Chapter 6- unit 5

Emerging Trends in Accounting

Virtual Accounting

Virtual accountants get access to your financial data either from your cloud or from your local
computer using RDP. It means data don’t get transferred and remain under your control and defined
security standards which ensure to keep your confidential data highly safe and secure from any kind
of threat.

Handle businesses of all sizes and industries

If you are confused about whether you can hire a virtual accountant for your too small business or
not, you will be amazed to know that virtual accounting services are available for businesses of all
sizes and all industries. No matter whether you have a large, mid-size, or small business in real
estate, hospitality, manufacturing, healthcare, retail, technology, telecom, wholesale, foods, or any
industry, taking the help of accounting and bookkeeping services is a cost-effective way to take your
business to the next level.

You can use accounting services remotely even if you are just a start-up as it can be your best idea to
focus on your business by finding the right accounting solution.

Accounts maintained by experts

To keep themselves in this competitive market, virtual accountants work effectively in improving
their skills, qualifications, and services. So, when selecting virtual accounting services provider, you
can be sure that you are going to hand over the accounting work of your business to a skilled,
knowledgeable, and reliable person.

A person or a company providing virtual accounting services has great expertise in handling the
accounting needs of small and mid-sized businesses from varied industries. When you choose a
company to offer the required services, they will deploy experienced and professional staff to meet
your requirements.

Tasks handled by Virtual Accountants

Still, confused about what services a virtual accountant offers or for what services you can hire a
virtual accountant? Here are some of the important tasks handle by your virtual accountant.

Bookkeeping

Payable and receivable accounts

Banks, credit card, and loan accounts conciliation

Payroll processing

Tax preparation
Financial statements preparation

Management reporting

Financial analysis

Any other tasks which can be handled by your in-house accountant

Want to know more about virtual accounting services? Like when you should consider outsourcing
your accounting tasks to someone you can rely on completely, in terms of affordability, security,
expertise, and professionalism.

It is advisable to consider these points and make a decision accordingly.

There is no need to hire a full-time bookkeeper for a start-up or a small business. So, finding
someone who can handle the accounting tasks efficiently while sitting at another place would be the
best solution.

No matter what your business size is, when you find an outsourcing company providing virtual
accounting services with years of experience and highly qualified staff at affordable prices, you can
use their services.

Smart City Accounting

A smart city is a technologically modern urban area that uses different types
of electronic methods, voice activation methods and sensors to collect specific data. Information
gained from that data is used to manage assets, resources and services efficiently; in return, that
data is used to improve operations across the city. This includes data collected from citizens, devices,
buildings and assets that is processed and analyzed to monitor and manage traffic and transportation
systems, power plants, utilities, water supply networks, waste, crime detection, information systems,
schools, libraries, hospitals, and other community services. Smart cities are defined as smart both in
the ways in which their governments harness technology as well as in how they monitor, analyze,
plan, and govern the city.

The smart city concept integrates information and communication technology ('ICT'), and various
physical devices connected to the Internet of things ('IoT') network to optimize the efficiency of city
operations and services and connect to citizens. Smart city technology allows city officials to interact
directly with both community and city infrastructure and to monitor what is happening in the city
and how the city is evolving. ICT is used to enhance quality, performance and interactivity of urban
services, to reduce costs and resource consumption and to increase contact between citizens and
government. Smart city applications are developed to manage urban flows and allow for real-time
responses. A smart city may therefore be more prepared to respond to challenges than one with a
conventional "transactional" relationship with its citizens. Yet, the term itself remains unclear in its
specifics and therefore, open to many interpretations.

Artificial intelligence and Accounting

Although AI is useful in nearly every area of business, it has proven truly revolutionary in the
accounting arena. Instead of spending days combing through columns of numbers, accountants can
now extract the information they need with the click of a button. Not only is this a massive time
saver, but it also provides more targeted data.

