Digital Disruption and The Impact on Accounting
Digital disruption has been defined as ‘New technologies and business models that impact, transform or re-invent existing goods and services, industries and business activities. It’s a change that can be positive or negative, and can drive substantial changes across the economy’ (Queensland Government Chief Information Office 2018). The business world has changed considerably over the past couple of decades, and in the next decade there will be more industry disruption and transformation (Birt et al. 2017). In recent years we have seen the emergence of the fintech industry, Big Data and data analytics, cloud computing, mobile phone technology, AI and social media, and all of these have consequences for the accounting profession.
Fintech companies include many aspects of finance, for example, borrowing money, foreign currency, e-commerce and government payments, and the growth of this sector is impacting on accounting systems and processes. With the streamlining of certain accounting processes due to the introduction of new technologies there will be less need for traditional accounting services, but at the same time there are additional opportunities for accountants in managing the regulatory, tax and financial implications of the fintech industry (ACCA 2016).
In today’s world, the amount of data that is produced is phenomenal. It is very hard to quantify exactly how much data is produced every day, but the unit of measurement at the moment is quintillion bytes! Ninety per cent of the data in the world has been generated in the past two years alone, and this is only going to increase. It is important for accountants and other business professionals to have the skills to understand data analytics. Accountants need to be able to blend data from different sources (e.g. company reports, ASX data, government data, economic data), use analytical tools to draw insights from the data, make decisions based on the data and communicate their findings to other parties such as management, the board and investors. There are many business analytical tools that assist accountants, for example Excel and Tableau.
Blockchain technology supports cryptocurrencies such as Bitcoin. Bitcoin is a digital currency that allows for online payments to be made without going through a financial institution (Raymaekers 2014). A blockchain is a structure of data that represents a financial ledger entry (Hassell 2016). The blockchain’s data is partitioned into blocks and these blocks are linked together using cryptographic signatures. The blockchain creates many opportunities and challenges for the accounting profession. Some of the current accounting and audit roles will diminish, as there will be less need for accountants and auditors to perform the transaction processing, reconciliation and control type tasks. However, there will be new opportunities for auditors in overseeing and auditing the blockchain.
AI is having an impact on many industries. Traditionally robots have been used in the manufacturing industry, but in recent years there has been adoption of robotic technology in the healthcare, agriculture and food-preparation industries. In auditing, drones are performing audits in remote areas that are difficult to access and would otherwise be too expensive or unsafe to send a human to.
- Birt J., et al. (2020). Accounting: Business Reporting for Decision Making 7th John Wiley & Sons Australia, Ltd.
- Google Image. (2021)