The Accounting Profession: Impact of Emerging Technologies

Introduction

Technology is altering how individuals do businesses, and as a result, accounting must also keep developing. Several technological trends have developed due to the information overload that ushered in the fourth industrial revolution, an era in which cyber-physical interactions will alter business (Berikol & Killi, 2021)¹. As science advances in the 21st century, it blurs the boundaries between sectors. Consequently, accounting professionals will require cross-disciplinary abilities to remain current with evolving technologies. It is impossible to predict when these capabilities will become mainstream. This paper analyzes the impacts improvements such as artificial intelligence (AI), quantum computing, and Blockchain technologies have and will have on the accounting profession. Therefore, adapting to these new techniques keeps specialists like accountants agile, creative, and better equipped to serve their customers.

Quantum Computing

Quantum computing utilizes the powers of physical sciences to interpret data, with the possibility to be 100 million times quicker than desktop technologies. Quantum computing is a subfield of computing that focuses on the development of computer expertise based on the ideas of particle physics, which specifies the conditions of mass and energy at the subatomic and atomic dimensions (Dhawan et al., 2018). Prediction, financial advisory, priority setting, risk reduction, timing, financial analysis, developing information and communication networks, cryptography, and artificial intelligence are some of the business applications for quantum computing (Dhawan et al., 2018). In their paper on particle physics, Dhawan et al. (2018) list the following: Instead of a binary system of values, in which each bit is either 1 or 0, supercomputers use quantum superpositions or qubits comprised of physical elements, often a solitary photon. Since a bit is always 1 or 0, a traditional computer can only perform linear calculations. The quantitative physical features of quantum entanglement imply that a qubit is simultaneously 1 and 0, allowing for significantly more computing capability.

Therefore, this indicates that supercomputers, unlike ordinary computers, may simultaneously address all issues, evaluating all viable solutions and eliminating those that do not function. These challenges are too intricate, sophisticated, and time-consuming for conventional machines, which can only perform a single operation at a time (Dhawan et al., 2018). The possibility that quantum programs will answer difficulties far quicker than classical computers has critical repercussions for quantitative finance, such as portfolio management, marketplace structure analysis, and default risk assessment (Dhawan et al., 2018)². Computer technology could facilitate quick, more intricate calculations, such as trading, efficiency, market instabilities, and hedging methods by accountants. Moreover, in domains such as asset allocation, capital market, project implementation financing, and information security, financial companies are researching the possible application of quantum entanglement.

Optimization is one of the most vital accounting operations and, as a result, could be affected by supercomputers. It is simple for a computer program to perform more trials quicker, although this is not achievable on a conventional computer. Thus, this is crucial in optimization situations when there are several viable solutions, and the objective is to determine the correct one (Dhawan et al., 2018). Computer technology can construct appealing portfolios containing thousands of assets with interconnected dependencies; thus, accountants can utilize it to determine a more effective risk management method.

Today’s finest modern computers may take longer to perform a sequence of complex calculations, making it impossible to undertake. However, accountants can use supercomputers to perform vast volumes of operations simultaneously in seconds. Numerous companies frequently perform risk mitigation, predicting, budgeting, and improvement on a broad scale (Dhawan et al., 2018). In addition to accelerating these processes, quantum computing may be able to perform additional tasks as well. It could enable accounting firms to alter their operations by raising income, cutting expenses, or minimizing capital investments, so allowing them to face whole new difficulties.

Unfortunately, quantum computing may affect the accounting profession negatively, as discussed herein. The greatest drawback is that it is still in its infancy of creation, and individuals are constantly constructing components and making predictions about what this technology will be (Hayes, 2019)³. The technology is too expensive, delicate, and lacks standards, resulting in widely different materials and techniques. Quantum computers must be chilled to a standard temperature near zero to enhance stability, which is difficult for financial analysts to maintain and regulate (Hayes, 2019). Quantum transistors are also extremely unstable, making testing them by accountants challenging (Hayes, 2019)⁴. Since supercomputers can only run restricted enterprise software and particular quantum calculations, it will be difficult for bookkeepers to use them effectively. As a result, quantum computers may always be designed for a specific purpose instead of a broad one.

Blockchain Technologies

The transactions of cryptocurrencies are documented on a public, secured ledger known as a blockchain. Blockchains are accessible, traceable, highly secured, immutable in retrospect, and disseminated to all parties to always have access to a complete ledger of confirmed financial entries (Schmitz & Leoni, 2019)⁵. The innovation enables direct transaction recording without the need for a mediator. Demirkan et al. (2020) explain that workstations known as miners validate inputs and add them to chains and the frames before them, forming the network. Using asymmetric cryptography, businesses may assemble these blocks and upload them to the ledger repositories (Demirkan et al., 2020)⁶. To edit any operations, an accountant must possess the firm’s private key and modify all the logs, as cryptography requires.

