INDIVIDUAL ASSIGNMENT I

“THE IMPACT OF INDUSTRIAL REVOLUTION 4.0

TABLE OF CONTENT

1. Introduction…………………………………………………………………… 1-2

2. Impact of IR4.0 on accounting profession……………………………………..2-4

3. Conclusion…………………………………………………………………….. .5

4. References……………………………………………………………………….6
1.0 INTRODUCTION

The newest technologies, majorly associate to digitization, has shown some affect

towards the condition of some industries and sectors of the economy. According to

Ślusarczyk (2018), these processes emerge at a different pace, where it will relate with the

maturity level of the economy, its investment opportunities and the innovation culture.

Therefore, the era of digitalization would also have its own impact on the accounting industry

or specifically on the accountant’s role in this context.

Ślusarczyk (2018) define the concept of Industry 4.0 as “blurring the differences

between the work of people and the work of machines” (p.232). Which means that industrial

revolution 4.0 would bring in mainly a technology which likely capable of imitating the work

of a human. The author also further explain that just like how the first industrial revolution

improvise manufacturers’ operation, the next industrial revolution embodied the use of

electricity into the economy and the industrial revolution three make automation on the day-

to-day work tasks of production workers, the fourth one in bringing betterment for

management of information and decision-making. The forth industrial revolution is bringing

in the industry with the usage of digitalized technologies such as Artificial Intelligence (AI).

This paper will use the term of forth industrial revolution and artificial intelligence

interchangeably.

The context of fourth industrial revolution step up from the previous industrial

revolutions as it could relates to all aspect in life. Under this framework, Ślusarczyk (2018)

set forth that “the industry processes and commercializes the exchange of information

between people, between people and objects and also between objects themselves” (p.232).

Accountants have the responsibility in preparing and examining the financial records

of firms. They make sure and make assertions that the records and accounts are accurate,
payment of that corporate tax are made in the given time frame and with an appropriate

amount. They also have to analyse the operation of the business based on the accounting

information and try to assist the company to operate more efficiently and effectively.

Greenman (2017) expressed that accounting industry has a long history of artificial

intelligence (AI) applications way back to more than 25 years ago mainly in the aspects of

financial reporting and auditing tasks. In 2015, University of Oxford conducted a study on the

future accounting. The study depicted that accountants have a 95 percent chance of losing

their jobs as machines take over the role of data analytics and number crunching. In contrary,

the study also suggested that the progressing of technologies may eliminate some jobs and

also create new ones.

2.0 THE IMPACT OF IR 4.0 ON ACCOUNTING PROFESSION

According to Greenman (2017), the job scope of accountant in this new era depicted a

quite a number of difference when compared to how it was two decades ago. It is probable

that in the decades coming, the role of accountant will again changing in complementing the

needs during that future time. Accountant roles will differ substantially over the next decade.

Accountants will be having more job scope on the more critical part such as consulting on

business development, advisory services and risk management. He also further expressed that

accountants will have to accept more on specialization and incorporate with the

implementation of advance technologies.

According to IBM (2018) “Artificial intelligence can be defined as human

intelligence exhibited by machines; systems that approximate, mimic, replicate, automate,

and eventually improve on human thinking”. “AI is the technology that enables computers to

perform decision-based tasks previously left to humans.” (AICPA, 2017). According to

intelligence, it is said that through the implementation of artificial intelligence, it could draw

to a new level of products and services under accounting scope. She listed out that these may

consist of customer service, research and development, logistics, sales, marketing and quality

information analysis. Also, the implementation of artificial intelligence also are capable of

conducting these types of work such as information analysis, report preparation, and many

routine activities such as bookkeeping, coding of transaction. Therefore, indicating that

artificial intelligence has the power to make changes on the accounting profession

specifically.

