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Abstract

This paper confirmed the high organizational transformability of accounting, but it did not prove the real problem of replacing human labor. The key emphasis of the study, unequivocally reflecting its brief essence, was recognizing the idea of a change in the role of the accountant over the past decades. Moreover, based on the lessons learned from the materials studied, it is appropriate to outline a general outlook for the development of the profession shortly. From a methodological point of view, this dissertation has reflected the clarity of following the primary goal and the sequence of tasks that fill the work with academic meaning and theoretical and practical relevance. Ultimately, it should be recognized that the research conducted is highly significant and relevant not only to the student community but also to those interested in the development of accounting, given the current threat of the disappearance of their occupation. The studys findings can reassure current and future students and reliably show them that the vector of accounting development, although undergoing metamorphosis, generally remains stable.

Introduction

The work of accountants today is quite different from the work their predecessors did a hundred, fifty, or even ten years ago. The accountant in the company of the present day is the operator among automated processes, beginning with collecting information for a particular reporting period and ending with the formation of final reports. Indeed, the employee of this department, especially in large companies, no longer has to deal with the early routine tasks, which creates some concerns about the prospects of the position in general. If already today, much of accounting turns out to be automated and works with little or no human input, one can expect that workers will be replaced entirely by robots in the coming decades. This assumption is a widespread opinion, which only adds resonance to the discussion of the accountants role in future companies. Against this backdrop, the logical question arises as to whether it makes sense to study to become an accountant at all (Flavin, 2019). The counterarguments in this direction are usually considered ideas that giving a few years of life to a profession that may no longer be relevant seems a completely illiterate investment of personal time, effort, and finances. Such considerations are especially true in countries with the most remarkable economic and technological growth in recent years (Dancey, 2016). Notable among these is Wales as one of the four administrative and political parts of the United Kingdom. Although Wales is not a densely populated region of the United Kingdom, its GDP growth rate is comparable to that of the most developed countries in the world. Thus, Welsh students are of heightened research interest as potentially vulnerable to human labor substitution by automated accounting.

Accounting Background/History

The vector of development of different spheres of human life is directly determined by highly rapid technological progress, which is rapidly changing the agenda. Such transformations are particularly strongly felt in industries associated with routine work, in which an employee tends to perform the same actions over a long period. Accounting as a professional field is such a field, and thus it is appropriate to focus on it to trace the pace of technical progress. It is worth saying that the term accounting is broad and ambiguous, and different dictionaries and sources uniquely interpret it. For the purposes of this paper, the whole essence of accounting comes down to an understanding of it as a continuous and systematic collection, fixation, and interpretation of specific information relating mainly to the financial activities of an enterprise. Consequently, accounting should be seen as a multifactorial area of professional activity that has several stages (Axtell et al., 2017).

In fact, ever since the emergence of the first companies, the functions of the accountant as a separate department of the firm have been critically necessary. Ever since human consciousness came to recognize the critical need to combine individual forces and resources in order to maximize benefits, the first companies began to emerge (Gerber, 2017). This is also when the recognition of the critical need for accounting departments as a significant component of the overall organizational structure seems to have arrived (Smith, 2021). The first accountants were masters of manual labor, accumulating, measuring, calculating, and estimating each transaction by hand or non-automatic calculators. Thanks to such employees, factories knew exactly or roughly what their product inventories were and whether their business was profitable at all: in other words, all financial and business accounting was the responsibility of accountants. The unstoppable progress of time could not help but affect this area, and with the advent of electronic calculators, spreadsheets, and computer software, accountants work has changed considerably. It is inappropriate to view this change as a movement in a more straightforward direction because the very essence of accounting was transformed. Although employees no longer had to perform calculations manually, it was necessary to set up and evaluate the validity of the use of working applications. Consequently, the qualitative change in the accounting structure is not facilitative but optimizing for the enterprise (Cooper et al., 2019). This is a crucial detail that is necessary for further discussion in this dissertation.

Research Problem

The central problem of this study is to determine the place of accounting automation in the phenomenon of human resource substitution and job decline in the industry accounting market, if such phenomena occur, in the context of Welsh graduate students. The task of this study should be considered a theoretical and practical synthesis of the existing relationship and an explanation of current and projected accounting market trends. It is still a big question to understand the outcomes to which such accounting optimization will lead. One probable reason is the dramatic reduction of jobs due to their replacement with more reliable, adaptable, and customizable systems (Cooper et al., 2017). Thus, exploring the potential of accounting automation is fundamental to this dissertation.