The verification scheme prohibits record manipulation, and transactions are saved permanently, culminating in an immutable, irreversible transaction record. In addition, Demirkan et al. (2020) implied that blockchain is a nearly indestructible digital wallet capable of documenting virtually anything that can be digitalized, including financial information and business agreements. The security and possible applications of blockchain are drawing the increasing interest of organizations. By building an escrow-like mechanism, the capability of its use to create smart contracts assures that participants stick to an agreement by eliminating intermediaries since it is a peer-to-peer network (Schmitz & Leoni, 2019)⁷. This simple two-party method can support inexpensive electronic payments from anywhere in the globe without the involvement of banks or attorneys. Thus, this allows financial transactions to occur nearly instantaneously instead of waiting for weeks for payments, commitments, and documents to clear. Legislation and adherence are significant problems for organizations; blockchain expansions can keep commerce secure and inform bookkeepers of the most recent guidelines.

Blockchain enables accountants operating in logistic firms with a transparent, distributed ledger that holds data on commodities, offerings, and payments. With the growth of fraudulent activity and privacy violations, cryptocurrency may one day substitute identities, credentials, and even credit card numbers with an online footprint (Schmitz & Leoni, 2019). Financial analysts must be informed of the innovation and its implications for their industry as blockchain advances are made. Some have referred to this unique distributed ledger established by blockchain as triple-entry bookkeeping due to the encryption that protects and safeguards it, producing a third entry (Schmitz & Leoni, 2019). However, this is merely a modification of the conventional double-entry procedure.

When a seller enters a debit for money obtained, the purchaser registers a credit for funds expended during the same event. It could not only be used to provide precise financial accounts and real-time corporate analytics but also to boost efficiency through a vast array of applications (Schmitz & Leoni, 2019). The same complexity in modifying transaction details that shields blockchain information from tampering is also one of its flaws. If a bookkeeper omits or makes a mistake in an agreement, it is incredibly difficult to rectify and can be quite expensive (Schmitz & Leoni, 2019). Crypto algorithms would be the sole solution to mitigate supercomputers from easily penetrating existing blockchain encryption.

Nonetheless, computer programs will soon be able to breach existing blockchain encryption methods easily. Quantum cryptography, nevertheless, is still in the experimentation stage and is not ideal for the web because it necessitates a separate network. Due to such problems, cryptologists are currently researching the use of supersingular isogenies, semi-structured lattices, and multiple regression factorization for qubit proof cryptography (Schmitz & Leoni, 2019)⁸. However, it will be remarkably hard to convert this investigation into serviceable programming code and update every computer that will demand it. With the requirement for new encryption techniques, browsers must now establish interactions with websites differently. The additional data could result in the websites refusing to connect or experiencing discernible connection delays, thus slowing bookkeeping transactions.

Artificial Intelligence (AI)

The capability of devices to program themselves by generating their projections is known as machine learning, and it is a fundamental element of AI. As algorithms collect and assess large amounts of data, neural systems built to mimic the brain’s functionality start to comprehend trends, form connections between the data, and classify it accordingly (Shaffer et al., 2020). Streamlining data entry procedures through machinery can help minimize expenses and inefficiencies (Shaffer et al., 2020). Using AI to automate repetitive operations and handle massive amounts of data would free up more time for financial analysts to focus on their core competencies.

Using AI technologies for business analytics is expected to reduce infrastructure costs and improve operational accounting efficiency. Predictive jobs, such as calculating what customers could desire based on the evidence fed into artificial intelligence networks, are becoming more accurate (Shaffer et al., 2020). Businesses will be able to improve the consumer experience, transportation, sales, advertising, and research & development sections as AI advances. Enterprises that struggle to maintain their finances up to date and recall where payments should be allocated are also addressed by AI.

Missteps in accounting can lead to wasted effort and erroneous financial reporting; bookkeeping irregularities must be remedied. Zemankova (2019)⁹ enumerated that electronic accounting codes can minimize errors and save effort by recommending or filling in financial procedures with AI. In today’s world, accounting software has advanced to the point that it can handle tasks that demand manual intervention. Zemankova (2019) enumerated that bank reconciliation can be automated by using artificial intelligence. However, more than half of all occupations are at medium or high risk of being replaced entirely by machines in the accounting profession. Although algorithms can conduct all of the basic accounting procedures, an accountant is still required to examine the program and make meaningful conclusions based on the findings.

Accounting sections will shrink, and some accountants’ jobs will be eliminated as AI takes over some of the more basic responsibilities of the profession. The remaining staff members will focus on complex and idiosyncratic computations in their roles. The most complicated accounting themes are fair value accounting, bookkeeping for hedges and derivatives, and forecasting the economic implications of pending lawsuits and prospective warranty expenditures (Qasim & Kharbat, 2020)¹⁰. More tactical plans like process development, cost reduction, and capital efficiency will also require accountants.

AI is unlikely to ever have the same abilities as accountants in skepticism, judgment, evaluation, and comprehending technical bookkeeping. It is possible to remove accounting irregularities that are difficult to detect if artificial intelligence equipment is appropriately set. They will be more competent, more prolific, and able to handle more customers, and they will be able to provide more value by providing insight rather than by putting in long hours of calculation. One of the most important consequences of AI in the accounting profession is the potential for large-scale joblessness due to the use of computers to replace workers. As a result of the development of AI, computers have become far more complicated, requiring more frequent repairs. In addition to this, machines can only perform the tasks for which they have been designed; therefore, they lack feelings and cannot make determinations (Munoko et al., 2020). As a result, when confronted with an uncomfortable circumstance, they will either execute improperly or completely break down.

