Business Processes and Internal Controls Acct2000

Faculty of Business and Law School of Accounting, Economics and Finance

STAGE 2ASSIGNMENT COVER SHEET

Acct2000 - Business Processes and Internal Controls

Cover Page

Robotic process transformation

A new digital era

1.0 Introduction and objective

Advancements in machinery and automation can lead to greater operational productivity and effectiveness, but it relies on how organisations adapt and accept them. In order to produce useful results, the domains of systems analysis, human aspects, and interactions between people and computers, among others, aim to coordinate both human and robotic labour (Cooper et al. 2022). The influence of technological advancement on financial and accounting functions has been one of those that is most evident. The use of blockchain technology, computing on the cloud, robotic process automation (RPA), artificial intelligence, and machine learning are among the technologies seen to be now or could potentially impact this industry (J?drzejka 2019). When referring to business processes, RPA most often means setting up a programme to operate duties that were formerly concluded by people, such as sharing data between multiple input sources, likeworksheets and emails. Record systems, like as Enterprise resource planning (ERP) systems and customer relationship management (CRM) and making money while doing so (Can Tansel, Trky?lmaz and Birol 2019). Given that RPA is becoming further broadly recognised in the discipline of accountancy, it is essential to have a more comprehensive understanding of RPA utilisation to clarify its consequences (Zhang et al. 2023).

The favourable and unfavourable features of RPA in the finance and accounting sectors will be investigated to have a better grasp of this topic. Furthermore, the competencies required fromaccountants and auditors to efficiently employ RPA will be discussed. Four of the largest firms of public accounting will share information about their employees' RPA usage experiences. As this is Stage 2 of the topic, the discussion will share similar and/or different views of authors with regards to the topic. This includes different methods to investigate the research topic followed by an opinion of RPA in the accounting and audit industry.

2.0 Discussion

Industry adoption of RPA is most advanced in the Accountancyservices, multimedia, Informationtechnology, and communications sectors, and is subsequently followed by the medical care, sales, and production and shipping sectors (Zhang et al. 2023). According to a Deloitte poll in 2018, 53% of respondents were in the process of implementing RPA, and 19% anticipated doing so over the following years, alongside a universal acceptance occurring across five years (Kokina and Blanchette 2019). The largest top study and consulting firm, Gartner, forecasted in 2020 that by 2022, 90% of big organisations internationally will have used RPA in one way or another, and it projected that the whole RPA field would expand at exponential rates throughout 2024 (Zhang et al. 2023). Considering that there are vast potential advantages of RPA technology, businesses ought to familiarise themselves on it (Gotthardt et al. 2020).

2.1 Merits of RPA

RPA takes care of the labour-intensive and duplicate duties workers are used to carry out. Employers who utilise RPA may use the programme whenever needed, and they don't have to pay employees salary or perks for completing the task. By doing this, the cost of the current manual processes is lowered by at least 25% to 40%. Global labour expenses are predicted to be reduced by $2 trillion because of this technology (Hazar and Toplu 2023). Kokina and Blanchette (2019)who employedan approach involving multiple case studiesalso verified this as one of the organisations emphasised that operations that include many systems are especially well-suited for robotic process automation (RPA), and processes that involve several persons repeating themselves can save more money if they are automated. A 2018 Deloitte poll revealed that 59% of businesses concurred adopting RPA had helped them save money (Perdana, Lee and Mui Kim 2023). Likewise, all other studies discuss cost reductions as a result of RPA deployment. Using RPA reduces flaws and inaccuracies in workflows. Automating tasks with technology reduces the possibility of errors during implementation. The machine does jobs consistently, regardless of their amount (Hazar and Toplu 2023). Kokina and Blanchette (2019)through their case studies approach had two of the eleven companies agreeing that RPA installation reduces errors in business operations, since automated systems may execute non-cognitive jobs more accurately than individuals. One of the interviewees emphasised the importance of internal procedures to avoid harmful coding and theft of funds by programmers and end users. These controls also act as a barrier against individual error and deception as the case-centered and exploratory research technique base is used to prove it (Zhang et al. 2023). The low error rates have enhanced auditor talents and activities. They have been allocated towards higher valuable duties, including those demanding analytic and thinking abilities according to the socio-technical systems approach used by Dahabiyeh and Mowafi (2023). Individuals can concentrate on challenging jobs that RPA cannot handle (Hazar and Toplu 2023). Research by Kokina and Blanchette (2019)demonstrated that RPA enhances employment and increases staff retention by releasing workers from repetitive chores in support of important tasks. One organisation was particularly favourable to this point. The primary focus of current RPA investigations is on quantitative evaluations. RPA initiatives employ a variety of measurable metrics, such as automation percentage, overallmoney saved, return on investment (ROI), and savings of full-time equivalent (FTE) (Zhang et al. 2023). According to a Capgemini research, RPA is perhaps the most often used software for automating back-office and middle office operations. The ROI varied between 13% to 18%, and the period of payback was between Seven and twelve months. A total of 31% of the organisations examined utilised automation in their accounting and financing departments, with an average return on investment of 12% and a return on investment of eleven months. When comparing with different back-end departments, thedivisions saw the largest cost reductions via technology (13% on average) (J?drzejka 2019).Integration companies like as Capgemini, KPMG, Accenture, and Deloitte use UiPath's (a RPA software organisation) services for digitalisation and automation initiatives owing to their excellent ROI and cheap expenses (Gotthardt et al. 2020).

