Enhancing company image through tech-based accounting

Technology helps accountants to become the most trusted advisors of companies

Accounting is the language of business, and business magnate Warren Buffet said, an accountant needs to “understand (its) nuances.”

Accounting, in fact, has been evolving over many years, with the most significant change, by far, being technology; technology has helped turn around unprofitable accounting functions into clearly profitable ones. For instance, around ten years ago, accounting firms wrote off “write-up” work as unprofitable due to its labor-intensive nature. Today, with technology automating the bulk of back-end work, “write-up” has transformed into “client accounting services,” and makes up 10% of company revenue, according to research by the American Institute of Certified Public Accountants (AICPA).

Even more, technology has enhanced an accountant’s ability to analyze statistical data with speed and accuracy, thus, transforming accountants into the most trusted business advisors of companies. They have also become the sharpest financial professionals in an organization, able to spot irregularities in financial dealings.

And so, even though accountants are supposed to be “numbers people,” which is also reiterated in the accounting resume template, a recent study by the International Federation of Accountants (IFAC), shows that today’s accountants, with tech-driven capabilities, are playing a significant part in detecting and reducing corruption. According to the report, 5% of GDP in the global economy is lost to corruption, which, the CEO of IFAC, Fayez Choudhury, calls “an economic cancer that disproportionately impacts those least able to absorb its malignancy”. He believes that the accountancy profession stands in the frontlines of confronting corruption, in partnership with good governance and strong business.

Proving the point, a confidential audit of the governing body of African Football, carried out recently by the financial services firm PwC, found “possible abuse of power” and reported “potential fraudulent adjustments” in accounting records that are “unreliable and not trustworthy.” These observations were made after PwC auditors reviewed relevant financial documents and performed the necessary procedures.

For instance, PwC auditors made a troubling discovery of a large number of cash payments, showing “little or no audit trail to verify if the cash has been spent legitimately or not.” The auditing process showed, in one instance, a rounded amount of $215,000 paid out during a General Assembly meeting in Ethiopia in March 2017, with no explanation of expenses. When PwC analyzed financial operations, the auditors discovered a striking absence of critical financial controls, and no separation of day-to-day financial operations, with conflicting duties like approving expenditure and payments and receiving the paid for goods and services, handled by the same person. The audit was also concerned about large procurements with no specialist employees involved in the transactions. The outcome of the audit was a scathing conclusion of “potential mismanagement and possible abuse of power.”

With accountants using technology and the correct formulas to separate rounded transactions against time, they are able to filter and identify suspicious financial dealings. Financial scandals in the early 2000s helped to install and prioritize these investigations, creating new opportunities for accountants in previously unfocused areas like forensic accounting.

Consequently, tech-savvy accountants of today have upended the perception that financial professionals are staid and risk-averse. As technology expert Angela Nzioki, said, “A company is only as good as how well its accounting is done.”

This article does not necessarily reflect the opinions of the editors or management of EconoTimes