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We are officially in the era of digital transformation where technology has greatly impacted audit processes. This has ushered changes that were hard to imagine as possible about a decade back. While the accounting profession has by and large embraced technology in various processes, it was restricted to the documentation, calculation, stor age and retrieval process. However, this is all set to change as cutting-edge technology dons a greater role in auditing. The clamour for different reporting and financial statements has been growing, and technology has all the right answersv. Taking a leaf out of fintech companies for development of intelligent software Bookkeeping outsourcing company in uk. Processes that will be touched by technology will include those areas where it may be necessary for a machine to understand and use that knowledge to identify complex information. Fintech companies have been able to deploy automated solutions by leveraging the power of AI and machine learning. Auditing will similarly find a greater role for technology, beyond the present functions. For instance, technology has developed to a level where it is possible for AI powered systems to look at all the data of a company that is being audited and identify anything that is amiss. This will help auditors to turn their focus to flagged areas that need more of their attention. Evolving reporting requirements Bookkeeping outsourcing company Present audit reporting helps investors and shareholders understand the financial health of businesses. However, in the context of a data driven world with more and more information available, there is an increasing chorus for auditors to share additional information. Stakeholders are of the opinion that auditors possess more information, than what is actually reflected in the reports. And the demand is for more contextual information from auditors about how a specific conclusion was made or arrive at. Readers want to know how the auditors arrived at a conclusion. This open the floodgates of confusion. Auditors crunch numbers and make conclusions, expecting a reader to do the same is an invitation to chaos. However, technology has the ability to present relevant information in the right form for dissemination, that is in alignment with the overall findings/conclusion. Impact of revisions and penalties corporate secretarial services in ukThe Financial Reporting Council released revisions to International Standards on Auditing (UK)[1], which had more to do with the Code of Ethics. This has great significance for auditors and by extension the companies that are being audited. The changed standards, despite being limited in scope can have implications for stakeholders. This needs to be read in the context of the fines levied by the FRC, on some of the top global auditing firms for misconduct. Even as the dust began to settle over the fines and the circumstances surrounding it, most of the iconic and respected auditing firms commenced an overhaul of their systems and processes, bringing in more technology driven processes to strengthen existing processes. This will be the order of the future, as auditors look towards technology for greater compliance. Moving from sample testing to testing of all transactions In the future, auditors will harness technology to carry out checks of all transactions, and not just rely on a sampling or random check of transactions. While the certainly humungous volumes of transactions may have come in the way of checking out all the transactions in the past or the present, this is all set to change. With the use of the right technology, not only will all transactions be checked, they will be completed at high speed, which means that the process of checking will not add to the time element. And this aspect of checking all the transactions will help auditors to gain more insights about the financial health and other inputs about the organization and the domain it operates. This will be invaluable to investors and shareholders who will now be able to understand reports on the basis of checking all transactions and not just a sample. Sampling has a probability of error, which will be corrected in the future. The need for speed The new techno-social order has turned time on its head. Processes that once took a specific period of time has now been shortened drastically. As a consequence, all other allied processes and procedures are also expected to commence/conclude at proportionate speed. Effectively, this has led to a cascading effect. Audit, resultantly, requires to be concluded faster than ever before. Manual processes do not stand a chance of delivering results at speed or with the accuracy and precision required. While it is impossible for technology, as it stands now, to replace the power of human intuition in tasks as complicated as auditing, many of the tasks that are repetitive or rote in nature need to be entrusted to technology and automated processes to be able to meet the deadlines. Leveraging the power of blockchain for cost effective audit processes Blockchain is the buzzword that will continue to hold sway over businesses well into the near future. And by virtue of being a distributed ledger, blockchain is the natural bedfellow for auditing processes. Auditors need not seek information or wait for clients or third parties to furnish statements, or any documents for verification and cross-verification. Auditors can simply carry out the verifications from blockchain ledgers. With the power of offering verifiable and immutable transactional information, these ledgers will save a lot of time and money, in addition to the assurance of offering information that is accurate and free from errors. This is basically, because the transactions themselves would have been carried out only after fulfilling the criteria or conditions of all –parties involved in the transaction. Analytics only as good as the data that is fed Analytics can be only as good as the data that is fed, which means that standards also need to improve so as to offer data that is of the right standard. While systems will be powered to detect anomalies over entire transaction history, the advantage of perception that is available to the human mind and the logic of perspective will be unavailable to technology driven systems. This will make it mandatory for records to conform to certain standards. The quality of the data and the processes or technology that is available to bring in the data from many sources needs to be advanced so as to prevent gaps in data capture and its use. The need for more regulations and standards Past processes had stakeholders trying to catch up with the regulations and standards. For instance, auditors and organisations had to fulfill or meet the standards and regulations as laid down and the need of the hour used to be a scramble to meet the standards. However, with changes in the way business is conducted, there are multiple issues which cannot be met or fulfilled by existing standards. This turns the whole equation of regulations and standards on its head. Regulations and standards are now expected to keep pace with the developments and evolving changes in the world of business. Till the regulations and changes are in place, auditors and businesses will have to work within the contours of existing regulations which may not be very easy considering the inherent differences among domains. Conclusion: Auditing is a proven facilitator for growth, in addition to meeting the requirements of accounting and financial reporting. While nations have their own set of policies about the size of businesses that need to be audited or not audited, it is a proven fact that auditing is one of the pillars of growth of a business. Technological innovations will assist the acumen of humans to bring about greater accuracy, improved reporting and faster conclusion. Auditing will not be limited to random checks but will encompass the whole history of transactions for specific periods. Contrary to popular belief, technology will not take the place of humans, but will help humans in their deliverables.

