EFFECTS OF MODERNIZATION OF TECHNOLOGIES AND TECHNIQUES TO THE

ACCOUNTING PRACTICES

Abadilla, Jeanelle Christine E.

Agustin, Mark John N.
De Guzman, Adrian S.
Miclat, John Joseph B.
Regodon, Renson Francis DG.
Vitug, Maureen Mae C.
Volante, Ma. Iris Danielle L.

Submitted in Partial fulfillment of Requirements in Business Statistics

Far Eastern University

Nicanor Reyes Sr. Street, Sampaloc, Manila

Mr. Manuelito Bengo

Bus Statistics Professor

ABSTRACT:
Accounting is the common language of business to the people. This language
had undergone so many changes throughout the ages and almost every accountant
had encountered this changes in the Accounting practices. Technology advancements
have enhanced the skills of the accountants in interpreting and understanding the date
effectively and efficiently. As the technology improves has the ability of the accountants
which makes their job a little easier.
This dissertation will focus on the changes of technologies and techniques that
resulted to some updates to the accounting field. It will also give a brief glance on what
Accounting practices are in the past and what it is in the twentieth century. Therefore,
the findings of the study will provide knowledge and awareness about the differences of
accounting practices from when it started until today.

INTRODUCTION
In the business world, accountants have the biggest role to play since accounting
is complex. Accounting is an art of recording, classifying, summarizing and interpreting
material events. It can also be defined with a simpler and broader purport; language of
business which has gone through many changes throughout the ages. These changes
were somehow caused by the development of technology. As our knowledge of
technology increased so has the accountants ability to analyze statistical values.
Technology advancements have enhanced the accountants ability to interpret and
present data efficiently and effectively.

BACKGROUND OF THE STUDY:

Accounting is the system a company uses to measure its financial performance
by noting and classifying all the transactions like sales, purchases, assets, and liabilities
in a manner that adheres to certain accepted standard formats. It helps to evaluate a
Companys past performance, present condition, and future prospects. Way back in the
beginning together with the invention of the Abacus, businesses keep track of
calculation and helps the accountants with the use of this adding machine. Then, came
the invention of the calculator which gives accurate calculation. But as the technology
improved, the accountants job also advanced. Even with the inventions of the adding
machine and the calculator there are still job that remain unsolved, such as the paper
works. The important job of the accountant such as the identifying, measuring and
communicating financial information needs to be reported in paper records, and
handwritten statements. But when the twentieth century came, accounting profession
take a new era and improved a lot with the use of modern technology. The impact of
technology or Information Technology (IT) as a whole will be discussed in this research
paper. IT is the area of managing technology and spans wide variety of areas that
include but are not limited to things such as processes, computer software, information
system, computer hardware, programming languages, and data constructs. In short,

anything that renders data, information or perceived knowledge in any visual format.
Computer programs or IT has changed the industry completely. The biggest impact IT
has made on accounting is the ability of companies to develop and use computerized
system to track and record financial transactions. Paper ledgers, manual spreadsheets
and hand-written financial statements have all been translated into computer systems
that can quickly present individual transactions into financial reports. With computer
programs such as Microsoft Excel, an accountant now had an electronic spreadsheet.
Computerized accounting system has also improved the functionality of accounting
departments by increasing the timeliness of accounting information. By improving the
timeliness of financial information, accountants can prepare reports and operations
analysis that gives management an accurate picture of current operations.
Advancements in information the technology have enabled companies to computerize
their information systems. Accounting information systems have also been
computerized as a result of significant improvements in the technology. The jobs of an
accountant became less tedious and more accurate especially with the calculations and
recording of transactions. Computer (technology) also helps accountant perform a
statistical reports, presentations, and analysis with greater efficiency. The use of
computerized Accounting information systems has brought opportunities for companies
to perform the accounting functions more effectively and efficiently because the use of
computerizes AIS has brought significant time and cost savings. Information become
available to the accountant and public users, such as the creditors, and government,
with just one click of a mouse.
SIGNIFICANCE OF THE STUDY:
Modernization of technologies and techniques affected the development of accounting
practices. Accounting is rarely seen done manually; this is due to the help of fast and
effective computer accounting programs that are downloadable in premium. Using these
technologies, accountant and their practices will be easy and fast. They would be able
to much efficiently make Financial Statements for a firm or enterprise.
This study is very beneficial not only for the accountants but also for the owners of the
company or businessmen. The research would be able to provide them ideas on how
people can heave the outputs of their manpower. Moreover, this exploration could show
how modernization brought great accounting developments to the public.

