Answer:
Conceptual framework in terms of financial reporting is defined as a theory of accounting that is prepared by a body of personal setting financial reporting standards against which all the practical problems related to finance can be tested objectively (Coyne, & McMickle, 2017). Conceptual framework of financial reporting deals with fundamental issues related to the financial reporting like users and objectives of financial reporting, characteristics which make accounting useful, other basic elements of financial reporting (e.g. equity, income, liabilities, assets, and expenses), and a concept to recognise and measure such elements. The very first conceptual framework was developed by Financial Accounting Standards Board (FASB) in US in 1970s. Since then, in developed countries most standards setting bodies have developed their own framework to help and guide the process of setting standards for financial reporting (Dai, & Vasarhelyi, 2017).
Today it is not a secret that financial reporting or accounting is midst of technical transformation and evaluation. And the growing technical integration into business operations is continuing reformation to the industry and accountants introducing different technical accounting process like Artificial intelligence and Blockchain. Both the approaches for financial reporting have the potential to be used as the future constructing tool. Accounting world is just the latest of series of industries that are affected significantly by the increasing use of AI. This rapid increase in the use of artificial Intelligence is the indication of future optimization of the system for financial reporting in the industry as the industry has already started relying on the system to deal with many financial reporting elements (Lu, Li, Chen, Kim, & Serikawa, 2018).
Artificial Intelligence: Artificial intelligence systems are much powerful and improving significantly and quickly. This system provides the outputs that are more accurate and replacing or suspending in some cases to the human efforts from accounting process (Heath, 2018). However the technology cannot replicate the efforts made by humans. This fact suggests us to recognise the limitations of such systems and is building a understanding to utilise these system in a way that computers and humans can work together to make the best use of these systems (Pannu, 2015).
In this order a number of theories for decision making and application of artificial intelligence have been applied to assurance and auditing problems while reporting financial data. Most of these theories have been sparse and mostly applied only at theoretical level. Although most of the AI applications and decision making theories were successful, some of these theories have not been proven successful in long run for financial reporting (Maury, 2017).
Today financial institutes are using artificial intelligence and machine learning in financial reporting to price, assess credit quality, market insurance and also to automate the interaction with clients. This system is more effective and efficient to deal with different element of financial reporting to make is easier for both the client as well as accountants. Use of such system will definitely be beneficial for industry as well. In this order the system is used by institutions as well as the industry foe different purposes. Institutes are using AI and other technique of machine learning along with some back testing models to analyse the market impact of trading in at large positions whereas broker-dealers, hedge funds, and other firms operating in finance industry are using this system to find opportunities for higher uncorrelated returns and also to optimize the new trade execution in the field.
Banking and investment industry of Australia is all set to be transformed by use of rising AI. This much use of AI will soon turn Australian to a robot while preparing the tax return for Australians. It can be seen in the planning of banking industry of Australia that in 2016 and beyond, this was expected by the Australians that their banks will be digitally accessible fully. Introduction of Artificial Intelligence in the banking sector will end the trend of standing in never ending lines at banks to make a single transaction. When it comes to the future of accounting industry in Australia AI has to potential to direct the industry towards a better world by making accounting easier for industry as well as customers (Najjar, 2018).
Blockchains: Blockchain is a lesser known technology dealing with some of the accounting or financial reporting element like records of income, assets, liabilities, and returns. The technology is defined as a ledger that is open and distributed to record as verify the transaction made by clients. In this technology main drawback is only one that is the records are not trusted by any of the central authority (Marr, 2018). This technology exits as file to maintain a continuously growing list of transaction made by the client called blocks. These blocks contain a timestamp along with a link that connects each block with the previous block that is also only with the help of fingerprint security. In this technology there is no scope to make any changes in the previously recorded data also the data cannot be altered retroactively. There are many potential uses of Blockchain in account ting as well as audit preparing such as, traceable audit trails, authentication of transactions, development of smart contracts, automated audit processes, and registry and inventory system of any of the asset (Sutton, Holt, & Arnold, 2016).
Like many of the technology forms, in the field of accounting and audit, Blockchain reduces the potential of errors while reconciling disparate and complex information from a variety of sources. Authenticity of the data can be counted as an advantage of using Blockchain because once the data is recorded it cannot be changed not even by the owner of accounting system. And the integrity of financial records in the system is guaranteed as each and every transaction of the client is recorded and verified as well.
For example: A German-based software firm, Smacc, uses Artificial Intelligence to help their freelancers, SMEs, to automate their financial reporting. Founders of the firm developed this concept to use Artificial Intelligence to help them in their accounting difficulties in the beginning of their start-up. By now they have received $3.5 million from a variety of high profile ventures. Clients of the fir transmit their receipt, which then gets converted into machine readable forms where these receipts get encrypted and preceded to their respective accounts with the help of these encrypted codes. Most beneficial advantage of this that over time this system improves its functions itself in terms of dealing with sales, invoices, management, liquidity profile, and expenses in a better way. Another advantage of using the system is that the system uses more than 60 data points in order to review or cross-check the invoices and receipt provided by the clients. This helps in authenticating the data very high accuracy.
