6.1 Digital technologies and the FF & New technologies and their use in the FF

Question 1

Core modernisation tools are:

Answer 1

• technologies anticipated to effectively update existing systems and improve capability
• considered mainstream
• includes:
  
  • Cloud technology
  • Data visualisation

Question 2

Exponentials are

Answer 2

• technologies that will deliver new capabilities, pushing the FF forward
• still at early adopter stage
• includes:
  
  • Blockchain
  • Advanced analytics

Question 3

Cloud computing is the

Answer 3

• provision of shared computing services over the internet, either public (shared) or private (closed)

Question 4

Cloud computing has drive the following changes in the structure and working of the FF:

Answer 4

• Collaboration - file sharing and version control issues are minimised (eg: Google drive allows multiple collaborators to update docs in real time)
• Flexible working - increased flexibility to work pattern and arrangements due to full access to all files and docs anywhere with an internet connection
• Increased security - cloud service providers understand the acknowledge the security of data is critical to their success
• Up to date - continually up to date software helps to ensure compliance with regulations
• Easier integration - cloud based accounting software can easily link with other cloud based software allowing integrated approach in a cost effective way

Question 5

Cloud computing, digital tech and financial reporting:

Answer 5

• provision of services via cloud networks has revolutionised many industries
• physical products and ownership of traditional physical assets is less important
• and there is a growth in significance of intangibles which aren’t recorded on Statement of Financial Position
• using financial statements alone may undervalue such entities as many intangible assets are generated internally and won’t be recognised
• eg: intellectual property and staff skills

Question 6

Big data and data analytics technologies have facilitated

Answer 6

• the ability to sort and analyse data to produce meaningful info far quicker, largely through use of spreadsheets and database software

Question 7

Impact of big data and data analytics on elements of FF:

Answer 7

• Business partnering - it will increase the significance of the bus partnering role, with potential for new insight to be gained (accountants will act as interface between data specialists and the bus to transform data into valuable info)
• Management accounting - it will contribute to the development of more efficient and insightful management control systems and budgeting processes
• Financial accounting - it will improve the quality and relevance of accounting info which can enhance transparency and stakeholder decision making
• Reporting - it can assist with the creation and improvement of accounting standards which will help to ensure the accounting profession continues to provide useful info as dynamic global economy evolves

Question 8

Internal audit and big data:

Answer 8

• big data and data analytics are expected to enhance the quality and relevance of internal audit assignments
• it’s changing how the review of internal controls and systems are carried out
• it enables internal audit to to better identify anomalies, fraud and operational risk and tailor their approach to target more bus critical areas

Question 9

Process automation and the FF:

Answer 9

• developments in technology are enabling more complex activities to be automated and therefore increasingly significant to FF
• most likely to be automated are repetitive, low skilled manual tasks such as data entry, duplication and processes that add minimal value
• this will free up time and resources for higher level value adding activities

Question 10

Advantages of investing in process automation within FF:

Answer 10

• Cost savings - reduction in headcount as routine aspects of finance work automated
• Value adding - staff and management time is freed up to focus on higher level value adding activity
• Improved accuracy - automated processes will be more accurate and efficient with removal of human error
• Positive returns - on investment
• Adaptability - can be used for existing processes or form part of an overarching process improvement exercise

Question 11

Disadvantages of investing in process automation within FF:

Answer 11

• Uncertainty - changes the way FF works and can lead to uncertainty around job security and future prospects
• Relationship management - time and resources are required for relationship management with IT support and software providers
• Competence - automated processes are built by IT staff who must understand the existing process as the automated process will only be as effective as the coding that drives it
• Training - cost of training staff on how new processes work
• Change management - the process must be managed carefully and led effectively

Question 12

Artificial intelligence (AI) and FF:

Answer 12

• AI and machine learning will have significant impact on FF
• Process automation will be enhanced by AI enabling automated reasoning making automation more flexible and capable of dealing with complexity

Question 13

AI and accountancy:

Answer 13

• In the short to medium term AI brings many opportunities for accountants to improve their efficiency, provide more insight and deliver more value to the bus.
• In the longer term AI brings more radical change, as systems increasingly carry out decision making tasks currently done by humans
• Egs: greater automation, fraud detection, predictive models and insights

Question 14

There will be a need to retain human involvement in many decision making processes due to AI’s limitations:

Answer 14

• Sufficient data of the right quality - is needed to enable effective decision making and for the machine to learn
• Not particularly flexible - models learn to carry out specific tasks based on a given set of data
• Entrenches societal bias - the data often reflects existing bias and prejudice in society
• Not every problem or task will be suitable - it may be unique or may require other factors to be considered such as ethics

Question 15

Data visualisation and the FF:

Answer 15

• particularly important as the provision of info to help support the efficient and effective running of bus is fundamental purpose of FF
• the ability to make data relevant, accessible and easy for all end users is vital

Question 16

Key benefits of data visualisation:

Answer 16

• Accessible - modern data visualisation graphics and dashboards are designed to be user friendly and intuitive
• Real time - synchronising real time data with data visualisation tools gives live up to date numbers which allows for quicker response
• Performance optimisation - the immediacy and clarity of info supports decision making and proactive efficient use of resources as problems are identified promptly
• Insight and understanding - combining data and visualising it in a new way can lead to improved understanding and fresh insight

Question 17

Blockchain and the FF:

Answer 17

• Financial reporting - accounting for cryptocurrency is currently a grey area and how they should be classified is subject to debate
• Cross border payments - blockchain driven solutions aim to make the transfer of money easy and seamless by circumventing the traditional centralised intermediaries (banks)
• Smart contracts - self executing contracts are created and agreed upon and then verified by the distributed ledger and cannot be tampered with
• Security and traceability - the distributed ledger means all participants hold a copy of the full ledger. Any attempts to change a single block will become invalid.

Question 18

Internet of things and the FF:

Answer 18

• IoT is a network of smart devices with inbuilt sensors and internet connectivity that collect and transmit data constantly and are an increasingly significant element of big data
• it should faciliate better bus planning, resource allocation and will help to optimise processes, minimise expenditure and give advanced warning of potential issues
• Finance professionals will work increasingly closely with IT as the two functions overlap and require each others mutual knowledge

Question 19

Mobile technologies and the FF:

Answer 19

• From perspective of FF the use of mobile technologies has centred on efficient communication within teams
• Some areas of efficiencies delivered are:
  
  • Communication and flexibility
  • Scalability
  • Less paperwork
  • Instant data visibility

Question 20

3D printing and the FF:

Answer 20

• Impact is largely from a costing perspective, practically dealing with changes in operations
• This technology allows:
  
  • Less waste (no offcuts or by products)
  • No overproduction - products made to order
  • Increase in direct costs - costs distinct to a specific job
  • Inventory holding of finished goods should be zero and raw materials should be delivered “just-in-time”