Introduction to finance and accounting for Masters in Accounting

Finance and accounting

1. Accounting in Practice

2. The work of an accountant and the attention that was needed when drawing up the accounting documents, respectively the accounting and fiscal reports, were weary and time consuming. With the advent of computers and accounting software, accounting has become easier and less risky to make mistakes. The only hurdle was that the staff had to be trained to use the new technology, but this was easily overcome. Gradually, the accounting programs became more and more complex, and they could execute, in addition to mathematical operations, a series of complex operations, accounting and tax reporting, management closures, complex records, etc. Accounting software is a digital conversion of the work done by an accountant. 21st century technology offers complex solutions, online accounting services (Cloud technology), compared to the classic, licensed accounting programs that are currently considered quite difficult to use by an entrepreneur, which is why they are used mainly by to accountants. Dr. Rakesh K 2 Introduction

3. It helps to evaluate a Company’s past performance, present condition, and prospects. A more formal definition of accounting is the art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of a financial character and interpreting the results thereof. Accounting software automates the traditional paper ledgers and accounting books. These software packages may come with a variety of specialized features or a generic program that can be customized to current business operations. Companies usually choose accounting programs based on the size of their operations and the number of users accessing the system. Large companies may choose system-wide software packages, such as an enterprise resource planning system. Dr. Rakesh K 3 Technology in Accounting

4. Increasing workload and complexity Staff wasting too much time on repetitive tasks Harder to meet client expectations Competition Document collection process Dr. Rakesh K 4 Why?

5. Administration - to define available menus for users and access rights in ERP, to customize documents and reports or to define the backup process of the ERP database. Accounting - intended for the automation of the accounting operations and for obtaining the financial and accounting statements and reports, legally binding. Inventory - for accurate real-time management and monitoring of all product stocks and stock movements, regardless of one or more locations. Fixed assets - for the detailed recording and follow-up of the financial operations carried out on the assets (fixed assets and inventory objects), with automatic reflection in the accounting. Payroll - for the management of information related to employees and for solving all activities related to salary calculation (holidays, contracts, payment of salaries and taxes, meal vouchers, etc.). Orders - for the correct estimation of the inventory requirement to be ordered from the supplier, considering several variables, such as seasonality or demand for products. Supply - for the optimal and efficient management of the supply chain and of the necessary supply. Sales - for organizing and tracking sales, discounts applied, but also for preparing the documents related to the sale. Receipts-Payments - to track the real situation of outstanding and outstanding invoices from customers or suppliers, but also of the situation of bad / good paying customers for one or more commercial agents. Dr. Rakesh K 5 Which?

6. Billing - for the registration and generation of documents specific to the billing circuit (proformas, invoices, notices, etc.). Services- for the activities of services, service and guarantees and for the preparation of the necessary documents. Production - for the correct record of the orders that are followed by a production process and for the efficient management of the production recipes, the input or consumption vouchers, the production reports, etc. Cost centers - for greater transparency on the distribution of costs by each division, branch, department, work point etc. so you can quickly understand what is profitable and what is not. Notifications - Automates sending to customers via email, information and documents (invoices, reports), directly from ERP. Interfaces - allows the automation and programming of data exchange, between ERP and third party applications such as online stores, warehouse management application (WMS), application for analysis and reporting (Business Intelligence), POS, EDI, software for sales agent automation (SFA) , CRM etc. Nomenclature - for recording important information about third parties / partners, administrations or products. Reports - for generating and customizing a large set of reports, for each department of the company. Dr. Rakesh K 6 Cont.….

7. Cloud based solutions Accounting software: FreshBooks, NetSuiteERP , A2X Automation Robotic process automation (RPA) uses software to perform routine accounting tasks without requiring human intervention. For example, accountants can use RPA to automatically generate and scan invoices, detect variances in financial records and respond to vendor inquiries. This technology reduces the amount of time accountants spend on repetitive processes, such as manual data entry, and decreases the risk of human error. Machine Learning Machine learning uses algorithms to create models that automatically process and analyze enormous volumes of data. These models independently learn from experience, so they continually refine their performance as they gather information. Dr. Rakesh K 7 How?

8. Data Analytics Software, statistical techniques and other tools help businesses interpret and identify patterns in complex data sets through analytics. Accountants and other financial professionals can gather meaningful insights from analytics to formulate new business strategies and make data-driven decisions. Data Visualization Data visualization platforms like Excel and Tableau summarize large data sets in charts, graphs, maps and other visual formats. These visualizations let you quickly evaluate information, identify trends, and spot outliers in the data. They’re also more accessible to broad audiences than complex statistical analyses, so accountants can use these graphics to convey their findings to clients, managers and stakeholders. Dr. Rakesh K 8 Cont...

9. Computerized accounting systems Increased functionality Improved accuracy Faster processing Better external reporting Enhanced security Software tools in accounting process Accounting software Income tax Audit Electronic data interchange Electronic funds transfer. Dr. Rakesh K 9 What?

10. Integration complexity Skill gaps Costs Data security Regulatory issues Increasing workload and complexity Dr. Rakesh K 10 Where?

