Accounting Changing Through Technology

Technology in Accounting The author of this report is going to offer a fairly lengthy report about how technology has played an integral role in the changing of accounting. Indeed, technology and the internet have changed many things in demonstrable and perhaps immeasurable ways over the years. The author of this report will cover a number of different ways in which technology has emerged and changed things.

Topics covered will include, but will not be limited to, pivot tables, API feeds from banks, credit card processing, vendor communication and enterprise resource planning (ERP) systems. The four main dimensions that these technological updates have addressed include speed, accuracy, timeliness and applicability. While these rapid advances in technology have created some logistical, training and security headaches for many accounting and other professionals, the good of technology and how it has changed accounting far outweighs the bad.

Summary Of course, the gold standard program of history when it comes to accounting would have to be Microsoft Excel. To be sure, there have been other "game-changing" programs for accountants such as QuickBooks and others. However, Excel was perhaps the first major step forward when it came to the transition from paper words and handwriting of accounting documents to the computerization that is so common now.

One of the tools that has emerged over years and remains one of Excel's most prominent and powerful tools to this very day would be the pivot table. The beauty of a pivot table is that it allows a large amount of data to be summarized and quantified in a fairly simple fashion. Indeed, there are other ways to do things like averages, counts and so forth in Excel and other programs.

However, those who have mastered pivot tables know that Excel is much more robust than a lot of the other (if not most other) solutions out there. Further, the complexity and ingenuity of the pivot table has evolved over the years. For example, it has been an issue with some versions of Excel to get a distinct count of unique values. However, a new data modeling feature of Excel has addressed this.

When it comes to accounting-heavy records such as customer, item and sales figures, this can be a very important feature to seize on. As with most things, the pivot table feature in Excel (and other programs that make use of it) is ever-evolving and updating with the times. As technology, software and computers become more complex, so too will be the solutions necessary to complete the proper accounting of the associated behavior and activity (Jelen, 2014).

There is speed in pivot tables in that the major limitation in pivot tables is how long it takes for a person looking at the data to center in on what they want. It is accurate in that Excel and other computerized programs do not make mathematical errors. So long as the pivot table is arranged and constructed properly and the data underpinning it is correct, then the results will be as well.

The data is timely in that the people making pivot tables are able to assemble and analyze the data in a very quick fashion and it is applicable because it does the same precise thing that others have done for decades…it just does the work much faster. Another major catalyst for change when it comes to accounting and the financial sphere at large has been what are known as API feeds. API stands for Application Program Interface.

It has a lot of applications in the general information technology sphere but some people have started to harness it for accounting and banking purposes. Indeed, a lot of banking and other financial data is now transmitted over API feeds, not unlike a Twitter or other feed of information. There are both older and newer companies that have entered the API feed sphere as a business. One such business is known as SNL. Their entire business is centered behind feeds of data.

Of course, this data could be used for accounting as well as other analysis purposes such as investments, auditing and so forth. However, accounting would be the obvious "core" intent behind the analysis whether it is someone who is internal to a firm, someone who is assessing competitors or someone that is analyzing a broader industry. To that end, businesses like SNL offer sector-specific data feeds. These data feeds can be in simple text, XML or other formats.

The data is commonly transferred through a channel of the internet known as file-transfer protocol. In other words, raw data that is requested or required is packaged and assembled and then offered in feeds to the people that are watching and/or that have requested it. The customer who seeks the feed, whether it be from a bank or somewhere else, can request a feed on a daily, weekly, monthly or quarterly basis. It can be a feed of data specific to a single firm (e.g.

The banking data for the firm that the accountant works for) or the data can be broader in scope such as information revenues, cash flow balances and so forth from other companies and/or broader sectors. SNL boasts that they offer nearly fifty thousand data points for public company financials, regulated industries, investment details, capital structures, capital offerings and mergers/acquisitions. As partially noted already, banks are getting into the API feed business in earnest.

While not all banks are involved, SNL boasts that they have feeds from more than thirteen hundred banks and thrifts. They also have the partnership of twenty thousand depository institutions, more than one hundred thousand bank branches and the list goes on. The point is that API feeds, while not extremely prevalent, are getting more common by the day and are being used as a means to siphon relevant data automatically to accountants around the world rather than those accountants having to find and collect the data themselves (SNL, 2015).

API data feeds from banks and other financial institutions are fast in that they are transmitted over the internet. They are processed quicker and then transmitted quite quickly as well to the persons and entities that are entitled to and that want the data. The data is accurate, presumably, because it comes from properly configured software and systems. Indeed, the data is just being passed along.

The data is timely because it is being transmitted when it is requested and for the time periods for which the data is supposed to apply based on what the customer wants and what the API feed creator has access to. The data is applicable because the person wanting and receiving the API data is presumably only ordering and requesting information that is needed and relevant to their job, their company and/or their industry.

