The factors affecting accounting in the era of technology revolution 4.0

384 International Conference on Finance, Accounting and Auditing (ICFAA 2018) November 23rd, 2018 Hanoi City, Vietnam The Factors Affecting Accounting in the Era of Technology Revolution 4.0 Nguyen Phu Gianga aThuong Mai University Submission day: 30/10/2018 Review day: 10/11/2018 Acceptance day: 15/11/2018 Abstract Accounting is the industry that takes advantage of new technologies to improve productivity and effective management. In the new era, cyber security, digital service delivery, robotics, augmented & virtual reality, and artificial intelligence have dramatically influenced accounting and financial transactions, or in other words accounting has become an integal part of this connected world. This context also changes working habit and ways of thinking of accountants, helping them understand that their manual work can be completed by automating technology, so that they can spend more time and efforts on those require the use of intelligence. Keywords: Accounting 4.0, Artificial intelligence, Big data, Technology revolution 4.0, Interoperability 1. Introduction In the 21st century, competition among industries depends on modern technology. Information technology has quickly reshaped the world and redefined the role of people, especially in the field of accounting and auditing. Capturing new technology, evaluating its role as it emerges and the meaning of information technology in the era of technology revolution 4.0 are essential to minimize costs and increase the benefits of accounting. Accounting and finance professionals need to consider the challenges and opportunities that new technology creates. From there, enterprises and organizations may introduce new strategy for the revolution. An introduction should be illustrated the following main points: 385 (i) Reasons for doing the research and the importance or necessity of research topic from theoretical and practical perspectives. (ii) Identify the issues of research: Research Articles: (1) The major issues of accounting in the new technological revolution are: social collaboration, digital service delivery, big data, payment systems, cyber security, robotics, augmented and virtual reality; (2) Study on the influence of factors on accounting in the technological revolution 4.0 (iii) Objectives of the research Study the influence of factors on accounting in the 4.0 technology revolution to identify major factor factors that will help accountants change accounting methods, how to organize the accounting 2. Literature Review There are many studies on the factors affecting accounting 4.0 such as accounting records, interoperability, virtualization ... Accounting records According to Deniz Appelbaum, Alexander Kogan, and Miklos A. Vasarhelyi [7]: Most accounting records are included in accounting software. Accounting records can be programmed for each accounting items such as fixed assets, inventory, costs, revenues, etc. to allow for real-time measurement and processing of information. For example, inventory evaluation and measurement will be automated by tracking the current purchase value (Krahel and Titera 2015). Production can also be measured continuously by collecting real- time data on energy consumption of production lines and labor costs. ... Such automation can reduce manpower on material observation. Interactive abillity According to Jun Dai and Miklos A. Vasarhelyi [8]: Industry 4.0 includes six key technology principles: interoperability, virtualization, decentralization, real-time capabilities, service orientation, and modeling... Interoperability is an important element of industry 4.0 as well as a very important concept. In the 4.0 industry, field devices, machines, technologies and even products will be connected through a global network (Drath and Horch 2014), enabling interactions within the enterprise and the entire value chain. When interoperability changes a business model, it can continue to impact accounting. In accounting 4.0, the association between suppliers, customers, banks and other business entities may allow for examination over time. If a transaction involves two business entities, two ERP systems will share accounting information. Entities will receive information, match the corresponding data in their system and issue a warning if they are not appropriate. Such interaction can automatically check for transactions and highlight suspicious transactions for accountants. Internally, transactions from different business processes can be used in combination to verify the continuity, rationality of the process (Kogan, Alles, Vasarhelyi and Wu 2014). 