- 10 Marks
Question
b) In the contemporary business landscape, the integration of digital technologies presents multifaceted challenges for accounting professionals, particularly in the areas of digital transformation, cybersecurity, regulatory compliance, and ethical decision-making.
You are the newly appointed Chief Finance Officer (CFO) of Fanofom Ghana Ltd (FGL), a prominent Ghanaian company that produces and exports shea butter for the cosmetics industry to several companies globally. As FGL largely deals with international customers, it is undergoing a digital transformation to enable it to operate 24/7, and thus meet the needs of its clients given the time differences around the world.
As a result, the company has recently migrated its accounting systems to a cloud-based accounting platform and implemented automation tools to streamline financial processes. However, one of the old and senior directors who described himself as a BBC, a street jargon meaning “born before computer,” has expressed serious concerns about the digital transition and associated problems such as cybersecurity risks, regulatory compliance, and ethical issues that would arise due to the ongoing digital transformation.
Required:
i) Identify and explain the challenges associated with the integration of digital technologies in accounting systems with respect to:
- Digital transition,
- Cybersecurity risks,
- Regulatory compliance,
- Ethical dilemmas. (8 marks)
ii)Recommend two remedies to address the identified challenges.
Answer
i) Challenges Associated with Digital Transformation in Accounting Systems
| Challenges | Explanation |
|---|---|
| Digital Transition | The shift to cloud-based accounting and automation requires workforce upskilling and adaptation. It introduces risks related to system reliability, data integrity, and operational disruptions. |
| Cybersecurity Risks | Cloud-based systems are vulnerable to cyber threats such as phishing, data breaches, and ransomware attacks. Implementing robust security protocols like encryption and multi-factor authentication is necessary. |
| Regulatory Compliance | Compliance with IFRS and local financial regulations can become complex with digital transactions. New frameworks for data governance and digital taxation must be integrated. |
| Ethical Dilemmas | AI-driven accounting systems and data analytics may create ethical concerns, including biases in automated decision-making, misuse of confidential data, and lack of transparency. |
ii) Remedies to Address These Challenges
| Remedy | Explanation |
|---|---|
| Training and Change Management | Conduct workshops to upskill employees, ensuring smooth adoption of digital tools and cybersecurity awareness. |
| Robust Cybersecurity Framework | Implement multi-layered security systems, including firewalls, encryption, and employee security awareness programs. |
Conclusion:
To ensure a smooth transition into digital accounting, FGL must address cybersecurity concerns, regulatory compliance, and ethical challenges. A combination of training, stringent security protocols, and regulatory adherence will ensure sustainable digital integration.
- Topic: Beyond financial reporting
- Series: Nov 2024
- Uploader: Salamat Hamid
