The year 1850 begins the First Industrial Revolution that uses water and steam for power generation, followed by the Second Industrial Revolution in the 1900 for industrialization, where electric power is used for mass production, which then continued by the Third Industrial Revolution in the 1970s for electronic automation. Lastly, currently, the Industry Revolution 4.0 which is the digital revolution, where information replaces capital and automation on cyber physical systems. Asset and products intelligence, as well as smart workforce is the main focus now. It includes the usage of internet, storage of data in the clouds, computerize system and increasing technology innovation. Industry Revolution 4.0 is bound to change the accounting world and also financial reporting.
Firstly, through this revolution, the usage of both internet and advance technology and smart devices will allows the accounting world to get digitalized. Accountants will now receive data and information through streaming of real-time financial data. This will automatically replace the need for bookkeeping. Certain data that was unobtainable previously will now be able to obtain through various embedded sensors. Not only that, all processes and operations data can be available real-time through integrated network systems. This revolution can also digitalize the service perform by accounting firms as work done can be entered and checked through system with enhance efficiency and effectiveness as well as reducing cost of overall service perform. Large amount of data can be absorbed and analyzed quicker using technology, providing better analysis and solution for clients.
Next, instead of human accountants, simple, routine task can be replace by robots or Artificial Intelligence (AI). Accounting jobs such as bookkeeping, a tedious job that is usually done by lower level accounting staffs, may be replaced by robots or AI. This is because bookkeeping requires many staffs to perform and that staffs only need to have knowledge on how to record and organized the financial transactions of clients company. It would be cheaper and more efficient when done by robots as accountants would just need to input the command codes into the robot for them to perform the work. This method will also reduce human error therefore, making work of accountants much easier. Robots and Ai can also process large data volumes, which exceeds human limitations. AI and robots can also have the ability the better adapt to the constantly changing patterns of the accounting world. Thus, this ability allows it to make a better and more accurate decision after analyzing the overall data and information available. The decisions produced by them are also more consistent and not biased.
Moreover, Machine Learning (ML) is a part of component in Artificial Intelligence (AI) in the field of computer science that uses statistical techniques to give computers and supercomputers the ability to interpret and learn with data, without being explicitly programmed. The potential applications in Machine learning in accounting world is infinite as the management can be automated. For an example, when the business receives a new invoice by applying the right techniques into the computer, the business can predict the expense account that the invoice belongs compared to the traditional method which the process can only be done by an accountant who was in charge remembering the entire accounting plan and knew what each account was for. Pursuing this revolution creates an automatic process in the future bookkeeping process. Additionally, if the business receives invoices or other documents in paper, the business can use the Machine Learning to extract information about the content, again creating an automate accounting process. Another possibility is that Machine Learning has the function of financial forecasting statement that can predict data based on past data like whether the business has a going concern issue which will be an insight found by the data and not by intuitions. These examples show that the role of Machine Learning makes up most of the work done by accountants or accounting advisors as it will be completely change the working model, making a huge impact in the accounting world.
Companies or businesses will also need to access the right skills in order in order to sustain their profit by following the latest trend in pursuing the industrial 4.0. Current trend of automation and data exchange will be automated mainly by Artificial Intelligence (AI) and Machine Learning (ML) that will create a foundation in our accounting world and financial reporting standards. The roles and responsibilities of professional accountants in an accounting firm need to improve their technical expertise that is relevant in their field as these technical skills are needed to be implemented by deep understanding of the business context and models so that the accountants may be more directly involved in managing the inputs or outputs of the projects by framing the problems and integrate results into business processes with the automated data process created by Artificial Intelligence (AI) and Machine Learning (ML). This evolution will be reflected by the contributions of skillful accountants in complying with relevant technical expertise to be able to have informed conversations with experts and other parts of the business. At the same time, critical thinking and communication skills are important as they need it to apply this in adopting new ways of thinking and acting in order to make different business tools. For an example, spending more time on being predictive and proactive during a meeting with client. With a right skills that is implemented by the company, the business may show a strong growth with a good prospect in the industry 4.0.
Furthermore, with the fourth revolution, the storage of accounting data with differs. Instead of keeping physical files, files can now be send to the cloud for storage. This can reduce risk such as loss of data due to natural causes such as flood or fire, or loss of data due to physical data theft. Storage in the clouds provides easier access to files regardless of where the user is. Information also can be directly shared with others without the need of physical passing of files. There is also a latest breakthrough– blockchain. Blockchain technology uses math and cryptography to provide an open decentralized database. Blockchain creates a record where its authenticity can be verified by anyone and that data stores in blockchain cannot be backdated. Therefore, there’s possibilities that data can be stored using blockchain technology in the future, creating a safer way of keeping certain data and information. Government may also implement tax collection through blockchain. Under everyone’s watching, fraud can be significantly reduced through blockchain as transparency of data increase.
Industrial revolution 4.0 will increase the credibility of and relevance of reporting at the same time increasing the initiative of systematic knowledge for the professional accountants. Instead of using internet and textbook to refer the International (IFRS) and Malaysia financial reporting standard (MFRS) while reporting or adjusting an accounting event, this industry manages self-controlling, self-auditing systems alongside with demand pull custom according to clients. For an example, the accounting software will suggest a relevant financial standard after analyzing the client’s case problem. There are claims that employment rate in this industrial revolution 4.0 will decrease drastically because of the automation of the cyber system that might take over many bookkeeping jobs. But professional roles like CFO will need to have technical expertise in this industry as they need to make decisions based on the data analyzed and results given whether the system complies with the relevant financial reporting standard. Thus, big companies gets to follow the pace of such challenging reporting environment as a result of accounting and regulatory change by improving the financial and non-financial reporting into a more automate reporting.
In conclusion, it is a vital growth for the industry in looking forward into Industrial Revolution 4.0 because it brings various benefits to the economy, environment, and society. Thus, accountants in the accounting world will be able to create many opportunities to be less involved with automated operations and strive more on a big-picture strategies such as resource efficiency.