How technology is changing accounting practices

New approaches to audit

Audit firms are investing in big data and analytics to support new approaches to audit, as well as their other services. The shift to full dataset analysis means less reliance on data sampling, which allows for greater emphasis on spotting patterns, outliers and exceptions. The result is that audit activities can be more focused on the areas of greatest risk.

At the same time the auditing processes are increasingly standardised and automated, leading to greater consistency in quality, and additional data sources and predictive models provide opportunities to identify business risks and better plan audit activities. 

Some of the technologies and their application will require specialist knowledge, raising questions around the skills required of auditors of the future, and how accountancy firms can find the best people with the necessary skills to meet clients’ needs.

Shifting client relationship and competition

The shift to online, cloud and mobile platforms significantly impacts on the way that accountants interact with others. The ability for both accountant and client to access accounting information
on demand typically empowers clients and changes the nature of the relationship.

Moving online also renders location increasingly irrelevant. Without the need to pass receipts, invoices and other paperwork regularly from the client to accountant, the relationship can be managed with minimal, if any, physical contact.  As a result, accountants can attract clients from anywhere.

Conversely, digital technologies also provide clients with a greater choice of accountancy services. Such technologies enable low-cost or even free access to platforms and services for anyone with an internet connection.

Greater self-service

Tax authorities and filing authorities have embraced digital platforms and moved their interaction increasingly online. For example, HMRC, the UK tax agency, has been at the forefront of digital filing strategies, with most tax filing now online. It is introducing the first phase of it's Making Tax Digital programme in April 2019, which focuses on VAT.

Regulators are focused on developing digital tax accounts, where users will be able to see and amend all their tax information throughout the year. These changes are leading to greater self-service by clients and tax payers. 

Emerging opportunities and new services

New technologies also offer accountants with new opportunities to use their core skills in new ways. Organisations' use of personal information coupled with greater awareness of privacy and security, offers scope to provide audit and assurance services in non-financial areas, such as cyber security. 

At the same time, as more people will be able to access financial resources and advice online, accountants have tremendous opportunities to work alongside digital platforms to deliver advice and services to these markets in all kinds of innovative ways.

As clients' demand for support with routine compliance declines, they will increasingly favour accountants who can successfully harness technology to deliver strategic advice and business insights. To become a valuable source of business advice and future proof their practice, accountants should:

• use improved system capabilities to get more information about businesses performance and risk management to deliver swift and accurate insights to stakeholders;
• research different sources of data to deliver fresh insights about customers, operations or strategy; or
• adopt predictive models to identify and understand the risks and opportunities facing clients and use this knowledge to provide valuable business insights.

More information:

• Read ICAEW's report: Providing leadership in a digital world
• Watch webinar: How technology is enhancing audit quality
• Complete ICAEW and Deloitte eLearning module: Digital Era