11. Use of AI in Accounting

12. Automation of tasks Enhanced data analysis capabilities Risk Assessment Regulatory Compliance Audit planning and reporting Quality control Client communication Professional development Strategic decision making Dr. Rakesh K 12 AI - Accounting

13. Reduction in Manual Labor: Automation tools can handle repetitive tasks that were previously performed by humans. In the context of auditing, this could include data entry, cross-checking information, or generating reports. By automating these tasks, the need for manual labour is significantly reduced. This not only saves time but also allows human resources to be allocated to more critical areas. Increased Efficiency: Automation can process tasks at a much faster rate than humans. It can work 24/7 without breaks, and it doesn't get tired or bored. This leads to faster completion of tasks, which increases the overall efficiency of the auditing process. It also ensures that tasks are completed consistently and accurately every time. Lower Risk of Human Error: Humans are prone to making errors, especially when performing repetitive tasks. Automation, on the other hand, performs tasks the same way every time, reducing the risk of errors. This is particularly important in auditing, where accuracy is crucial. Cost Savings: While there may be an initial investment required to implement automation, it can lead to significant cost savings in the long run. Automation can reduce labour costs, as fewer human resources are needed. It can also reduce costs associated with human errors, such as the cost of correcting mistakes or the cost of poor decision-making based on inaccurate data. Time Management: By taking over routine tasks, automation allows auditors to focus on more complex tasks that require human judgment and expertise. This could include interpreting data, making strategic decisions, or identifying anomalies that could indicate fraud. This not only makes better use of auditors' time but also can lead to a higher quality of work.. Dr. Rakesh K 13 Automation of Routine Tasks

14. Advanced Algorithms : Advanced algorithms are sophisticated computational procedures designed for complex data analysis. They can process and analyse data more accurately and efficiently than traditional methods. In auditing, these algorithms can sift through vast amounts of data to identify trends, patterns, and anomalies that might be missed by manual analysis. Real-time Analysis : Real-time analysis refers to the ability to analyse data as it is created, captured, or updated. This is particularly useful in auditing as it provides up-to-date insights, allowing auditors to make timely decisions based on the most recent data. Predictive Analytics : Predictive analytics involves using historical data to predict future trends. This can be particularly useful in auditing for forecasting financial trends, predicting potential risks, and aiding in strategic decision-making. It uses statistical techniques, machine learning, and data mining to make these predictions. Big Data Handling : Big data refers to extremely large data sets that may be analysed computationally to reveal patterns, trends, and associations. Traditional data-processing software can’t handle big data. However, with the advent of modern technology, auditors can now analyse large volumes of data, which was not feasible manually. This allows for a more comprehensive audit and can lead to more accurate results. Fraud Detection : Fraud detection involves identifying patterns and anomalies in data that may indicate fraudulent activities. Advanced algorithms can sift through vast amounts of data to identify these patterns and anomalies. This can be particularly useful in auditing, where detecting fraud early can save a company significant amounts of money and protect its reputation. Dr. Rakesh K 14 Enhanced Data Analysis Capabilities

15. Risk Identification : This is the first step in risk assessment where potential risks are identified by analyzing patterns in data. It involves recognizing potential threats or hazards that could negatively impact an organization’s ability to conduct business. These risks could be financial, operational, technological, or compliance-related. Risk Evaluation : Once risks are identified, they need to be evaluated in terms of their severity. This involves determining the potential impact of the risk on the organization and the likelihood of its occurrence. The evaluation helps in prioritizing the risks, focusing on the ones with the highest severity. Risk Mitigation : After the risks are evaluated, appropriate measures are suggested to mitigate these risks. Mitigation strategies could include risk avoidance, risk reduction, risk sharing, or risk acceptance. The choice of strategy depends on the severity and type of risk. Continuous Monitoring : Risk assessment is not a one-time activity. It involves continuous monitoring of data to identify new risks. As business environments are dynamic, new risks can emerge at any time. Continuous monitoring ensures that these risks are identified and addressed in a timely manner. Risk Reporting : The final step in risk assessment is risk reporting. This involves generating comprehensive risk reports that provide detailed information about the identified risks, their severity, and the proposed mitigation strategies. These reports aid in decision-making, helping stakeholders understand the risk landscape and make informed decisions. Dr. Rakesh K 15 Risk Assessment

16. Regulation Understanding : This involves the ability to comprehend and interpret complex regulations. It requires a deep understanding of legal language and the ability to apply it to various business contexts. This understanding is crucial for ensuring that business operations align with regulatory requirements. Compliance Checking : This refers to the process of verifying whether business practices are in line with established regulations. It involves regular audits and assessments to ensure that all business operations are conducted within the legal framework. Non-compliance Identification : This involves the detection of areas where the business does not meet regulatory standards. It requires a thorough understanding of regulations and the ability to identify discrepancies between these regulations and the business’s current practices. Compliance Reporting : This involves the creation of detailed reports that demonstrate the business’s compliance with regulations. These reports are typically submitted to regulatory bodies and may include information about the business’s compliance checking processes, identified areas of non-compliance, and corrective actions taken. Regulatory Updates : This involves staying abreast of changes in regulations and adjusting compliance checks accordingly. It requires continuous monitoring of regulatory changes and the ability to quickly adapt business practices to meet new requirements. Dr. Rakesh K 16 Regulatory Compliance