386 Virtualization According to Atzori, L, A. Iera, and G. Morabito. 2010: In the 4.0 technology era, individual business processes or the whole value chains can be digitized to facilitate control and analysis. Recorded information can significantly reduce the workload of the accountant. Since everything involved in a business process is virtualized, an accountant can do the job on the web. For example, the virtual world may record the time when the material came in until when the product leaves the company and is sold. Accountants can use this information as a substitute for inventory accounting by comparing mirrored transactions with the company's ERP system. Mirror world can also be used to track non-financial data eg HR, warehouse. Enterprises in the accounting environment 4.0, the internal control mechanism can interfere with each individual machinery to continuously monitor accounting data and detect abnormal transactions beyond the expected threshold. Such systems will be able to self- adjust norms, standards when the environment changes and update to the accounting program. These systems will be significant improvements to the performance of the accounting profession according to Vasarhelyi and Halper (2011). Technology According to Akyildiz, IF, W. Su, YS Subramaniam, and E. Cayirci [1]: Sensors, CPS, IoT, IoS and intelligent plants are the core technologies in the 4.0 technology era and can completely replace human role in data collection. Sensors can accelerate the collection of accounting data to real time with a much wider range of data throughout the business process at a relatively modest cost. Another essential device in Accounting 4.0 is the Cyber Physical System (CPS), a new technology that helps tracking and documenting production, data analysing and building intergrated virtual model. In the context of Accounting 4.0, CPS can be used to track and analyse accounting data, discovering irregularities over time. The ERP system can record accounting transactions and business events without human intervention. By automatically comparing the information stored in the CPS and corresponding accounting data in the ERP system, accountants and management of custormer companies can receive real-time alerts if a transaction violates accounting standards. 3. Theoretical Framework and Methods 3.1. The factors affecting accounting in the time of technology 4.0 The major issues of accounting in the new technology revolution are: social collaboration, digital service delivery, big data, payment systems, cyber security, robotics, augmented and virtual reality, artificial intelligence. Social collaboration The professional working style of accounting will be shaped in social collaboration. Crowdsourcing will be used extensively to contribute to the development of accounting services. Social tools will be integrated into the system to transfer accounting data to customers and other partners in accounting transactions. 387 As the use of social tools becomes common, accountants need to change their ways of approach, communication and collaboration. Social collaboration will help accountants shorten work completion times by the end of the month, improve decision-making and productivity. However, new challenges will emerge, such as: risks to sensitive company data, prudence in making key strategies ... Digital service delivery Accountants are using digital service delivery to provide and access resources. Enterprises can provide self-service features such as: Online database that customers can use to access document, accounting services, tax declaration services and audit services. These types of services can be completed cross- border. With service delivery, accountants can perform services efficiently and quickly, accounting procedures are arranged automatically and accurately. At the same time, accounting principles must be based on the International Financial Reporting Standards. Big data The world generates 2.5 trillion bytes of data per day in the form of barcodes, telephone signals, digital images, transactional databases, personal location records, reporting systems. These are countless transactions that accountants need to deal with. Moreover, transactions are primarily in the form of data comes first and materials come after. Therefore, it creates huge risks, requiring prudent accounting principles. Especially large corporations with terribly big data; creating challenges for accounting. In addition, vendors also offer