Digital Accounting Revolution and Misconception among Organizations and People
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Digital Accounting Revolution and Misconception among Organizations and People
Chapter 1
Just like in life, in business, change remains constant. From reducing unprecedented business disruptions to adopting new operating paradigms, professionals in different areas encounter significant changes that will likely affect them and their organizations. The reality is that most of the changes experienced by professionals in different areas and organizations result from emerging technology. The accounting profession has been among the professionals changing due to the changes in emerging technologies (Berikol & Killi, 2021). The real issue of discussion in this paper concerns the digitalization of accounting. As a result of the emerging technologies, the nature of accounting is going to change. This is because the professionals will need to acquire new knowledge in the use of the latest technologies to perform accounting duties. As such, it means accounting professionals will require to develop new skills to use the new technologies in their duties. Therefore, there is a misconception among people and organizations since people think that, due to digital accounting, they are likely to lose jobs. Alternatively, organizations believe they will need to hire new professionals for the accounting work since their accounting professionals will not understand how to carry out operations using new technologies. Also, organizations think that they would be negatively affected by the digital revolution. Thus, the proposed research project is digital accounting revolution and misconceptions among organizations and people.
The digital accounting revolution is going to impact accountants and organizations positively. With the emerging technologies, the accounting profession will change and move beyond the mere payroll and bookkeeping duties. Emerging technologies will move the accounting professionals beyond the usual responsibilities and prepare them for advanced jobs, which is a benefit to the accountants as they would have an opportunity to earn more income and add skills. While some pundits have indicated that the accounting profession has a dim future in the digital revolution, technologies like cloud-based data management, advanced analytics, and process automation are projected to elevate accountants in fresh and empowering ways (Higgins, 2021).
Emerging technologies will support but not replace accountants. According to Higgins (2021), in 2015, industry leaders were pronouncing the death knell for accountants since they were convinced that the emerging technologies, especially automation, would end in the death of accountancy. Alternatively, some accountants have expressed fears of job loss by expressing their concerns that they will be replaced and have fewer opportunities for creative problem-solving emanating from the overdependence on technologies to solve daily tasks. However, it has emerged that accountants need to worry much about replacement but need to put their emphasis on adaptation. The digital revolution has changed the playing field radically for accountants. Big data has emerged as a rich resource that accountants should tap into to compete effectively (Santos de Jesus et al., 2020). For businesses and professionals ready to leverage the potential associated with digital tools, the shift in technology represents an opportunity and not a threat.
Although the digital accounting revolution is associated with the opportunity of benefiting businesses and accounting professionals, the topic of the digital accounting revolution and existing misconceptions is not well recognized. The topic has not been well researched and presented to accounting professionals and organizations. However, only a few accounting professionals and organizations understand the topic. This emanates from their research on the potential and opportunities associated with the digital accounting revolution. The primary sources for the information are accountants with immense knowledge in the digital accounting revolution. The topic of the impacts of the digital accounting revolution is of interest at the time, and there are some historical benchmarks to note. The digital accounting revolution is in the fourth industrial revolution, where emerging technologies are taking over, and their adoption is projected to help communicate and make decisions without involving humans. This relates to industrial revolution three, where computers and automation were introduced and forecasted to take over the accounting profession (Kruskopf et al., 2020).
The study will help understand the digital accounting revolution’s openings and benefits to organizations and accounting professionals. This will help promote the adoption of the digital accounting revolution by accounting professionals and organizations. However, the conflict may be convincing the accounting professionals and firms about the benefits due to the existing misconceptions.
A qualitative approach will be used for the study. The strength of the approach is that it would be possible to get a wide range of information for analysis. However, the approach will have a weakness because it will require a lot of time to collect and analyze data for the study.
The study of the topic is significant to the accounting field. Studying the topic will help to prepare accounting professionals and organizations for the digital accounting revolution. Besides, the study will help in dispelling the misconceptions that organizations and people have concerning the digital accounting revolution.
