UHY GLOBAL JANUARY 2023 FEATURE


THE MARCH OF TECHNOLOGY


With accounting fast becoming a digital profession, the adoption of cloud, automation, AI and more is creating huge opportunities for proactive firms – and new risks for those lagging behind The pandemic stalled or slowed many things in business, but digitisation was not one of them. In fact, data suggests that lockdowns accelerated the digitisation of customer and supply chain interactions, and internal operations, by three to four years. As business embraces digital technology, business service providers must do so too. Accountancy has been developing as a digital profession in recent years, but the pandemic has made it go further and faster. For example, despite the return of face-to-face meetings in most global jurisdictions, many service providers now offer a virtual meeting option to facilitate more frequent or convenient client communications. Virtual communication is only the tip of a technological iceberg, however. The march of technology is creating huge opportunities for the accountancy profession across many service lines. At the same time, it is creating significant risk for those in danger of being left behind. “The use of technology by our clients continues to grow by leaps and bounds,” says Steven Chong, group chief transformation officer for UHY in Malaysia. “That creates an imminent risk for professionals who cannot integrate or connect with that technology. The threat to those still living in a ‘bricks and mortar’ world is becoming a reality by the day.” With that in mind, what are the digital trends most affecting professional service providers and their clients, and what technology is becoming a ‘must have’ for accountants? REPLACING MANUAL INPUTS The first thing to note is that service providers, businesses and countries are all at different stages of technology adoption – what is becoming mainstream in one jurisdiction may still be in its infancy in another. But we can discern a clear pattern, which begins when technology is used to replace routine manual tasks. “We have to be flexible, because clients are adopting technology at different speeds,” says Rebecca Roberts, senior manager and head of cloud accounting at UHY Hacker Young in the UK. “For some smaller clients, the idea of being able to scan a box of receipts into an accounting app, rather than entering the details manually, is still quite revolutionary, even if the technology has been around for several years. But in general, these things are becoming part of everyday life.” Scanning receipts straight into accounting software, alongside other innovations like digital invoicing, is a gateway to the power of digitisation. This entry-level technology saves large amounts of time for both bookkeepers and small business clients, and improves the accuracy of information in accounting systems. In a similar way, robotic process automation (RPA) also creates business efficiency and is likely to be one of the most important drivers of competitive advantage for finance professionals in the next few years. Barbara Jędrzejek, partner and chief finance officer at UHY ECA, Poland, believes RPA has a key role to play in the streamlining of accounting and financial processes. “Robotic process automation can be implemented in almost any area of financial activity,” she says. “But it has the greatest potential in areas that involve time-consuming, repetitive activities that, by their nature, are relatively easy to describe in a computer-readable format. “Due to the ongoing trend of digitalisation of accounting and finance, resulting in more structured data and greater standardisation of processes, this area seems to be an ideal candidate in the search for processes with automation potential. "In recent years digitalisation has also been driven by regulators and tax authorities through the digital filing of tax returns and Standard Audit Files, as well as the wider implementation of national e-invoicing platforms." Again, the immediate benefits of RPA are likely to be focused on time, accuracy and employee satisfaction (as hitherto mundane manual tasks are automated). But when tax records, receipts, invoices and other potential data sets are standardised and digitised, much more also becomes possible. AHEAD IN THE CLOUD Much of that potential is due to the wholescale transition to cloud computing. Cloud applications can be accessed from anywhere and on any device, which means bookkeeping, for example, can happen in almost real time. By integrating a range of cloud platforms – bank accounts, accounting systems and invoicing solutions, for example – a wider array of back-office tasks can be digitised and automated. When you have systems that talk to each other in real time, the result is efficiency, accuracy, speed – and a huge amount of shared data. Unstructured data was once regarded as something of a nuisance, because small and medium-sized businesses in particular had no way of using it. But powerful cloud-based software can manipulate data in a way that was once unthinkable, at least beyond the largest multinationals. As Steven says, data as the ‘new oil’ is not a new concept. What is new is that the ability to extract value from data is filtering down to all sectors and strata of business. “With the right tools, data can democratise what used to be the exclusive realm of multi-million-dollar systems,” he adds. “There are now endless opportunities to adopt and integrate all sorts of tools and facilities from the technology marketplace, at a fraction of the cost of what a large corporate might have paid for similar outcomes in the past.” Data that can be efficiently collected, validated and standardised is opening up huge opportunities for business. It is revolutionising accounting in much the same way. THE ERA OF BIG DATA Business data is valuable – and the more of it you have, the more valuable it tends to be. But that is only true if you have technology that can validate its accuracy, put it into a usable form and analyse it for insight. Increasingly, that is where artificial intelligence (AI) and machine learning (ML) technologies come