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ACCOUNTING AUTOMATION IN DECISION-MAKING: A CASE STUDY

Prof. Ph.D. Amaya Erro Garces. Business organization department at Public University of Navarra. Campus de Arrosadía - 31006 Pamplona, Spain.

Prof. Ph.D. Inés González-González. Business Department at International University of La Rioja. Av. La Paz, 137, 26006 Logroño, Spain.

Prof. Ph.D. Cristina Alcaide Muñoz. Economy and Business Department at Alcalá de Henares University. Plaza San Diego, Alcalá de Henares, Madrid, Spain.

Área temática: A) Financial Information and Accounting Standardization

Keywords: Accounting; automation; decision-making; technology; digitalization

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Accounting automation in decision-making: a case study

Abstract

This research paper presents a new framework for automatize accounting in order to improve business decisions. This framework provides stakeholders with information in real-time. Additionally, a forecasting model to optimize fiscal and managerial decisions is also described. Fieldwork is based on a case study of a successful implementation of this automation as empirical evidence of the proposed framework. Main findings show how the automation of accounting proposed allows real-time decisions and costs and time savings in performing manual accounting entries. In this context, banking transactions are essential information in the automation process. In addition, fiscal savings are also obtained through the forecasting of future scenarios.

Introduction

Information is the main input for decision-making. In the managerial context, accounting provides useful information to managers in order to make successful decisions and particularly financial accounting is the principle source of information for those decisions. Nevertheless, this information is sometimes not available in time; thus companies are not able to adopt their decisions with complete data (e.g., Spanish financial statements – profit and loss statement and balance sheet- are elaborated in March or April, they are approved in June, and, finally, they are presented in July, whereas companies must pay their taxes in December of the past year). This situation results in an increase in fiscal payments, while a company cannot choose its best fiscal strategy, as information is not finished in time to formulate these strategies.

The delay between fiscal periods and statements presentation varies among countries. Concerning the Spanish framework, Spanish accounting regulation establishes a maximum period of 3 months for the elaboration of financial statements. Furthermore, a period of 6 months, from the end of the year analyzed, is authorized to approve these statements and one additional month to present financial statements in the commercial register. This obligation is stablished in the third part, article 2, of the Spanish General Accounting Plan, and in the Corporate Enterprises Act; the law that regulates societies behavior in Spain. Accordingly, suppliers, investors, banks and other shareholders are not able to access to real information of the company; they just acquire the last information available.

Due to the described weaknesses of financial accounting system, management accounting emerged to provide information to take decisions. In this context, financial accounting is the standard source of information for decisions of how to distribute resources among companies, whereas management accounting is the principle source of information for decisions of how to allocate resources within a company. Management accounting provides information that helps managers to control activities within the firm, and to decide what products to sell, where to sell them, how to source those products, and which managers to entrust with the company’s resources. Nevertheless, managers need more information and actual information to support their decisions.

Moreover, time is a scarce resource and this late decisions involve money loses (Leclerc et al., 1995). They affirmed that in deterministic situations, people make decisions involving

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time loses in a manner consistent with the convex loss function, proposed by the prospect theory, as they are risk-adverse. In the same line, when companies decide without the complete decisions, these risks imply money loses. These circumstances particularly affect to small and medium firms (SMEs), as these companies present more difficulties to access to financial resources. In a context of a predominance of small businesses in Spain, this problem acquires greater dimensions. At the present 99.9% of Spanish businesses, have fewer than 250 workers. For that reason, it represents a significant problem for the Spanish economic situation (Palacín-Sánchez; Ramírez-Herrera and Di Pietro, 2013).

This research paper contributes to the management accounting literature in several ways. Main contribution is to present a new framework for automatize accounting in order to improve business decisions. This framework is useful for stakeholders of a company, as it was previously mentioned. Additionally, a forecasting model to optimize fiscal and managerial decisions is described. Finally, a case study of a successful implementation of this automation is provided as empirical evidence of the proposed framework.

