How has accounting changed since the 1970s?

Accounting has changed dramatically over the years. From the first IBM computers to the AI-powered tools of the present day, the world of accounting has transformed hand in hand with technological change. So, as Accountancy Age celebrates its fiftieth anniversary, we thought we’d take a whistle-stop tour of the industry milestones over the past 50 years.

1970s – Early computers

The 1970s weren’t all flared trousers and bright colours, they were shaped by political and economic turbulence, defined by events such as the Watergate Scandal in the States and the Three-Day Week in the UK. But the years weren’t all doom and gloom, especially for accountants, who began to reap the rewards of the first mass-produced microcomputers. 1978 saw the arrival of VisiCalc, short for “visible calculator”, the first spreadsheet software. The Apple II computer’s “killer app”, VisiCalc revolutionised financial modeling and sold over 700,000 copies in six years.

1980s – Changing workplace

As accountants became empowered by these new tools, the make-up of their workforce was also changing for the better. The social upheaval of previous decades had paved the way for a less male-dominated accounting industry, and by 1985, almost one third of all American accounting graduates were women. PCs had now become a part of everyday life too, with more user-friendly computers and software rapidly entering the workplace. As a result, the early eighties saw the birth of not one but two accounting software pioneers, by the names of Sage and Intuit.

1990s – Rise of accounting software

Fast-forward to the decade of the Spice Girls, Titanic and the early days of the internet, and the accounting landscape had developed into something we’d recognise today. Many accounting tasks had been automated and computers were used by the majority of businesses. Meanwhile, firms like Sage had broken North America, with the acquisition of leading desktop accounting software, Peachtree, ultimately securing a multi-million pound valuation and entering the FTSE 100.

2000s – Scandal and regulation

The fall of Enron, once labeled by Fortune as “America’s Most Innovative Company”, shook both Wall Street and the accounting industry. The scandal brought down Arthur Andersen LLP with it, previously classed among PwC, Deloitte, EY and KPMG. In short, both Enron and Arthur Andersen had hidden Enron’s losses and made the firm appear more profitable than it really was. New laws came to action in the wake of the scandal, with heightened consequences for fabricating financial statements, along with fresh compliance measures and closer attention paid to accounting firms’ ethical conduct.

Present day – Cloud accounting and AI

After the instability of the noughties, the 2010s have brought with them the accounting industry’s most significant change yet. With the advent of cloud accounting tools, first with Xero in 2006, then new products from Quickbooks and Sage, accountants and businesses can now access their accounts regardless of location, on any device.

At the same time, artificial intelligence now has very real, practical applications across a range of industry sectors, thanks to advances in computer processing power and the volume of data to play with. Take Fluidly’s real-time cashflow forecasting software, which combines AI with financial modelling to produce a forecast that’s always up to date. By connecting to an accounting package, Fluidly applies its bespoke cashflow algorithms and machine learning, and uses accounting platform data to automatically build a detailed baseline cashflow forecast.

It’s no secret the accounting industry has come leaps and bounds in the past 50 years. For companies to remain competitive, it’s crucial they continue to move with the times. Find out more about managing cashflow with Fluidly.