enterprises a variety of softwares for resource management, sales management, scheduling, and on-demand access. This requires accountant to have many tools to handle as well as dealing with the challenge of data security. Payment systems The Internet has become a trading hub all over the world. Consequently, global payment systems are formed as credit and debit cards, electronic wallets, smart cards increase. Electronic payments through mobile phones are increasing as well as the emergences of many types of virtual currencies and online lending websites. This requires accounting to update regularly, immediately and linked to the bank automatically. Besides these utilities, payment systems in the new technology revolution will face the following challenges: There will be many outside suppliers so competition will become fiercer; increasing volume and value of transactions means frauds will also increase. Some of the current payment systems will collapse, and the concepts of cash will become less prominent. Virtual reality Virtual reality is where we can interact online with simple interfaces such as keyboards, mice and headsets, etc. As the virtual experience becomes more common, accounting will face new challenges: the risks from artificial intelligence, virtual reality, high cost and risks in managing new areas. 388 Artificial intelligence Artificial Intelligence (AI) is a machine or software that can behave like a human brain. The software is capable of mimicking human behavior to make independent decisions, can learn and interact with each other. From there it is possible to build an artificial accounting software with scenarios for specific types of transactions to solve issues occurring in real life. Artificial intelligence can automate repetitive process operations in place of human. Accounting software built on artificial intelligence can effectively solves problems, complies perfectly with the procedures, without errors. However, it also has the limitation that accounting staffs may be unemployed, creating the social consequences. 3.2. Research methods To assess the impact of factors on accounting in the age of digital revolution, the author has issued 130 questionnaires for 10 enterprises: Vinamit JSC, Samsung Group, Duhal Lighting Equipment, Color Life JSC, FPT Software Company, DMSpro Company, E & Y, KPMG, DELOITTE, AASC and used the Likert scale with the following contents: Social collaboration 1.1. Introduce better controls and education to enforce governance (SIC) 1.2. Develop new skills and attract digital natives (SDS) 1.3. Adapt to meet the changing expectations of the profession. (SAC) Digital service delivery 2.1. Recruit those with the required digital literacy skills and/or develop them (DRS) 2.2. Plan tactically and strategically to deliver competitive advantage (DPS) 2.3. Consider the implications of businesses, advisers, regulators, and others becoming progressively more connected and exchanging data automatically (DED) Big data 3.1. Manage the increasing volume and complexity of the data to be analysed and audited (BMD) 3.2. Help other parts of the business to better analyse and exploit data (BHO) 3.3. Estimate cost and return on investment (BEC) Payment systems 4.1. Use their experience and insight to innovate current systems and adapt to new and emerging payment systems (PIS) 4.2. Develop expertise and guidance on areas such as online and virtual payments and their taxation (PDS) Virtual Reality 5.1. Develop new approaches to measuring and analysing costs and return on investment (VDA) 5.2. Consider new ways to conduct business/enhance services by applying AR (VNC) Artificial intelligence 6.1. Stay informed and know what is possible (AIN) 6.2. Assess the potential to automate tasks and procedures (AAA) 6.3. Up-skill to take advantage of the potential to focus on higher value work. (AUW) ACCOUNTING 4.0 389 Independent variables ranged from 1.1 to 6.3, consisting of six groups: - Social collaboration (1.1, 1.2, 1.3): SCI, SDC, SAC - Digital service (2.1,2.2, 2.3): DRS, DPS, DED - Big data (3.1, 3.2, 3.3): BMD, BHO, BEC - Payments systems (4.1, 4.2): PIS, PDS - Virtual reality (5.1, 5.2): VDA, VNC - Artificial intelligence (6.1, 6.2, 6.3): AIN, AAA, AUW Dependent variable is: ACCOUNTING 4.0 3.3. Results and Discussion The subjects of the survey were 6 production companies and 4 audit firms. The surveyees are: Accountant (88 people) and auditors (42 people). After performing Cronbach's alpha tests, multi-collinear, correlation ... the author made the exclusion of variables SAC, DRS. Research