Problem Statement
Both accountant professionals and organizations have not well understood the digital accounting revolution. As a result, different misconceptions have emerged concerning the digital accounting revolution. The problem is that the misconceptions surrounding the digital accounting revolution may hinder accountants and organizations from embracing digital accounting tools, thus, hindering firms and individuals from getting benefits associated with the digital accounting revolution. For instance, there is a misconception that the digital accounting revolution will replace humans. This has not gone well with the accountants since they fear that their jobs as accountants will be replaced by the adoption of accounting software (Abe, 2021). This is a concern because accountants may end up barring the adoption of digital accounting tools, which they fear may replace them. Failure to support the adoption of digital accounting tools may mean that organizations may be barred from the benefits that they may get from the tools.
Purpose of the Study
Digital accounting presents a more dynamic approach to accounting processes and managing entities. It ensures that companies and organizations realize efficiency by mitigating systemic errors inherent in traditional accounting techniques. While implementing digital accounting processes and systems may involve serious stakeholder engagement, in terms of cost and procedures, this approach is worthwhile in creating an enabling environment for businesses to realize growth (Esmeray, 2020). Thus, sufficiently addressing misconceptions on digitalized accounting processes is critical in promoting operational efficiency in organizations and paving the way for future expansion and development by leveraging the same technologies.
Moreover, conducting an in-depth evaluation of trends in digitalized accounting revolution and related processes will be critical in ensuring that organizations are conversant with their choice of accounting systems based on adaptability and compatibility with internal processes. Meanwhile, evaluating underlying misconceptions will establish a solid basis upon which entities realize sustainable growth by effectively integrating these digitalized processes to achieve sustainability.
In utilizing a case study approach, this research will present a real-time scenario on digitalized accounting processes and factors that impact strategic implementation. It will also, identify underlying misconceptions at individual and organizational levels, to promote sustainable growth and improved decision making (Kruskopf et al., 2020). Thus, this study presents a feasible solution to managing digitalized accounting processes in organizations by drawing from real time processes for informed decision making, stakeholder management, and sustainable policy formulation and stipulation to govern these systems.
Case studies promote data collection and analysis efficiency because they promote data focus. Additionally, they ensure that the data collected is comprehensive and meets the data collection criteria and objective (Ebneyamini, 2018). Thus, reliance on this approach will promote sustainable decision making based on more comprehensive data and informationResearch Questions
In the conduction of research, a research question is considered integral because it helps the researcher focus on the area of scrutiny. Indeed, the research questions help the researcher focus on the thesis and avoid covering other emerging or divergent issues. This study will be guided by different research questions, which will help exhaustively cover the issue of concern. The research questions are as follows:
Main Question:
1. Why do firms fear the digital accounting revolution? This question will help understand why most firms avoid the digital accounting revolution. It will inform the fears that need to be dispelled.
Sub-questions:
1: What are the different organizational misconceptions that hinder the adoption of digital accounting tools? The question will inform the misconceptions that organizations have in adopting digital accounting tools. This would help to understand the areas to address.
2: What individual misconceptions are there concerning the digital accounting revolution? The question will be essential to help understand people’s misconceptions that hinder the adoption of digital accounting tools. The responses will help to inform how to handle the misconceptions.
3: Are firms ready to embrace digital accounting tools? The question will help to understand firms’ position regarding using digital accounting tools. This will help to inform whether firms need to be motivated to embrace the tools or not.
4: How can the misconceptions be dispelled? The question will inform how firms and people can avoid misconceptions. Such would help in the adoption of digital accounting tools.
5: What are the benefits associated with the digital accounting revolution? The question will help to understand the different merits emanating from using digital accounting tools. This will inform people and organizations about the significance of the digital accounting revolution.
Conceptual Framework
Theory of Accounting Engineering
The theory covers procedures, principles, and concepts that form the foundation of the digitalization of accounting. The theory focuses on shaping the accounting profession based on digitalization and the outcomes of the accounting structure and professional accountants. It evaluates the adjustments accounting practices have generated in the accounting profession and its members by concentrating on the changes that have emerged due to digitalization (Tekbas, 2019). Besides, the theory also focuses on redesigning the accounting profession regarding digitalization. The theory’s role is to develop accounting practices within the digitalization framework to help solve accounting issues that emerge due to digitalization. The theory’s purpose is to offer a new model suggested by providing a steady set of logical principles that constitute the basic reference framework for assessing and developing the digitalization impacts on accounting practices. Without the proposed model, it is considered unrealistic for the accounting profession to embrace the digitalization process.