Purpose of Research

The idea that automation will replace manual labor is not coincidental and has historical roots. Over the past centuries, humanity has actively watched the industrial industry change, seeing how factory workers, without whom a factory could not seem to work, were soon replaced by conveyor belts and machines. Similar substitutions are occurring now, with robotic kiosks replacing cashiers, mobile vending machines with embedded machine technology replacing janitors, and cab drivers being replaced by autopilots. In peoples minds, such transformations are automatically extrapolated to more intellectual work, particularly accounting. According to Thomson Reuters (2021), these fears are supported by statistics: more than 78% of accounting processes will be automated soon. In turn, this creates fear for people already working in the industry and for students who one day decide to learn the accounting trade. This is evident in an analysis of students posts on social media, and Reddit in particular (u/Slick_Deacon, 2018). It is worth mentioning that Reddit is one of the most popular active social networks that combines the functions of a public forum (Record et al., 2018). The reference to Figure 1 shows the novice students experience of whether his or her profession will be in demand shortly. Similar thoughts are evident in the analysis of the response comment (Figure 2), in which a user who has already earned a bachelors degree in accounting asks the same question. It can be seen that this person, who has already gained knowledge and competencies as a certified public accountant, senses market trends and understands that Artificial Intelligence is likely to be a great optimization tool but not a replacement.

It is important to emphasize that such changes are not an intangible future but will likely happen within the next decade. Opinions differ somewhat, however, as to when full automation will occur. According to GrantThornton (2020), about 96% of all financial accounting functions will be fully automated by 2025, as shown in Figure 3. On the other hand, Törnqvist & Forss (2018) noted that full automation will not be available until twenty years from now, that is, by the early 2040s to 2045s. Gulin et al. (2019) showed that most of the companies surveyed expected automation to be available by 2018. That said, in 2018, Everatt told in his article that by 2020, all accounting processes at large companies would be automated. By 2020, however, Axson (2015) foreshadowed the death of digital technology because the 40% mark of automated operations would be reached. As can be seen, there are some parallels in the five opinions above. For example, many authors sincerely expect automation as if it were the most effective cure for business. At the same time, most authors wish to accelerate the integration of full automated accounting by shortening the time frame. According to some of them, automation should have been completed by now, but in practice, it is clear that this is not the case at all. Only one conclusion can be drawn from such discussions of the time frame for full automation: the process itself is sensitive and dynamic and weakly subject to external rules. Although the effect of this trend cannot be avoided in the Welsh context, research will provide an in-depth assessment as to how automation in the accounting field has impacted students employability is Wales.

Government support for the digitalization of accounting cannot be ignored either. The British authorities have proposed an automated system for managing taxes, including VAT, at the enterprise level (Kefron, 2021). As a component of HMRCs ambitious program, MTD has a focus on easing the VAT refund system and substantially reducing risks and the likelihood of errors. For example, businesses with a total taxable turnover in excess of £85,000 of VAT were required to keep digital records and use HMRC-compatible enterprise financial management platforms from April 1, 2020 (Kefron, 2021). From this, it is already reasonable to conclude that the pace of accounting automation is increasing and that the agenda for fully digital accounting, supported by government initiatives, is approaching.

Research Objectives & Questions

Research aim and objectives:

1. Identify the automation changes in accounting practices.
2. Identify the strengths and weaknesses of automation in accounting practices.
3. Examine the changes have occurred in the Welsh graduate employment market.
4. Assess the skills Welsh accounting graduates currently need, to be employed in accounting practices.

The primary research questions of this dissertation are as follows:

1. What are the automation changes in accounting practices?
2. What are the strengths and weaknesses of automation in accounting practices? Including a critical review of disruptive technologies.
3. What changes have occurred in the Welsh graduate employment market?
4. What changes have occurred in the skills requirements for Welsh accounting graduates in the past 10 years? And what skills are now needed to be employed in accounting practices?

