Technological Impact on Accounting Firms

Chapter 1: Introduction

Background of the study

The accounting industry is a very competitive market. There are many companies that operate in this market space. In recent some years, various technological changes and developments have been observed in the industry. Stoel, Havelka and Merhout (2012) stated that the operations and processes of accounting companies, to a great extent, are affected by these technological innovations. According to Horbach, Rammer and Rennings (2012), today technology is one of the main aspects of operations of these organisations. Due to this reason Gonzalez, Sharma and Galletta (2012) believed that such advancements have a significant impact on operations of the accounting companies. Cheng and Lai (2012) stated that by adapting to such developments and changes, the accounting firms could improve their performance and satisfy their customers. By adapting to the latest technological changes and developments, the company can improve its performance and make its operations sustainable. This way chances of attaining success for the firm can be increased by a great margin.

Westermann, Bedard and Earley (2015) determined that technological innovations, accounting firms are now using high-end accounting systems and software. These have helped the companies to simplify their business processes and also focus on identifying ways through which their performance can be enhanced. Such companies are now using a mix of highly sophisticated accounting software that allows for quicker input and computation of the data. On this basis, Lim (2013) points out that increasing use of technology has essentially changed the whole accounting industry. Not only a major part of operations of these organisations is being carried out through cloud-based systems, but it has also made client interactions smoother and efficient. This study aims at determining whether technology has affected the accounting firms negatively or positively. This would further evaluate the extent to which this has affected the industry.

Aim and Objectives of the study

The main aim of this study is “To Analyse the Impact of Technological Innovations on Accounting Firms”. To achieve this aim, the following objectives will have to be fulfilled first.

To identify technological innovations in the context of accounting firms.

To evaluate the role of technological innovations in accounting companies.

To explore current trends for accounting firms.

To analyse the impact of technological innovations on accounting companies.

Research Questions

By answering the following research questions, aim and objectives of the study can be achieved.

What are the various types of latest technological innovations for accounting companies?

What is the role of technological innovations for accounting firms?

What are the latest trends for accounting companies?

How technological innovations influence accounting companies?

The rationale of the study

Through this study, the researcher aims to thoroughly analysing the accounting industry and the various tools and technologies used in it. The main purpose behind conducting this research it that it would analyse whether the technological changes have affected the accounting firms positively or negatively. It will also consist of an evaluation of the extent of such impact on the companies. The researcher will also be able to identify and analyse trends and the factors that affect the accounting industry.

Chapter 2: Literature Review

Introduction

In this section, the researcher presents a detailed and critical assessment of different aspects of the research topic. Through this chapter, the researcher can acquire more details about the subject matter and therefore develop a sound theoretical base and conceptual clarity as well. For any research study, the chapter of the literature review is very important. It helps in understanding the research topic in a better, detailed and more effective manner. In the following paragraphs, a critical analysis of different topics and aspects related to the subject matter has been evaluated. The knowledge base of the researcher can be improved by a great margin with the help of this chapter.

Technological innovations for accounting firms

According to Razi and Madani (2013), the role of technology is crucial in the functioning of accounting firms. Through the use of the latest technologies, accounting companies can improve their operations and thereby provide better services to the customers. In view of Pierce, Snow and McAfee (2015) the technological changes and developments have made operations of the accounting firms more efficient and effective. Through these technological changes, the management of the accounting firms aims at managing the firms in an efficient and effective manner. With the use of latest tools and technologies, the accounting firms provide better services to their customers and focus on their satisfaction.

One of the main technological innovations in the field of accounting is cloud-based accounting. According to Tsai (2013), it has revolutionised the way accounting companies work. They are now slowly shifting to using cloud-based systems and applications in almost every aspect of their operations. This gives the employees and the management freedom to access information from any anywhere at any point in time. Thus they are able to perform their tasks and duties effectively. Cebula (2012) states cloud-based applications nowadays are being heavily used in managing employees and finances. The management can keep a record of personal data and access it easily and comfortably. This allows the management to manage different aspects of their employees such as payroll, employee engagement, etc. Further, through cloud-based management systems, the company is able to maintain records of its employees and use them properly.

Another aspect of technological innovations in the accounting industry is the complete integration. According to Gerber (2016), this has completely changed the way accounting companies operate. While in the past accuracy and reliability of information was a major concern for the management of accounting companies, but by integrating all aspects of operations with technology, it is now a lot simpler for the management to access information that they know would be accurate and reliable, as argued by Omoteso (2012). Modern day systems such as ERP, CRM, CMS and other such software essentially integrate all aspects of operations of the companies and make the relevant information easily accessible to the management.