17. Audit Planning : This involves analysing previous audits and current data to plan effective audits. It requires a comprehensive understanding of the business’s operations, risks, and controls. The goal is to ensure that the audit is efficient, effective, and addresses the areas of highest risk. Real-time Reporting : This refers to the ability to generate reports during the audit process. Real-time reporting allows for immediate identification and communication of issues or discrepancies, enabling timely corrective actions. Insight Generation : This involves generating insights from audit data to aid decision-making. It requires advanced data analysis skills to identify patterns, trends, and anomalies in the audit data. These insights can inform strategic decisions and improve business operations. Audit Documentation : This involves automating the documentation of audit processes and findings. Automation can increase efficiency, reduce errors, and ensure consistency in the documentation process. It also facilitates easy retrieval and review of audit records. Audit Review : This involves reviewing audit findings and suggesting improvements. The review process assesses the adequacy of the audit work, the validity of the findings, and the appropriateness of the recommendations. It is a crucial step in ensuring the quality and effectiveness of the audit. Dr. Rakesh K 17 Audit Planning and Reporting

18. Data Quality Checking : This involves checking the quality of data used in audits. It ensures the data is accurate, complete, consistent, and relevant. High-quality data is crucial for reliable audit findings and insights. Audit Quality Checking : This refers to the process of checking the quality of audit processes and findings. It involves reviewing the audit methodology, testing procedures, and the validity of audit findings. Quality Improvement : This involves suggesting measures to improve data and audit quality. It could include enhancing data collection methods, refining audit procedures, or improving training for audit personnel. Quality Reporting : This refers to the generation of quality reports for management. These reports provide an overview of the audit findings, highlight areas of concern, and suggest improvements. They are essential tools for decision-making and strategic planning. Quality Assurance : This involves assuring the quality of audits by continuously monitoring audit processes. It ensures that audits are conducted in accordance with established standards and best practices, and that the findings are reliable and valid. Dr. Rakesh K 18 Quality Control

19. Automated Communication : This involves automating routine communication with clients, such as sending reminders or updates. It can save time, reduce errors, and ensure consistent communication. Personalized Communication : This refers to tailoring communication based on client preferences. It can involve using the client’s preferred communication channel or personalizing the content of the communication to make it more relevant and engaging. Communication Analysis : This involves analyzing communication to understand client needs better. It can include analyzing the frequency, content, and response to communication to gain insights into client preferences and needs. Communication Reporting : This refers to generating reports on client communication. These reports can provide valuable insights into the effectiveness of communication strategies and identify areas for improvement. Communication Improvement : This involves suggesting measures to improve client communication. It could include enhancing the clarity of communication, improving response times, or using more engaging communication methods. Dr. Rakesh K 19 Client Communication

20. Skill Identification : This involves identifying the skills necessary for effective auditing. It can include technical skills like understanding accounting principles, as well as soft skills like communication and critical thinking. Training Recommendation : This refers to recommending training programs that can enhance an auditor’s skills and knowledge. These programs can range from workshops on specific auditing techniques to comprehensive courses on audit regulations and standards. Performance Evaluation : This involves assessing the performance of auditors. It can include evaluating their adherence to auditing standards, the quality of their audit reports, and their ability to meet deadlines. Career Development : This refers to suggesting opportunities for career advancement for auditors. It can involve recommending roles or positions that can help auditors broaden their experience and take on more responsibilities. Professional Networking : This involves suggesting networking opportunities for auditors. Networking can help auditors connect with industry professionals, stay updated on industry trends, and discover new career opportunities. Dr. Rakesh K 20 Professional Development

21. Strategic Analysis : This involves the examination of data and information to gain insights and understand the organization’s internal and external environments. It helps identify strengths, weaknesses, opportunities, and threats, thereby aiding in strategic decision making. Strategy Formulation : Based on the strategic analysis, strategies are formulated. This involves setting objectives, determining actions to achieve the objectives, and mobilizing resources to execute the actions. A strategy describes how the ends (goals) will be achieved by the means (resources). Strategy Implementation : This is the action stage of strategic management. It means mobilizing the organization’s resources to execute the formulated strategies. It involves the design and management of systems to achieve the best integration of people, structure, processes and resources in achieving organizational objectives. Strategy Evaluation : This is the final step of strategy management process. The key strategy evaluation activities are appraising internal and external factors that are the root of present strategies, measuring performance, and taking remedial / corrective actions. Evaluation makes sure that the organizational strategy as well as its implementation meets the organizational objectives. Strategic Reporting : This involves the generation of reports related to strategic decision making. These reports provide a comprehensive view of the organization’s strategy, its implementation, and the resulting performance. They serve as a valuable tool for communication and accountability, enabling stakeholders to track progress and outcomes. Dr. Rakesh K 21 Strategic Decision Making