The backbone of every business

About Accountancy

Why does anyone start a business? Well, you see a need in the market and realise that there is potential for you to fill that gap with your products and services, ultimately creating and benefiting a business ecosystem. However, the fundamental reason that anyone starts a business is simple: to turn a profit. And wherever there is a business there will be accounts, which is always referred as backbone of every business - Accountancy.

The Origins of Accountancy

At first will dig some history about where the accountancy came from: tracing back thousands of years to ancient civilizations, good accountancy is what keep businesses healthy and helps them flourish. The earliest discoveries by archaeologists are from as far back as 3300 to 2000 BC, of ancient tax records from Egypt and Mesopotamia. Some historians theorise that the key reason for the development of writing itself, originated with the need to record trade and business transactions.

It was in the 15th century that Italian monk Luca Pacioli overhauled the commonly used bookkeeping structure, setting the stage for modern accounting. Known as the father of accounting, Pacioli demonstrated the advantages of a double-entry system for bookkeeping. The concept was simple: list an entity's resources separately from any claims upon those resources by anyone else. This was the foundation for what we call the balance sheet today, complete with separate debits and credits. This improvement made bookkeeping more efficient and provided a clearer picture of the overall financial health of the company.

What is Accountancy

Financial reporting is a business need across the world. Every company in every country is required to prepare financial statements, which give a true and fair view of its financial position to its owners and investors. Companies listed on stock markets have to release periodic financial reports to account for the money that their shareholders have invested which is called as accountancy. These financial reports have to be prepared on the basis of accounting standards which differ from country to country.

Accountancy as a Profession

As a crucial function that serves as the backbone of any business, accountancy is sector agnostic. A qualified accountant can find a job in any field, from media and entertainment to education to healthcare to government. As in most sectors today, accountancy is still evolving, and there have been transformative technological breakthroughs.

Recent trends brought about by technology: Evolution in Accountancy

Field of accounting is not a legacy system any more, technology is being widely embraced through out Accounting, Auditing, taxation processes and some of the technologies in accountancy is listed here:

Blockchain : (also known as distributed ledger technology) is an innovation that enables companies to record their transactions directly into a joint digital register, creating an interlocking system of permanent accounting records. Since all entries are distributed and cryptographically preserved, blockchain decreases the costs of maintaining and reconciling ledgers, and offers complete certainty over the ownership and history of assets. 

Artificial Intelligence (AI) : is also primed to transform the way accounting is done by automating monotonous tasks and allowing financial staff to prioritize higher impact priorities. AI can help streamline data entry and analysis from financial data spread out over multiple documents, PDFs and spreadsheets by extracting data, automatically classifying it based on spend category and populating reports. AI can also be used to easily detect fraud as well as enforce corporate policy, serving to keep businesses robust.

Internet of Things (IoT) : is technological innovation that can see use cases in accounting as well. With a system of interconnected devices which exchange data over the internet, through IoT assisted accounting, chartered accountants will automatically receive all associated data through a digital system, instead of having to coordinate with a bookkeeper to gather information. This will enable more comprehensible risk evaluation and offer real-time management that allows businesses and accountants to manage issues immediately. 

As a profession, accountancy offers a dynamic career that is often misunderstood from an outsider’s perspective. A vital job is practically recession proof, wherever there is a business, there is a need for accountants.