It was not too long ago that the competition at the global market, which generally stayed at the same level or increased very slowly, allowed corporate accountants to take their time collecting, assessing and packaging financial data for organizations (Gullberg, 2016). However, in the past few years, the situation has changed drastically due to the emergence of e-commerce, which created the conditions for the transfer to a fast-paced, highly competitive, and rapidly developing global market (Simkin, Norman, & Rose, 2014).
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Production cycles have shortened considerably, whereas the pace of innovation has gained momentum. The companies that wanted to keep up with the new speed had to leave behind annual and monthly budget reports as inadequate, old-fashioned tools, unable to meet the requirements of the coming era in business. The major problem with them was that they gave an overview of the past events ignoring the present and giving no prognoses for the future (Gullberg, 2016). In order to stay afloat, enterprises had to transfer to the so-called “new economy”, which presupposed the introduction of real-time reporting in accounting (Trigo, Belfo, & Estébanez, 2014).
Real-time reporting in accounting has a number of considerable advantages over traditional accounting system, based on monthly, quarterly or annual reports. First and foremost, it gives executives an unprecedented facility to react immediately to the changing market environment, working out problems as they come up – an opportunity that has taken production management to a new level (Trigo et al., 2014).
Moreover, real-time accounting helps to rescue data which traditional systems usually lock away. It happens because of the elimination of the time gap between the moment when the information is fed into the system and the moment when it becomes accessible and capable to add value to the problem-solving process. In fact, real-time accounting can anticipate possible outcomes even before particular business conditions emerge (Gullberg, 2016).
Real-time reporting necessitates significant advancement of Accounting Information System, which is made possible with the use of modern technologies. These are:
- business process management, which supports never-ceasing monitoring of business activities;
- mobile phones, which make it possible to keep in touch with the situation and to have access to the reports anytime from anywhere;
- cloud computing, which gives an opportunity to share information among all those who need to stay updated in order to make decisions regarding the current state of things;
- business intelligence, which allows selecting the most relevant information about routine business operations;
- enterprise architecture and enterprise application integration, which is aimed to structure data with the purpose of creating real-time reports having an added value for users (Trigo et al., 2014).
As it is evident from the technological trends in real-time accounting, their implementation was preconditioned by the need to access, collect, store, evaluate, and share infinitude of data. This leads us to the concept of big data, which encompasses all the internal and external information concerning the enterprise, including both structured and unstructured facts that are crucial for making smart, reasonable, and well-grounded decisions at any given moment of time (Bhimani & Willcocks, 2014).
The influence of big data is now so profound that it has fundamentally changed the principles of business operations, including the accounting system. It led to the appearance of the technologies and digital channels that provide improved mechanisms of data collection and delivery and enable faster and more accurate analysis, which was quite impossible to perform within the traditional system of accounting.
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However, it would be fair to admit that, although the ability to receive and store huge amounts of information is now experiencing enormous growth, the technical capacity to process these amounts is still lagging behind. Major innovations are still in store for the future generation of accounting systems (Vasarhelyi, Kogan, & Tuttle, 2015).
The above-mentioned tools for data collection, storage, and sharing has told on the way accountants now view the financial performance of the organization, develop monthly budgets, and assist executives in the process of decision-making. Being able to evaluate the most recent possible information about the demand, accountants can now rely not only on the previous experience in order to make prognoses for the future (Vasarhelyi et al., 2015).
Besides, the importance and the scale of big data led to the appearance of new professional tools in accounting. Excel, which was used before for all kinds of processing, is now suitable only for small projects as it does not allow analyzing vast quantities of non-numeric data. New data processing tools (e.g. VMob) visualize information in order to juxtapose, compare, find correlations, contrast, and finally make sense of it.
Thus, with the appearance of big data, reporting, which now actually goes far beyond mere accounting, is no longer limited to the financial aspect. It has three dimensions: financial and non-financial data, mandated and voluntary, qualitative and quantitative (Trigo et al., 2014). The main point is that real-time reporting requires the accountant to add value by using all varieties of data with the purpose of improving production quality (Bhimani & Willcocks, 2014).
Since big data has had an impact not only on accounting but also on the entire process of business operation, there arises a need of enhancing productivity by coordinating and optimizing of all the activities within the enterprise. This makes Business Process Management one of the essential spheres of operation management nowadays. Like accounting, it has been recently using the real-time approach in order to ensure the possibility to observe and control business processes with the view to establish and maintain an ongoing internal control (Dumas, La Rosa, Mendling, & Reijers, 2013).
Its primary objective is to make companies more flexible, more productive, and more capable of modernization. It is the most relevant policy-making method, which estimates business activities in order to comprehend, manage, and improve them in the process of creating value-added goods and services that would completely satisfy the potential consumer (Trigo et al., 2014).
Business Process Management Suites have been lately evolving into the system that is highly demonstrative of the new epoch of intelligent business. It now features a modern module called the Business Activity Monitoring (BAM), which gives managers an opportunity to access real-time dashboards that show all the current activities of employees inside the company. It was initially created for providing the holistic picture of business processes to operation managers and chief executives. Real-time accounting is answering the need to process the incoming information for managers to react quickly and reasonably. BAM is successfully implemented in BMP as one of the most efficient technologies for real-time reporting and control (Trigo et al., 2014).
Thus, as we can see, the present role of Business Process Management in establishing internal control is hard to overestimate. This has become especially evident since the focus of attention was shifted from the automation of business processes with the application of recent technologies to human-driven activities that accompany the usage of machines (Dumas et al., 2013)
Basically, BPM tools perform the following tasks in order to establish ultimate control over the organizational performance:
- visualizing business processes;
- identifying required measures in order to ensure success;
- comparing and contrasting variants in order to opt for the one that is most likely to lead to improvement;
- applying the improvement and create conditions for the next one;
- controlling the performance in real-time in order to introduce corrections in case of necessity;
- re-engineering the entire process from the very beginning in case the results are not satisfactory enough (Becker, Kugeler, & Rosemann, 2013).
All the enumerated activities allow introducing changes that are accounted for by the real-time data, not only hypotheses, which makes them more grounded.
Thus, the conclusion that can be drawn is that real-time reporting in accounting marks the beginning of a new era of production management. It still has to overcome a lot of challenges some of which can already be dealt with through the use of such modern technologies as BMP and BMA, mobile phones, cloud storages, business intelligence, and enterprise architecture and enterprise application integration (Trigo et al., 2014).
Becker, J., Kugeler, M., & Rosemann, M. (2013). Process management: a guide for the design of business processes. Heidelberg: Springer Science & Business Media.
Bhimani, A., & Willcocks, L. (2014). Digitisation,‘Big Data’and the transformation of accounting information. Accounting and Business Research, 44(4), 469-490.
Dumas, M., La Rosa, M., Mendling, J., & Reijers, H. A. (2013). Fundamentals of business process management. Heidelberg: Springer Science & Business Media.
Gullberg, C. (2016). What makes accounting information timely? Qualitative Research in Accounting & Management, 13(2).
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Simkin, M. G., Norman, C. S., & Rose, J. M. (2014). Core concepts of accounting information systems, (13th ed.). Australia: John Wiley and Sons.
Trigo, A., Belfo, F., & Estébanez, R. P. (2014). Accounting information systems: The challenge of the real-time reporting. Procedia Technology, 16, 118-127.
Vasarhelyi, M. A., Kogan, A., & Tuttle, B. M. (2015). Big data in accounting: An overview. Accounting Horizons, 29(2), 381-396.