is revolutionary and is changing the accounting profession.
AI is the simulation of human intelligence processes by machines, especially computer systems. These processes include learning (the acquisition of information and rules for using the information), reasoning (using rules to reach approximate or definite conclusions) and self-correction (searchenterpriseai.techtarget.com). According to Ms. Zhang, machine learning algorithms can be used to predict future events using example data and past experience, and extract patterns from data.
Blockchain and Smart Contracts
Blockchain and smart contracts are another vital part of the emerging accounting technology. Blockchain is a shared public ledger that contains an ordered and chronological record of transactions and is immutable. According to Dr. Vasarhelyi, smart contracts are computer programs that operate on blockchain technology to automatically control business processes against pre-determined rules.
The “smart layer” in the technology stands out because there is a fear of uncertainty when it comes to auditing and blockchain since it is continuously changing. It points out that there could be continuous auditing, continuous control monitoring, data analytics and process mining models. Audit firms can rely on this information because it is a continuous audit of the data used. The firm using blockchain would need controls in place to use blockchain successfully.
In conclusion, the duo summarized that technology is the way of the future in accounting through RPA, AI, blockchain and smart contracts.
Process Risk and Technology Solutions Summit Blog Series