Generic IT Skills for Accountants in 2022

Generic IT Skills for Accountants in 2022

Accountants, whether they are working in CPA firms, corporates or organisations, are usually faced with heavy workloads as well as pressure under deadlines and ad-hoc duties. Being able to use information technologies and/or software applications smartly and strategically could assist accountants to enhance productivity, reduce workloads, and improve operational efficiency and quality.

In this article, four common types of technological business applications and skills required are introduced. While these are solutions to fundamental issues, some of their functions may require advanced accounting and IT knowledge. Self-learning materials can be quite easily found and obtained from the Internet at a low cost or even for free. Readers can learn and equip themselves with any of these IT skills whenever and wherever you want. What you need to consider are time, self-motivation and commitment.

1. Accounting Software

Accounting software is a common type of business application, they are used by many small and medium sized companies or organisations with simple operations, such as trading firms, service providers or companies with several investment properties for rental purposes.

Accountants are usually required to record master data, including general ledger accounts, customers, suppliers, product items and currencies, and transaction data, including adjusting entries, cash collections and payments as well as transactions of sales, purchases and payroll with accounting software. Unlike manual accounting, most or even all the computation and data consolidation processes are completed automatically and systematically by accounting software. Based on the system settings and built-in formulas in accounting software, journal entries of cash collections, cash payments, sales, purchases and payroll, inventory records, ledger accounts and their balance, financial and managerial reports can be generated and presented on screen in a couple of seconds with several clicks.

Understanding how to use an accounting software application, no matter which brand or whether it is cloud-based or not, is one of the fundamental and essential IT skills of an accountant nowadays. You are suggested to spend a couple of hours to learn how to use an accounting software application after completing Module 1 “Accounting” of the HKICPA QP Examination or a fundamental accounting course.

If an accountant is familiar with a particular brand of accounting software application, he/she is likely able to understand how to use another brand’s accounting software application shortly with a brief introduction provided by his/her colleagues. Under the same circumstances, the accountant would likely be able to use some of the basic accounting functions of an enterprise resource planning system.

2. Enterprise Resource Planning (ERP) System

ERP system is an integrated system which combines several business systems and their data together, such as accounting software, point-of-sales (POS) system, production and material planning system, human resources and payroll system and fixed asset management system. Normally, ERP systems are usually adopted and used by multi-national firms, big companies, governments, NGOs and universities.

ERP systems usually provide more advanced accounting functions and system controls compared to accounting software. Many functions and system controls of ERP systems can be classified as best practices which have been adopted and used by some successful corporates and organisations.

Accountants are usually required to use some of the following specific functions of an ERP system:

(i) Budgeting – for budget planning and budgetary controls. Some ERP systems are able to send prompts if a particular expense has already reached the budgeted amount. By enabling a specific system option, ERP systems are able to reject any transactions with over-budgeted item(s) if no discretionary approval has been made by an authorised staff;

(ii) Multi-currencies – for recording transactions with foreign currencies, revaluating account balances with foreign currencies, determining realised and unrealised exchange gains or losses, translating account balances from the functional currency to a reporting/presentation currency for financial reporting and analysis purposes;

(iii) Analysis codes – for allocating revenue and operating costs among departments, operating units, projects or even products with pre-defined rates or a specific allocation base, and performing financial analysis with a particular analysis code, multiple analysis codes or a matrix of analysis codes (with different levels and aspects); and

(iv) Reporting tools – for designing financial reports with specific formats and layouts. Without understanding some technical database commands and programming codes, accountants could easily retrieve opening and closing balances or the year-to-date amount and/or month-to-date amount of any general ledger accounts, whether it be the current year or previous years, with some simple code and parameters. Some of the ERP systems even offer their reporting tools as an add-in program of MS Excel, allowing accountants to calculate subtotals, do further computations and/or manage report layouts more easily in MS Excel.

Some ERP system vendors offer different certification programs to users, accountants, business consultants, IT consultants and technical staff.  Through participating in professional system trainings and preparing for the certification examinations, accountants can understand every key system features and functions, best business practices, and interactions between system modules and functions of a particular ERP system. ERP certifications are well recognised in the business world, some corporates, organisations, CPA firms and IT advisory firms recruit some accountants with the requirement or preference that job applicants should be current holders of ERP certification(s).

