The Accounting Technology Revolution

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The Accounting Technology Revolution
University of Kentucky Editor Journal of
Information Systems
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Presentation Outline

• What are Accounting Technologies?
• Survey / quiz results
• Accounting Technology Revolution? What Accounting
  Technology Revolution?
• Reflections Advice on Innovation Research
• Conclusion
• Small Group Work

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What are Accounting Technologies?
What Do we Talk About, When We Talk about
Accounting Technologies?
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What are Accounting Technologies?

• Technology is Changing Everything about
  accounting Bob Elliott AICPA KPMG (retired)
• Accounting Technology the tools of accounting
  work

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Ph. D. Student Survey Data What research method
will you use?

• Quantitative Archival Data 48.58
• Modeling, Essay, Lit Review 15.53
• Qualitative Data 15.49
• Quantitative Survey Other 10.82
• Quantitative Experiment 9.57

Quiz Results
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Ph. D. Student Survey Data What research topics
will you investigate?
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Ph. D. Student Survey Data Publications
of Published, Under Review, or Planned
Submission Papers
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Accounting Information Systems (AIS) Quiz

• 11/12 questions are from UG accounting systems
  class quizzes exams at Univ. of Kentucky, Miami
  U, Bentley College
• 1 question from Masters class (encryption)
• Reported results are of correct answers
• Questions are in 4 areas
• ERP
• Accounting controls
• Current events in accounting systems
• Programming markup languages

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Quiz Questions ERPs

• Most accy systems in large companies today are
  ERPs
• Q1 ERP Enterprise Resource Planning system
• Q2 Serves all departments within an enterprise
• Integrates accounting systems enterprise-wide
• Real-time pricing costing info, cost savings,
  more timely better accy information
• Q3 SAP Systems, Applications, Products
• Results Students 28, faculty 23 (p.75)

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Quiz Questions Accy Controls

• Q3 Public vs. private encryption Critical to
  data security in networked environment
• Private key encryption ? same key to encrypt
  decrypt
• Public key encryption ? two keys one private
  one public. Either key can encrypt, other key to
  decrypt
• Q8 Currently, most accounting systems run in a
  environment.
• Q9 The trend in the operating environments for
  accounting systems is a migration towards a
  environment.
• Results Students 21, faculty 21 (p.99)

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Quiz Questions AIS Current Events

• Knowledge of largest sellers of accounting
  software
• Q5 According to the June 2, 2003 on-line Wall
  Street Journal, has agreed to buy
  in a 1.7 Billion Stock-Swap Deal.
• Q6 Four days after the agreement described in
  question 5 was announced, announced a
  hostile takeover bid for Company A.
• Q6 The company with the largest market share and
  world-wide sales of ERP Systems for large
  corporations is .
• Results Students 22, faculty 28 (p.50)

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Quiz Questions Programming Markup Languages

• Q10 XBRL Xtensible Business Reporting Language
  for standardizing coding the content of
  accounting information (by aicpa, nasdaq,
  microsoft 1000s)
• Q11 Benefits of XBRL fin information
• Produce fin info once for everyone (tax, fin
  reporting, internal) ? Accy info reuse ease of
  use
• Reduce accy costs (no re-enter data, no manual
  errors)
• Comparability (across companies)
• Accessibility transparency
• Results Students 22, faculty 24 (p.84)

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Quiz Questions Programming Markup Languages

• Q12 Knowledge of languages
• 1 pt for an Object-oriented (e.g., C,ASP) or
  mark-up language (html, xml, xbrl)
• .5 pt for traditional language (Fortran, C)
• Almost all current software development is in
  object-oriented or mark-up languages
• More functionalities in software, lower
  development cost, Easier to use software

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Quiz Questions Programming Markup Languages

• Q12 of Students Faculty Who Know at Least
  one Object-oriented (OO) or Mark-up (MU)
  language

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Rhetorical ?s about Quiz

• Was this a fair exercise?
• Feedback, You come take my Intermediate Accy
  test!
• I want to see you take a quiz written by Stefan
  Reichelstein!
• Technology literacy for core technologies of
  accounting systems?

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Presentation Outline

• What are Accounting Technologies?
• Accounting Technology Revolution? What Accounting
  Technology Revolution?
• Reflections Advice on Innovation Research
• Conclusion
• Small Group Work

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The Accounting Technology Revolution

• BCE ( 2,000 years ago)
• Tokens (8000BC), Cuneiform writing (3500BC),
  Abacus (300 BC)
• Before 1500 ( 500 years ago)
• Bookkeeping (1200), Paciolis book (1490)
• Before 1960 ( 40 years ago)
• Cost accounting (1770? 1920?), flexible budgeting
  (1904), ROI (1910)
• After 1960 (within 40 years)
• Hand calculator mainframe computers (1960-
  1980)
• Personal computer (1980 1990)
• Networked computers (1990-1995)
• ERPs (1990 current)
• WWW (1995-current)

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When the (technology) revolution came

• Academic accountants were busy doing other
  things.
• What were they doing?

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Is technology research published in the top
general accounting journals? 1989 1998 ? NO

• Number of Published Accounting Systems and
  Information Systems Papers in the Top 5
  Accounting Research Journals (Adapted from Postom
  and Grabski 2000)

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Is technology research published in the top
general accounting journals? 1999 2002 ? Yes
(in some not others)
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What technology research is published in the top
accounting journals?

