Digital includes systems such as spreadsheets, databases

Digital Revolution is theadvancement of analog electronic technology and mechanical devices to digitaltechnology (Lee,2016, p440). This period of revolution began during 1950’s –1970’s where technological advances such as computers, phones and the worldwide web began to surface. The Digital Revolution has had a significant impacton the way businesses function and the advancement of technology has changedthe way many jobs like financial reporting are executed.  Prior to the Digital Revolution andthe emergence of computers, financial reporting was much more complex and simpleaccounting software did not exist. Accountants had to physically go to thefirm’s subsidiaries to check data was sufficiently collected and processed.”Audits could be performed only by teams of accountants manually scouring reamsof financial information” (Maucaulay, 2016).

This highlights how financialreporting was only prepared manually and there were no ‘shortcuts’. Computerswere used to carry out weekly payroll calculations which calculated employees’entitlements. Because these were identical tasks, the computer ran it as abatch, which created the ‘batch processing’ operation.Financial reporting has been hugelyinfluenced by the role of computers.

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Computers keep “large amounts of data,conduct intricate calculations and manage financial transactions” (Mathews, nodate). This includes systems such as spreadsheets, databases and accountingsoftware. The use of computers varies depending on a company’s size. Largecompanies use a networked system to allow multiple staff to access theaccounting system, whereas smaller companies have a computer operated by one individual.Local Area Network (LAN) and Wide Area Network (WAN) are used to shareexpensive equipment or to link offices miles apart. The internet is the mostcommon WAN and accountants can share data wirelessly e.

g. through The Cloud.The popularity of computers has ledto the creation of applications and software which helps accountants. One waythis has helped is by the invention of spreadsheet applications and accountingpackages that are used to run financial functions like double entry bookkeepingand organising data using graphs. This can be achieved using software e.g.QuickBooks, Cognitive Technology, Microsoft Excel and ERP.

Softwares have largeand inclusive accounting information systems that automatically collect andprocess data. Packages can be tailored to fit specific needs of companies and businessescan develop their own software to fit their requirements. Furthermore,computers allow accountants to store large amounts of data in a compact spacewhich allows them to keep previous transactions. This is more efficient than largequantities of files in cabinets. Payment records, purchases and transactions aretracked which allows reliable auditing and analysis of business performance. The Digital Revolution and use ofcomputers has benefit the accounting sector and financial reporting in manyways. The CFA Institute believe using technology in various aspects offinancial reporting will make the process more efficient and will lead toinvestors “Receiving more transparent, better-quality information on a timelybasis” (Singh, Peters, 2016).

Accountants save time as computers speed upprocesses and produce reports instantly. Computerised systems work based on thesame principles as double entry bookkeeping, however the function is madeeasier because entries are entered once. Moreover, sharing of data isbeneficial for financial reporting as multiple people can simultaneously accessdata like ledger entries and changes are available for everyone to view. Thisallows several people to work on same tasks and collectively recognise errors.Another benefit of using computers is improved accuracy of data. While dataentry is in progress, accounting programs check whether data entered iscorrect, e.

g. verifying whether the amount received in a payment matches theamount due.  Although the role of computers has drasticallyhelped financial reporting, there are still limitations with the technology. Onedisadvantage is that accessing data from electronic filing can be harder tofind because information is “continually rekeyed for different purposes – at times,incorrectly – misplaced, not updated” (Keyes, Hill, 1998, p 27-1).

This is moretime consuming, defeating the purpose of technology. Another vulnerability isthat technology increases the chances of computer crime, cyberattacks andinformation hacking. Technology allows the public to order directly to companies’systems and make payments electronically, making companies prone to fraud andhacking.

The system manager must make sure that there is system security which isdifficult as each user needs access to facilities, but too much access jeopardisesthe safety.Overall, embracing the DigitalRevolution and incorporating computers within financial accounting has helped tocreate reliable and consistent systems that organise and analyse financial data,therefore reducing possible mistakes and strengthening the validity offinancial reporting.  

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