The technology moves on. Those who align themselves with the changes survive and those who cannot perish. There was a time when accounting firms use to do paper-pencil-based accounting for their clients. Technology moved on, and now these firms use online accounting software in India for the purpose.
Adopting Big Data, AI, ML and Data Analytics
However, this time the technology has taken a giant step. It has come with Artificial Intelligence, Data Analytics, and Machine Learning. Together with cloud computing, these technologies have the potential of changing the way accounting firms will serve their future clients.
The adoption of new technologies is going to change to audit and tax services, though not drastically. It means providers of accounting services have to shift their emphasis to analytical services such as advisory services and strategic thinking. They will need to hire accountants with new skills.
Will it harm accounting firms?
Next Generation Accounting
Well, the accounting firms will need to change in order to stay in business. And they must do it fast.
The scenario is that the technology will take care of the compliance-related tasks making low-level accountants redundant. The accounting firms will drive their growth and profits by focusing on higher-valued advisory services and value-added strategic inputs to their clients.
They need to adapt to the changing environment within the next 5-10 years to occupy valuable, satisfying, and profitable space.
The adoption will enable accounting firms to leverage new technologies to provide critical insights to their clients. In fact, the clients are already asking them to provide business advisory services, in addition to accounting, statutory compliance, and tax services.
Some of the accounting companies have already started to provide transaction-based audits in place of the traditional year-end, balance-driven audit.
How New Technologies Will Change Accounting Services
The 5G internet is 1,000 times faster than 4G. It will allow for untethered, always-on, and tremendously fast cellular networks that support strong security protocols.
It will enable CPAs to access the client’s financial information in real-time over secure internet and process it using big data analytic tools residing in the cloud.
The 5G will also boost the use of IoT devices and sensors, which will generate data on business’ operational activities. The accountants will need to monitor, analyze, and manipulate this real-time data to provide actionable advice for making effective business decisions.
In fact, new technologies will enable accounting firms to verify business transactions in real-time. They will be able to do a real-time audit of clients’ full financial data sets. The auditors may not need to do the sampling.
Today, auditing involves processing structured and aggregated business data. Tomorrow auditors will be working with unaggregated and unstructured business data gleaned from invoices, contracts, or the emails.
They will need to clean and aggregate it up from various sources. They will need to analyze it and present real-time financial insights, let us say, in a dashboard. They may need to continuously monitor and investigate transactional information after alerted by algorithms scanning for the new transactions.
Are You Contemplating a Change?
This picture may seem too dramatic for a traditional accounting firm. However, it is certain that technology is going to transform accounting services in many ways. We will see a radical reshaping of some of the areas like tax preparation and planning and financial reporting, including closing at the end of the month.
Today, providers use accounting software in India to prepare historical financial statements and reports that are based on past transactions. They will need to evolve to provide real-time insights and financial advice to the business owners for making data-driven business decisions.