Impact of ICT on Accounting
Introduction to ICT on Accounting
Information technology has created significant benefits for the accounting departments. Computer systems and IT networks have shortened the lead time which is needed by the accountants in order to present as well as prepare the financial information to stakeholders and management. Information technology has not only minimized the lead time for representing the financial information but also has improved the overall accuracy as well as the efficiency of the information. The biggest impact of the information technology on accounting is the ability of the organizations in order to develop as well as use the computerized systems for recording and tracking the financial transactions. Manual spreadsheets, handwritten financial statements, paper ledgers all have been translated into the computer form which is helpful in quickly representing the individual transactions into the financial reports. Most of the popular accounting systems can be tailored to the specific industries and organizations which allows the organizations in creating the individual reports easily and quickly for the management of better decision making. Along with this, information and communication technology also allows the easy change in the economic values of the business operations (Ghasemi, Shafeiepour, Aslani & Barvayeh, 2011).
Impact of ICT on the accounting system
- Reliability: ICT, information and communication technology has provided the accounting system a high level of reliability in information with the help of the valid procedures which are effective and efficient.
- Timeliness: with the information and communication technology in accounting, financial information can be easily taken any time whenever required. The access to the information is easy because of the classification of the information stored precisely in the ICT platforms.
- Cost: with the use of ICT, the cost of the accounting system has increased. This is because of the expenses incurred on the purchase of software and hardware.
- Security: ICT is able to provide a great deal of information and data security as compared to the manual systems. ICT provide a high level of security to the accounting system in terms of privacy, data confidentiality, authorized access etc.
- Back-up: as ICT provides the measures in order to store data more than once, there is also the greatest assurance of the data backup and information backup. Along with the backup facility, ICT is responsible to store a large amount of data which can be accessed easily.
- Efficiency: there is a proper efficiency between ICT and accounting system. This is due to the easy access to the information and increased accuracy of the financial information with a reduction in human errors.
- Flexibility: information and communication technology on the accounting system has provided a less rigid form in order to keep the information about accounting as there are a number of accounting platforms are available, the process of accounting can easily be done in a diverse manner (Taiwo & Edwin, 2018).
Types and elements of ICT and accounting system
Elements of ICT
1. Computer technology
2. Communication technology
3. Telecommunication technology
4. Computer communication technology
Elements of accounting system
2. Procedures and instructions
5. Information technology infrastructure
Categories of ICT
1. Function ICT
2. Network ICT
3. Enterprise ICT
Categories of accounting
1. Manual system
2. Legacy system
3. Computerized system
Challenges in the adoption of ICT in accounting
Information and communication technology is considered to be a good platform to invest. It includes investing money, intellect, time and others. The cost is also related to acquiring different components such as setting up hardware and software. These systems and components are responsible for incurring the cost of maintenance. Along with this, when the organization do a number of activities related to the computers as well as other electronics, the amount of staff can be reduced. This can further change the organizational work, lowering the security of a job, and can cause a high level of inefficiency and unproductivity (Evans, 2018).
Adaptability and responsiveness
When the organizations invest in order to provide training to their employees for boosting the qualification level, it is also a different aspect for the workers in order to adopt the changes with a positive response. Here, the workers can be less productive or unresponsive.
In the settings of an organization, where the system of management is rigid, the adoption, as well as implementation of ICT, become hard. In this case, the management of a particular organization is not willing in order to change as well as evolve with the new use of the technology (O'Mahony & Vecchi, 2005).
In order to set up a system of information technology, there is a requirement of different components of ICT. The IT infrastructure includes different experts that can design, fix, maintain, and install the system and also maximize the use of various new technologies. An organization which is unable to provide the infrastructure cannot gain the maximum benefits from the adoption of information and communication technologies.
- Ghasemi, M., Shafeiepour, V., Aslani, M., & Barvayeh, E. (2011). The impact of Information Technology (IT) on modern accounting systems. Procedia - Social And Behavioral Sciences, 28, 112-116. Retrieved from https://www.sciencedirect.com/science/article/pii/S1877042811024621
- Taiwo, & Edwin, A. (2018). effect of ICT on Accounting Information System and Organisational Performance. European Journal Of Business And Social Science, 2(2). Retrieved from http://www.ejbss.com/Data/Sites/1/vol5no02may2016/ejbss-1737-16-effectofictonaccountinginformationsystem.pdf
- Evans, L. (2018). Impact of ICT in Accounting. Retrieved from https://getrevising.co.uk/grids/impact_of_ict_in_accounting
- O'Mahony, M., & Vecchi, M. (2005). Quantifying the Impact of ICT Capital on Output Growth: A Heterogeneous Dynamic Panel Approach. Economica, 72(288), 615-633. Retrieved from https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1468-0335.2005.0435.x