Abstract

The study examines the effects of technological innovation in the accounting profession in SOWEDA. Specifically, the study examined the outcome of technological innovation on the efficiency of the accounting profession, the outcome of technological innovation on the effectiveness of the accounting profession, and the challenges SOWEDA face to innovate.

To achieved the study objectives, the study employed a descriptive survey design, using structured-questionnaire to sample 6 respondents (employees of SOWEDA) by means of convenient simple random sampling.

Findings revealed that technology innovation is relevant in the efficiency of the accounting profession and in improving the performance of accounting systems in business though not without challenges. It also revealed that the use of accounting information technology has led to the timely and accurate preparations of reports, as stakeholders have limitless access to information through the aid of technological innovation.

Major challenges faced with the use of accounting information were packages are sophisticated, costly, and difficult to use. The study recommended that financial institutions must put in place controls that will reduce security threats from both internal and external sources, this will include upgrading and providing backups.

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

It is generally known that Accounting is the language of business. This language has gone through many changes throughout the year. Despite the changes, accounting technology has always played a part in making the accountant’s job easier. Technological advancements have improved the accountant’s ability to interpret the language of business with so much ease.

This has improved significantly the quality of accounting data. This has made accountants become the most trusted business advisors in the business. We can start way back in the beginning with the introduction of the abacus that was used for calculation. We can go back to centuries where attempts were made to build adding machines to help accountants with mathematical solutions.

After this came the invention of calculators which were more accurate. The speed and proficiency of the accountants’ jobs have greatly been enhanced as technology develops. Despite the abacus adding machines and calculators, the accountant still had to keep track of business functions with paper entry. The act of identifying summarizing and analyzing economic information was done on papers. It was more or less made up of handwritten statements.

Towards the end of the twentieth century, the accounting profession began to take a new look. The coming of computers and accounting software has changed the industry completely. The need for adding machines, calculator’s ledgers and pens were canceled with the coming of programs such as Microsoft Excel and Access which gave the accountants electronic spreadsheets they could work in.

The main reason for the training of accountants which includes basic accounting auditing and tax preparation was a thing of the past. Due to an increase in Technology, an accountant can now perform statistical accounting or forecasting analysis with greater efficiency.

Technological innovation has reduced the number of crunchers sitting behind a desk working on people’s taxes and has opened the profession to new challenges with so much more to offer than decades ago when they relied on an abacus for a calculating tool.(Krunglinsi, 2009).

Information became available to accountants with the click of a  mouse. This has changed the number of accountants work. More doors are open with the use of technology. These diversified opportunities in the field of new accounting, new special areas developed and business people started looking for professional accountants for technology advice.

Accountants became more knowledgeable about which financial systems work best. The accountant’s role is to help these businesses become more productive. Integrating the client’s technologies properly with the accountant’s systems made the practice more efficient when it came to times of write-ups and reconciliation processes.

Not only does the client need to have proficient financial processes but the accountants themselves need software that keeps track of clients’ accounting information with improved efficiency. Accountants were pushed towards acquiring new skills due to advancements that information technology had made in the accounting industry.

In2010, the government of Liberia invited the World Bank to carry out an assessment on the business sector accounting and auditing practices in the country (World Bank, 2011, p. 1). The report highlights some pertinent issues concerning the accounting and auditing practices in Liberia. The World Bank team found that there is a need to strengthen both accounting and auditing firms in Liberia in keeping within the transitional best practices.

According to the team, there is no legal directive for reporting entities to apply International Financial Reporting Standards (IFRS) or the preparation of financial statements in keeping with national standards. The team also found out that the local auditing firms are not fully implementing National or International Standards on Auditing (ISA) in performing an audit.

The Central Bank of Liberia was the only entity in 2008 communicating its financial reports using the International Financial Reporting Standards and as a regulator in the financial industry mandated all commercial banks to be compliant by end of 2012.

In addition, the consultants further explained that the gap could be the result of a lack of technical skills, expertise, and competence of the auditors as well as regulators. They added that the lack of technical skills and expertise in information technology affects financial reporting and audit quality (World Bank,2011, p. 20). Therefore, one of World Bank’s recommendations is to build human capacity, technical skills, expertise, and competence, thus, enhancing efficiency and improve the industry (Worldbank, 2011, p. 27).

