Throughout the course of this paper, the way in which new information systems have impacted upon the accounting profession will be evaluated. Attention will be paid to identifying new innovations that have had a major impact upon this sector. The way in which the technologies that are evaluated have altered the performance of accounting at Ernst and Young will also be analyzed. Conclusions will be drawn based upon the information that is explored.
An information system is a system comprised of the communication channels network that is utilized within an organization (Princeton University, 2006). In the years gone by, there was no computerized system for processing accountancy tasks and businesses within the sector had to rely upon paper pads. Adding up had to be done manually, which meant that there was a possibility that errors would take place. Computerized information systems have reduced the likelihood of mistakes and sped up the process. Once data has been entered into the system, it can be used over and over again at the push of a button.
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Computerized accountancy systems have also made it easier to correct errors and facilitated easy data classification. The chances of losing information are also considerably smaller when it has been entered into a digital information system. Paper pads can easily get damaged or lost, whereas computers are significantly sturdier and harder to misplace (Shanker, n.d.) Advances in accounting information systems mean that information can be utilized in order to translate various different dimensions within a business into a unified financial dimension. This facilitates communication within organizations. It provides information that aids managers in the decision-making process.
The emergence of the Internet has had a phenomenal effect upon accountancy information systems. It has enabled organizations to gain access to financial data in real-time. Real-time financial reporting provides more timely and thorough financial disclosure than other methods. It facilitates continuous financial auditing and means that fiscal communication is now considerably easier than it once was.
Another major technical innovation that has revolutionized accountancy is XBRL, which is a worldwide standard for financial information (Mogadam, Rostami & Salehi, 2010). It makes it easier to utilize, retrieve and locate fiscal data on the Internet. (Chan, Krahel & Vasarhelyi, n.d.). This is one of the many technological advancements that is helping to pool together accounting information and make the relevant information readily available.
Advancements in computer software have also improved the effectiveness of accountancy information systems. The quality of accountancy information is dependent upon the functionality of the software that is utilized (Mogadam, Rostami & Salehi, 2010). Therefore steps forward in this area improve the entire system. They help to boost the extent to which accurate records can be kept and used in an effective manner.
The adoption of computerized information systems by Ernst and Young has unquestionably improved the accuracy of the company’s accountancy and prevented information from getting lost. It has stopped the organization from having to store accountancy information on sheets of paper and meant that the process is now far more efficient. The emergence of the Internet means that Ernst and Young’s employees have access to financial information at the touch of a button. The company’s use of XBRL has facilitated cheaper, faster and better financial reporting (Ernst & Young, n.d.) and the current computer software has no doubt boosted the quality of its accountancy.
In conclusion, technological innovations have revolutionized the world of accountancy. They have enabled companies like Ernst and Young to keep accurate, efficient accounts without the risk of losing information. The more technology is developed, the more organizations will have to remain abreast of it in order to stay afloat. Accountancy is an arena in which change is constantly occurring. It is a case of companies either being adaptive or getting left behind.
- Chan, D., Krahel, J. & Vasarhelyi, M., n.d. XBRL: Consequences to Financial Reporting, Data Analysis, Decision Support, and Others. Retrieved from http://eycarat.faculty.ku.edu/
- Ernst & Young, 2013. What is XBRL? Retrieved from http://www.ey.com/
- Mogadam, A., Rostami, V. & Salehi, M. (2010). Usefulness of Accounting Information System in Emerging Economy: Empirical Evidence of Iran. International Journal of Economics and Finance, 2 (2), 186-195.
- Ogah, J. (2013). An Evaluation of the Relevance of Accounting Systems as a Management Decision Tool in Union Bank of Nigeria Plc, Uyo Branch of Akwa Ibom. Greener Journal of Business and Management Business Studies, 3 (1), pp. 38-45.
- Princeton University (2006). Information System. Retrieved from http://dictionary.reference.com/
- Shanker, S. (n.d). What Are the Benefits of an Information System in Accounting? Houston Chronicle. Retrieved from http://smallbusiness.chron.com/