into play. AI-powered software can scan paper documents for useful information, which is then digitised and fed into other systems. Algorithms can monitor real-time transactions for unusual behaviour that might suggest fraudulent activity. ML allows programmes like these to refine themselves over time, becoming more accurate and more useful as they accumulate more data. What does this mean for professional services like accounting? “If utilised properly, this technology can hasten the transition from service providers to business advisors,” says Rebecca. Steven agrees. “The modern narrative for the accountant is to position ourselves as a valued advisor to the client, as opposed to doing back-room, mundane paperwork that clients rarely appreciate. Access to comprehensive analysis of data, benchmarks, up-to-date reports and so on is the sweet spot.” AI-powered accounting is gradually coming of age. By finding patterns in large datasets, AI allows finance professionals to embed themselves as business strategists. “For example, by analysing current and historical data, an algorithm might predict your company cash flow, and highlight any upcoming issues,” says Rebecca. “It would then be the role of the advisor to begin a conversation about the business impact of that information and suggest possible solutions.” In fact, modern cloud accounting software includes a dashboard of data points that updates in real time. Business leaders will know quickly if an invoice has not been paid or a deadline is due. But intelligent apps continually scan this data for insight, and this allows accountants to dig deeper, using up-to-the-minute information to help clients make better, evidence-led business decisions. THE FUTURE IS HERE All of this technology is available now, though Steven acknowledges a lag between ‘voluntary and forced adoption’. Some professional service firms are getting ahead of the curve, while others are waiting for market demand to force them into action. The worry is that, by the time they act, late adopters will have lost ground to more proactive competitors. Realistically, the direction of travel is set. Steven’s team is already using the cloud and client data in sophisticated ways. It has also just launched SmartLedgers, a cloud-based bookkeeping platform, in conjunction with UHY-Advisory and Secretarial Knowledge Limited (UHY ASK) in Hong Kong. In the UK, Rebecca’s team offers an app stack that includes cloud accounting, automated cash flow AI and scanning software, to name just three. Barbara and her colleagues in Poland, meanwhile, are taking the lead in helping clients digitise and automate main document flows within the company, and implementing Power BI-based reporting for the online presentation of financial reports and key business metrics. The next stage of evolution is not far away as the technology already exists. “In the future, computers will be able to replace humans in performing more complex tasks, such as analysing regulations, drawing conclusions based on data or making predictions based on predictive analysis,” says Barbara. The widespread uptake of AI in audit analytics seems to be one logical next step. Whatever the form and speed of technological adoption, Rebecca says the one certainly is that it will happen. “My title is head of cloud accounting, but in five years the role won’t exist. Cloud, automation, AI – those things will just be what we do.” A NEW ERA FOR TAX: THE POLISH EXPERIENCE Around 90% of tax administrations around the world admit to using advanced technologies – data science and analytical tools – to implement standards and systems to enable more efficient tax billing and collection. As a result, the traditional system of reporting historical data based on tax returns is gradually becoming a thing of the past. Conversely, a world in which taxpayers' transactions can be analysed in real time, using systems that verify their accuracy, seems increasingly near. In Poland, as in many countries, it is now mandatory to report tax data in digital format. All businesses in the country have to submit tax documentation through the Jednolity Plik Kontrolny (JPK), a standardised format equivalent to the Standard Audit File (SAF-T). Receiving data in this way creates new opportunities for tax authorities. Taxpayers' accounts can now be audited on an unprecedented scale and irregularities identified more easily than ever before – and this may be just the first step towards implementing real-time tax settlements. The digital revolution in the Polish tax system goes beyond JPK. Since January 2022, it has been possible to issue e-invoices through the National e-Invoice System (KSeF) – this will become mandatory from January 2024. In another development, the STIR system (Clearing House Information and Communication System) provides information on the accounts of authorised entities held by banks and cooperative savings and credit unions, analysing transactions to assess the risk of tax fraud. This data is transmitted so quickly that the Head of the National Tax Administration can prevent VAT fraud almost immediately. The result is that the number of tax audits in Poland is decreasing from year to year – but their effectiveness is increasing. OPTIMISING PROCESSES RPA is another digitisation trend that can be used to streamline tax returns, assisted by the growth of more structured tax data and greater standardisation of tax processes. "Algorithms can replace humans in performing increasingly complex processes, but they can also learn to react to unpredictable actions,” says Barbara Jędrzejek. “The appropriate use of bots to prepare tax statements can increase control over a company's tax processes and minimise the risk of human error, which in the world of real-time tax reporting will be crucial. “IT solutions are already starting to change the working methods and responsibilities of employees in finance, accounting and tax departments across Poland." As real-time transaction tracking becomes more of a reality, preparing for bigger changes ahead is key. 


iStock.com/AndreyPopov

Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17