Summary

The overall structure of the work is represented by five chapters, each of which consistently solves its functional problem. The first chapter introduces the reader to the general nature of the problem, describes its significance and urgency, and postulates the purpose and questions of the entire thesis. The second chapter is presented by a voluminous literature review that characterizes the current academic agenda and critically assesses the body of accumulated knowledge. The literature review outlines not only the central vector of the topic of the entire thesis  that said, the problem of accounting  but also reviews additional knowledge necessary for a deeper understanding of the essence of the topic under study. The third chapter of the work is a discussion of the methodological part, giving an idea of the strategies of search and analysis of materials, research design, and observance of ethical norms. Chapter four is a summary of the essential findings and conclusions gathered through the literature review. Chapter five is a summarizing conclusion, highlighting the central theses of the entire thesis and offering some recommendations for students of today.

Literature Review

Introduction

It is generally believed that world accounting has its medieval origins in Luca Pacioli, an Italian mathematician of the fifteenth century. Pacioli is not called the founder of modern accounting for nothing, for it is to his name that such advances in algebraic and geometric sciences are associated (Sangster, 2021). In his hereditary work, a textbook of commercial arithmetic, Pacioli described such applied problems as the calculation of compound interest, the solution of biquadratic equations, and the applicability of algebraic solutions to geometric problems. However, although Paciolis contribution to accounting is undoubted, it would be a mistake to regard him as the first expert in history. For example, the first attempts at arithmetic accounting are more than 7,000 years old and were found in the remains of ancient Mesopotamia (Axtell et al., 2017). Accounting was then used for its direct purpose: with the help of an account, farmers counted and predicted livestock production, estimated profitability from crops, and planned future inventories: in other words, they conducted actual economic and economic activities.

Between ancient Mesopotamia and Pacioli, the accounting craft underwent several stages of evolution. For example, in Roman times, according to Cavalletti (2020), Emperor Augustus recorded all his financial decisions, whether of land distribution, donations, or public expenditure, as the book Res Gestae Divi Augusti attests. Gradually the economy ceased to be in kind and took on a monetary approach: in doing so, individuals gave an amount of money equivalent to the value of the goods being sold or bought. Obviously, this turn in the development of accounting required specialists to accumulate, measure, and evaluate large quantities of financial data, which forcibly steered accounting toward progress.

Accounting Practices Today

Till today, humanity has not stopped buying or selling essential commodities, although this is the basis of any economy, modern commodity-market relations have changed radically. Cash transactions, bank transfers, cash payments, savings and deposits, digital currencies, and currency conversion transactions: are just a tiny part of what the current stage of the economy is all about. For accountants, this means dealing with a data set that has never existed before. Consequently, relying solely on human labor turns out to be impractical and inefficient. Humans continue to make mistakes even if they are highly skilled experts, whereas a better, more intelligent method of data processing, namely computer automation, is generally free of these errors (Paychex, 2020). Thus, the automation of accounting was a new step in the evolution of the craft, which quite naturally threatened the need for human input. In turn, this has raised academic interest in the issue, which is reflected in the multifold increase in citations of articles on related topics, as shown in Figure 4. This literature review seeks to assess the significance and relevance of this threat in the context of Welsh accounting students, using relevant and credible literature as a basis.

The Primary Reason for Accounting Automation

Business management in todays legal and economic field requires the entrepreneur to comply with many rules and criteria. Basically, in order to effectively manage production, a business must not only systematically report income through income tax returns and pay taxes faithfully but also keep track of subpoenas. Accounting is a dynamic field, so new regulations, ordinances, and accounting rules appear frequently (Axtell et al., 2017). Given this, todays entrepreneur works under constant uncertainty and risk, so must make balanced, adequate decisions to keep the business and economic activities of the entire enterprise under control. On the other hand, the possibility of errors made by accountants is never ruled out. These can be data entry errors, incorrect transaction errors, failure to account for commission, errors of principle, or duplication errors (Paychex, 2020). Moreover, miscalculations and assumptions can be made intentionally if the accountant is interested in causing damage to the company for personal or commercial purposes. In this context, it is particularly noted that the threat of such problems is equally severe for small businesses and multinational companies. More specifically, if a small company makes an accounting miscalculation, it can be a fatal mistake: incorrect financial data has often been the cause of forced company closure (Nickolas, 2021). On the other hand, an accountants mistake can cost tens of millions of dollars for large companies, as was the case with the prominent British supermarket chain Tesco (Nazir, 2020). Therefore, that means that the estimated damage will not be lower than for a small company. All of this leads to the idea that a person in the role of an accountant is prone to error.