While the API feed realm is still a little younger and in its nascent stages, the same cannot be said about credit card process. Indeed, the scalability and manifestation of credit card process has changed so much in recent years. It has gotten to the point that anyone with a PayPal account, a smartphone and a few other minor things can literally process credit card transactions on their phone or tablet. Of course, credit card processing has been very present in the American business climate for quite some time.

However, nowadays it is starting to trickle down to smaller businesses and individuals to the point that anyone can use it. Conversely, the data that underpins credit card processing is much more accessible and this includes to accountants. Accountants that are wanting to retrieve and track credit card transactions and the data involved can do so quite easily. The metrics and statistics involved would include gross sales, sales tax, transaction fees (e.g. from Visa, PayPal, etc.) and so forth.

In the "old day," that sort of information (credit card or not) would have to be tallied up using much cruder methods. It has gotten to the point that individual transactions at stores can be barcoded.

Rather than not being able to assess minute data once a sales day has passed, an accountant or other financial professional can scan a code or input a transaction number and get all of the data they need including the date, the amount of the sale, the taxes paid, what was bought, how much was paid and so forth (Rob & Opara, 2003; Kedmey, 2014).

The speed of credit card processing has always been a "plus" in its column but it's only better now because it is even faster and more mobile than it has ever been. The processing is accurate the vast majority of the time as long as there is not any user error.

The timeliness of the processing of credit card transactions is improving for much the same reason as was mentioned for the "speed" attribute and the applicability of people being able to use credit cards quickly and effectively is not in question. For that matter, what is also not in question is the ease in which, relative to older and more dated methods, accountants can track and use credit card data. There are some necessary evils in the form of processing fees and so forth.

However, the convenience and ease factor that exists is usually more than enough for even an accountant to suggest that going with other methods of payment (check, money order, cash, etc.) would be nonsense due to the extra hassle involved. Indeed, depositing cash and/or checks manually at a bank will always be inferior to being able to wire or otherwise transfer funds electronically. As far as communication between accountants and vendors, general technology shifts have also changed that for the better.

Not even twenty years ago, the primary methods for a lot of accountants and other people when it came to communication with vendors or anyone else would have been via the phone or fax. While the traditional landline phone and fax are still used by many people, they are far from being as ubiquitous and heavily used as smartphones, tablets, laptops and social media when it comes to communication.

Nowadays, even the most mobile accountant or vendor can be easy to reach via a cell phone call or text and this makes it much easier for accountants and vendors to keep in touch and get their mutual work done. While accountants and vendors that are desk-bound all the time may not see any benefits, those accountants, vendors and other professionals that are constantly mobile can remain in contact with the people that they need to be in touch with.

The speed in which an accountant can reach out to a vendor or vice versa is very high. The accuracy of the communications is quite good as well as people can create contact lists, click on emails/phone numbers right out of other applications and initiate their communication and so forth.

Timeliness is also greatly enhanced because people can speak in real-time a lot more often than they could in prior days, weeks and years when being on a plane or in a car meant being cut off (at least in part) from the office. However, mobile technology wielded in the right way has eliminated a lot of those problems. As far as applicability, there is perhaps the notion that people are online too much and rely too much on online means.

However, perhaps most accountants, vendors and other business people would not make any such gripe. If anything, they would complain that the person they are trying to reach let the battery die or that they are getting their calls screened (Girsch-Bock, 2011). Finally, there is what is known as enterprise resource planning, or ERP for short. ERP actually impacts the industry and the workplace as whole. It is certainly not limited to accountants. As such, the author of this report will drill down on the implications and developments for accountants.

To be sure, the two types of parties most interested in ERP solutions would be accountants and information technology professionals because those two sectors of employment are going to be the most involved and interested in an ERP solution much of the time. This is because it is very much an online and technology-driven solution and just about any ERP is going to have an accounting or financial part to it.

The basic idea behind ERP is to have a single (or close to it) solution from a software/hardware standpoint that manages the entire software and hardware sphere and keeps things as seamless and as integrated as possible. For example, a sample ERP system would have a point of sales function and that module would then feed the proper data, and in the format needed, to the financial and accounting people.

A lot of headaches can be had when it comes to ERP solutions and implementations because a lot of people do them poorly and/or incompletely. However, when properly implemented and harnessed, ERP systems can make a business run much more efficiently and smoothly than it otherwise could and this is music to the ears of executives and accountants alike. ERP solutions are fast in that they are integrated and seamless when done correctly.

They are accurate in that the systems talking to each other are speaking the same language and have the same instruction set. The data is timely because the system is presumably set up to be as close to real-time as possible for those that are keeping an eye out. Finally, there is obvious applicability because the ERP system is, by nature, designed to be catered to precisely what the business needs from a data and operations standpoint.

From an accounting perspective, this means the data is captured, it is accurate and it can be funneled and analyzed in the proper ways so as to complete the required reporting and internal management accounting tasks that are necessary (Mahesha & Akash, 2013; Gulkvist, 2013). Before concluding this report, there was a bit of foreshadowing in the introduction about some potential downsides when it comes to these newer technologies. Without question, the biggest one would be data security.

The society in which accountants operate and function is one that is full of data flowing.