Current trends in accounting

The accounting industry is affected by a large variety of factors and forces. It has become imperative for the management of such organisations that they oversee and manage the business functions effectively so that the company can sustain in the market. According to Curtis and Payne (2014), the level and scale of competition are very high in the industry. Due to this reason, it is all the more important for the management to identify and explore different factors that could influence operations of the accounting companies. In this regard, Pavlatos (2012) stated that there are several trends that influence the operations of accounting firms.

One of the biggest trends in the accounting industry is the rise of cryptocurrencies as a part of financial processes and systems. In recent some years, cryptocurrencies have emerged as the most preferred way of making and receiving payments. Nuryanto and Afiah (2013) stated this is affecting the accounting industry in a significant manner. This is a major trend in the accounting industry because it is slowly changing the way payments are made and recorded. Rikhardsson and Dull (2016) expect that the cryptocurrencies will bring greater transparency to the financial processes and systems. According to Miles (2017), an increasing number of people are inquiring about cryptocurrency. This is changing financial processes and systems, for instance, while many countries have completely banned cryptocurrencies, many nations are thinking about changing their financial reporting and taxation systems.

Another significant trend prevalent in the accounting industry is the increasing cases of data thefts and measures to improve data security. According to Bachlechner, Thalmann and Manhart (2014) accounting companies have access to a large amount of sensitive information about companies and individuals. Since they use digital methods and systems to carry out their operations, they are greater risk of security threats. Due to this reason, accounting companies are opting to use stricter data security measures and systems. This way they can use the data and also ensure that it is not leaked or accessed by any unauthorised individual. Weijermars (2015) expects that in the future volumes of data consumed by the accounting companies will increase manifolds. Therefore, they will need to employ different data security features and systems. This way they can be sure that the data is safe and only they can access it. Customer service will improve through such a system.

Role of technology for accounting firms

According to Majdalawieh, Sahraoui and Barkhi (2012), technology plays a crucial role in the functioning of the accounting companies. It provides accounting companies with the ability to manage and control their operations in an efficient and effective manner, along with providing the customers with better and improved services. One of the main reasons for technology playing a crucial role in accounting firms is virtual storage of documents. Nicolaou, Nicolaou and Nicolaou (2012) stated that accounting companies keep a large amount of data and information about companies. Recording all such information on paper and storing and managing them is very difficult and time-consuming task. Thus through technologies such as local servers, computer systems, the accounting companies can store a large amount of data in a very confined physical space as well. On this basis, Carter, Phillips and Millington (2012) rightly stated that technology has made it simpler for accounting companies to store and manage different types of information and also ensure that it is easily accessible. Omoteso (2012) believed that digitising the documents have gradually replaced the physical storage. The speed of access is another added benefit.

Cloud-based applications and digital systems have essentially eliminated bureaucracy. Now the employees in an accounting company do not have to take permission from different individuals working at different positions in the firm. Rather they can gain direct access to the required data just by using the computer (Lim, 2013). These systems are simple, intuitive and easy to use. They provide the accounting professionals with a direct channel to the clients and also acts as conduits for accessing information and any such relevant documents and information. According to Tsai (2013) technology has made it a lot simpler for the management as well as the employees to perform their tasks and duties easily and effectively.

Virtual calendars and task management system is another aspect that underpins the role of technology in accounting companies. Essentially, technology has made it simpler for the management to keep track of not only different types of information, but they can also maintain their schedules and calendars. Stoel, Havelka and Merhout (2012) stated online diary and calendars are a boon for such professionals, as they enable the employees to complete their tasks and duties on time, thus meeting expectations of the clients as well as fulfilling the organisational standards. Gonzalez, Sharma and Galletta (2012) stated that one of the most important aspects of the accounting profession is that these individuals have to keep their knowledge updated with the latest trends. Technology makes it a lot simpler for these professionals to keep them updated and also be able to maintain their skills at the highest levels.

Latest technological developments in accounting

Miles (2017) states one of the biggest technological developments in the accounting sector is the increasing use of artificial intelligence and robotics. Complex and repetitive tasks are being carried out by robots and artificial intelligence. According to Nuryanto and Afiah (2013), this is a trend that has the most significant impact on operations of accounting companies. By using robots, these companies can branch out the repetitive tasks to them, while enabling their human employees to perform tasks that require a lot more attention. By using robots, the management can be sure about the accuracy and reliability of the results. This further helps in reducing operating costs and also increases the overall efficiency of business operations for the companies. However, Pierce, Snow and McAfee (2015) argued that no matter how much technology is developed and improved, it can never replace the human mind and its abilities.