REVIEW OF RELATED LITERATURE:

Review of Related Study:
Accounting has always been a front-runner in IT use. Carr notes that basic
accounting systems were the first areas computerized and the analytical aspects of
accounting acquired increasing support from financial modeling packages which
became available in the 1970s. The use of IT has now become all pervasive. Clark and
Cooper find all but not the smallest businesses has computerized accounting systems
and that other functions depend on IT. Though IT is extensively used, the quality and

mode of use is not always satisfactory. King, Lee, Piper and Whittaker observe from
industrial companies that IT made book-keeping more comprehensive, accurate, timely
and frequent, although IT did not help produce more focused and tailored information,
IT saved time in book-keeping, but this was absorbed by growth; the pace of systems
integration is slow, though increasing; IT is largely used to computerize existing
systems; limited evidence shows that IT supports decision making and this by proactive
accountants; and there is limited evidence that IT gives greater access to and wider
dissemination of information. Barras and Swann find that the accounting profession is
slow in adopting IT due to accountants propensity to look at the bottom line benefits, a
reluctance to accept that accounting craft is capable of being automated, unsuitable
technology and firms failure to search for alternative accounting methods more suitable
for computer techniques. Carr observes that accountants in industry and commerce
made more use of IT than those in accounting firms. Wilson and Sangster attribute this
to the nature of the tasks: accounting tasks in industry are more algorithmic while those
in accounting firms require more judgement and processing of qualitative information.
Using modern technology in accounting, as a preliminary information source, is
essential for creating on time information and relating to assistance to organizations in
managing their trade. In Iran most of the economic agencies and companies are using
computer as an essential and required mean for creating facilities in performing financial
operations. Computer can perform more complicated financial operations with speed
and lot of accuracy. Increase in using computer and modern technology in various
operations of organizations is in such a manner that in some companies, number of
computers are equal to the number of workers of organization so the personnel to
perform their current and daily operations thorough this channel, but essential for the
correct management and utilization of accounting information systems in an
organization, is sufficient awareness of directors of that organization towards the said
systems and modern technologies. Management of modern information systems is a job
of a person specialist in information technology and also possessing management
experience and knowledge. Also accounting as a primary technique of utilizer, can
create a close and affiliated communication with the modern technologies. At present
not utilizing these technologies, impossible and selection somewhat need main issues
and some of the important responsibilities in planning and compiling structure of
company so depending on the type and manner of admission of modern means, to
estimate the goals of organization, lesser expense, more profit or responding the
beneficiary responsibilities groups. Results of research of Dastgir and Colleagues
(2003), shows that accounting information system makes effect in the improvement of
management decision taking. Thong & James (1999), in a research shows that a
characteristic of competition environment makes indirect effect in the admission and
utilization of information system. Mitchell et al. (2000), has discussed this topic that
accounting information can help small and medium companies and founders to achieve
the capability of managing their short term difficulties in issues like costing, expense and
circulation of sums, by providing information for support through supervisory and control
manners. Bokhari (2005) in a research defines the study of relation between using
information system and satisfaction of user. As per his statement there is positive and
considerable relation between these two variables. The research results of Ismail and
King (2007) shows that companies with complicated IT system are possessing higher

rank and grade in comparison to companies with lower complication. In addition,

companies with owners or directors possessing high level of accounting and IT
knowledge higher rank in comparison with companies where the directors possessing
low capability. Therefore, the accountants are obliged to prepare an abstract and
classified information about the financial condition, financial function and financial and
budgeting flexibility of commercial unit for taking decisions of wide spectrum of utilizers
and considering the expansion of commercial relations utilization of complicated and
new approaches in the economic and accounting paths using traditional and old method
is not the solution but may cause to presentation of irrelevant information.