Also noteworthy is the fact that an individuals work as an accountant is itself imperfect. The individual cannot perform dozens or hundreds of arithmetic operations per minute, and moreover, cannot comprehensively evaluate the whole existing picture. This is shown by statistics evaluating accountants reactive rather than proactive nature, as accounted for by 44% of business owners (Djurovic, 2021). At the same time, just like any other person, the accountant requires breaks, days off, and vacations, which affects the operational efficiency of the entire operation. The reduced security should also be noted, as the accountant may not provide encryption of the data used or be an industrial spy from a competitors company (Moffitt et al., 2018). Added to this, according to Djurovic (2021), only 25% of small businesses seek the help of a highly qualified accountant, while the remaining percentage either manage the businesss operations themselves or seek help from relatives. To put it another way, there are many problems with a person in the role of an accountant, which is why companies are looking to automate accounting.

The Essence of Accounting Automation

In the era of digital business, the decision to use accounting automation software seems justified and, moreover, necessary. There are several interpretations of accounting automation, looking at the phenomenon from different angles. Kokina & Blanchette (2019) emphasizes the mechanical part of the account, showing that this process is based on previously created scripted rules. Cooper et al. (2019) show that automated processes optimize the accounting approach by reducing the need to perform routine tasks. In Zubrenkova et al. (2021), automated accounting, in general, is seen as a vital direction for a modern company, the absence of which would entail the companys demise. All of this together allows to interpret accounting as an essential part of the information support system of the work of any enterprise, focused on the use of computer technology. In this definition, it is important to note that the automated approach does not mean a block of economic and financial accounting management isolated from a person but implies a competent symbiosis between a person as an operator and technology as an optimization tool.

In view of this, it is interesting to examine the individual functions of computerized accounting. The central core of the use of computerized technology lies in the smoother achievement of organizational results. Concerning accounting, this means correct business accounting, managing cash flow inside and outside the organization, planning, and adjustments as per the agenda (Axtell et al., 2017; Moffitt et al., 2018). Other accounting functions managed by automated systems include budgeting and cost control, preventing financial errors of any nature, and employee performance evaluations combined with the companys HR department (Alvehus, 2018). Consequently, the operation of automated accounting management systems is characterized by multitasking and ambiguity of operation, which means that one should expect that the very decision to automate accounting entails many benefits for the company.

The economic, organizational, and social benefits of using automated accounting are unconditional. Most of the studies devoted to this issue focus on the benefits since the solution to this issue are of applied importance for the organization. In general, it should be said that the amount of accumulated scientific work in the field of automation of accounting continues to increase. In addition to Figure 4, attention should be drawn to Figure 5 in this context, which shows that automation research is multifaceted. Independent academics worldwide are exploring the applicability of the concept of accounting automation in areas such as artificial intelligence, civil engineering, transportation systems and telecommunications, robotics, and cybernetics, combined with the apparent industry of operations management. The use of automated accounting provides an opportunity to save accountants time by automating repetitive activities (Cooper et al., 2019). According to Djurovic (2021), time savings start at one hour per day, with Whatman (2021) indicating that savings are maximized at the close of the financial reporting period. In his article in Forbes, Gass (2018) comes to similar conclusions, showing that when robotic processes are used in accounting, audit time is reduced from months to weeks. This is not surprising when one considers the number of versatile tasks and the amount of information used that accumulates by the end of a quarter, half-year, or year.

Associated with significant time savings is an increase in another metric, namely labor productivity. Because of optimization, an accountant can perform more tasks in a shorter period. Widell (2021) agrees, pointing out that automated accounting increases production efficiency by up to 44 percent. At the same time, when an employee has more free time, it allows them to take on additional tasks, promoting active career development because of the employees professional development and demonstration of excellent results. In addition, accounting automation improves data accuracy by ignoring the human errors studied above.

Two other benefits of automated accounting functionality are increased security and cloud technology, both of which require separate discussion. The criterion of increased security when using automation should be considered from several angles. First, computer calculations, often protected by encryption mechanisms, reduce the likelihood of physical unauthorized access to materials: only a specialist who knows the decryption key can work with the documents. Second, the use of centralized record management systems makes it possible to instantly restrict access or completely block it in case of illegal actions. However, Rîndau (2017) and Moffitt et al. (2018) emphasize that the decision to use automated accounting generates a cybersecurity threat that exposes data to the risk of theft through fraudsters. This is hard to disagree with, given the multiplicity of ways to steal virtual information, from phishing to social engineering (Paychex, 2020; Moffitt et al., 2018). Consequently, the security of automated accounting is determined by finding an effective balance and certainly using robust encryption algorithms where even stolen data would be uninformative without a decryption key.

