Does tech trump 'old school' accounting?

Technology is taking the world by storm. Some might say that it is taking over. We can debate that for a fairly long time with little or no winner. In terms of accounting, tax and payroll, the technological advancements have been extreme. But does tech trump “old school” accounting?

How tech has changed accounting

Accounting:

The biggest impact that technology has had on accounting is saving time. In addition to the time savings, the amount of paperwork has been reduced significantly. The ability to process hundreds of invoices in several seconds helps accountants tremendously.

Tax:

Hours and hours spent sitting at the South African Revenue Service (SARS) to hand in bits and pieces for tax or VAT returns have been saved. Submission of tax returns online using e-filing is now the preferred method to file your return. Tax calculations can be checked in real-time, before submitting, lowering chances of mistakes being made and avoiding multiple returns being submitted.

Payroll:

The key here is private information must be kept private. Payslips are secured in how they are produced. There are options now to send the payslip with a secure password straight to the person’s email address. On top of that, what seems like, millions of pieces of paper NOT having to keep locked up in case someone comes looking.

Having said all this, there are some downfalls to the technology. We are not discussing them here though.

Accounting basics haven’t changed

Despite all the advancements in technology, the basics of the accounting function have not changed. In certain instances, technology has actually made the accounting function more complicated than it is and needs to be.

In its most basic form, accounting is the collection of all transactions and the recording of those transactions in one place.

The “old school” way was in big double ledger books that were about the width of a desk. Everything was done in pencil.

Best of all, everything was correct. Computer programs took the books off the table and do EXACTLY the same thing. There are pros and cons to this technology, as with everything in life.

Pros and cons

The computer systems are quicker and more accurate. They ensure accuracy by putting checks in place that the user has to conform to before moving forward. Quicker does not always mean more accurate. Human error is always going to be present.
Another big advantage is that once updated or closed, you cannot go back and change it. This is crucial when it comes to processing the year-end.

Having said all that, I went to see a potential client about their accounting and they brought out books. I was taken aback at first because I had not seen records like this since my varsity days but was pleasantly surprised when I checked them to reveal they were 100% correctly calculated. EVERYTHING balanced. A big sigh of relief!

On the other hand, I’ve had an unpleasant experience with computer systems that are not accurate and required a complete recapture of two years’ worth of transactions. It comes down to the person in the chair doing the work as with everything in life, I suppose.

Means to an end

It does not matter how you record the transactions of your business because it is a means to an end. The end being the accurate disclosure of your business activities to SARS or regulatory body etc.

Provided that it all balances, it does not matter how you get to the result. Much like there are many roads that lead to Rome, there are many ways to capture your business activities.