The article is organized as follows. Firstly, next section presents literature review about this issue. Section 3 describes fieldwork and research design. Section 4 presents the main results of the paper, where the research questions are addressed. Finally, conclusions of the research paper are presented in section 5. This section also points the limitations of the study and suggests future lines of research.

Literature review

The development of automation within organizations

Innovation is just a form of looking into the future to create new products and services before the competitors do. Every business must innovate to compete. Processes, functions, data, inventory turns and speed to market will force employees to learn a new language called innovation. According to Schumpeter (1949) innovation as the critical dimension of economic change. Automation supports innovation, thus it implies several changes in the organization.

Operations automation has interested practitioners since several years ago. The integration of electronic components such us sensors or microchips enabled new developments in manufacturing plants (Lucke et al., 2008) and support production automation. Several “Factories-in-a-Lab” and specific projects have been created for achieving these goals. The iFactory in the Intelligent Manufacturing Systems Centre at the University of Windsor, in Canada (ElMaraghy et al., 2012), the iFactory established at the University of Sttugart (Wiendahl et al., 2015), the Smart FactoryKL in Kaiserslaurtern, or the Intelligent Networked Manufacturing System (Lucke et al., 2008) are some of these initiatives.

Moreover, automation has been applied to several functions of a company. Logistic improvements, operational progresses, or even human resources methods use automation to increase competitiveness and improve results. For instance, Neumann et al. (2010) evaluated the impact of automation strategies on productivity and ergonomics, to conclude that automation of transport and assembly both lead to increased productivity. In the same line, Onnasch et al. (2014) conducted 18 experiments to analyze the effects of automation in human performance.

Several case studies have been described about automation practices. Automation in buidings, referring to the automation of lighting and energy saves, or the evaluation of automation practices in the construction sector (Ippolito et al., 2014 and Aghemo, et al., 2014) are some examples of these case studies. Automotive industry presents different experiences in this field (Bhamu et al., 2013; Rybicka et al., 2016; Villareal et al., 2017). Most of these cases present a relationship between automation and Lean method. In general, the

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manufacturing sector develops many examples of automation in operational processes (Wang et al., 2013) and most analysis focus on the advantages of automation and the effects of the elimination of time-consuming and tedious tasks. Even abstract models to support an industrial firm evolution in automation are defined (Legat et al., 2013) and automation is perceived as one of the most important industrial trends, with the Internet of Things and cyber-physical system (Wollschlaeger et al., 2017). Obviously, there is a close relationship between automation and industry 4.0. Nevertheless, not just industrial sector is involved in automation, as several initiatives have been taken in the service sector.

The banking sector leads most of these projects. For example, online banking services are based on automated processes (Al-Mudimigh, 2015). Kinsey and Newton (2016) describe in their book the new international banking system, identifying the future goals of the banking sector. Precisely, automation is a future challenge for banks while an opportunity. Not just the bank sector is affected by automation. Kassem et al. (2015) described a strategy to promote automation in the University. They showed how this university moved from a manual process of information to an automated one. Even the health sector is implied in this tendency (Qureshi and Syed, 2014), and high opportunities could appear in the implementation of automation practices in the public sector (Bin Taher et al., 2015). In this line, Bin Taher et al. (2015) proposed a ten-step change management framework to guide managers on business process reengineering and automation in a public sector context.

Recent research focused on the impact of automation in labor markets, industry and employment (David, 2015; Espí-Beltrán et al., 2017; Frey and Osborne, 2017; Leitão et al., 2016; Hao, and Petri, 2015; or Dorn and Hanson, 2015). Even implementations in farmers have been analyzed (Ortega-Reiget et al., 2017). The effects of automation on labor market -the elimination of some jobs and the creation of new jobs- is one of the most critical areas of research in the consequences of automation (Frey and Osbornel, 2015). Singh and Debasish et al. (2016) studied the current trends towards automation and its impact on jobs in some countries. Arntz et al. (2016) made a similar research for the OECD countries, finding that we find that, on average, across the 21 OECD countries, just 9% of jobs are automatable. Berger and Frey (2016) concluded that automation causes job polarization, but not net employment decline.