Greenman (2017) in his research also mentioned on a study conducted by the

Association of Chartered Certified Accountants (ACCA) that it is projected that artificial

intelligence or automation will lessen the accountants’ burden on routine or day-to-day tasks,

therefore, open up the opportunity for the accountants to emphasize more on critical scope

such as consulting services and other higher-value work. The author also expressed that

maybe in years coming, artificial intelligence may finally be fully involved participate in the

supervising and assessing of compliance with laws and regulations, policy of a company,

evaluate staffs performance and may be even acquiring and firing.

In the current time, the usage of accounting software is not something new to the

accounting profession. Also, the application of tax filing software did not give much impact

on accountants and did not make the accountant to be out of business, when actually it has

assisted them on many task and resulted them to be more efficient and making it doable to

come out with a lot more returns than they could before.

For example, Botkeeper is a bookkeeping accounting software with embedded

artificial intelligence features. Under this software, it combines the function of bookkeeping
together with human-assisted Augmented Intelligence with advanced automation and skilled

accountants. Some of the smart features is it capable of scanning document and generate the

relevant information on the transaction into the system. The software also is capable of

prompting and reminding the user on making due bill payment. This software has an

objective of providing its client with the function of bookkeeping without having to have

anyone in the company to do it. Where according to the CEO, Enrico Palmerino the software

is capable of mimicking the accountant brain. He further explained that “the easiest way to

think of botkeeper is as a robot bookkeeper” and that “since creating the botkeeper, we’ve

never had to hire a bookkeeper”.

Unfortunately, according to the testimonials, the said objective and features of this

software are still far beyond what it really is as it stills require huge human assistance in order

to operate. It is much more limited than a human bookkeeper, it still could not mimic the

accountant ways of thinking. For example, the software is not capable in making proper

recognizing on the company’s revenue, not capable of producing bank reconciliation and

lastly could not do journal entries such as month-end accruals or deferrals. The software also

still requires the supervision of accountant in order to review the data and its accuracy.

The stated software above might actually depicted that how much advanced is the

software in terms of its implementation in artificial intelligence, human assistance and

manpower is still needed and it could not fully replaced human. Someone is still needed to

analyse the information and data presented and come up with a conducive conclusion.
3.0 CONCLUSION

The emergence of artificial intelligence through the transition of forth industrial

revolution in the accounting industries has showed various mixed feedbacks and impressions.

Some studies expressed that the application of artificial intelligence in the future would result

in the accountant being set off by the advanced technologies. Less accounting profession will

be offered and needed for the community. Furthermore, many researches also predicted that

company would not need much workforce under the accounting department specifically.

Nevertheless, there are also those who expressed that the existence of artificial intelligence

would give more benefit to the accountant itself as they would be incurring less workload as

it will be taken over by technologies through automation of routine work as an example.

Besides that, accountant also will be able to be focus more on the critical task which requires

professional judgement and analytical thinking. In the nutshell, it could be concluded that the

rising of usage in artificial intelligence in accounting industry should not be viewed as a

threat to the accounting profession instead it should be seen as an assisting tool which could

result in a more efficient working culture.

In combating the risk and concern on the accounting profession being taken over by

technologies, teaches that the quality and role of accountant in this current globalisation era

need to be further stepped up. Which means that it is crucial for accountant to have critical

and depth understanding in interpreting the company financial data and consult the client on

how to further improve and grow its business.

Greenman, C. (2017). Exploring the impact of artificial intelligence on the accounting

profession. Journal of Research in Business, Economics and Management, 8(3), 1451-

1454.

Ślusarczyk, B. (2017). Industry 4.0 Are we ready?. Polish Journal of Management Studies

17(1), 232-248.

DHL Customer Solutions & Innovation, Artificial intelligence in logistics. (2018). A

collaborative report by DHL and IBM on implications and use cases for the logistics

industry. Retrieved from https://www.ibm.com/downloads/cas/XOQW7Q0D.

Jariwala, B. (2015). Exploring Artificial Intelligence & the Accountancy Profession:

Opportunity, Threat, Both, Neither? International Federation