PRESENTATION, ANALYSIS AND INTERPRETATION OF DATA

This chapter presents analyses and interprets the data gathered from the review on
related literature and related study.
Evaluation of the study variables are hereunder presented in tables, figures, bar graphs
and subsequently discussed and analyzed textually consistent with the problems posed
in the study.
METHODOLOGY
This research is the kind of inductive research. In other words it is a kind of
survey study. The instruments of this research are questionnaire and interview. The
participants of this research are financial managers, accountant generals and
accountants of Khorasan-e-Razavi.

Hypothesis:
H1: Accountants need to acquire new skills with the help of IT
H2: IT causes the reduction of costs which are related to collecting information
H3: With the help of IT reduces time of production report
H4: The accuracy in accounting process becomes better with the help of IT

Table 1: Descriptive statistics

Frequency
H1
H2
H3
H4

Reject
Accept
Reject
Accept
reject
Accept
Reject
Accept

19
55
29
45
6
68
2
72

Frequency
percent
25.7
74.3
39.2
60.8
8.1
91.9
2.7
97.3

Z value

P value

4.18

.000

1.86

.031

7.21

0.0000

8.14

.0000

In order to test the hypothesis the article analyzes the questions which are
related to that hypothesis in the questionnaire. The article are seeking whether the
average score the higher that 3 or not. In other words it want to know whether over half
of testes agree with the hypothesis or not.

Table 2: Result of hypothesis testing

Hypothesis

Result

Accountants need to acquire new skills

with the help of IT
IT causes the reduction of costs which are
related to collecting information
With the help of IT reduces
production report

95 % accept
5% reject
95% accept
5% reject

time of 95% accept

5% reject

The accuracy in accounting process 95% accept

becomes better with the help of IT
5% reject

The result shows that most of the respondents agreed that accountants need to acquire
new skills with help of Information technology maybe because it makes the accountants
work easily. 95% agreed that information technology causes the reduction of costs
which are related for collecting information.
95% agreed that with the help of information technology, it reduces time of
production report and 5% rejected it
95% accept that the accuracy in accounting process becomes better with help of
information technology and 5% rejected it. Most of the respondents agrees because
information technology helps accountant to handle accounts.
METHODOLOGY
These findings, and others covered in this white paper, are based on the
independently conducted CCH Technology Survey, which explored how technology is
changing the tax and accounting profession, how professionals anticipate it will continue
to change and what is needed to compete and succeed in the future. The survey looked
at different technologies In the past, present and future and the impact of technology
on the profession.
The 2012 CCH Technology Survey included quantitative interviews with 405 tax,
audit and accounting professionals in U.S. firms nationwide to examine how technology
has changed the profession and how professionals anticipate it will change the skills
and tools they need to compete in the future. The survey was conducted for CCH
online by ORC International from August 9-22, 2012. The survey reflects experiences of
randomly polled tax, audit and accounting professionals working at firms ranging in size
from 1 to more than 100 employees.

Figure 1: Emerging Trends and Technologies (Firms have already or will have implemented within three years)

Social Media

Smartphones

Cloud/SaaS

Tablets

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Large firms(50+ employees) Mid-size firms(10-49 employees)

Small firms(1-9 employees)

Figure 1: For recently considered emerging trends and technologies, the speed
of adoption of some technologies, the speed of adoption of some technologies has
quickly made them foundation in large firms.

