Accounting principles and practices

Technology and Accounting

Technology has now become a euphemism for the information age. As individuals, information rarely escapes our grasp as now anybody can have access to its vast array of knowledge. More importantly, in the midst of our global society, technology has a profound role on our nation's ability to participate in a more competitive environment. As the age old adage states, "Knowledge is power," and in many instances this statement is correct. Information allows individuals to make better informed decisions regarding projects that can have grave implications on society if the solution is incorrect. Further, information allows more convenience in regards to access and search of particular concepts. Technology allows humans to live longer while allowing them to live more productive lives. The benefits that technology derives are as difficult to enumerate as they are to fully comprehend. It is my contention that the information age has a very profound impact on society, especially if society is dependent on a particular technology to flourish. For one, technology can be used to supplement human judgment to make better informed decisions. Further, technology can help streamline processes in an effort to make individuals work more efficient. Finally, technology can help institutions better safeguards information thus reducing fraud, miscalculations and other human errors.

In regards to accounting, technology has a profound role in terms of accuracy. The profession of accounting is predicated on accuracy of financial aspects such as assets, liabilities, cash, accounts receivable, accounts payable and so forth. Errors in these particular ledgers can result in consequences for both management and stockholders who ultimately make decisions based on this information. If the input is wrong, it is possible for management to make a misinformed business decision due to errors in accounting. For example, Insight Enterprises lost $70 million due to an accounting error. These transactions started in 1996 and ended in 2008, a stretch of 12 years with accounting errors. Chief Financial Officer Glynis Bryan explained on a conference call with investors that the company moved credits on sales made from its balance sheet to its income statement before it legally should have. This error, overtime, cost the company over $50 million dollars. Technologies helps abate of diminish the prevalence of human errors in accounting. With software and technological oversight, many of the errors experienced by Insight Enterprises could have been avoided. Furthermore, the duration that these errors occurred suggests that proper oversight of accounting was not in the company. With technology, proper oversight can help reduce the duration, and the subsequent damage of accounting errors (Elliot, 2004).

Technology also allows accountants be more efficient in regard to their labor. Technology helps to reduce much or the redundant and routine tasks associated with accounting. Accountants no longer need to count specific line items or add all the ledgers together by hand. They simply input the required numbers into the system, which will do the computations itself, free from human error. The oversight system within technology can also help diminish the intentional errors of unethical accountants attempting to steal or input incorrect data into the system. As such, technology helps abate the influence of fraud within the accounting industry. This concept has recently come to the forefront of popular discussion as the financial crisis still grips American society. Financial oversights, particularly those with the mortgage arena, might have avoided the crisis many Americans are currently enduring. In fact, congress, with the Dodd-Frank act has provisions with the law that use technology to help reduce accounting fraud. Provisions in the law Sarbanes-Oxley also uses technology extensively to help ward off the influence of fraud within the accounting and business professions (Bratton, 2002).