Add Thesis

Digitalization of the Accounting Industry

The influence of digitalization on the accountants’ role and their self- understanding

Written by Anonymous

Paper category

Master Thesis


Business Administration>Accounting




Master Thesis 2.2 Digitization Many researchers ask themselves what role accountants play in the ongoing digital revolution in academic literature (Jeacle and Carter, 2014; Frey and Osborne, 2017; Taipaleenmäki and Ikäheimo, 2013). In addition, some authors pointed out that the coverage of digital terminology is limited (Parviainen et al., 2017; Henriette et al., 2015). Kaarbøe et al. (2018) reviewed about 30 literature reviews and found that current research only covers limited aspects of topic digitization. They believe that the literature review conducted mainly focuses on big data and social media as digital tools, and they require greater diversity in the relationship between digitization and data analysis, robotics, and artificial intelligence. Gbadegeshin (2019) believes that although digitalization has had a significant impact, there is not much academic research on this topic. In addition, he pointed out that practitioners have written a large number of existing reports in the form of reports, white papers, consulting companies, service guides, and blogs. These articles focus on digital transformation and are based on opinions and speculations. Therefore, Parviainen et al. (2017) believes that it is challenging for companies to know how appropriate and reliable the information is for their situation. Therefore, with the continuous development of technology and career changes, we hope to further investigate the impact of digitalization on the role of accountants. 2.2.1 What is digital? Based on the common knowledge shared between professional institutions, scholars and practitioners (Schumacher et al., 2016; Brennen and Kreiss, 2016), the term digitization is used interchangeably with the term digitization many times. Gbadegeshin (2019) explained that they express different things, even though the two concepts are interrelated. To understand how digitization works, we provide a theoretical framework developed by Unruh and Kiron (2017). According to Unruh and Kiron (2017), there is no consensus on the meaning of the terms digitalization, digitalization, and digital transformation. The definition of these terms usually depends on the people who use them, such as consultants and technical experts. These terms are often misunderstood and cause confusion (Parviainen et al., 2017). Therefore, we tried to explain the difference using the following framework provided by Unruh and Kiron (2017). Digitization is called the digitization framework, which is defined as the transfer of analog data to a digital set. (Rachinger et al., 2018; Gbadegeshin, 2019; Unruh and Kiron, 2017). Digitization provides the use of digital opportunities (Rachinger et al., 2018), which means that innovators can develop new business models and business processes to take advantage of recent digital products (Unruh and Kiron, 2017). 2.2.2 Stages of Accounting Technology Development Researchers describe the history of accountants' use of information technology in financial functions as three stages (Källroos and Havelka, 2017; Kaarbøe et al., 2018). The first phase involves the transition from a manual system to recording financial statements in a functional IT system. At the same time, the second phase involves the introduction of an enterprise resource planning (ERP) system. We are currently participating in the final phase; using advanced digital solutions. In the next section, we will explain the different periods of digitization and their impact on the role of accountants. The first stage: from manual accounting to computerized accounting The literature regards Luca Pacioli as the father of accounting education because he invented double-entry bookkeeping, which is still used today (Sangster and Scataglinibelghitar, 2010). In fact, modern accounting is built on this scientific system (Amanamah et al., 2016). In addition, in the past few decades, the accounting system has undergone a major shift from manual to automatic accounting system (Arcega et al., 2015). Since the 1950s, it has become easier and faster to process massive amounts of data and generate more accurate and timely reports due to the use of computers to process and store information (Murungi and Kayigamba, 2015). Before the 1980s, accounting was traditionally done manually by recording all transactions in columnar files and keeping them in a large number of binders (Kaur, 2017). In addition, Shiraj (2015) explained that the task of traditional accountants involves recording financial information mainly by hand, papers, and journals. Because accountants need to pay attention to data entry when doing accounting work, the researchers pointed out that traditional accounting can be understood as a large amount of information. Computerized accounting uses a software package, which can complete all traditional accounting tasks in a computer. Sam et al. (2012) mentioned in their research that the computerized accounting system seems to reduce the challenges in the practice of bookkeeping. In addition, Warren et al. (2014) believes that computer-based systems are generally more accurate than manual methods. Nevertheless, today, companies can still choose to use manual accounting systems, computerized accounting systems, or a combination of the two (Scott, 2015). Once computers became popular through cheap software, the work of accountants entered this medium: the concept remained the same, and the method shifted from thesis to the program (Kaur, 2017). Read Less