Finance Management Eco System: Moving from compliance to decision making. Part 1 of 3
The profession known as accounting predates the Mesopotamia era 7,000 years ago. Mesopotamian business men were recording goods received and expenditure paid out. During the 4th and 3rd millennium b.c., in ancient Iran and Egypt, clay tokens were use in the bookkeeping process. During the Medieval and Renaissance periods, Europe shifted to a monetary economy. Here is where we see the birth of the double-entry account system. As the west became the business hub of the world, Queen Victoria in July 1854 created the profession of chartered accountants by granting a royal charter to the Institute of Accountants. United States would set up its first national accounting society in 1887, respectively.
The accounting profession in the U.S. had its first major leap forward with the creation of spreadsheet, notably VISICALC, by Dan Bricklin and Bob Frankston in 1978. This was a major game changer; from paper to electronic. Spreadsheets automated the record keeping process. Prior to the advent of spreadsheets, the monthly closing process of financial records, could take up to 14-days. Spreadsheets scaled it down to 24-hours. With the explosion of home computers in the 90s, Intuit and Microsoft launched desktop accounting softwares, Quickbooks and Quicken. In 2000, Intuit brought an additional offering to the market, Quickbooks Online. Intuit products set the baseline for financial management software.
A caveat that should be noted is, software producers did not market their products exclusively to the bookkeeping, accounting or financial services industries. They marketed to the Do-it-yourselfers also. This effected the accounting profession adversely. Due to the marketing by software developers, consumer and business owners, no longer saw seasoned accounting professionals as a necessary ingredient in their business operations. And accountants, remained focused only on compliance matters such as data recording and taxation and not qualitative measures that are derived from merging accounting and operational knowledge.
With advancements in cloud computing, apps and artificial intelligence (AI), software developers have been able to create operational efficiency and reduce human error to10%; which in most cases are financial transactions that fall out of normal activities. Lastly, these technologies shift the focus from financial compliance to financial intelligence and qualitative decision making.
Clients employ Auphsite Consulting and simplerAccounts to streamline their financial compliance needs and advise on Financial Intelligence: what do the numbers really mean. We welcome the opportunity to learn how we can serve you.