• An informal analysis
• JAR
• Most frequent Financial characteristics of high
  tech companies.
• Analytical model of changes in accounting system
  technologies
• AOS
• Most frequent field studies of emerging
  technologies in accounting ? managerial
  accounting.
• Behavioral research on the effects of changing
  accounting technologies (e.g., decision aids)

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Does Sarbannes / Oxley, Etc. Reduce the
Importance of AIS in Accounting?

• Large accounting firms sold consulting units
• Therefore, is AIS irrelevant?
• Accounting firms can no longer provide consulting
  services to audit clients
• Some accounting firms sell only technology
  services ( do no audits)
• Computing communications technologies are the
  backbone of accounting
• Dramatic increases in B2B B2C e-commerce
• Should auditors be ignorant of the core
  technologies of accounting systems the
  (e)businesses of their clients?

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Shouldnt MIS (not accounting) academics study
AIS Issues?

• MIS academics rarely focus on
• Accounting system technologies (e.g., XBRL, ERP)
• Control issues (auditability)
• Typically not trained in these technologies
• Stated differently Shouldnt accounting
  scholarship ignore the accounting technologies
  that underlie financial managerial accounting
  systems?
• True for much of the period from 1960 to present

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AICPA Top Ten Technologies - 2002

• 1. Business and Financial Reporting Applications
  e.g., XBRL, XML
• 2. Training and Technology Competency achieving
  AIS technology competency
• 3. Information Security and Controls data
  security integrity, encryption
• 4. Quality of Service Downtime, 24 / 7
  reliability (Critical for B2B, B2C)
• 5. Disaster Recovery Ice storms, flood,
  terrorists, fire

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AICPA Top Ten Technologies - 2002

• 6. Communication Technologies Bandwidth Data
  sharing, visual audio files
• 7. Remote Connectivity Tools Systems that
  generate their own output (e.g., shop floor
  machines), FedEx
• 8. Web-based and web-enabled applications Ebay,
  Online tax preparation services
• 9. Qualified IT Personnel Hiring keeping
  personnel who know accounting technology
• 10. Messaging Applications Instant messaging
  applications for business (e.g., FedExpress)

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Presentation Outline

• What are Accounting Technologies?
• Accounting Technology Revolution? What Accounting
  Technology Revolution?
• Reflections Advice on Technology Research
• Conclusion
• Small Group Work

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Advice on Technology Research

• Relevant / Hot topics!!!
• The economics of emerging accounting technologies
• Accounting for high technology industries
  (Relevance re-lost? E.g., Intellectual capital,
  Levs work)
• Partner with technology researchers (a k a
  nerds)
• If you must learn a technology, pick one ( not
  more).
• Technology presents more opportunities for grant
  than other areas of accounting research
• Deans, Dept Heads, Provosts, Presidents love
  grant

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Reflections Advice on Innovation Research

• For those who choose risky research ? Expect
  Accept Rejection of Innovation
• Many Nobel Prize winning papers were initially
  rejected (Gans Shepard 1994).
• JS Bach was the 3rd choice for Kappelmeister
• Beethoven was almost always in deep debt
• Frank Lloyd Wright struggled for clients much of
  his career

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An Ecumenical Research Agenda

• AIS scholars need nonAIS scholars
• To understand the economics psychology of AIS
• NonAIS scholars need AIS scholars
• To understand professional practice
• To understand the core technologies of accounting

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Conclusions (1 of 2)

• A(n unreported) revolution in accounting
  technologies
• Technology is the backbone of professional
  accounting ( so it shall ever be)
• Accounting professionals academics should know
  the core technologies of AIS
• Technology research is increasingly published in
  the top accounting journals
• Economics field-based

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Conclusions

• How risk averse or seeking are you?
• Less risk ? economics based technology research
• More risk ? psychology, sociology, computer
  science based technology research
• I am risk seeking (fiction as research method
  seriously??????)
• To innovate, follow your passion learn to
  embrace rejection ? (occasionally youll find an
  acorn!!!)

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Partial Bibliography

• Daft, R. L. and A. Y. Lewin (1990). "Can
  Organization Studies Begin to Break out of the
  Normal Science Straitjacket? An Editorial Essay."
  Organization Science 1(2) 1-9.
• Gans, J. S. and G. B. Shepard (1994). "How are
  the mighty fallen rejected classic articles by
  leading economists." Journal of Economic
  Perspectives 8(1 (Winter)) 165-179.
• Kuhn, T. S. (1970). The Structure of Scientific
  Revolution. Chicago, University of Chicago Press.
• Weick, K. E. (1985). Editing Innovation into
  Administrative Science Quarterly. Publishing in
  the Organizational Sciences. L. L. Cummings and
  P. J. Frost. Homewood, IL, Richard D. Irwin
  366-376.

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Small Group Work

• Why did I choose these papers?
• Diversity Under-represented methods (Hodge ?
  experiment, Miller OLeary ? field study)
• Published in top accounting journals

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Small Group Work

• Respond to written questions or ask new questions
• Shyest person in the group should be spokesperson
  person who has not been a spokesperson yet
• Be brief in reporting! Lets work towards
  dialogue (not monologue)

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Small Group Work

• Groups A, B, C ? Hodge paper
• Group A ? Questions 1 5
• Group B ? Questions 2, 3, 4
• Group C ? Questions 6 7
• Groups D, E, F ? Miller OLeary paper
• Group D ? Questions 1 4
• Group E ? Questions 2 3
• Group F ? Questions 5 6