Accounting Disrupted

Accounting Disrupted: How Digitalization is changing Finance delivers a powerful analysis of the new technological forces buffeting the accounting profession and identifies key pathways to responding to the challenges. Al Bhimani, distinguished accountant, academic, and author, shows readers how established business fundamentals are being eclipsed and that accounting has not been spared.

You'll learn:

• How the new realities of digitalization, including big data and AI, are affecting audit work and financial management practices
• How learning fast about and from more diverse data sources is essential to the new accounting environment
• Why accounting information must start to speak to what will take place rather than about financial activities that have occurred
• What finance must do in a world of changing risks, data growth, fast digitization, and increased regulation

The author makes a compelling case that accounting now faces a crunch: it needs to reshape itself from the core because conventional financial analysis is proving too cumbersome and slow for executives in digitalized organizations. In a straightforward and illustrated style packed with case studies and practical examples, he shows readers how big data, blockchain, robotic process automation, and artificial intelligence, can help accountants adapt to new realities.

Perfect for finance leaders in both the private and public sectors, Accounting Disrupted also belongs on the bookshelves of accounting students who wish to better prepare for the technological and professional environment in which they’ll shortly find themselves.

Preface xi

Acknowledgments xv

About the Author xvii

Chapter 1 Accounting Disrupted 1

Global Forces Reshaping the Digital Economy 5

What Do Businesses Want? 10

With Great Data Power Comes Great Responsibility 12

Why Data is Growing 13

If Finance Stands Still 15

Notes 17

Chapter 2 Unleashing Digitization 19

Why is Finance Changing? 22

The Rise of Digital 24

Decision-Making and Information: A Warning! 35

Notes 38

Chapter 3 The Trouble with Finance 41

Business is No Longer Linear 43

Strategy Folklore 45

The Importance of “?s” 50

High Sales Volume Means High Profits, Right? 54

How Do New Technologies Disrupt Accounting? 56

What Now? 60

Notes 61

Chapter 4 As If Managing Costs Mattered 63

Accounting Pillars 66

A Risk from Which There is No Return 66

Volume is Half the Story 69

Growth Through Scope 76

Notes 82

Chapter 5 Learning is Everything 83

Learn Fast: Cut Costs Faster 85

Intelligent Learning 87

Push the Pedal 90

Notes 93

Chapter 6 Performance Changes 95

New Targets for Performance Management 98

Whose Performance, Anyway? 99

Operations Get Closer to Strategy 100

Incentivizing Digitalization 101

Data’s Consequences 104

Digitalization Makes All Enterprises Unlike 105

On Being Data-Centric and Intuitive 106

Predictive Performance Management 108

How to Track Digitalization 110

Notes 111

Chapter 7 Digitalization and Auditing 113

Big Data: Big Audit Questions 116

RPAs, AI, and Audits 118

Blockchain is Here 121

Notes 128

Chapter 8 Better Change Your Mind 129

Unite and Conquer: The New Data Mantra 132

What Skills? 137

Risking Digital 140

The Hidden Side of Data: Careful! 144

What “New Normal”? 147

Notes 150

Resources 153

Index 157

AL BHIMANI, PHD, is Professor of Management Accounting at the London School of Economics. He was formerly Head of the Department of Accounting at LSE and Founding Director of LSE Entrepreneurship. He is an internationally sought-after speaker and has written several books, including Management and Cost Accounting (2019).

Digital technologies and intelligent machines are enabling enterprises everywhere to reshape their businesses and the economy at large. With information available at the touch of a button, digitally enabled corporations have become agile, able to swiftly refocus their strategies and resource allocation decisions across the board.

Accounting Disrupted: How Digitalization Is Changing Finance delivers a compelling call to arms for members of the accounting profession to embrace these new technologies and techniques. Al Bhimani—accountant, academic, and author—shows readers why conventional financial analysis is proving itself ineffective in dealing with the information needs of executives in all sorts of organizations. He demonstrates how the new wave of digitalization can help accountants bridge the gap between what traditional accounting provides to executives and what they really need.

Using practical illustrations and extensive case studies, the book illustrates the key challenges facing accounting and audit professionals and identifies effective new ways to meet those challenges. Readers will discover how to use multiple sources of data and information to help them survive and thrive in the new accounting environment.

From big data to blockchain, robotic process automation, and artificial intelligence, the book demonstrates how the finance profession must adapt to and incorporate new digital technologies in order to stay relevant and useful in a changed world.

Perfect for finance leaders in public and private organizations, Accounting Disrupted will also earn a place in the libraries of accounting students who wish to better prepare themselves for the technological and professional challenges they’ll soon face. The book is an insightful treatment of the issues consuming and transforming the worlds of finance and accounting that will be of interest to everyone from mid-level managers to C-suite executives.

PRAISE FOR ACCOUNTING DISRUPTED

“Automated technologies are changing every area of business. Accounting is playing catch-up because financial reporting, costing, auditing, and information activities are all impacted. Finance professionals need to rethink how to benefit businesses that are digitally transforming. Rich with insights and examples, this book provides a very valuable roadmap for achieving this goal.”
—Srikant Datar, Dean, Harvard Business School

“Digitalization is disrupting everything, even accounting—Al’s book is required reading for all CFOs.”
—Sir Martin Sorrell, Founder and Executive Chairman, S4 Capital plc

“Accounting Disrupted will allow you to see the world of finance through new eyes. The convergence of new technologies is creating a new paradigm for the field—everything we thought we knew comes under question. Better learn the lessons from this book—fast!”
—Kamran Malik, Partner, People Advisory Services, Ernst & Young

“Innovation and agility are at the core of management decision-making today. Al’s book provides a holistic overview of what finance professionals need to know, not only to stay relevant but to lead the conversation.”
—Christopher Locke, Business Lead GS Accelerate, Goldman Sachs

“Few books have the power to shift a whole profession’s modus operandi. This is one of them. Not only is it timely, but it will transform financial management and accountancy.”
—Mthuli Ncube, Minister of Finance and Economic Development, Republic of Zimbabwe; professor, University of Oxford

“A fascinating read filled with eye-opening insights into the move to a digital world and how it is impacting and revolutionizing the way we think about accounting, the finance function, and financial management in general. This is a must-read for CFOs, other C-suite executives, and anyone working in the financial management domain.”
—Anthony Pember, Managing Director, Grant Thornton Public Sector LLC