According to Cebula (2012), mobile accounting is also another key technological trend in the field of accounting. Gonzalez, Sharma and Galletta (2012) stated that accountants and employees working in accounting firms are becoming increasingly dependent on mobile devices to gain access to the relevant data. Further, as argued by Westermann, Bedard and Earley (2015) the mobile devices help in improving the overall connectivity of employees with the clients and amongst themselves. In this regard Pierce, Snow and McAfee (2015) stated that through the increasing use of mobiles on an everyday basis in accounting companies, the employees are able to carry out their tasks and duties with ease and comfort whilst maintaining hi0gh quality standards, as per requirements of the company.

Technology has become the forefront for security-related aspects of operations of the accounting companies. In view of Curtis and Payne (2014) these companies are now giving a lot of attention on using the latest tools and technologies to protect data. Employee training, regularly updating security protocols, better password protection, etc. are some of the latest technological tools used by companies to improve their security.

Chapter 3: Research Methodology

In any study, the aspect of research methodology holds significant importance. It enables the researcher to determine the best course of action to be taken so that the study can be carried out in an efficient and effective manner. Thus the role of research methodology is crucial for the success of any research investigation. By properly defining the tools and techniques that will be used during the course of an investigation, the researcher can essentially control the whole study and thereby ensure that its aim and objectives are fulfilled. In this regard, Neuman (2013) rightly opined that research methodology could act as a tool that would provide the researcher with more control over the research process and ensure that its aim and objectives are achieved.

Lewis (2015) defined two types of research methods, each related to different research paradigms – qualitative and quantitative. It is crucial for the researcher to not only understand and differentiate between these methods but also to determine the best way to implement them. If any mistake is made, then the research would be affected in an adverse manner. In this study, the qualitative research method will be used. As the name suggests, this method gives more importance to words rather than numbers. The main reason for selecting this method is that this study does not aim to prove anything new. Rather it just expands on the already available literature and data sets. The use of qualitative methods will provide a greater amount of flexibility to the researcher, thereby ensuring that the subject matter is covered and analysed as thoroughly as possible.

Research Technique

Since in this study qualitative research methods will be used, it can be said that interviews will be used as a method to collect the primary data. The use of this method will allow the researcher to explore the research topic in great detail. In addition to this, the scholar will also be able to gain a thorough understanding of the subject matter (Taylor, Bogdan and DeVault, 2015). The main reason for selecting interview for primary data collection is that through it the researcher can collect a plethora of information regarding the research topic. While to collect secondary data the researcher will use journals, books, magazines and articles.

Data Description

During the data collection process, the researcher will use the interview technique to collect the primary data pertaining to the research topic. Herein 15 managers at different accosting firms in the UK will be interviewed. The questions will be prepared with the objective of obtaining more information on the impact of technological developments on the companies. Aspects such as current trends and performances of the accounting firms over the last few years will be given more importance. The use of such data sets in the current investigation will help in ensuring that the current study is carried out in an efficient and effective manner (Vaioleti, 2016).

Validity and Reliability

Validity and reliability are two of the most important aspects that affect the data collection process. Mackey and Gass (2015) stated that if these are properly managed, then the researcher can fulfil the aim and objectives of the research study. The validity of the data can be associated with the overall credibility of the investigation. This is especially relevant when collecting and using the secondary data. The researcher will use well-known and respected sources to collect secondary data for the current study. While on the other hand, reliability is related to repeatability of the findings or the results. It will be important for the researcher to use only reliable sources for data collection and analysis in the current study. Collectively they will help in maintaining the overall quality and effectiveness of the research.

Difficulties

There are several difficulties that the researcher might encounter while conducting the current investigation (Silverman, 2016). One of them is that the managers might not respond well to them being interviewed. The researcher might not be able to convince them to participate in the study. This will have an adverse impact on the data collection process as well as overall quality and reliability and validity of the research investigation.

Budgetary Issues

The researcher might have to suffer from budget-related issues (Alvesson and Sköldberg, 2017). There is always the possibility that the research process might go in excess of the allocated budget activities. This further becomes an issue considering the fact that this study has not been funded by anyone else than the researcher. This will make it very difficult to deploy a lot of money in collecting the data and analysing it. The researcher will have to find alternative means of data collection as well.

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