Blockchains is the world into a better and secured place using the technology. Apparently blockchain technology is becoming far more than just a use in Bitcoin. Today Blockchain is being used to introduce innovative creations across the sectors like, media, healthcare, finance, government and many more. In practical use of Blockchain, giant market suppliers around the globe are using the technology to track their supply chain process and regulate the same. For example, Walmart, Airways, FedEx, UPS, and Maersk all are using Blockchain technology to track their shipping process. Not only these nut many other international shipping companies are using the same technology to monitor their shipping channel. With the use of this technology into their business system companies are able to track their supply chain process more efficiently (Krauth, 2018).
I personally agree with all the arguments made by authors to describe various benefits of using these technologies in the field of accounting. All the arguments are pointing only benefits of the technology only few are there describing the disadvantages of these technologies. With these advantages of technology in finance I found accounting easier with the involvement of digitalization. Many more evidences show that these technologies are making the finance much easier than that of it was. This shows that there are only few drawback of using such technologies in the finance sector but these can be neglected to make financial reporting easy and more precise.
From all the discussion made in the paper it is concluded that the technology is making our life easier. Technology is making our lives easies not only in terms of finance but it is helping us to deal with many more complex problems in other sectors also like, in healthcare, manufacturing, supply-chain, and many more. All the arguments made in the discussion are showing advantages of using these technologies that are supporting the use of such technologies and it is necessary too to make some of the complex processes easier. Artificial Intelligence and Blockchains are most common till date to resolve the complexity of accounting problems. From evidences or real life practical use of AI and Blockchain by companies, to make their tasks easier, motivating software developers to improve these technologies more and more to control most of the disadvantages.
References
Coyne, J. G., & McMickle, P. L. (2017). Can blockchains serve an accounting purpose?. Journal of Emerging Technologies in Accounting, 14(2), 101-111.
Dai, J., & Vasarhelyi, M. A. (2017). Toward blockchain-based accounting and assurance. Journal of Information Systems, 31(3), 5-21.
Heath, N. (2018). What is AI? Everything you need to know about Artificial Intelligence. ZD Net. Retrieved from https://www.zdnet.com/article/what-is-ai-everything-you-need-to-know-about-artificial-intelligence/
Krauth, O. (2018). 5 companies using blockchain to drive their supply chain. Tech Republi. Retrieved from https://www.techrepublic.com/article/5-companies-using-blockchain-to-drive-their-supply-chain/
Lu, H., Li, Y., Chen, M., Kim, H., & Serikawa, S. (2018). Brain intelligence: go beyond artificial intelligence. Mobile Networks and Applications, 23(2), 368-375.
Marr, B. (2018). 35 Amazing Real World Examples of How Blockchain Is Changing Our World. Forbes. Retrieved From https://www.forbes.com/sites/bernardmarr/2018/01/22/35-amazing-real-world-examples-of-how-blockchain-is-changing-our-world/#7b656b0943b5
Maury, N. (2017). How Artificial Intelligence and Machine Learning Impact Accounting. Accounts Daily. Retrieved from https://www.accountantsdaily.com.au/how-artificial-intelligence-and-machine-learning-impact-accounting
Najjar, D. (2018). Is Artificial Intelligence (AI) the Future of Accounting? The balance small business. Retrieved from https://www.thebalancesmb.com/is-artificial-intelligence-the-future-of-accounting-4083182
Pannu, A. (2015). Artificial intelligence and its application in different areas. Artificial Intelligence, 4(10), 79-84.
Sutton, S. G., Holt, M., & Arnold, V. (2016). “The reports of my death are greatly exaggerated”—Artificial intelligence research in accounting. International Journal of Accounting Information Systems, 22, 60-73.
Essay Writing Service Features
Our Experience
No matter how complex your assignment is, we can find the right professional for your specific task. Contact Essay is an essay writing company that hires only the smartest minds to help you with your projects. Our expertise allows us to provide students with high-quality academic writing, editing & proofreading services.
Free Features
Free revision policy
$10Free bibliography & reference
$8Free title page
$8Free formatting
$8How Our Essay Writing Service Works
First, you will need to complete an order form. It's not difficult but, in case there is anything you find not to be clear, you may always call us so that we can guide you through it. On the order form, you will need to include some basic information concerning your order: subject, topic, number of pages, etc. We also encourage our clients to upload any relevant information or sources that will help.
Complete the order form
Once we have all the information and instructions that we need, we select the most suitable writer for your assignment. While everything seems to be clear, the writer, who has complete knowledge of the subject, may need clarification from you. It is at that point that you would receive a call or email from us.
Writer’s assignment
As soon as the writer has finished, it will be delivered both to the website and to your email address so that you will not miss it. If your deadline is close at hand, we will place a call to you to make sure that you receive the paper on time.
Completing the order and download