This research focuses on the benefits of the automation of a concrete function of a firm: the financial function. The accounting process presents several restrictions that motivates this change to automation. These limitations are described in the next subsection.

The automation of accounting practices and decision-making process: Limitations of accounting

As it was described above, accounting should overcome some problems. Time need to present financial statements, the difficulties faced by shareholders interested on the situation of a company, or the lack of information to support business decision-making are some of these worries. Practitioners developed several efforts on behalf of improving the quality of the information in the production process. The positive impacts of ERPs implantation to facilitate information flows (Gatttiker and Goodhue, 2004), the increase of information transparency in the ERP adoption (Al-Jabri and Roztocki, 2015), or the evaluation of sales profitability through the using of an ERP system (Kościelniak, 2014) demonstrate some of these beneficial impacts.

Nevertheless, accounting practices have not experienced the same interest in the academic or business environment. Wilson and Sangster (1992) pointed to several factors that constrained further technological innovation in accounting: funding, change, skills, policy, and equipment, whereas the technological skills were the most relevant constraint for the development of computers applications in this area. The automation of accounting has

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employment implications (Wilson and Sangster, 1992) and affects the role of the accountant (Jack and Kholeif, 2008). McCosh (1986) suggested that management accountants are losing their battle to technology for the provision of control information. However, since technology does not change the core management accounting process, accountants could still play a role in designing reports and in planning. He calls for a change in the management accountant’s role from interpretative to consultative.

In the same line, Jack and Kholeif, (2008) tested the conflicting beliefs about the role of management accountants. They concluded that there are significant difficulties of establishing sustainable automatized structures where there are conflicting dispositions and conjecturally specific understandings of the roles of different groups of actors within the boundaries of an organization, and specifically here the role of management accountants. This situation affects negatively to the implementation of accounting automation systems. Even more, the strategic role of these actors in a company give them more strength to paralyze or, at least, to reduce the impacts of this innovation.

Nonetheless, this situation is changing. López-Gavira and Omoteso (2013) conducted an experiment with students from Spain and England, and they concluded that students from both countries find Virtual Learning Environments tools and techniques useful for their learning. In fact, accounting automation could improve this situation, and would help companies to overcome these problems, but several constraints reduce these applications.

Decision-making process

Automation is mostly close to real time information, and technologies such as collaborative robots or ERPs. This real time information is an important support for decisions, as it offers the best evidence to adopt a choice.

Most research papers that work on mechanization analyze the role of automation in the decision-making process. For instance, the e-business model proposed by Al-Mudimigh for Citibank automate bank services and several business decisions. Aviation systems are a traditional case of automatic decisions (Wiener and Curry, 1980; Sarter and Woods, 1992; Hilburn et al, 1997; Bliss, 2003; Metzger and Parasuraman, 2005; Dixon and Wickens, 2006; Moisier and Skitka, 2018 and Billings, 2018). Trentham and Scholl (2008) revise automation techniques in the public and private sector, to conclude that these techniques improve productivity and efficiency in organizations. Parasuraman and Wickens, (2008) identify the optimal levels and stages of automation.

Skitka et al. (2000) showed the responsibility of errors in automated devices. They proposed measures to reduce “automation bias” that provokes these errors. These scholars also analyze “Automation bias” in decision-making contexts. Huber (1990) designed a theory of the effects that computer-assisted communication and decision-aiding technologies have on organizational design, intelligence, and decision-making. Even theoretical models are defined in order to design the most effective decision-making process, considering automation. For instance, Parasuraman (2000) outlined a model with different levels of automation. On the other hand, Cummings and Bruni (2009) developed a model to assign decisions to humans or computers.

Focusing in our area of interest, accounting is highly close to manager’s decision-making process. In the specific case of the financial function, decisions are highly relevant for the implications they have in the future of a company. Investments, expenditure or even employees future depend on these decisions. Thus managers must take decisions supported with the best information available. As it was mentioned, the last financial information is not available in time, and decision-making process is affected from this situation. Moreover, not just managers are implied, but also other shareholders. They need information of the

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company to decide their investments, to supply the company, or even to work for the firm. As a result, from the implementation of accounting automation, accountants would change their role from the historian to a role combining bookkeeping and decision support (King et al., 1990). However, Quattrone (2016) considered that the effects of the digital revolution on management accounting and decision-making are still unclear.

