As with virtually every other profession, technology has fundamentally shaped how accountants do business and conduct their daily activities. As previously highlighted, digital technologies have proven useful for accounting firms seeking to get through larger workloads and more complex clients.
In this article, we will explain the history of accounting technologies, from spreadsheets to AI, and how these solutions have helped drive innovation.
Accounting in a Pre-Digital Era
The evolution of accounting technology has been a long and winding road. So, to fully appreciate the importance and development of accounting technology, we must first go back in time to a pre-digital era.
However, the earliest recorded accounting technological innovation came in 1494 when the Italian mathematician Luca Pacioli (also known as the father of accounting) documented his double-entry bookkeeping method. Incidentally, most of the principles described by Luca during the Italian Renaissance are still in use today.
A couple of centuries to 1879, the next major pre-digital accounting technology marvel had an arguably even more significant impact. Invented by James Ritty and John Birch following the American Civil War, the automated money handling system — more commonly known as the cash register, was created to stop James’ saloon employees from stealing his profits.
The Spreadsheet Revolution
In the early days, accountants used pen and paper to track their finances. However, this was a time-consuming and error-prone process. Unbeknown to many at the time, in 1969, a revolutionary piece of software was released that would forever change the accounting world n the decades to come.
The Language for Programming Arrays at Random (LANPAR) was one of the first electronic spreadsheets ever created. Used exclusively by some of the largest corporations, such as General Motors and AT&T, for their national budgeting operations, the LANPAR helped establish the electronic spreadsheet as a viable alternative to pen & paper. However, due to the size, price and complexity of computers in the ’60s, the spreadsheet wouldn’t truly take off until a decade later, in 1979, when the Apple II introduced the world to VisiCalc — the first electronic spreadsheet on a microcomputer.
The spreadsheet would once again be revolutionised in the 1980s by IBM’s Lotus 1-2-3 (discontinued in 2013) and Microsoft Excel in September 1985. Excel made it possible to automate many of the tasks that accountants used to do manually, such as calculating financial statements and tracking expenses. Today Microsoft Excel is intrinsic to the world of accounting, making familiarity with the software a minimum requirement for any aspiring accountant.
AI & Machine Learning
In the same way that Microsoft Excel revolutionised the way accountants worked and ultimately changed the world of accounting technology forever, so too have recent advancements in artificial intelligence (AI), automation and machine learning.
In recent years, artificial intelligence (AI) has begun to play a role in accounting technology. AI-powered accounting software can automate multiple tasks at once and help accountantso identify potential problems such as fraudulent transactions or flagging compliance issues.
The future of accounting technology is bright. As AI develops, accountants can focus on more strategic tasks, such as providing business advice to their clients.
The evolution of accounting tech has had a profound impact on the profession. Accountants can now be more productive and efficient and provide better service to their clients.
As AI continues to develop, the role of accountants will continue to evolve. Accountants will need to be skilled in using AI-powered tools, and they will need to be able to understand how AI can be used to improve the accounting process.
Keep your business up-to-date with INAA
By employing AI, automation and machine learning in your accounting firm, you can ensure that your business is best positioned to capitalise on this emerging technology.
Here at INAA, we’re on a mission to help professional accounting firms deliver best-in-class services worldwide.
We aim to make global business personal and encourage all of our members to collaborate and drive the conversation on accounting and auditing developments.
If you’re interested in finding out more about the current trends within the accounting industry, be sure to take a look at what INAA can do for you. Apply for your membership today.