Data is a foundational element in AI and accounting. AI’s capacity to gather, organize, analyze and
interpret numerical information can make it a valuable tool for an accountant. When its capacity is
utilized fully and properly, artificial intelligence in accounting makes it possible for a company to
build a more holistic accounting strategy, one that can be built on more efficient bookkeeping and
financial accessibility.

Ultimately, regarding AI as an accounting tool is an important distinction for an accountant to make.

AI isn’t meant to integrate with an accounting department to squeeze out the human element
involved in a company’s financial oversight. It’s meant to enhance a department’s ability to provide
the most accurate financial information possible. This makes AI something not to fear, but instead,
embrace. Besides, no matter how sophisticated or fast an AI-based algorithm gets, there is still no
replacement for the human element when it comes to applying information derived from data into a
real-world financial strategy.

The Benefits of AI

AI’s ability to easily extract data is undeniably convenient for accountants. But it also adds significant
value that goes beyond convenience.

A solid AI program adds efficiency to the accountant role. This spares the accountant from having to
conduct activities such as gathering data for audits or analyzing organizational expenses. These
actions tend to take up a lot of time and energy, which could take time away from other important
duties like strategic financial development and maintaining regulatory compliance.

Integrating AI into accounting can also increase accuracy and reduce human error. This can further
streamline the accounting process, as minimizing mistakes naturally translates into less time having
to discover, track down and correct errors. From a big-picture standpoint, this can also potentially
make a business less subject to large-scale accounting issues like missed payments or tax penalties.

Another benefit of AI in accounting is the ability to reduce the risk of fraud. Because artificial
intelligence can audit every document related to finance, it can detect irregularities and alert
accountants to their presence. While this can stop small, honest mistakes from transforming into
much larger issues, it can also bring attention to large-scale suspicious behavior in a rapid manner.

Prepare for the Future of Accounting

Accountants everywhere are seeing what artificial intelligence in accounting can do for them. They
are increasingly adopting this technology and discovering that they become better and more
effective at their jobs as a result. It is a sea change that is permanently shifting the role and the
importance of accountants — for the better.

Cloud Computing
The cloud is made up of servers in data centers all over the world. Moving to the cloud can save
companies money and add convenience for users.

"The cloud" refers to servers that are accessed over the Internet, and the software and databases
that run on those servers. Cloud servers are located in data centers all over the world. By using cloud
computing, users and companies do not have to manage physical servers themselves or run software
applications on their own machines.

Cloud computing is possible because of a technology called virtualization. Virtualization allows for
the creation of a simulated, digital-only "virtual" computer that behaves as if it were a physical
computer with its own hardware. The technical term for such a computer is virtual machine. When
properly implemented, virtual machines on the same host machine are sandboxed from one another,
so they do not interact with each other at all, and the files and applications from one virtual machine
are not visible to the other virtual machines even though they are on the same physical machine.

Virtual machines also make more efficient use of the hardware hosting them. By running many
virtual machines at once, one server becomes many servers, and a data center becomes a whole host
of data centers, able to serve many organizations. Thus, cloud providers can offer the use of their
servers to far more customers at once than they would be able to otherwise, and they can do so at a
low cost.

Even if individual servers go down, cloud servers in general should be always online and always
available. Cloud vendors generally back up their services on multiple machines and across multiple
regions.

Users access cloud services either through a browser or through an app, connecting to the cloud over
the Internet — that is, through many interconnected networks — regardless of what device they are
using.

Financial Analytics

Financial analytics is the creation of ad hoc analysis to answer specific business questions and
forecast possible future financial scenarios. The goal of financial analytics is to shape the strategy for
business through reliable, factual insight rather than intuition. By offering detailed views of
companies' financial data, financial analytics provides the tools for firms to gain deep knowledge of
key trends and take action to improve their performance.