Accounting automation previous research

The automation of accounting practice has been studied in the management literature in the last years. The effects of this automation in employment (Wilson, 1991) or the limitations in graphical analysis (Remus, 1987) are cited as disadvantages of using advanced computer technology in accounting. On the other hand, some research focused on the importance of automation in auditing and decision support (Abdolmohammadi, 1987). The digitization of financial data has led to the development of computer-based accounting information systems capable to converting accounting data into valuable information in a fraction of the time that it would take to do so manually, and it helps to reduce the cost of managing financial information (Wilson & Sangster, 1992). King et al. (1991) pointed to the advantages of accounting automation as it allows companies to make information provision more proactive, such they can complete historical reports with actual information. They affirmed the utility of this proactive information in financial forecasts that are essential to make decisions.

In the same line, Burritt and Schaltegger (2010) sustain that accounting should be orientated more towards improving management decision-making. Automatize accounting tasks would provide firms with more actualize information; therefore they will be prepared to decide with the whole information about their situation. Some experts define the link between accounting and strategic decisions as MAS; formal system designed for providing information to managers (Bouwens and Abernethy, 2000). The use of decision models requires information to be aggregated. According to Gordon and Miller (1976) and others (Chenhall and Morris, 1986; Mia and Goyal, 1991), four dimensions of MAS -scope, integration, aggregation and timeliness- can be defined. Information by functional area (i.e. summary reports on activities of other business units, or other functions of the organization), by time period (e.g. month, year) or through decision models (supporting marginal analysis, inventory models, DCF, what-if-analysis, cost-volume-profit analysis) provides managers with information about the outcomes or results of decisions made in other departments.

As stated by Solana (2014), the complexity of nowadays organizations require the use of the most advanced technology. Numerous studies (Brynjolffon et al., 1994 and López Sanchez, 2004) support the theory that ICT use increases the productivity. On the other hand, according to Lempinen and Rajala (2014) information technology (IT) facilitate the creation of business value in the organizations. In this context other authors have focused their reviews in the way that digitization affects accounting and implies changes in accounting information. Bhimani (2006) focused on emerging concerns in management accounting and digitalization. Bhimani and Willcock (2014) defended that digitalization creates new possibilities for enterprises. They pointed to the potential of Big Data in relation to the financial function. Even more, as they concluded, “the possibilities for the digitally enabled business create a range of information literacy challenges as well as new possibilities for accounting information providers”. Power (2014), Duan and Xiong (2015) and others analyze the opportunities of Big Data in decision-making, and in creating real value for organizations. Big Data analytics can be helpful, according to Cokins (2014), in providing sales and marketing with more reliable information. Gray and Alles (2015) suggested the use of data fracking to move into more strategic roles. Also, Conesa (2019) studies automation in audit area.

In summary, accounting automation research has concentrated in analyzing advantages and disadvantages of technology in accounting practice, and has pointed the opportunities of improving decision-making though the use of computers. However, the automation of the

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accounting process and its applications in decision-making has not been sufficiently considered in the literature, which is, precisely, the contribution of this study.

Questions as which should be the maximum time to arrange accounting data (RQ1), which procedures should be prepared in order to automatize accounting (RQ2), or even if a framework could be defined to create an automatized accounting (RQ3) are considered as the research questions of this paper. To answer these research questions, in the next section, fieldwork and research design is presented and discussed.

Fieldwork and research design

The aim of this research paper is to present a new framework for automatize accounting in order to improve business decisions, as it was pointed in the introduction section. To deal with this objective, fieldwork included the identification of innovative accounting software, a face-to-face meeting, messages and informal contacts with the designer of this accounting software, Mr. Ray Fernández Rupérez, and its team, through the use of a semi-structured interview (Qu and Dumay, (2011).