2.2 Demerits of RPA

RPA initiatives do not always end satisfactorily. Thirty to fifty percent of first RPA efforts fail. Furthermore, these ventures involve considerable risk (Hazar and Toplu 2023).The corporation's goal, beliefs, and behaviour norms are not in line to the usage of RPA. If this potential danger is not reduced, RPA's costs may end up outweighing its advantages, yielding a poor return on investment (Hong, Ly and Lin 2023). While the impact of advances in automation on labour is not new, RPA's simplicity of use, scalability, and application to white-collar professions may make this worry more significant. According to preliminary findings from a research, accountants who possess lower skill levels who often complete recurring, low-value assignments are disproportionately affected by RPA. Respondent 1 from a company stated that RPA is not usually used as a means of terminating workers, whereas Respondent 2 claimed that an elevated effort was put into improving RPA's reputation and eventually theirjobs are about to be stolen (Zhang et al. 2023).The unfavourable belief amongst personnel about RPA leadingto employment shortages and many job cuts was also noted by interviewees as a source of friction involving themselves and RPA engineers (Zhang et al. 2023).Automated data entry provided by the RPA system will pose serious risks to important responsibilities like receivables,payables, daily journals, ledgers,transactions, and invoice-to-PO (purchase order) matching.RPA may handle every allocation and modifications, including reconciliations with banks and credit card sales (Can Tansel, Trky?lmaz and Birol 2019). RPA operates within the organization's technological framework as it is aprogramme (Hazar and Toplu 2023). While RPA's ability to mimic user interface (UI) conversations is supportive in permitting robotics that is problematic to attain using conventional automated systems, it also raises questions regarding authorisation and bot managing as it can be thought-provoking to differentiate among individuals and bots when they are imitating human conduct (Zhang et al. 2023). The choice to design and apply RPA might be taken independently by company divisions, avoiding the information technology division of the organisation. This can heighten worries across RPA's control and handling of risks (Zhang et al. 2023). Another obstacle is that certain clients desire to socialise. RPA is not just for customers who prefer to transact with other humans (Hazar and Toplu 2023). This is because, from the perspective of the customer, utilising RPA in audits is not accepted as it's an unfamiliar audit technique that differs from the conventional auditing methodology (Dahabiyeh and Mowafi 2023). RPA involves tight coordination among accountants and customers. Not every one of the customers have effectively digitised their company's operations processes. Through a scenario based approach by Perdana, Lee, and Mui Kim (2023)customers could be in various phases of the technological transition.Certain consumers may still use traditional processes and preserve paper records, rather than having already converted to digital copies. False findings can also be produced using RPA. As the tool settings by themselves are insufficient to provide the intended and accurate result, the issue here is with modelling the RPA tool itself. According to a senior audit manager (using the socio technical systems approach), the system will identify several issues in the batch; nevertheless, he chooses to proceed to investigate further. Red flags that the tool raises aren't always red flags. Therefore, even when the tool raises a red signal, he won't see it because of his involvement and comprehension of the company's daily operations and the customer cycle (Dahabiyeh and Mowafi 2023). RPA transforms traditional duties into computerised ones. Consequently, the organization's core is available through electronic mediums and hence possibly vulnerable to attackers (J?drzejka 2019). EY draws on four cyber hazards related to RPA deployment and utilisation: misuse of special privileges, exposure of private information, security flaws, and interruption of services (Gotthardt et al. 2020). A person interviewed reported a data breach caused by coding flaws in RPA devices. The automated system was erroneously designed and utilised inaccurate data about clients, resulting in the client viewing another clients' details, which breaches the General Data Protection Regulation. They discovered out when the consumer called the call centre, who subsequently informed the procedure owner and bot creator (Zhang et al. 2023). For some audit tasks, RPA might not be the best option when it comes to automation. Certain audit jobs are too complicated and intricate for RPA to handle, necessitating the expertise of specialised audit professionals. Having an onsite RPA workforce during the deployment phase is therefore crucial for accounting companies, as it enables the group to swiftly offer the assistance the company needs whenever required (Perdana, Lee and Mui Kim 2023). The dangers of deploying RPA may outweigh the anticipated advantages if an efficient control system isn't set up, which would lead to an inadequate return (Hong, Ly and Lin 2023).Through semi-structured interviews, Hong, Ly, and Lin (2023)commented that insufficient control environments can be characterised by insufficient supervision of RPA execution, ranging from disaster restoration and handling of errors to managing configurations, handling changes, authorisation, and data retention.