How Accounts digitisation is bursting outsourcing myths

It is no doubt that the operations of the accounting firms in UK have witnessed consistent transformations on its journey through the information era. Right from the physical ledgers for tallying accounts to the tremendous digitisation that has been infused in accounting, there is a constant surge in its operational excellence.

This massive scale of digital evolution has been continuously reinventing itself to open doors to the infusion of outsourcing and Information Technology in all industries. Businesses have been reaping the benefits of digitisation and outsourcing for the past two decades to produce phenomenal operational excellence in their respective fields.

However there have been and there still is a resistance from the accounting ecosystem to accept accounting digitisation and adapt outsourcing a standard business practice. This has stunted the growth of the digital accounting landscape significantly.

  

This resistance can be attributed to lack of clarity of digital accounting systems and several myths surrounding the outsourcing of accounting services. One can understand as how digitisation of accounts is eliminating the reasons to believe various myths of outsourcing accounting services from the below paragraphs.

What is Accounting digitisation? 

Accounting digitisation can be defined as the process of converting physical accounting records and documents from any physical form like ledgers, notebooks or a paper based system into an organized electronic format. In the earlier days of computing, spreadsheets were used to store, manipulate and retrieve accounting data.

Today there are multiple software, tools and web applications that are exclusively dedicated to accounting that include digitization, storing, retrieval, manipulation, organization, indexing and analysis of the accounting data. The capabilities of these tools would exponentially reduce the workload, errors and the execution time of the accounting tasks.

What are the accounting outsourcing myths? 

The critics of outsourcing accounting tasks mainly cite data security to oppose outsourcing. Along with that there are other myths that are contributing to the resistance of the people who refrain from outsourcing. Some most believed myths are mentioned below.

  • Outsourcing is a cumbersome process
  • Small businesses cannot outsource
  • My data security will be compromised
  • I would need to invest extra on digital infrastructure for outsourcing
  • The idea of taking my business to cloud is intimidating

How does accounting digitization burst the outsourcing myths? 

Digitisation of accounting and its associated tasks has been simplified by the accounting services providers by modularising and streamlining the tasks into efficient processes. Accounting and Bookkeeping services like transaction processing, bookkeeping, filing Self assesment tax returns/VAT returns, payroll processing have been restructured into simple workflows with the help of digitisation and the infusion of software/tools for an effective service delivery.

Let us see how accounting digitisation overcomes the myths of outsourcing below

Myth 1: My data security will be compromised 

Accountants and accounting firms are provided access to client’s financial data with a great deal of trust. Hence this is a valid fear of any accountant considering the security of client’s financial data.

There is a good basis to this fear when dealing with accounting data which are physical in nature. The security measures of physical accounting data like ledgers, sheets and papers can be easily bypassed. But it is not possible in the case of digitised accounting data.

Accounting data that is digitised is bound by numerous data security protocols. Companies which deal with financial data are required to be certified with renowned Information Security Management Systems certifications and they are subjected to audits frequently. Also, these companies sign an NDA with the accountants or accounting firms to safeguard client’s data.

 

And hence, service provider companies give primary preference to data security and honour the confidentiality and integrity of the data they are entrusted with.

Myth 2: Outsourcing and digitisation are cumbersome and hinder business execution 

Many accountants and accounting firms feel that digitisation is a difficult process that involve an extra effort in running the business. But digitisation of the physical records enables the data to be stored in an organised manner bound by security protocols and effective retrieval features.

This kind of data organisation would only help the accountants or firms in propelling forward rather than be a hindrance. What would actually be cumbersome is the huge pile of physical data sitting in the offices taking space and hosting termites.

Myth 3: Small businesses cannot outsource 

Many accountants and accounting firms with a traditional approach for a long term feel that outsourcing is a costly affair and it is unnecessary. This myth arose as only big accounting firms with sizeable revenues and a large client base outsource. But on the contrary, accounting service providers have a wide array of services customised for the Tier 2 and Tier 3 accounting firms as well.

Due to digitisation, large chunks of financial data can be organised, retrieved and stored in a hassle free manner using accounting software and tools. These software and tools have paved way for these companies to redesign their services to suit the requirements of the small businesses at affordable costs.

Myth 4: I would need to invest extra on digital infrastructure for outsourcing 

This is a traditional belief that existed in the 1970s where there were limited or no computers or digital machines to run the business. All accountants and the accounting firms in the 2010s are equipped with computers and faster internet connections which is all that is required for outsourcing. The service provider companies will possess all the required software, FTPs and tools to on-board the acceptors of outsourcing in a cost and time effective manner.

Myth 5: The idea of taking my business to cloud is intimidating 

Incorporating cloud based services for businesses has been in execution for the past two decades. Today businesses are deploying them in full swing with the presence of high end cloud services. Many businesses are migrating from their private servers to run their business on cloud services like Amazon Web Services.

The data centres of these cloud service providers follow state of the art security protocols which ensure maximum security to the client’s financial data. Also a cloud based business model will ensure high levels of efficiency in business operations and moderate costs which eventually benefits the accountants and accounting firms.

We are living in the brightest phase of information era where any business can reap the benefits of digitisation and outsourcing to a maximum extent. This gives a competitive edge for the accounting firms and opens multiple windows of opportunities for them to expand their business.