Unit 5- emerging trends in accounting

Meaning of Digital Transformation

Digital transformation refers to the strategic process of integrating digital technology

into different areas of a business to change its processes. The goal of digital
transformation is to improve productivity, increase agility, and shift the company culture
to one that keeps up with the digital age and its technologies

Definition of Digital Transformation

Digital transformation the realignment of, or new investment in, technology. business
models, and processes to drive new value for customers and employees",

-Brian Solis's of DT is entirely holistic

Objectives of digital transfomation

1. To increase speed to market with new products and services.

2. To increase employee productivity. 3. To increase responsiveness to customer

requests.

4. To gain more insight into individual customers to better anticipate and personalize
products and services.

5. To improve customer service, especially in providing more intuitive and more

engaging customer experiences.

Features of digital transformation:

1. Changing the way

2. Core operational

3. Rapidly and radically change

4. Drive growth

5. Aspects of human society

Benefits of digital transformation Digital transformation:

[Link] efficiency and effectiveness: The implementation of technologies such as

Al and RPA boost worker productivity, reduce errors and speed time to market.

2. Improved engagement with customers, employees and business partners:

Organizations are able to better process data to make smarter, more accurate decisions
and anticipate the needs of their different stakeholders.
3. More agility and responsiveness to changing markets: An organization's culture and
capabilities shift to support ongoing change.

4. Enhanced ability to innovate: A workforce and updated technology capabilties

support and encourage experimentation, while also limiting risk.

There are several digital transformation technologies are

1. Cloud computing: Cloud computing gives an organization quicker access to its

software,new functionalistic and updates, along with data storage, from anywhere at all
times.

2. Commodities information technology: These gives an organization the ability to focus

investment dollars and people resources on the IT customizations that differentiate it in
the marketplace.

3. Mobile platforms: Mobile platforms enable work to happen wherever and whenever.

4. Machine learning and Artificial Intelligent: Artificial Intelligent is wide-ranging data

programs, that provide organizations with insights for faster, more accurate decisions
around sales, marketing. product development and other strategic areas.

5. Automation: Automation can handle routine repetitive tasks faster and more
accurately than humans who are then unregulated from such tasks to pursue higher-
value work.

6. Emerging transformational technologies: These help organizations to move faster,

work more efficiently, and create new products and services, including blockchain,
augmented reality (AR) and virtual reality (VR), social media, loT, edge computing.

Digital transformation challenges

The following are the most common reasons for failures of digital transformation -

1. Lack of employee engagement.

2. Inadequate management support.

3. Poor or nonexistent cross-functional collaboration.

4. Lack of accountability.

5. Data privacy and security concerns.

6. Budgetary [Link]

7. Limited in-house skills and expertise.

8. Regulatory and legislative changes.

9. Immature digital culture.

Meaning of Data Analytics

Data Analytics is a discipline focused on extracting insights from data and includes
processing. Analyzing and managing the data in an effective & efficient way to optimize
business Performance.

Big Data Meaning

Big Data is the collection of data sets that are so large or complex analysed by
traditional

Databases, such as the spreadsheets.

Big data trend is growing mainly because of three factors.

1. Growth in computing power

2. Data sources

3. Infrastructure for knowledge creation

Purpose Of big data in accounting:

1. Visualisation software

2. Process larger amounts of accounting data

3. Improves risk analysis

4. Data governance and privacy

5. Gaining business insights

6. Risk management

Benefits or advantages of Big Data Analytics

1. Big data analysis derives innovative solutions in accounting errors.

2. Big data analysis helps in understanding and targeting customers.

3. It helps in optimizing Accounting processes.

4. It helps in improving Accounting and research.

5. It improves stakeholder's wealth with availability of record of clients.

6. It helps in financial trading, sports, poling, securitylaw enforcement etc.

7. Anyone can access vast information via surveys and deliver answer of any query.

8. Every second additions are made to the Existing data.

[Link] platform carries unlimited data.

Drawbacks or disadvantages of Big Data Analytics

1. Traditional storage can cost lot of money to store big data.

2. Lots of big data is unstructured.

3. Big data analysis violates principles of privacy.

4. It can be used for manipulation of stakeholder's records.

5. It may increase social stratification.

6. Big data analysis is not useful in short run.

7. It needs to be analyzed for longer duration to leverage its benefits.

8. Big data analysis results are misleading sometimes.

Accounting with drones:

Drones, mechanical robots and robotics software are being increasingly used in
assisting the work and in some cases, replacing human workers in almost every
industry. Accounting may seem an odd fit for drones, with attention more often focused
on how the flying missions deliver packages or are used in war zones. Drones are a
major source of Big Data and are changing accounting and audit in a seismic shift.

a) Entrepreneurial accountants are creating drones as an audit service.

b) Drones may save money for accounting clients who can use them for stocktakes,
mapping. safety monitoring and to inspect bridges and buildings.

c) The global market for drone applications is forecast at US$100 billion by 2020.

Forensic accounting:

Forensic accounting is a rapidly growing area of accounting concerned with the

detection and prevention of financial fraud and white collar criminal activities. In simple
it is the use of accounting skills to investigate frauds and to analyse financial
information to use in legal proceedings.

