Internet of Things (IoT) is a system of interconnected devices, machines, appliances, etc which communicate with each other and exchange data using the internet, without any human intervention or interaction. Simply put, IoT is an extended application of the internet, where any device or appliance you can think of is connected to each other and share data and information over the internet. This brings along a new dimension of interconnectivity and impacts all that we know and see around us today. In this article, we’ll briefly discuss IoT and its impact on modern accounting practices.
What’s with IoT?
As we all know, the advancements of wireless technology have enabled numerous devices and appliances like smartphones, tablets, computers, etc to be connected to the internet. However, wireless internet connectivity is no longer only limited to ‘smart’ devices. They can now be implemented on any device or appliance, even mechanical ones by using sensors and other IoT-enabled devices.
Hopefully, in the very near future, almost all devices and appliances are expected to be armed with sensors and internet connectivity. This will enable them to provide their users and manufacturers with updates and other important data. IoT will be able to provide vital information like how many times their appliance or device is used or how many devices does individual customers have in their home to manufacturers. Now, imagine this same concept implemented with the modern accounting industry.
With real-time updates that are enabled by IoT devices, the analysis of vital and relevant information will surely give businesses many new avenues for better business planning and resource allocation and will also help optimise operational processes, minimise expenditures, and mitigate issues quicker. It will also allow organisations to gather customer and client behavioural data to further tweak their business operations. For example, warehouse storage devices can have sensors which can automatically send out supply orders to manufacturers in case of low stock inventory. Delivery truck sensors can be programmed to track each and every start and stop along with other information such as mechanical failure updates to schedule maintenance in the planned route itself. There are specialised sensors out there which can even alert farm owners about the health of their cattle and what not.
How will IoT change the accounting industry?
We can expect many changes in the accounting industry, especially in the auditing aspect, as IoT slowly gains more momentum. It’s stated that proper implementation of IoT will change the sources, also the flow of data, from billing, resource planning, and core accounting systems. This will consequentially change how audits are carried out for each of these business aspects. CPAs still need to present to monitor and manage all data and financial transactions.
But with IoT, the methods and practices will change dramatically. With IoT assisted accounting:
- CPAs will automatically receive all associated data through a digital system and won’t have to go to a bookkeeper to gather client information.
- CPAs will gain access to real-time transactional data, along with many controls and exposures in the existing operations, which increases the need for continuous auditing processes.
- This will allow a wider and more comprehensible risk evaluation, which will help to quicken issue assessment and remediation.
- It will offer real-time management, which will enable both businesses and CPAs to respond to issues immediately.
Audits are not the only aspect of accounting which will be influenced by IoT. CPAs now have to keep becoming more and more tech-savvy. According to accounting genius Doug Sleeter, CPA/CITP, proper implementation of IoT will bring “accounting closer to IT”. This will result in professionals from both industries to come together more often and work together to create smoother work and data flow mechanisms. They will also have to collaboratively consult with their clients on how to set up an IoT-based business structure properly. In short, they have to become data specialists who can dabble in both profiles and use critical situation analysis to regain maximum ROI.
The rate with which IoT emerges is astonishing, to say the least, and yet it’s a simple application of interconnected and systems and devices. The accounting industry has recently come to terms with the previous technological advancements and implementations like cloud hosted accounting solutions and services. But since IoT is already here, the way accounting is done will be changed, again.
But the real excitement about the accounting implementation of IoT comes from the fact that it enables accountants and CPAs to serve their clients with IoT-assisted data connectivity. This will also give way for many specialised enterprise services and solutions to derive the maximum potential benefits from IoT-assisted accounting. IoT, accompanied by various accounting, payroll, human resources, and order and inventory management processes, will categorise data in such a manner that will make it a lot easier for CPAs to determine the correct issue resolution process, income stream, and generate immense business value for their clients.
Simply put, adopting and implementing cloud hosted accounting services will help small and medium businesses, CPAs, and accounting firms shape their practice for the future. In all of its intricacy and scale, IoT will bring forward data connectivity of grander scale. It will help provide insights with meaningful and structured data collection and analysis. And just like cloud accounting, IoT is all set to change the accounting industry and bring in exceeding business growth and profit, along with creating enormous business value for CPAs and accounting firms leveraging IoT and its data benefits.
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