Digital transformation does not constitute changing the technology, tools, or materials. It is exceedingly essential to change the perception (Deshmukh, 2006). As such, it becomes vital to change the accounting education structure to enhance the perception and awareness of the accountants on digital systems. Thus, the theory is critical in supporting reshaping the current accounting education within the engineering skills framework by forecasting how the accountants and accounting profession will be impacted by digitalization. Engineering skills emerge as the most vital aspect in the conception of digital accounting for purposes of digital evolution (Tekbas, 2019). Based on this scenario, the engineering sciences would offer professional accountants the capabilities of numerical and analytical thinking, creativity, problem-solving, and effective communication. The acquisition of these skills has an essential effect on accountants in the realization of digital transformation.
Presently, all the data applied in the accounting profession are generated in the computer environment. As such, it is almost impossible for the accounting industry today to avoid the application of digital systems during the implementation process. The digital world has thus opened new areas of discussion on accounting. The accounting engineering theory is structured based on these discussions. Therefore, the accounting profession can be considered to be changing with digitalization. As such, it would be expected to create new opportunities meant for professional accountants.
Through the accounting engineering theory, it would be possible to understand whether incorporating digital accounting tools into an organization would be integral. Indeed, from the theory, it is apparent that accountants would acquire the skills necessary to use digital accounting tools. Such a move would necessitate accountants to adopt digital accounting tools. Besides, through the theory, it would be possible to provide a supportive environment that would see accounting professionals feel competent to work for an organization adopting digital accounting tools. Therefore, the theory would help ease the process of implementing digital accounting tools in an organization.
Porter’s Value Chain Model
This is a framework for creating an analytic structure that follows interdependent tasks from acquiring raw materials or ideas through production and eventually into the customer’s hands. The model is helpful because businesses in all industries can identify linkages or alliances between discrete tasks that lead to product development. Discussions regarding value chains tend to focus on frameworks and mechanics associated with the process, but more information can be accessed from the analysis. Indeed, value chain analysis emerges as to where real market opportunities are identified. Porter believes that firms will likely gain a competitive advantage by embracing new ways of conducting activities, using new technologies and procedures, or applying different inputs.
The model involves five key activities: marketing and sales, service, outbound logistics, operations, and inbound logistics (Bygren, 2016). Alternatively, there are support activities. These are presented in a vertical column above primary activities. These support activities include firm infrastructure, technology development, human resources, and procurement. Figure 1 below shows different activities based on Porter’s value chain model. [KO1]
Figure 1: Different Activities Based on Porter’s Value Chain Model
In using Porter’s value chain, there is a need for a firm to determine whether it is trying to lower or differentiate costs. This is vital in prioritizing changes that become identified during analysis. Besides, when using the model, it is essential to consider how changes will benefit an organization.
Porter’s value chain may be applied to the scenario under consideration. This emanates from the reasoning a company would go for an alternative that would reduce operating costs and foster competitive advantage. In the case of digital technologies, an organization adopting digital technology tools is likely to boost its productivity and efficiency. This implies that a firm embracing digital accounting tools would earn varied benefits, including enhanced time management in the delivery of services. This would positively impact an organization, which would boost its competitive edge. This being the case, there would be an inclination of an organization towards adopting digital accounting tools as a result of the supporting activity improving the value chain of the firm.
Assumptions, Limitations, and Delimitations
In employing a case study, this research assumes that the research is widely qualitative. It implies that it will employ primary research tools to collect data and adopt qualitative research and analysis tools to make decisions. This assumption is premised on the underlying study’s nature that may not be largely quantified because of inherent non-numerical aspects.
Moreover, the study assumes that the sample and population selected as part of the case study meet the diversity criteria. Primarily, efficient study techniques provide that the data collected should be diverse to ensure that the decision-making process is comprehensive and extensive by accounting for converging and diverging concepts. Thus, by drawing from several organizations into the case study, the research assumes that it is not only objective but also diverse to present a less biased finding for decision making.