3.       Spreadsheet Application (especially Microsoft Excel)

Spreadsheet application is another common type of business application, and it can be used in different ways in daily business operations:

(i) preparing business documents, such as sales invoices, delivery notes, cash reimbursement forms, etc.;

(ii) storing data as a data table, such as customers or members, suppliers, sales, purchases, cash collections, cash payments, etc.;

(iii) preparing financial statements, financial analysis, budgeting and forecasting;

(iv) creating worksheets for calculating depreciation expenses, loan payments and related interest expenses;

(v) creating worksheets for preparing consolidated financial statements for a group of companies; and/or

(vi) visualise data and interpret analysis results with charts or tables.

Accountants should pay attention to the following useful functions of Microsoft Excel:

(i)   Conditional Formatting – a lot of people are not aware that this function can do the following matters automatically with simple settings:

a) highlight either duplicate or unique values;

b) highlight either top or bottom ranked numeric values (such as top/bottom 10 items or top/bottom 5% of items);

c) show different icons or colours based on numeric values in different levels.

(ii) PivotTable and PivotChart - by loading some raw business data to these two functions, Microsoft Excel can assist users to group and summarise the data at the background, users can drag and drop what kind(s) of data and/or corresponding total should be presented in the PivotTable and/or the PivotChart with several clicks.

(iii)   PowerPivot – it is a free Excel add-in function available, with Excel 2016 or later version, for data  modelling. Users can:

a) import data from different formats, such as text, CSV file, MS Access, MS SQL, a popular database management system, a table of a PDF file, a table of a webpage, or even from a Facebook account;

b) transform data patterns easily with the built-in tool, such as combining the values of day, month and year together from three different columns with several clicks (usually no spreadsheet formula is required);

c) add some calculated columns in the existing data table based on the existing data with user defined formulas. For example, adding a calculated column of total amount in a sales data table, the user is required to provide a formula once (which should be multiplying the value of the quantity column with the value of the unit price column), Excel can calculate the result and store it automatically to different rows. Users are not required to copy the formula from a particular cell and then paste such formula in another cells. This may prevent a problem of pasting a wrong formula to particular cell(s) or having inconsistent formulas in the same column;

d) link/join data with multiple data tables (without understanding some technical concepts about inner join, outer join or cross join); and

e) visualise and present data with the functions of PivotTable and PivotChart.

(iv)   Macro – if an accountant is required to prepare some vouchers, invoices, reimbursement forms or reports repetitively from time to time with MS Excel, he/she may consider using the Macro function by enabling the “Developer” tab once. By using the Macro function, the accountant could record some actions, such as mouse clicks and keystrokes, on a worksheet for constructing a template of a particular voucher, invoice, reimbursement form or report, without saving a physical file somewhere in his/her computer or in a server. A new voucher, invoice, reimbursement form or report could be generated on a blank worksheet by running a Marco with several clicks or with a user-defined shortcut key in MS Excel.

4.  Business Intelligence (BI) Application

According to the IBM, one of the most well-known IT companies in the world, business intelligence (BI) is an umbrella term for technology that enables data preparation, data mining, data management, and data visualization.[1]Some accountants are required to conduct business analysis in different aspects and present their findings to senior management regularly. BI applications are an ideal tool for these accountants as they can:

(i)   import business data from different systems or departments with different data format;

(ii)  consolidate and link data;

(iii) analyse and summarise data;

(iv) visualise and present data and findings in a dashboard, which contains data tables, charts, gauge meters and/or maps, and

(v)  upload the dashboard to a Cloud-based platform for presentation and sharing.

Many BI applications provide an interactive data drill down function for presentation, a presenter may select a specific item in a dashboard with a simple double-click function, he/she would be able to view the details of that specific item, such as a breakdown of total sales figure by region or even raw transaction data. Using a total regional sales amount as an example, where an accountant is presenting the sales performance among different regions with a bar chart, if he/she would like to elaborate on the sales performance among the countries in the Asia-Pacific Region a little bit more, he/she could double click the corresponding total sales figure or the bar under Asia-Pacific Region. If the audience would like to know more about the sales performance among the stores in Hong Kong, the presenter could do this by double clicking the corresponding total sales figure or the bar under Hong Kong.

Through understanding how an accountant can use these four common business applications in daily operations, readers may have some idea about which business application(s) and function(s) they should be familiar and equipped with.

If you are familiar with all of these business applications, you may consider proceeding to the next level, which involves exploring and learning advanced IT skills for accounting. Some advanced IT skills will be introduced in the next article, please stay tuned.

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About the author

Chris Cheng, Senior Lecturer, Department of Accountancy, The Hang Seng University of Hong Kong