Conclusion

In conclusion, businesses and their bookkeepers must understand, analyze, and use innovations for enhanced company benefits. Emerging technologies, including blockchain, quantum computing, and AI, can boost income, speed, output, and customer happiness while decreasing expenses and saving time. In addition to providing accountants with specific and substantial advantages, technological advancements are changing their profession and even their function. Tomorrow’s accounting professionals will be substantially different from those of today. In lieu of record-keeping and data analysis, they will assist businesses in transitioning to cryptocurrencies, train machine learning techniques to explore and manage information, and use supercomputers to generate difficult estimates. If businesses and bookkeepers do not stay informed of and connected with modern technology, they will soon experience a decline in business while tech-savvy corporations profit.

References

Berikol, B. Z., & Killi, M. (2021). The effects of digital transformation process on accounting profession and accounting education. In Ethics and Sustainability in Accounting and Finance, Volume II (pp. 219-231). Springer, Singapore.

Demirkan, S., Demirkan, I., & McKee, A. (2020). Blockchain technology in the future of business cyber security and accounting. Journal of Management Analytics, 7(2), 189-208.

Dhawan, S. M., Gupta, B. M., & Bhusan, S. (2018). Global publications output in quantum computing research: A scientometric assessment during 2007-16. Emerging Science Journal, 2(4), 228-237.

Hayes, J. (2019). Quantum on the money [quantum computing in financial services sector]. Engineering & Technology, 14(4), 34-37.

Munoko, I., Brown-Liburd, H. L., & Vasarhelyi, M. (2020). The ethical implications of using artificial intelligence in auditing. Journal of Business Ethics, 167(2), 209-234.

Qasim, A., & Kharbat, F. F. (2020). Blockchain technology, business data analytics, and artificial intelligence: Use in the accounting profession and ideas for inclusion into the accounting curriculum. Journal of Emerging Technologies in Accounting, 17(1), 107-117.

Schmitz, J., & Leoni, G. (2019). Accounting and auditing at the time of blockchain technology: A research agenda. Australian Accounting Review, 29(2), 331-342.

Shaffer, K. J., Gaumer, C. J., & Bradley, K. P. (2020). Artificial intelligence products reshape accounting: Time to re-train. Development and Learning in Organizations: An International Journal, 34(6), 41-43.

Zemankova, A. (2019). Artificial intelligence in audit and accounting: Development, current trends, opportunities and threats-literature review. In 2019 International Conference on Control, Artificial Intelligence, Robotics & Optimization (pp. 148-154). IEEE.

Footnotes

1. Industry 4.0 comprises computer-generated concept development and three-dimensional (3D) manufacturing, which can produce solid objects by layering materials.
2. Asset management is the identification, scheduling, and administration of a company’s projects and initiatives following its organizational plans and delivery capabilities. A risk premium is a borrower’s exposure to the possibility that a borrower may be unable to make necessary repayments on their debt obligation.
3. Many experimental technologies are heavily shielded and refrigerated to temperatures close to absolute zero to maximize their dependability. Consequently, the construction and maintenance of quantum computers are exceedingly costly.
4. According to quantum theory, charge-carrying particles are only permitted to inhabit quantum properties in circuits used to construct transistors. As more particles are introduced, permitted bands are formed in a predetermined order.
5. Blockchain Technology (BT), or distributed ledger technology (DLT), is a framework that utilizes algorithms to validate transactions by storing books of accounts in blocks among multiple computers connected to a peer-to-peer connection. Bitcoin’s working principle, known as BT, has been dubbed one of the most fundamentally innovative and influential breakthroughs to emerge in the last few years.
6. Asymmetric cryptography utilizes two distinct yet mathematically related keys. The first is the primary blockchain, which encodes communication and can be published openly, and the second is a unique identifier.
7. Blockchain Technology (BT) serves as an alternative to the trusted third party required to validate transactions by providing a triple-entry ledger strategy that allows identification and accountability. Trust is transferred from an external body to all blockchain system participants due to this interlocking system of long-lasting financial records.
8. As far as potential post-quantum security systems go, isogeny-based algorithms uses the shortest keys possible, necessitating keys that are of similar size as those already in use. Semi lattices are utilized to generate other order frameworks, or in combination with other completion criteria.
9. Accounting identifiers are codes utilized for bookkeeping and monitoring customer-related firm information. When accountants activate financial codes, consumers will be able to manage invoicing with their business and collect detailed data for each purchase at checkout.
10. Fair value alludes to the agreed-upon realistic price of an investment, commodity, inventory, or instrument between a firm and its customers. It is calculated to arrive at a reasonable price for the client without causing the seller to lose money. Bookkeeping for hedges treats fluctuations in market valuation of the reciprocated hedge and the underlying investment as a single entry, reducing big price movements. In corporate accounting, hedge financial reporting is employed with derivatives.