Finally, the research assumes that each of the study participants understands the basic accounting systems and processes and can employ this information to make decisions. Meanwhile, they understand digitalized accounting processes, and their impact on organizations. While misconceptions are inherent at organizational and individual levels, the study assumes that these participants understand the basic principles and guidelines. In essence, the assumption guides the data collection process on underlying misconceptions. It employs any additional information provided to establish key decisions that would positively impact the accounting industry and profession.
However, the study presents several limitations and weaknesses, partly based on the assumptions and selected sample and population size. For instance, the assumption that the participants (organizations) in the case study understand the basic accounting processes and underlying digitalization trends is limiting. Essentially, not all participants may clearly understand these processes because different entities and organizations employ various accounting systems or management processes that greatly differ. Moreover, the extent to which these participants understand these processes vary based on the roles assigned.
Additionally, the assumption that the sample selected in the research accounts for diversity is limiting based on the unavailability of critical tests that back such assumptions. Primarily, the selected population for the study comprises professionals and general organizations in the sector. While the roles and functions performed by each of the selected entities and organizations vary, there is limited evidence that suggests that the information or knowledge possessed by the selected participants is diverse to enhance effective decision making with limited bias.
To delimit the underlying limitations, the research set objectives that should be met. These objectives include, as a minimum, identifying the main misconceptions surrounding digitalized accounting systems and processes at an individual and organizational level to impact the decision-making process. Moreover, the study allows for fluctuation in the information provided to integrate any outliers into the decision-making process.
References
Abe, E. N. (2021). Future of work, work-family satisfaction, and employee well-being in the fourth industrial revolution. IGI Global.
Berikol, B.Z. & Killi, M. (2021). The effects of the digital transformation process on the accounting profession and accounting education. In Ethics and Sustainability in Accounting and Finance, Volume II (pp.219-231). DOI:10.1007/978-981-15-1928-4_13
Bygren, K. (2016). The digitalization impact accounting firms’ business models. https://www.diva-portal.org/smash/get/diva2:939040/FULLTEXT01.pdf
Deshmukh, A. (2006). Digital accounting: The effects of the Internet and ERP on accounting. IRM Press.
Ebneyamini, S., & Sadeghi Moghadam, M. R. (2018). Toward developing a framework for conducting case study research. International journal of qualitative methods, 17(1), 1609406918817954. https://doi.org/10.1177%2F1609406918817954
Esmeray, A., & Esmeray, M. (2020). Digitalization in accounting through changing technology and accounting engineering as an adaptation proposal. In Handbook of Research on Strategic Fit and Design in Business Ecosystems (pp. 354-376). IGI Global.
Higgins, M. (2021). The future of accounting: How will digital transformation impact accountants? Forbes. https://www.forbes.com/sites/forbestechcouncil/2021/05/19/the-future-of-accounting-how-will-digital-transformation-impact-accountants/?sh=557f626f53fb
Kruskopf, S., Lobbas, C., Meinander, H. & Soderling, K. (2020). Digital accounting and the human factor: Theory and practice. ACRN Journal of Finance and Risk Perspectives. https://www.acrn-journals.eu/resources/jofrp09f.pdf
Kruskopf, S., Lobbas, C., Meinander, H., Söderling, K., Martikainen, M., & Lehner, O. (2020). Digital accounting and the human factor: theory and practice. ACRN Journal of Finance and Risk Perspectives. https://helda.helsinki.fi/dhanken/handle/10227/377333
Santos de Jesus, S.M., Campos, J.F. & Junior, A.M. (2020). The technological revolution and the new profile of the accounting professional with the entry of digital innovation. International Journal for Innovation Education and Research, 8(2), 221-229. DOI:10.31686/ijier.Vol8.Iss2.2200
Tekbas, I. (2019). The theory of accounting engineering. ResearchGate. https://www.researchgate.net/publication/333162067_THE_THEORY_OF_ACCOUNTING_ENGINEERING_ISMAIL_TEKBAS
Sample Figures (APA.org)