Is the accounting industry as deadpan and mundane as what many people expect it to be? Will there be any major changes in this industry in the next few years?
With technological advancements and the increasing emphasis on the topic of sustainability, we foresee that the accounting industry will move forward with these recent trends to become a growing and more prosperous industry. So, what are the anticipated changes in this industry for 2022?
- Technology Transformation
Ever since Covid-19 hit, many industries have started to incorporate technology into their work to cope with the pandemic, such as using Zoom for meetings instead of physical meetings. Similarly for the accounting industry, Cloud Accounting is becoming more frequently practiced in this industry instead of using the traditional accounting software, which is storing information on hard drives of the office desktop computers. The old traditional accounting software limits access to data and often results in high costs to constantly update the software to backup financial information.
On the other hand, Cloud accounting is the practice of using an accounting system that is accessible by anyone through the internet. It promotes the transparency of accounting records but more importantly increases efficiency of accounting processes. With Cloud Accounting, accounting processes can be done remotely as accountants can access their accounts anywhere. This is particularly useful during and after the pandemic when many offices are still practicing hybrid mode.
Other than Cloud Accounting, Blockchain is also an increasing popular technology to aid the accounting process. Due to distributed ledger technology, blockchain technology eliminates the need for entering accounting information into multiple databases and hence removes need for auditors to reconcile disparate ledgers. This increases efficiency as it reduces the time and risk of human error. The question now is, will blockchain replace accountants in the near future? Although the incorporation of blockchain technology into accounting processes is already practiced by many companies, blockchain technology will most likely not replace financial reporting and financial statement auditing in the immediate future.
- Remote Working
Remote working often comes with technology advancement. A recent PWC research shows that Financial Services companies has increased their remote working staff from 29% (before the pandemic) to 69% (after the pandemic). This shows that more firms realize that it may be more efficient for their staff to work remotely on some days instead of everyday. Some companies such as Shopify provide their employees the option to work fully remote post-pandemic. In fact, hiring remote workers can reduce a firm’s operating costs and allows the company to source for suitable applicants that are located overseas.
The reduced operating costs can be used elsewhere, such as developing the company’s technology to continue remote operation in the long run or expand the company by hiring more employees. However, remote working does come with some challenges, such as employees feeling disconnected with the company and their colleagues or difficulties for the company to bring their employees to the same page.
There are websites and applications that companies can explore to connect their employees together. For example, the HR department of some companies are already exploring the incorporation of the metaverse into their employees’ day to day remote working life and allow employees and employers to keep track of their deadlines and communicate with other people in the company. It also makes the life of the HR department easier as it will be easier to track the progress of the employees throughout the day and see the overall company’s efficiency.
Hence, remote working is definitely the new “in” that many corporations are exploring.
- Sustainability
Do you know what is sustainability accounting? Sustainability accounting is the practice of measuring, analyzing and reporting a company’s social and environmental impacts. Different stakeholders have different priorities and interests. For example, an employee’s priority may be to enjoy better employee benefits. Communities may be interested in how much greenhouse gas a firm is producing so that it does not pollute their neighborhoods. Shareholders may be interested in the company’s financial performance, including ESG. ESG refers to the “Environmental, Social, and Governance” information about the firm. There is evidence showing that companies that take environmental and social responsibilities seriously perform better financially. This is because companies that are environmentally friendly attract more investors to take notice of them, especially investors that only invest in ethical companies.
Although sustainability is an increasingly important factor in a firm’s business operations, it is tricky to measure it. Most of the information used to gauge a firm’s sustainability is provided by the firm itself instead of being audited. This results in doubts being casted on the ESG that is being reported to the public. To add on, ESG disclosures are voluntary, meaning that it is not compulsory for businesses to disclose their ESG and there are few consequences for baseless claims or non-disclosure.
However, sustainability accounting is not going away any time soon as there is increasing pressure on companies to measure and report their sustainability information. It is also important for firms to consider the long-term implications for humanity and the planet. Sustainability accounting can help firms differentiate themselves from other firms that do not practice sustainability accounting, which can potentially build a loyal investors base. Hence, it is important for companies to train accountants to measure sustainability to play a role in changing how we live.