Mr. Fernández is the co-founder and chief executive of Proyelia, which helps organizations adopt the best practices in Business Engineering, through modern management and technology. His strong background as a consultant has led Mr. Fernández to pursuing efficiency and effectiveness, improving the productivity of thousands of professionals in the Basque Country for years. Several informal contacts were maintained with Mr. Fernández in order to prepare a face-to-face meeting. A face-to face interview was practically the best methodology a study of this type could use, so authors could analyze and understand perfectly how this software works, and any doubt was posed and clarified immediately. Multiple research studies keep the reliance on this type of methodology (Cabiddu et al., 2014; Stamati et al.,2015; Gutierrez-Gutierrez et al., 2016) in fact, it has long been the dominant interview technique in the field of qualitative research (Opdenakker, 2006). Unlike other interviews, face-to-face interview is characterized by synchronous communication in time and place, which allows creation of human rapport and, in turn, allows for more in-depth data collection and comprehensive understanding, since stimulus material and visuals aids can be used to support the interview (Opdenakker, 2006).

In the last years, Mr. Fernández realized that organizations invest huge resources in inefficient accounting systems, which is a significant limitation for SMEs, due to their scarce funds. With this idea in mind, he created a new software based on the following three statements.

Statement 1. Accounting principles

Currently, the Spanish General Accounting Plan sets out six mandatory accounting principles to develop accounting statements; the so-called Generally Accepted Accounting Principles, (GAAP). However, it does not have preference for any principles; they are not prioritized. The plan just establishes that, in the case of conflict between them, the one that expresses best a true and fair image of the organization’s equity, financial position and results must lead. (General Accounting Plan, 2007). In this respect, and focusing on SMEs and theirs limitations, Mr. Fernández developed a new accounting system in line with the previous accounting principles (true and fair organization’s image) and, in combination with a the Weberian concepts of bureaucracy (Weber, 1946): efficiency, predictability, calculability and control through non-human technology (Lapsley, 1999).

Mr. Fernández believes that although each organization has developed an own accounting system, they are often effective but not efficient. He claims that these systems need too many resources (time-consuming and money-consuming) due to high internal bureaucracy.

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From his own experience, he believes that “managing accounting and fiscal requirements of a company may imply an expenditure of around 13% to 16% of the total expenses of the company”.

Therefore, on this basis, he decided to develop a new accounting system based on innovative software, which automates a large part of accounting processes, simplifying accounting tasks and offering information in real time. In fact, Mr. Fernández´s system automates around 90% of accounting entries and supports predictions, as it will be detailed in in following pages). Therefore, this new system helps the organization to speed up the accounting process, minimizing resources required at the same time.

Statement 2. User-focused

Many research studies have tried to develop theoretical models to identify factors that drive the consumer´s attitude towards technology and how consumers use and accept technology (Plouffe et al., 2001; Gounaris and Koritos, 2008), since it represents a major concern for both academics and experts (Antoneli et al., 2016). In this regard, the most popular theoretical model to understand the use and acceptance of technology from consumers is the Technology Adaptation Model (TAM), developed by Davis (1989). This model focuses on the evaluation of factors that influence people’s attitudes and intentions, besides it has been successfully used in several technological adoptions, such as the implementation of online banking (Al-Somali et al., 2009), web-based training models (Hashim, 2008) and the use of Internet on tourism industry (Castañeda et al., 2009).

According to Davis (1989), the adoption of Information and Communication Technology (ICT) is based on two main characteristics: Perceived Usefulness (PU) and Perceived Ease of Use (PEOU). The former indicates the degree to which the person believes that using a particular system will improve their job performance, and the latter is related to the degree to which a person believes that using a particular technology will improve their perform with less effort while performing their duties. The combination of this two characteristics leads to both greater perception of value and greater intention to use. Following this logic, Mr. Fernández developed a system whose interface is similar to Excel (see Figure 1a and 1b), so he tries to facilitate its adoption, reducing an unwelcome conduct from users. Some information in the Figures are blurred because of the confidentiality.