Disruptive Technologies

Cloud technology is becoming a severe trend in todays accounting industry, a functional advantage. On the one hand, companies have access to digital copies of documents from anywhere globally, which significantly simplifies the work. In turn, this creates a tendency for accountants to work remotely, as commercial information is made available even when working from home, subject to all cybersecurity rules. Djurovic (2019), for example, notes that 37% of industry employees find themselves working remotely in 2021, and there is a possibility that this number will grow. This fits perfectly with data from McCabe (2020), who showed that 81% of companies expect the number of remote employees to increase in the coming years. On the other hand, the use of cloud technology solves the problem of optimizing workspace. Under the Welsh government regulation, records related to accounting must be kept for at least three years for private companies and seven years for government agencies (Permanent Secretary, 2019).

These rules will not be revised until 2024, but it is unlikely that these requirements will be changed, given the international bureaucratic experience. Such a solution allows to meet long-term planning goals, preserve potentially valuable documents, and use them as evidence in case of conflicts. However, such a solution requires the company to have an extensive archive, especially if the company is significant. Cloud technology, along with accounting automation, is one of the most apparent manifestations of disruptive technologies. Strictly terminologically, such technologies include any tools, phenomena, or processes that have the potential to change the sustainable functioning of a market or industry (Smith, 2020). In other words, disruptive technologies adjust the organizational vector of enterprise development and catalyze its business evolution. Thus, automation through cloud technology allows avoiding using physical storage and conserve company space. At the same time, it means that any employee with authorized access can access the desired document without searching for the physical original.

Another apparent positive manifestation of automation, made possible only by introducing cloud accounting technologies, is comprehensive integration. When documents are digitized, or initially do not have a physical original due to the electronic workflow, their employees access to them is more optimized. For example, a complete report for a fiscal year can be helpful for a manager, a finance department, a marketing department, or employees in analytics: with the proper level of access, each of them can freely access the document without the need to disturb other employees. All of these things combine to create a situation in which automated accounting is beneficial for the successful commercial development of a company. While in practice, the decision to automate accounting is not without its drawbacks and from some angles may cause more problems, in the end, it can significantly increase labor productivity and reduce the time to perform routine tasks.

For breakthrough technologies, however, it is fair to point out their strictly ambiguous impact on enterprises, industry, and the market as a whole. In fact, inventions such as cloud computing and artificial intelligence integration that simplify the way work tasks are performed can have some drawbacks. For example, breakthrough technologies are rarely perfect in the initial launch stages, so that businesses may experience financial and technological difficulties operating them (IET, 2021). In addition, imperfections can cause low productivity, mainly if technical delays result in software outages. It should not be forgotten that the low testability of such developments is often associated with a higher market price for the technology and low reliability (IET, 2021). Finally, it is not unlikely to be a scenario in which investing in a particular disruptive technology ultimately proves strategically unwarranted if the tool does not have sufficient viability and competitive advantage.

Benefits and Weaknesses of Technology/Automation

Against the backdrop of the apparent benefits of automated accounting, a sensitive issue becomes determining the role of the accounting department employees shortly. On the one hand, it is natural for an entrepreneur to optimize the operational structure to show the best results at the lowest cost. From this perspective, the choice of automated accounting seems to be a viable strategy that will achieve the desired commercial results and, according to Kokina & Blanchette (2019), significantly reduces the risk of human error. On the other hand, performing routine tasks on an automated level does not eliminate the need to monitor and proofread them when necessary. An entrepreneur who invests in stand-alone computerized accounting alone will almost certainly ultimately fail due to the impossibility of using automated accounting alone. Thus, the apparent problem is determining the balance between digitalization and employee retention.

If one pays attention to current market trends, it is clear that automation is already very much integrated. This can be confirmed both by the total market volume and by the constantly emerging and evolving software. For example, Wadhwani & Sahas (2019) comprehensive report indicates that the automation market will reach $5 billion by 2024. Reportlinker (2021) gives a more accurate estimate, adjusted for changes caused by the COVID-19 pandemic: according to the report, the marke

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