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A brave new world - at least, for the brave

12th Jul 2010
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I get the impression no-one's really taking this very seriously.

When I had the audacity the other day to suggest that accountants might need to look to a future that didn't involve them actually preparing accounts I was met with - well, incredulity would be a polite way of putting it.

What I was pointing out in this blog post was that things are going to change over the next five years or so. Sorry, that's just the way it is.

I qualified in 1981. Just after I qualified I remember spending days on a cashflow forecast shortly before our audit partner appeared with a fancy Apple computer running Vizicalc. That was the last time any of us slaved over pages of A3 forecast workings trying to get them to add up!

And what about the extended trial balance? I don't think any of my under staff 25 would have the faintest idea how to do one, or know what it was for.

The same goes for company accounts. A large part of my professional exams involved hand writing a full set of company accounts from scratch. Does anyone do that these days? I suspect 99% are computer-generated. They are certainly word-processed. The last typist I had who could type a set of accounts retired in 1991. Ah, those were the days. You Tippexed out the figures on a photocopy of last years accounts, wrote in this year's figures, handed them in for typing, and with any luck you got them back 24 hours later. The real skill you had to learn was how to take the draft back to your typist and explain - VERY nicely- that you wanted to insert a new note half way down page 4 and could she please retype pages 5 to 27 (because the new note changed all the pagination!). Today you can have a set of company accounts from your TB in about 15 minutes!

What I should have mentioned when I referred to Xero last time is that this sort of software is now striking at the very bedrock of our profession. Yes, they are threatening to do away with - gasp - the bank reconciliation! Two things are happening here. Firstly, Xero  -and I am sure others will follow - is offering a live link between the accounting software and your online banking service. Electronic bank statement data is automatically imported daily without any human intervention, so no posting required. All you have to do is add or confirm the nominal and VAT coding.

This in itseff is going to transform small business bookkeeping. But the second change on the horizon is the demise of cheques and old fashioned banking methods. Once everything is done electronically, online or using debit cards, then the bank reconciliation becomes a thing of the past - there won't be any timing differences to be reconciled, the bank statement will be your bank balance. Ask an accountant in Holland, New Zealand and other countries that have done away with cheques. It's happening now, I reckon it will all be done well within five years from now.

So where does that leave us? Either with a big problem - or a big opportunity. It's your choice.

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David Winch
By David Winch
13th Jul 2010 08:26

Nostalgia corner

When I moved to rural Cumbria in the late 1970s some local accountants were still preparing horizontal Balance Sheets, typed on A3 paper, using typewriters with two colour ribbons so the headings could be underlined in red.  (Of course the colour didn't come out on the carbon copies!)

Memories . . . .

David

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By mikefrancis
14th Jul 2010 12:33

Where does that leave us?

For the timid and incompetent it will be seen as a problem; for the bold and the innovative it will be an opportunity.

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