Results on Factors Influencing Accounting in the 4.0 Technology Revolution: Table 1- Descriptive Statistics N Minimum Maximum Mean Std. Deviation SCI 130 1.0 3.0 1.946 .5881 SDS 130 2.0 4.0 2.746 .5328 DPS 130 3.0 5.0 4.438 .5283 DED 130 4.0 5.0 4.792 .4072 BMD 130 3.0 5.0 3.215 .4311 BHO 130 3.0 4.0 3.700 .4600 BEC 130 4.0 5.0 4.500 .5019 PIS 130 2.0 3.0 2.662 .4750 PDS 130 2.0 5.0 3.277 .7677 VDA 130 3.0 4.0 3.700 .4600 VNC 130 2.0 3.0 2.800 .4015 AIN 130 3.00 4.00 3.3923 .49015 AAA 130 3.00 5.00 4.0000 .46589 AUW 130 4.00 5.00 4.6308 .48446 Valid N (listwise) 130 390 With the statistics described in Table 1; “the implications of businesses, advisers, regulators, and others connected and exchanging data automatically” (DED) were the most significant influences on accounting, with the highest average of 4.792. Next are “Up-skill to take advantage of potential to focus on higher value work” (AUW, Mean = 4.6308); “Estimate cost and return on investment” (BEC, Mean = 4.500); “Plan tactically and strategically to deliver competitive advantage” (DPS, Mean = 4.438). The paper also examines whether there is any difference in the perception of factors influencing accountants in the 4.0 technology revolution between the views of accountants and auditors. Determining the difference in perceptions about the influence of factors on accounting in the 4.0 technology revolution Descriptives ACCOUNTING4.0 N Mean Std. Deviation Std. Error 95% Confidence Interval for Mean Minimum Maximum Lower Bound Upper Bound Accountants 88 5.000 .0000 .0000 5.000 5.000 5.0 5.0 Auditors 42 4.190 .3974 .0613 4.067 4.314 4.0 5.0 Total 130 4.738 .4412 .0387 4.662 4.815 4.0 5.0 Test of Homogeneity of Variances ACCOUNTING4.0 Levene Statistic df1 df2 Sig. 139.454 1 128 .000 Since Sig <0.05, there is no difference in the perception of factors affecting accounting 4.0 between accountants and auditors. EFA Results KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy. 530 Bartlett's Test of Sphericity Approx. Chi-Square 895.013 df 91 Sig. .000 391 Total Variance Explained Compon ent Initial Eigenvalues Extraction Sums of Squared Loadings Rotation Sums of Squared Loadings Total % of Variance Cumulative % Total % of Variance Cumulative % Total % of Variance Cumulativ e % 1 2.951 21.079 21.079 2.951 21.079 21.079 2.182 15.587 15.587 2 2.055 14.682 35.761 2.055 14.682 35.761 2.077 14.833 30.420 3 1.950 13.927 49.688 1.950 13.927 49.688 1.884 13.456 43.876 4 1.654 11.813 61.501 1.654 11.813 61.501 1.877 13.408 57.284 5 1.519 10.847 72.348 1.519 10.847 72.348 1.835 13.106 70.390 6 1.252 8.939 81.288 1.252 8.939 81.288 1.526 10.898 81.288 7 .713 5.092 86.380 8 .568 4.059 90.440 9 .454 3.241 93.680 10 .263 1.881 95.561 11 .242 1.728 97.289 12 .195 1.391 98.681 13 .104 .741 99.422 14 .081 .578 100.000 Extraction Method: Principal Component Analysis. Rotated Component Matrixa Component 1 2 3 4 5 6 AUW .856 AIN .830 AAA .762 BEC .873 BHO .872 BMD .642 VNC .925 VDA .914 SCI .959 SDS .883 PIS .911 PDS .869 DED .863 DPS .857 Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. a. Rotation converged in 6 iterations. 392 KMO 0.53 demonstrates that factor analysis is appropriate. Bartlett's test is statistically significant (Sig. <0.05): the observed variables are correlated in overall. Percentage of variance 81,288%> 50%: proportion of variance explained 81,288%. Regression Coefficientsa Model Unstandardized Coefficients Standardized Coefficients t Sig. Collinearity Statistics B Std. Error Beta Tolerance VIF 1 (Constant) 1.288 .797 5.382 .000 DPS .512 .120 .515 .135 .003 .708 1.412 DED .516 .121 .507 .960 .001 .663 1.509 BMD .451 .117 .479 .691 .001 .633 1.579 BHO .418 .101 .418 .173 .003 .740 1.351 PIS .334 .134 .336 .251 .002 .395 2.530 PDS .351 .183 .389 .617 .002 .400 2.499 VDA .012 .158 .013 .079 .001 .306 3.268 VNC .025 .170 .022 .144 .000 .344 2.906 AIN .418 .118 .420 .152 .002 .479 2.089 AAA .439 .126 .441 .306 .000 .469 2.134 AUW .411 .122 .412 .090 .002 .460 2.176 a. Dependent Variable: ACCOUNTING4.0 Regression results: The most influential factor for accounting in the 4.0 technology era is “The implication of businesses, advisers, regulators, and others becoming more connected and exchanging data automatically” DED (Standardized Beta = 0.516); followed by “The problem of planning tactically and strategically to deliver the competitive advantage” DPS (Standardized Beta = 0.512); followed by “The problem of managing the increasing volume and complexity of the data to be analyzed and audited” BMD (Standardized Beta = 0.451); followed by “Assess the potential to automate tasks and procedures of artificial intelliengce” AAA (Standardized Beta = 0.439). 