Article by (Mason, 2024)

The Role of Technology In Modern Accounting

17 Aug

The accounting profession has evolved significantly since its inception nearly five millennia ago. Before,
accountants used manual bookkeeping methods to maintain financial records. These systems typically
involved painstaking tasks like recording expenses in handwritten ledgers and filing paper receipts. 1 The
age-old stereotype of accountants sorting through endless cabinets of financial information wasn't
always that far from the truth.

However, recent advances in accounting technology have made it easier than ever for professionals to
digitize their bookkeeping practices. What used to take weeks now takes minutes, eliminating tedious
tasks and allowing accountants more freedom, responsibility and time.

Accounting apps, software and other innovative tools offer many benefits for accountants. Technology
boosts efficiency, improves accuracy and saves time.2 But it can be challenging to determine which tools
you should implement into your daily routine, especially if you’re new to computerized accounting
systems.

Let's explore the role of technology in modern accounting and its many applications in the workplace.

Examples of Accounting Technology

Technology in accounting has developed rapidly in the past few years, but businesses have used digital
tools for decades. In 1983, for instance, Intuit released QuickBooks, a popular accounting software that
tracks financial transitions and generates reports.3 Many businesses continue to use QuickBooks today,
but new technologies like robo-advisors, cloud-based systems and blockchain have altered the
accounting profession in many ways.

Here are some technologies that have had a significant impact on the accounting landscape in recent
years.

Cloud-Based Solutions

Traditional accounting software is installed on individual devices. In contrast, cloud-based solutions are
hosted by third-party servers. Accountants use web browsers to access these applications, and all of the
data is automatically backed up in the cloud.4 This can also be referred to as cloud computing.

Cloud-based accounting tools have several advantages. First, companies can save money by paying a
subscription fee for these services instead of investing in expensive IT systems and paying teams to
maintain them. These resources also quickly scale up or down to accommodate businesses’ changing
needs.4
Additionally, authorized users can access cloud-based software from any device and any location, giving
accountants more freedom. For instance, professionals can use this technology to collaborate with
remote colleagues on mobile devices and send digital invoices to clients. 4

Accounting Software

Software vendors have developed a multitude of different accounting programs over the years. Some
examples include FreshBooks, NetSuite ERP and A2X. These tools can help perform a variety of tasks,
such as:5

 Budgeting

 Generating financial statements

 Managing inventory

 Paying taxes

 Processing payroll

 Recording financial transactions

Accounting software has many advantages over manual bookkeeping. These applications give
businesses more control over their financial records, improve data accuracy and keep data secure.
Additionally, many tools have analytics and financial forecasting capabilities, which help businesses
better understand their past and future performance to make more informed decisions. 5

Automation

Robotic process automation (RPA) uses software to perform routine accounting tasks without requiring
human intervention. For example, accountants can use RPA to automatically generate and scan invoices,
detect variances in financial records and respond to vendor inquiries. This technology reduces the
amount of time accountants spend on repetitive processes, such as manual data entry, and decreases
the risk of human error.2

Machine Learning

Machine learning uses algorithms to create models that automatically process and analyze enormous
volumes of data. These models independently learn from experience, so they continually refine their
performance as they gather information.

This technology enables accountants to collect, manage and process vast data sets that would be
impossible for humans to analyze manually. For instance, machine learning models can quickly analyze
millions of financial transactions and make predictions using real-time data.

Researchers have also designed machine learning models that detect fraudulent financial statements.
While these tools are still in the early stages of development, accountants may use them in the future to
audit individuals and organizations more efficiently.7

Data Analytics
Software, statistical techniques and other tools help businesses interpret and identify patterns in
complex data sets through analytics. Accountants and other financial professionals can gather
meaningful insights from analytics to formulate new business strategies and make data-driven
decisions.8

Analytic tools have many practical applications in accounting processes, including:8

 Advising clients: This technology allows accounting professionals to assess clients’ data and
provide personalized financial advice.

 Assessing risk: Accountants draw on analytics to predict potential outcomes of business

 Forecasting: Accounting firms can predict future financial trends and recommend ways to
improve the organization’s performance.

 Performance monitoring: Accountants use analytics to evaluate key performance indicators and
employees’ productivity.

 Problem-solving: Analytic tools reveal underlying factors contributing to complex business

Data Visualization

Data visualization platforms like Excel and Tableau summarize large data sets in charts, graphs, maps
and other visual formats. These visualizations let you quickly evaluate information, identify trends, and
spot outliers in the data. They’re also more accessible to broad audiences than complex statistical
analyses, so accountants can use these graphics to convey their findings to clients, managers and
stakeholders.9

Predictive Analytics

As the name suggests, predictive analytics attempt to predict the future using data. This type of analytics
uses historical data and past outcomes to generate informed forecasts about future events. 10

Predictive analytics have many useful applications for accountants. For example, professionals can use
this method to forecast upcoming expenditures and create an accurate budget, and accountants can
estimate future sales and identify areas where the company can expand.10

Artificial Intelligence

Artificial intelligence (AI) powers many accounting programs. This self-learning technology imitates
human thought and enables accountants to aggregate and analyze vast quantities of data. Additionally,
AI automates repetitive tasks, such as data entry and filing tax returns. Thus, AI saves time and lets
accountants focus on responsibilities that require critical thinking and creativity. 11

AI has seen a tremendous technological revolution in just the past few years, with the release of Open
AI's ChatGPT and Google's Bard tool.

Cybersecurity
New cybersecurity advances help accountants keep sensitive financial data safe and secure from
cybercriminals. For instance, password management protection and stealth log-ins prevent
unauthorized users from accessing credentials and accounts. Also, cloud storage and intrusion detection
systems help protect client information from data breaches.12

Harness Accounting Technology With an MS in Accounting

Exciting new technological developments are reshaping the accounting industry. Learn how you can
leverage the latest tools by earning an Online Master of Accounting from William & Mary. You’ll receive
mentorship from world-class faculty with years of leadership experience and extensive networks in the
accounting industry. Additionally, you’ll prepare for the CPA exam by taking rigorous courses on
essential topics, including accounting analytics and information systems, advanced corporate finance
and financial reporting.