As a subset of business intelligence and enterprise performance management, financial analytics

affects all parts of a business and is crucial in helping companies predict and plan for the future.
Financial analytics involves using massive amounts of financial and other relevant data to identify
patterns to make predictions, such as what a customer might buy or how long an employee's tenure
might be. With a wealth of financial and other relevant data from various departments throughout
their organizations, corporate financial teams are increasingly leveraging this data to help company
leaders make informed decisions and boost the company's value. By helping businesses understand
their top- and bottom-line performance (along with other indicators, including financial and
macroeconomic data), measure and manage their assets, and forecast variations within the
organizations and industries in which they compete, financial analytics offers insight into
organizations' financial status and improves the profitability, cash flow and value of the business.
Financial analytics also helps companies improve income statements and business processes.

Importance of financial analytics

Financial analytics can help companies determine the risks they face, how to enhance and extend the
business processes that make them run more effectively, and whether organizations' investments are
focused on the right areas. Advanced analytics and its ability to leverage big data will enable
organizations to rethink their strategies for solving problems and supporting business decisions.
Analytics can also help companies examine the profitability of products across various sales channels
and customers, which market segments will add more profit to the business and what could have an
impact on the business in the future.

economic trends, setting financial policy, formulating long-term business plans and pinpointing
projects or companies for investment.

Types of financial analysis include the following:

Horizontal analysis refers to the side-by-side comparison of an organization's financial performance

for consecutive reporting periods. The aim is to determine major shifts in the data. Later, this
information could be applied to a more detailed analysis of financial results.

Vertical analysis pertains to the proportional analysis of a financial statement. Each line item on a
financial statement is listed as a percentage of another item -- for example, every line item on an
income statement is provided as a percentage of gross sales, while every line item on a balance sheet
is given as a percentage of total assets.

Short-term analysis provides a detailed review of working capital, involving the calculation of
turnover rates for accounts receivable, inventory and accounts payable. Any differences from the
long-term average turnover rate should be studied further because working capital is a significant
user of cash.

Multi-company comparison entails tallying and comparing major financial ratios of two organizations,
usually in the same industry sector. The aim is to determine the companies' relative financial
strengths and weaknesses.

Industry comparison contrasts the results of a specific business and the average results of an entire
industry. The purpose is to determine any unusual results in comparison to the industry average.

Block Chain Management

A blockchain is a distributed database that is shared among the nodes of a computer network. As a
database, a blockchain stores information electronically in digital format. Blockchains are best known
for their crucial role in cryptocurrency systems, such as Bitcoin, for maintaining a secure and
decentralized record of transactions. The innovation with a blockchain is that it guarantees the
fidelity and security of a record of data and generates trust without the need for a trusted third
party.

One key difference between a typical database and a blockchain is how the data is structured. A
blockchain collects information together in groups, known as blocks, that hold sets of information.
Blocks have certain storage capacities and, when filled, are closed and linked to the previously filled
block, forming a chain of data known as the blockchain. All new information that follows that freshly
added block is compiled into a newly formed block that will then also be added to the chain once
filled.

A database usually structures its data into tables, whereas a blockchain, like its name implies,
structures its data into chunks (blocks) that are strung together. This data structure inherently makes
an irreversible time line of data when implemented in a decentralized nature. When a block is filled,
it is set in stone and becomes a part of this time line. Each block in the chain is given an exact time
stamp when it is added to the chain

Features

Blockchain is a type of shared database that differs from a typical database in the way that it stores
information; blockchains store data in blocks that are then linked together via cryptography.

As new data comes in, it is entered into a fresh block. Once the block is filled with data, it is chained
onto the previous block, which makes the data chained together in chronological order.

Different types of information can be stored on a blockchain, but the most common use so far has
been as a ledger for transactions.

In Bitcoin’s case, blockchain is used in a decentralized way so that no single person or group has
control—rather, all users collectively retain control.

Decentralized blockchains are immutable, which means that the data entered is irreversible. For
Bitcoin, this means that transactions are permanently recorded and viewable to anyone.

How Does a Blockchain Work?

The goal of blockchain is to allow digital information to be recorded and distributed, but not edited.
In this way, a blockchain is the foundation for immutable ledgers, or records of transactions that
cannot be altered, deleted, or destroyed. This is why blockchains are also known as a distributed
ledger technology (DLT).