EFFECTS OF AUTOMATED DATA PROCESSING INNOVATIONS ON THE ROLES OF ACCOUNTANTS/BOOKKEEPERS

Innovations in business systems has given rise to various types of accounting packages like enterprise resource planner (ERP), Accounting systems, Cloud accounting systems etc that has eliminated the manual data processing roles of accountants in the accounting cycle to more technical roles. Generally data processing in accounting involves a series of repetitive tasks but developments in Artificial Intelligence like the use of Robotic Process Automation tools (bots) for Data Entry or conversion of hard copy source documents to electronic data using OCR readers can only spell doom to a lot of accounting jobs, just the way typewriters was taken over by word processors (Microsoft Word) or Most design jobs were taken over by graphics application (Corel, Adobe etc) the world would soon see less relevance data processing accounting skills but rely more on technical systems aided skill sets that can both optimize performance of an organizations record keeping operations and drastically reduce overhead and operational costs. Innovations in an automated data processing system that process accounting information are classified into 2 main architectures; reactive systems (data processing after payment is made eg accounting systems) and proactive systems (data processing before payment is made e.g. ERPs) both contribute to the same objectives of an organization but act differently.

The role of an accountant/bookkeeper is primarily to record, analyze and interpret financial records but the roles of recording (data entry) and analysis (arranging) has been taken over by innovations in system automation, the data processing roles of bookkeepers or account clerks are now performed by any professional that can simply perform routine repetitive functions like data entry and analyze transactions leaving the system to automate the remaining tasks therefore to what extent has the role of bookkeepers been taken over by innovations accounting systems? This article uses the accounting operational calendar also known as the accounting cycle to illustrate to what extent existing technological innovations has taken over the role of accountants and how it is achieved.

ACCOUNTING CYCLE

Accounting Cycles is the collective and repetitive process of recording and processing the accounting events of a company in different accounting periods. The series of steps begins when a business transaction occurs and ends within the period of closure where the cycle is repeated in the next financial year.

The 5 steps of the accounting cycle including;

-         Step 1: Identifying business stockholders

-         Step 2: Understanding accounting needs

-         Step 3: Identifying accounting transactions

-         Step 4: Recording transactions

-         Step 5: Preparing Accounting Reports

Harold Averkamp describes a manual accounting cycle as “ a process that includes the following steps: identifying, collecting and analysing documents and transactions, recording the transactions in journals, post the journalised amounts to accounts in the general and subsidiary ledgers, preparing an unadjusted trial balance, preparing a worksheet, determining and recording, preparing adjusted trial balance, preparing financial statements, recording and posting closing entries.” 

Assuming every accountant/bookkeepers operation revolves around the processes stated by Harold Averkamp that means each accounting cycle stage represents an accountant’s job description. The table below tries to measure using an accounting cycle to what extent innovations in data processing software/tools classified as reactive and proactive systems have completely taken over manual repetitive tasks and administration of an accounting cycle and also outline specific existing vendors that can provide these automated services thereafter. To conclude, our article I would list a combination of existing vendor accounting software that can be used to do the same manual tasks stated in the accounting cycle.

A summary definition of the table above is stated below;

-         Accounting Cycle Stage: the major stages of every accounting operations

-         Description Of Manual/Traditional Task: Description of manual accounting tasks associated with accounting cycle stage like journalizing source documents etc

-         How Systems Are used to Automate the Stated Task: existing vendor system functionalities that can process the accounting cycle task.

-         Vendors of Pro-Active Data Processing Systems That Perform Automated Task: Example of Existing Proactive Data Processing Vendors that perform Accounting entry before payment is made

-         Vendors of Reactive Data Processing Systems That Perform Automated Task: Example of Existing Proactive Data Processing Vendors that perform Accounting entry after payment is made

-         Vendors of Artificial Intelligence Tools That Perform Automated Task: Example of Existing Artificial Intelligence Tools that perform Automated Accounting Tasks like Automated data Entry.

Below I would analyze the combination of system functionalities that use Accounting systems and tools that provide accounting automation services in an accounting cycle using existing vendors as examples;

CONCLUSION

Our simple analogy points out that there are existing system functionalities that if combined/integrated can carry out the role of account clerks/bookkeeper in any accounting cycle of an organization more like how Heavy duty machines and factory automation took over manual labour operations. But, since systems cannot run by themselves, someone still needs to configure these systems to meet the specific financial reporting requirements of an organization, therefore, a new job description in accounting eliminates data processing and analysis rendering jobs of accountants to be more routine and technical roles in nature and where they would focus more on the interpretation of financial statements and make recommendations to stakeholders of an organisation based on the data generated by their accounting systems. The Accountants/bookkeepers job descriptions has certainly evolved towards roles of accountants skilled in automated data processing and accounting processes automation and I believe in the near future Artificial Intelligence tools like Robotic Process Automation (RPA) with a combination of some of the above Accounting systems would be used to record, analyse and interpret financial statements to management and external parties without the input of an accountant or bookkeeper.