2.3 Roles and skills for Accountants to use RPA

Automation, and notably RPA, has had a radical impact on accountants' job since it has altered the kind of the service that professionals in accounting provide (Kokina et al. 2021). We will briefly discuss some of the roles accountants end up adopting whilst using RPA. The identifying role is the first role. Accountants may identify possibilities for RPAby determining whether activities are conventional, monotonous, and rule-driven, with little deviations, and if they can save a substantial amount of labour hours (Kokina et al. 2021). They add to the rationale for RPA projects by quantifying labour hours spent and anomalies.Accountants might use the explainer role to walk software designersthrough specific process stages and internal control measures (Kokina et al. 2021). They work together with IT to make sure RPA is successful.Since IT experts are generally responsible for RPA development, accountants who take on the trainer role may learn how to code automated systems (Kokina et al. 2021).

The accounting and audit activity is changing because of the growing practise of RPA, with a focus on a move into higher-value and increasingly difficult operations. Given this tendency, accounting professionals must prioritise ongoing skill development, especially in soft abilities like communication and problem-solving (J?drzejka 2019). Technology expertise, including knowledge of coding for computers, analytics software, and IT, is another essential ability. Furthermore, analytical thinking and teamwork hasbecome anessential skillthat hasallowed accountants to successfully negotiate the changing environment (Cooper et al. 2019).

2.4 Perceptions of Managers and employees

There is broad consensus among chiefs and subordinate-level personnel concerning the gains of RPA, according to surveys with 14 executives, the Big 4 bookkeeping corporations and a poll of one hundred thirty nine staff members and higher-level accounting professionals (Cooper et al. 2022). Transforming everyday tasks into valuable efforts toenhance career opportunities. Encouraging worker impressions can stimulate the exploitation of RPA in accountancy organisations, which can successfully manage turnover concerns and lower replacement costs (Cooper et al. 2022). However, there may be a minor difference in anticipation for work-life balance enhancements, alongside management expecting greater advantages than staff receive. Remarkably, lower-level staff members report enhanced work-life balance as they acquire RPA expertise (Cooper et al. 2022). Still, a lot of workers observe that even while technology has altered what they must do, their overall burden hasn't changed, suggesting that RPA isn't decreasing labour but rather splitting work (Cooper et al. 2022).

3.0 Conclusion

In the near future, we will be dependent on technology to do the jobs for us, and this is just the beginning. RPA in the accounting and audit industry will be of good use if applied in an effective and efficient manner. Learning the automation process for accountants is going to be crucial. Organisations cannot rely on paying developers to come and solve small issues that the system might be having. As accountants we dont need to worry about job security just yet. The need for human touch with using software is still necessary. Saying that, RPA is of satisfactory benefits that could help organisations when compared to the drawbacks. Organisations need to keep resolving the complications that occur daily explicitly concentrating on data breach and privacy issues. There is more scope for research in this field. This includes on how RPA could integrate with different cultural and diverse aspects of the organization. Alignment of RPA with the clients and organisational goals could also be researched on.

References

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