Page 49 - CMA Journal (Nov-Dec 2024)

Focus
Focus Section
Section

Transitioning from Manual to Digital Accounting
– A Necessity, Not a Choice

It was generally believed that accountants would spend more sophisticated
more hours in their offices compared to employees of other structure to the entire
professions, such as sales, production, administration, process.
stores, etc. The main difference is the expectation of a high
standard of accuracy from accountants, as they deal with Problems and
money. Hence, they have to be extra vigilant in their areas of Solutions in Shifting
responsibility, which include important tasks such as audit, from Manual to
taxation, compliance with various statutory obligations, Digital Accounting
International Financial Reporting Standards (IFRS), Generally
Accepted Accounting Principles (GAAP), and the Practices
preparation of various financial reports that form the basis
of important business decisions and financial risk Shifting from manual
management for other stakeholders. Any non-compliance, accounting to digital
inaccuracy, or delays may result in fines, penalties, legal systems is not an easy Syed Shamim Ahmed, FCMA
actions, or other serious consequences. No other task and may face several Former General Manager Finance,
department in the organization regularly faces such challenges: Karachi Port Trust (KPT)

regulatory scrutiny, except for some reviews in cases of • Resistance to
deviations from set goals. For example, if sales or production Change: Employees who are accustomed to manual
aligns with targets, management feels satisfied. systems may fear the unknown and resist change. They
Problems in Manual Accounting Practices might worry that the new automated system could make
their roles redundant or that they may struggle to adapt.
Dealing with such an important task manually, especially To address this, it is essential to educate staff about the
when it involves large volumes of data and numerous benefits of the new technology, assure them that there
computations, is bound to create many hurdles. will be no job losses, and provide proper training to help
them transition smoothly.
• Time-Consuming: Repetitive and extensive data entries,
along with the preparation of various documents such as • Lack of Technical Know-How: Initially, both the
vouchers, journals, statements, etc., are highly organization and its staff may lack the technical expertise
time-consuming. required for digital systems. This can slow down work,
lead to errors, and waste time. The solution lies in raising
• Errors and Omissions: Handling large computations awareness and providing comprehensive training.
manually often leads to errors and omissions, which must
be corrected to prevent incorrect decisions. • Data Shifting Issues: Transferring data from manual to
digital systems can be problematic, especially if the
• Lack of Security/Transparency: It is difficult to keep manual records are disorganized. Proper supervision is
track of every transaction, making information leakage necessary to prevent data loss or leakage during this
and misuse a possibility.
process.
• Restricted Accessibility: Sharing data and enabling its • High Initial Costs: TThe transition requires significant
beneficial use by other staff members is limited.
investment in hardware, software, consulting fees, and
• Compliance Delays: Meeting timelines to comply with staff training. Proper planning and phased
accounting standards and other regulatory targets implementation are crucial to manage these costs
becomes challenging, often causing delays. effectively.
• No Real-Time Insight: Obtaining real-time insights is • Data Quality: Digital accounting relies on high-quality
difficult for obvious reasons. data to produce accurate results. As the saying goes,
"garbage in, garbage out." Therefore, data must be
• Rigidity: The accounting workforce, engaged in
monotonous tasks for long periods, often develops a well-organized, correlated, and verified for accuracy
rigid attitude. before being digitized.
• Compliance Requirements: Digital systems must
These hurdles highlight the need to shift from traditional comply with laws, regulations, and audit standards.
methods to technological solutions as they become
available. Simple calculators have eased accounting tasks, Ensuring all necessary compliances are met is critical to
while digital tools have further streamlined computations avoid legal or financial repercussions.
and reporting. The introduction of computers and laptops • Staff Confidence: Employees handling the transition
has transformed the entire scenario: calculation errors are must feel confident and supported. A lack of interest or
greatly reduced, balancing financial statements has become expertise can lead to delays, cost overruns, or project
easier, and the storage, retrieval, and sharing of data have failure. Clear communication, ongoing support, and
been streamlined, saving considerable time and giving a vigilant supervision are key to maintaining staff morale.
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