1.2 Problem Statement and Justification

The professions of accounting will change significantly in the years to come (ACCA,2016, p. 10-11). ACCA explained that there are many factors that will affect the change. Firstly, the rapid advancement of digital technologies and their influence on firms will change the procedures and beliefs of accounting and the competencies required by professional accountants.

Manual tasks such as bookkeeping will be replaced by accounting software and systems, multifaceted and difficult processes will be automated, and provision will be made to outsource some of the functions while other services are repatriated. Secondly, there will be increased regulations and robust governance which may influence the profession greatly in the coming years. To some extent; all professional accountants will be touched directly or indirectly. For example, the inter-governmental tax plan will affect professional accountants in several roles as well as countries which will reduce the base erosion and shifting of profit, consequently, the greatest impact will be experienced by specialists.

Thirdly, as businesses are changing so will the prospect of accountants. Professional accountants will require the competencies, expertise, skills, and outlook to allow them to encounter more requests for complete and forward-looking information. Fourthly, accountants will be anticipated to look ahead of the numbers.

Accountants will have to team up and form partnerships with people external of the business and other areas of the business to understand and clarify the numbers. They will have to reason and act more strategically and shift their attention to decision-making processes than earlier. Lastly, continuous globalization will cause both opportunities and challenges to those that are associated with the profession.

Accountants will need to expect and accept emerging changes in practices of business, geography, tasks, responsibilities, and code of practice to build the required technical skills, expertise, and integrities, in addition to the performance and qualities they possess.

In addition, some of the changes that will occur in the accounting profession are: the composition of the audit team will have to change; it will have to incorporate people from the background of mathematics who have the expertise the algorithms required for the extraction of data (Hunt, 2018, p. 9).

The makeup of the audit team will comprise more members with Information Technology (IT) knowledge than today, therefore, the building of staff capabilities in these areas will be to some extent different.

Next, the legislation governing Artificial Intelligence (AI) is little at present but will have to change (Boillet, 2018, p. 19). Moreover, universities’ curriculum for accounting students will have to change to meet their needs in the future (Islam,2017). The author added that schools will require to develop or integrate new units for accounting students’ in disciplines such as digital technology, cloud computing, integrated reporting, and big data.

Moreover, the author argued that accounting firms should work along with universities to bring together lecturers with the expertise to teach the course. Also, universities should be thinking of building the skills of current lecturers or hire experts in related fields to run the affairs of these new units.

The auditor’s report around the world will be transformed in such that they will provide enhanced reports that will go beyond the traditional form of reporting (Moritz, 2019). The reports will provide insights and understanding by providing better clarity into the kind of problems addressed and the findings to stakeholders.

The quantity of corporate reporting and scope is increasing (ACCA, 2016, p.14). Within 5 to 10years, there will be increased regulations, additional and regular corporate disclosures, and more consciousness of the interlinked non-financial and financial reporting will be required. Theskillstocommunicateamorecompleteandeffectiveopinionofcorporatereportingwillbeneededby professional accountant. Accountants are expecting integrated reporting to slowly become mandatory worldwide.

The accounting and auditing profession is undergoing continuous metamorphoses and will continue to encounter greater problems in the future(ACCA,2016,p.15,20-21).

For the industry to overcome these problems, accountants and auditors must develop and reveal the ability to join their critical thinking skills and as well as technical skills and abilities within their personal performances and potentials. Both accountants and auditors will need to become proactive instead of reactive. They must posses’ robust communications and ethical skills.

Since this study sets out to assess the effect of technological innovation in the accounting profession,  the study will not be complete unless the following questions are answered.

1. How much do technology tools improve the efficiency of the accounting profession?
2. How much do technology tools improve the effectiveness of the accounting profession?
3. What are the changes SOWEDA faces to innovate?

1.3 Objectives of the Study.

1.3.1 Main Objective

The main objective of this study is to examine the effects of technological innovation in the accounting profession in SOWEDA.

1.3.2 Specific objectives include;

1. To find out the outcome of technological innovation on the efficiency of the accounting profession.
2. To find out the outcome of technological innovation on the effectiveness of the accounting profession.
3. To find out the challenges SOWEDA face to innovate