Automation and Digitalization in Financial Accounting and Auditing - Status Quo and Future Prospects for Auditors and Companies in Germany

Thao Hien Nguyen

Bachelor's thesis

Abstract:

The thesis aims to identify the status quo for automation and digitalization in financial accounting and auditing and the prospects companies and auditors. Findings from existing literature are compared with the statements obtained from the expert interviews to answer the main research question: "What is the status quo of the use of digital technologies in financial accounting and auditing firms and what are the future prospects for financial accountants and auditors in Germany?" The use of digital technologies in financial accounting and auditing in Germany has not reached its limits yet. The results of the thesis show that the Big 4 auditing firms embrace digitalization, while medium-sized auditing firms are floating with the digital development of their clients. The Big 4 auditing firm benefits through its vast global network and can invest in digital technologies. Furthermore, they have a significant consulting business and must advise customers on up-to date digital technologies. Therefore, the auditing sector also benefits from the development and implementation of digital technologies. Currently, medium-sized auditing firms lack the monetary and human resources to implement digital technologies on their own. However, there are blanket market solutions that medium-sized auditing firm can use. Moreover, the status quo and the prospects depend on the degree of digitalization of the client. The auditor will not be able to use digital technologies in a meaningful way if the data from the client is not compatible with the technology. The literature review and empirical research findings show no general status quo for the financial accounting department in companies either. Some companies are comparatively advanced in their digitalization processes, while others are still lagging. The empirical research findings show that not all digital technologies are relevant across financial accounting departments and auditing firms. Concerning blockchain, the literature review showed high importance, which the empirical research does not support. Hence, the future of blockchain seems unclear for financial accountants and auditors. Artificial intelligence and robotic process automation are already used to automatically execute balance confirmations or recognize invoices. This brings about a large efficiency gain. Both technologies seem promising to boost further automation in the future. The use of digital technologies has not yet reached its limit in accounting and auditing and the implementation of technologies will change the profession of accountants and auditors. The results from the literature review and empirical study conclude that the job descriptions for financial accountants in companies and auditors will change. If more financial accounting and auditing tasks will be automated, accountants and auditors will take on more qualitative and constantly changing tasks instead of repetitive tasks. Thus, employees of the external accounting department, having many repetitive tasks, may lose their importance. Further digitalization can result in a more substantial shift to management accounting, where they will control and optimize the processes. Through the further use of digital technologies in companies, the auditor will take on a new role in the future. Auditors can use the freed-up time through efficiency gain to focus on complex issues with the client again. Thereby, the audit profession will develop in the direction of an advisory function. Furthermore, in the future digital client will need the support of the auditor with his questions about artificial intelligence and other technologies. Future auditors and financial accountants will need much more IT expertise to keep pace with the digital transformation. Significantly, the auditor must be careful to stay on the same digital plane with their client to carry out the audit correctly. Otherwise, the auditor will, at a certain point, lack the expertise to perform audit procedu

Abstract:

res properly.

Keywords

Automation, Digitalization, Auditing, Financial Accounting

Language used: English

Date on which the thesis was submitted / produced: 16. 5. 2022

Thesis defence

• Supervisor: doc. Ing. Karel Tomšík, Ph.D.

Czech University of Life Sciences Prague

Faculty of Economics and Management

Bachelor programme / field:
Economics Policy and Administration / Business Administration