Figure 1a: Accounting scorecard and profit and loss account

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Figure 1b: Journal and general ledger

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On the other hand, this system has not only a visually appealing format, but is also extremely functional. Mr. Fernández claims that organizations allocate around 16 per cent of their resources on administrative formalities, which is significantly reduced with his system, as 90 per cent of accounting tasks are automatized. For instance, in the current accounting systems, information about any transaction must be entered manually; however, Mr. Fernández realizes that nowadays the higher volume of accounting entries is related to banking transactions, which are mentioned in bank statements. In this sense, Fernández’s system allows users to import all this information with a simple click of the mouse and each accounting entry is developed automatically. Now, users only need to classify each invoice with a specific nomenclature provided that invoice is new to system concerned. If it has been imported previously, system will classify it automatically, besides any error or, even new invoices (without classification) will be notified by system. Prior to that, user must create two files, one with invoices issued, and the other with incoming invoices, where he or she may check invoice status.

In case a transaction needs special attention, such as loans, payroll or the depreciation of an asset, user may configure it in a new Excel sheet (see Figure 2), he or she can open as many sheets as needed, depending on organization needs. However, this system offers a

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second option; user may enter any transaction manually for particular transaction. As a result, this system helps organizations reduce administrative load, resulting in an efficient accounting system. In fact, according to Mr. Fernández, “workers only need to spend four days per year to develop the accounting statements, even if the user has to be in charge of accounting tasks of more than one organization. In fact, at present, I take care of accounting statements of eight organizations, at once, using this system, and I only spend one day per trimester to accounting tasks, and it is enough”. Once all accounting information is entered in the system, at the end of the year, user only must push a button to obtain accounting statements.

Figure 2: Automatic accounting entries

On the other hand, Mr. Fernández estimates that the number of accounting entries for SMEs, in current accounting systems, is around 1,820. However, his accounting system, based on efficiency, simplifies it, as it only shows active account, offering just the needed information. In this regard, Mr. Fernández declares “his system only shows active accounts belonging to group 3. If the payment has been done, accounts related to group 3 is not entered, it is not necessary. However, in current accounting systems, a transaction related to the purchase or sales of goods, for example, is entered with two accounting entries when the first one may be deleted without missing information and affecting true and fair organization’s image”.

Statement 3. Forecasting

Finally, according to Mr. Fernández, this system not only offers a simple and effective way to develop accounting statements, but also allows organizations to anticipate events, facilitating decision making process as well as consulting support, as it may be used as a forecasting system. For instance, profit taxes could be optimized by estimating the results of the following years. Even more, amortization decisions can be also decided, according to managerial criteria.

The Accounting Cycle

Figure 3 describes the differences between the usual accounting process and the automatized process proposed:

Figure 3: Traditional Accounting Cycle versus the proposed process

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Both transactions entries and reporting elaboration are substituted by automatic processes. This automation implies a reduction of the number of tasks developed by the financial department (time saving) and an immediate access to statements as they are provided in real time.

To sum up, empirical evidence of the implementation of a new framework for accounting automation is presented though the experience of Mr. Fernández, co-founder of Proyelia, an innovative company located in Spain. This automation framework is based on Mr. Fernández´s own experience in the elaboration of financial statements and the need of time and resources saving in this process.

Results

As it was mentioned, time saving was the main objective for the adoption of a new framework to simplify the elaboration of financial statements and accounting1. In order to achieve this goal, the frequency of data entries should be maximized. By so doing, an employee does not required to stop his or her activity to engage on accounting tasks. This situation implies a reduction in interruptions and, consequently, an increase in productivity. While on the other hand, fiscal obligations define the maximum time needed to acquire accounting information. Whereas accounting obligations are completed annually, fiscal requests involve trimestral requirements (as VAT must be paid every three months); such accounting should be completed in time to estimate this tax. As a result, three months is the maximum period to arrange accounting data (RQ1). In fact, an employee can be involved in accounting every three months and not daily. Time savings are relevant by the concentration of accounting tasks and fiscal requirements are achieved.

