Accounting Systems Assessing the Current and Future

¶ … Accounting Systems

Assessing the Current and Future State of The lifeblood of any business is the revenue it generates while managing costs, ensuring profitability of the business, and its long-term survival and growth. The catalyst of managing a business effectively is the use of accounting information, financial analysis, and increasingly in the 21st century, the use of real-time financial analytics on key performance indicators (KPIs) used to manage a business (Ferguson, Seow, 2011). Accounting systems continue to be the foundation of managing businesses to profitability while mitigating potential risks though insightful and real-time use of financial data. The future of accounting systems will be increasingly influenced by the real-time reporting and analysis as the Securities and Exchange Commission (SEC) has required the largest publically traded corporations in the U.S. To report their results through the extensible Business Reporting Language (XBRL) protocol (Tribunella, Tribunella, 2010). The SEC is setting a very rapid pace of adoption of this standard as it greatly benefits stakeholders outside the corporation and makes enforcement and compliance management from a government standpoint much easier to accomplish electronically. The XBRL standard signals the advent of real-time financial reporting, analytics and compliance in the U.S. securities industry (Yoon, Zo, Ciganek, 2011). It remains to be seen if other nations will adopt the XBRL standard to the extent the U.S. has, yet it clearly sets a pace in terms of modern accounting systems. The intent of this analysis is to present the use of modern accounting systems today including the role of information systems and technologies including the influence of Enterprise Resource Planning (ERP) systems on current practices. This analysis also includes insights into the future direction of modern accounting systems that are being heavily influenced by the XBRL standard and rapid advances in cloud computing (Gill, 2011).

Analysis of Modern Accounting Systems

The study of accounting systems needs to encompass the entire operations of a business to fully understand how various accounting techniques, strategies and reporting standards including FASB, GASB, and AICPA all contribute to the attainment of complex business objectives and strategies. The synchronization of underlying accounting approaches and techniques to a company's strategic plans must be engrained into each functional department and their corresponding strategies for accounting systems to be effective (Ferguson, Seow, 2011). Accounting systems have progressed beyond just reporting the results of operations; they are today being increasingly relied on as an essential part of strategy planning across each functional area of a business. The infusion of accounting data into production, product planning for costing and supply chain related data, sales for pricing and opportunity cost analysis, and value-based approaches to services-based pricing all are forcing a rapid pace of innovation in modern accounting systems (Ferguson, Seow, 2011). The pace of innovation is taking the drudgery out of accounting as a profession and moving the accountant out of being a technician who produces reports who specializes in personal productivity applications to a strategist who relies on real-time analytics applications that provide the opportunity to provide insights into the strategic direction of a business. The accountant as strategist is also becoming increasingly critical as the burden of compliance continues to become even more costly for companies to afford (Ferguson, Seow, 2011). Modern accounting systems are as a result maturing quickly to support this transaction of the account from technician to strategist, with an increasingly critical role for modeling a business to be profitable while minimizing risks.

The agility of modern accounting systems is increasing because of this shift of accountants from being technicians to strategists as well. Of the many development and improvements to accounting systems that are enabling this transition, the greatest continues to be the development of role-based taxonomies of data and reporting structures matching the unique needs of accountants, finance managers, directors of accounting and vice presidents throughout organizations to the accounting data collected daily (Ferguson, Seow, 2011). These role-based taxonomies of data are also leading to greater use of data aggregation, analysis and reporting to consolidate the terabytes of data being generated on a daily basis in many of the world's largest corporations (Ferguson, Seow, 2011). The use of data reduction analytics is nascent in accounting systems yet shows significant value from the ability to quickly analyze and find patterns in data not discernable using existing software applications or technologies. The use of data reduction algorithms and techniques have made it possible to interpret decades of data within seconds and find insights that financial planners can create effective risk reduction or revenue generation strategies with (Ferguson, Seow, 2011).