Uses of forensic accounting:

1. Fraud detection where employees commit fraud

2. Criminal investigation

3. Cases elating to prfessional negligence

4. Arbitration sevice

5. Settlement of insurance claims

6. Dispute settlement

Role of forensic accountant:

1. Criminal investigations

2. Personal injury claims

3. Fraud investigations

4. Matrimonial disputes

5. Professional negligence

6. Expert witness cases

7. Meditation and arbitration

8. Computer forensics

Meaning of Inflation Accounting

Accounting for Price Level Changes or Price Level Accounting is a technique of

preparing financial statements, wherein the general price level changes are reflected
and true and fair view of the business is ascertained.

Although, the technique is supposed to incorporate changes in the general price level in
the financial statements, the generally observed trend in prices being upward,
accounting is done for increasing prices. Hence, the technique is also called Inflation
Accounting.

Outsourced accounting :

Outsourced accounting is a service which provides a full accounting department

experience for small businesses. An accounting department handles the day-to-day
transaction

coding, accounts payable, accounts receivable, payroll, management financial

reporting and many other services. Outsourced accounting providers have a full a full
compliment of accounting professionals allowing them to offer a small team of
accountants at a lower cost to hiring.

Cloud Accounting

It is a process of using accounting system that is accessed via the internet or through
other networks of cloud application service provider.

Cloud accounting software is also known as online accounting software or web-

basedaccounting software and it is accounting software that is posted on a remote
server. Users send the data to "the cloud where it is processed and returned to the user.

Essential characteristics of cloud computing :

1. On demand self service

2. Broad network access

3. Resource pooling

4. Rapid elasticity

5. Measured service

Types of cloud computing:

1. Public cloud

2. Community cloud

3. Private cloud

4. Hybrid cloud

Advantages of cloud computing :

1. Reduced cost

2. Geographically unlimited access

3. Increased performance

4. Unlimited data storage, processing capacity and automatic Backup

5. User friendly

6. Easy access to information

7. Easier scale of service

Disadvantages of cloud computing:

1. Technical issues

2. Secuity in the cloud

3. Possible downtime

4. Cost

5. Lack of flexibility

CREATIVE ACCOUNTING

Creative accounting consists of accounting practices that follow required laws and
regulations, but deviate from what those standards intend to accomplish. Creative
accounting capitalizes on loopholes in the accounting standards to falsely portray a
better image of the company. Although creative accounting practices are legal, the
loopholes they exploit are often reformed to prevent such behaviours.

DATABASE ACCOUNTING:

A database is a shared collection of inter-related data tables which meet the various
informational needs of an organization. Thus, an accounting database stores the
accounting data. It is a collection of accounting data which is inter-related to depict the
various aspects of the accounting information system.

Predictive Accounting:

Predictive accounting projects future financial performance using a statistical

understanding of an organisation's processes. Predictive accounting seeks to
understand the future. It is based on the observation that much of an organisation's
work is repeatable. The work steps of these activities have been well thought out and
provide an "invisible hand" that guide's daily work.

Human resource accounting:

According to American Accounting Society Committee, "Human resource accounting is

the process of identifying and measuring data about human resources and
communicating this information to interested parties."

Importance of Human Resource Accounting or Advantages of Human Resource

Accounting
1. Human Resource accounting nrovides relevant information to the management
enabling it to

take appropriate decisions in matters relaing u huwiartesouces like recruitment,

selection,hiring, training, development, transfers, promotions, retrenchment, etc.

2. An investor or an analyst gets the complete picture about the effectiveness of

application of funds by the organisation.

3. Human ResouronAon areness in the employees about their levels of efficiency and
performance, and thereby provides an opportunity for their improvement.

4. Management will be facilitated in the form of knowing accuratelv the retun on Capital
employed both in physical and human resources-ariu uiereby take steps tor increasinng
5. Human Resource Accounting helps management to reorient their attitudes towards
labour and in improving their administration styles.

Limitations of Human Resource Accounting

1. Valuation of Human Resources is a vague concept. Quantifying the value of human

resources, is almost an impossibility, despite the various methods suggested.

2. If the cost of measuring human resource value is higher than the benefits derived
from it, the entire effort would be a waste and uncalled for.

3. No Law considers human resource as an asset, making human resource accounting

just a theoretical concept.

GREEN ACCOUNTING

Environmental accounting, also called green accounting, refers to modification of the

System ofNational Accounts to incorporate the use of natural resources. Environmental
accounting is a vital tool to assist in the management of environmental and operational
costs of natural resources.

GREEN ACCOUNTING

Environmental accounting, also called green accounting. refers to modification of the

System of National Accounts to incorporate the use of natural resources. Environmental
accounting is a vital tool to assist in the management of environmental and operational
costs of natural resources.

1. Meeting regulatory requirements;

2. Operate its factory in a way that environmental damages do not occur,

3. Promote a culture and attitude of environmentally safe working amongst its
employees;

4. Disclosure to shareholders the amount and nature of the preventative measures

taken by the management;

5. Ensures safe handling and disposal of hazardous waste;

Advantages of green accounting

1. Discloses utilisation of natural resources

2. Social contribution by corporates

3. Environmental protection

Disadvantages of green accounting:

1. Action of environmental expenditure

2. non-marketed boots and services

3. consumption of natural

4. Other limitations of environmental accounting