4. Recommendes solutions and conclusions 4.1. Recommendes solutions About Digital service It is easy to see that large-scale digitization occurred during the Fourth Industrial Revolution. Therefore, accounting need to create better data quality - improving timeliness, accuracy, reliability and comparability of reported data. This requires accountants to use appropriate and consistent means of measurement and reporting, and to ensure transparency. 393 This means that data must be available immediately (real time) at all times of the day (24 hours, 7 days a week and 365 days a year). Information on financial statements must be improved for accuracy, reliability and comparability. Real-time data migration, through digital media data, can be deliverred directly to stakeholders and there is little need for third-party audits; so the data must be reliable. Improved data transfer for management control Big Data facilitates data mining for all decision types, all types of managers and all kinds of gatekeeper. Machines with real-time data will no longer have to wait passively for operator decisions and instructions. People can optimize production schedules, predict errors and perform maintenance and repairs, actively propose work arrangements and adjust operating parameters to maximize productivity and product quality. Therefore, the need to control the transmission of data is extremely necessary. The role of accounting human resources Accounting includes stages such as collecting, processing, analyzing and providing information. All these stages can be replaced by machines. So, instead of manual work, accountants must be the ones who know and use technology for their work. An employee should develop the following skills: Ability to code and understand big data technology structures, ability to construct experiments, gather and analyze data, make vidence-based decisions, strong communication skills, strong quantitative skills in statistical analysis, visual analytics, machine learning, and ability to analyze unstructured data, business expertise – a good sense of where to apply analytics and big data. Employers should look for graduates that can think critically, identify issues, develop questions, determine appropriate analyses, interpret results; graduates that are data literate, know what data is available, how it is stored, where it is stored, how to access it; understand data science and be able to bridge the gap between technical knowledge and business knowledge; graduates that can communicate findings. Moreover, accounting - auditing should follow certain legal legislations, humans are always needed in the procedure of updating equipments to be used for their works. Artificial intelligence is a man-made and for-human product; automation can change circumstances and working conditions, but it can not be asserted that artificial intelligence can totally replace human in the field of accounting - auditing. This will place higher demands on accounting: computer processing, information security, data analysis and computer networks. However, every individual and organization working in the field of accounting - auditing must be aware of the importance of technology to apply it to suit the trend, save resources and increase the efficiency of work. 4.2. Conclusion Accounting continues to evolve in the technological revolution 4.0. Information technology has a great impact on the accounting, auditing profession. Information 394 technology helps accounting and auditing keep up with the times, reducing the expectations gap in accounting. Information technology helps accounting, auditing change their approaches, methods or means and techniques but does not change the objectives of accounting. Information technology helps accountants reduce the expectation gap, the risks and costs accounting, and improve accounting quality. 5. References Atzori L, Iera A, Morabito G (2010) The internet of things: A survey. Comput Netw 54(15):2787–2805 Baur C, Wee D (2015) Manufacturing’s next act., Available at: Accessed 22 July 2016 Brown DL, Dillard JF, Marshall RS (2005) Strategically informed, environmentally conscious information requirements for accounting information systems. J Inf Sys 19(2):79– 103 Burritt RL, Hahn T, Schaltegger S (2002) Towards a comprehensive framework for environmental management accounting—Links between business actors and environmental management accounting tools. 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