Regarding the procedures required to automatize accounting, banking transactions have a central relevance in the automation process. As banks are involved on strategical digital

1 As it was mentioned in the last Section, Mr. Fernández estimates that managing accounting and fiscal

requirements of a company may imply an expenditure of around 13% to 16% of total expenditure.

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transformations (Martins et al., 2014), companies´ transactions are digitalized by banking services. Consequently, companies can easily access to their transactions though banking platforms. These online transactions are the main information for the proposed framework. Most manual transactions entries are substituted by banking transactions and they are automatically classified in the corresponding account. Just several transactions require manual entries (e.g., loans and depreciation). On the other hand, financial statements and tax reports are automatically elaborated from the mentioned transactions and follow the official requirements. In conclusion, the process and procedures described are quite simple and are based on banking services (RQ2).

Finally, as it was described in the Fieldwork and Research Design Section, a framework can be defined to create an automatized accounting. Fiscal obligations are should be taken into account in order to develop this automatized accounting and fiscal deadlines are critical to define procedures in the automatized system (RQ3). In fact, Mr. Fernández´s accounting system was designed following these objectives:

Objective 1. Solve managing, accounting and fiscal requirements

Objective 1.1 Manager´s requirements: “how is the business going?”

Objective 1.2 Accounting requirements: financial statements

Objective 1.3 Fiscal requirements: taxes payments

Objective 2. Cost minimization, which implies time minimization:

Objective 2.1 Minimizing the number of times a practitioner should involve to accounting tasks throughout the year (statement 1, efficiency). Fiscal requirements (VAT, every three months) determine the optimal time to arrange accounting data.

Objective 2.2 Maximizing the automation opportunities, reducing time invested in administrative tasks (statement 2, automation).

The automation of accounting presented helps the CEO in the decision making process, as it provides accounting information in real time (just as happens in a Smart Factory or the Industry 4.0). This information is valuable for offering the economic situation of the company (“how is the business going”) based on the very last data and for taxes minimization, as it provides forecasting of future scenarios. Managers can decide investments or even depreciations according to these predictions. On the other hand, as it was mentioned, monotonous tasks such as conducting accounting entries are automatized which implies significant time and resources saving.

Finally, accounting and fiscal requirements are achieved, as the automation process includes the elaboration of financial statements (e.g., profit and loose statement and balance sheet) and fiscal forms. Furthermore, these reports are automatically elaborated by the software so errors are minimized and also time invested on this activity is also reduced.

Conclusions

The automation of accounting provided multiple advantages. It reduced restrictions that small and medium companies face to access to financing. Additionally, it improves banking conditions for these firms, and, consequently, the cost of finance. Accounting automation also helps companies in decision-making, as they access to real information in time. Suppliers, competitors, shareholders and other stakeholders benefit from this implementation, as they are able to obtain improved information of the company.

This research paper presents a new framework for accounting automation that could help managers and other shareholders in decision-making. According to Inchausti (1997),

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accounting information is subject to the influence of market pressures and pressure from regulatory bodies. Nevertheless, this research demonstrates that several improvements can be achieved in this field. Firstly, frequency required to perform the accounting entries is maximized and just once per three months employees should complete these tasks. Even more, time savings are obtained from the automation of accounting entries as 90% of the entries can be automatized. Secondly, decision making is improved as decisions are made from data in real time, just like as in a Smart Factory. Stakeholders can also access to real time information. Thirdly, taxes can be minimized as a result from the forecasting obtained from the automation software. Fourthly, banking transactions are considered as the main input in the procedures required by the automation process. Finally, time saving, resources saving and tax saving are obtained as a result of the automation of accounting practices.

This research presents a number of limitations. Firstly, the fieldwork presented is based on a case study, which do not allow for generalization. Additional empirical research should be conducted to expand the conclusions proposed and contribute to the research on the topic. An extension of this study encompassing a greater number of case studies could be done to confirm the findings. In this sense, further research can focus on the automation of the relationships between companies and the public sector to reduce bureaucracy and costs, and the role of accounting and fiscal forms in this context.

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