Chart Title
Agility needed to quickly implement

14%

Resources to manage system implementation

11%

Skill resources to ensure staff capable of leveraging technology

13%

Understanding of how emerging technology will benefit firm

13%

0%

5%

10%

15%

Figure 2: Today firms are concerned about their ability to manage new
technologies. In fact, less than 15 percent of accountants say they are very confident
that their firm is able to understand and manage emerging technology.

Figure 3: Firms with Written Technology Strategy Covering Emerging Technologies

Small firms (1-9 employees)

Mid-size firms (10-49 employees)

Large firms (50+ employees)

0% 5%
10% 15%
20% 25%
30% 35%
40% 45%
50%

Figure 3: Large firms are more likely to have a written policy covering emerging
technologies; still, less than one-half do.

Figure 4: Trends Having a Future Impact on the Accounting Industry

Consumerization

58%

Social Media

59%

Big Data/data analytics

67%

Changing demographics

75%

Globalization

75%

Cloud computing

78%

Workflow automation

85%

Mobile/remote connectivity

89%

IT security privacy

91%

Regulatory complexity

93%

Figure 4: Technology-related trends will have the biggest impact on the future of
the profession.

Figure 5: Considerations Impacting Technology Investment Decisions

Improve practice management/ profitability

Enhance stuff productivity

Enhance client service

56%

59%

64%

Figure 5: Improving client service, staff productivity and practice

management/profitability are key considerations impacting technology investments.
Among accounting professionals, however, enhanced client service is the top
priority when firms are making technology-related investments, according to the CCH
Technology Survey. Firms reported that the top considerations that drive technology
investments are: client service; stuff productivity; and practice management/profitability.

Figure6: Few Firms Manage Technology Very Effectively

Leveraging social media
Managing system implementation
Leveraging mobile technology

6%
9%
10%

Leveraging cloud computing

12%

Enabling decision support

16%

Managing knowledge

16%

Managing firm/practice performance

Managing risk/compliance
Managing/retaining data

17%
18%
26%

Figure 6: In most instances, fewer than one in four firms report they are very
effective at managing core technology areas.
Figure 7: Mobile Devices Used Professionally

Figure 7: The majority of employees in large and mid-size rms are utilizing
smartphones, tablets or a combination of the two.

Figure 8: Mobile Device Operating System

Figure 8: Apple devices are most common among accountants, although at small
rms are nearly as likely to use Android devices.
Figure 9: Average Number of Hours Per Week Spent Using Social Media

Figure 9: Among professionals using social media, those at large rms report
using it most. They spend nearly six hours per week using social media professionally.

Figure 10:Challenges in Leveraging Technology

Figure 10: Accountants generally attribute their rms technology challenges to a

near-equal combination of lack of understanding, skill and investment.

Figure 11:Biggest Concerns with Social Media Professionally

Figure 11: Security/privacy tops the list of concerns for using social media
professionally.

Figure 12: Firms Technology Culture

Figure 12: Most professionals view their rm as having a tendency to wait to

adopt new technology, although many realize the importance of being rst to adopt.

Figure 13: Social Media Tools Used Professionally by Individuals

Figure 13: Among those using social media professionally, LinkedIn and
Facebook account for the majority of usage.

CONCLUSION
Over time, technology has been one of the most powerful and pervasive forces
influencing the tax and accounting profession. Today, this is truer than ever. Firms
seeking opportunities to increase relevancy, build better business performance,
enhance service capabilities and improve efficiency need technology to drive results.
Important technologies they are turning to include: Cloud; Mobile; Social media; and Big
Data.
Each of these is powerful, but brought together, they will have a game-changing
impact on the profession. Its clear the capabilities technology offers the profession
today are big, and the possibilities even bigger. The CCH Technology Survey provides a
window into the challenges and opportunities that accounting firms face as they engage
with technology. Understanding the role of technology and implementing the right
solutions is key to each firms continued success. Everything you need to serve your
clients successfully, in sync with their expectations, is available today. To succeed, you
need to ensure your firm has the right processes in place; you partner with the right
provider who will help you leverage differentiated technologies to meet your business
goals; and you remain open to change.

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