Digital transformation of finance – accounting

FACTORS INFLUENCING SUCCESSFUL DIGITAL TRANSFORMATION AND THE IMPLICATIONS OF DATA SECURITY MANAGEMENT POLICY .... Thanks to technology and digital transformation, the Finance and Accoun

HCM UNIVERSITY OF TECHNOLOGY AND EDUCATION Ngô Tr n Kim Ngân ầ 21136177 Nguyễn Thị Thu Ngân 21136178 Đặng Th Pha Lêị 21136040

Thu Duc, May 2023

PROJECT REPORT SCORECARD

SUBJECT: MANAGEMENT INFORMATION SYSTEMS

ASSIGNMENT TABLE

5 Hoang Thi Quynh Ngan 21136176 Abstract, Chapter 2

100%

7 Nguyen Thi Thu Ngan 21136178 Video Demo,

INDEX

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2 Aims of the study 2

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PART B CONTENT 2 Chapter 1 ANALYSIS OF THE IMPACTS OF THE DIGITAL TRANSFORMATION PROCESS IN THE FINANCIAL -ACCOUNTING FIELD 2

1.1 Overview of Digital Transformation 2 1.2 Overview of Digital Transformation if the Financial and Accounting Sector

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1.3 Analysis of VOS viewer on factors influencing the digital transformation process in the Finance Accounting Sector 6 –

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2.1 Factors influence successful digital transformation 15 2.2 Implications of data security management policies 17

Chapter 3 PROPOSING SOLUTIONS FOR SUCCESSFUL DIGITAL TRANSFORMATION Error!

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3.1 Application of Information Technology 18

3.2 Emphasizing Information Security 19 3.3 Developing Human Resources 20 4.3 Changing Corporate Culture 21

PART C CONCLUSION Error!

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REFERENCES 23

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Digital transformation of Finance - Accounting

Trần Hoàng Mẩn, Lê Phương Minh, Huỳnh Th Trà My, Hoàng Th Quị ị ỳnh Ngân, Ngô Trần Kim

Ngân, Nguy n Th ễ ị Thu Ngân, Đặng Th Pha Lê ị Ho Chi Minh City University of Technology and Education

Abstract:

With the development of the Industry 4.0 revolution, digital transformation is one of the top keywords of “ ” interest for every country, every business, and every field Although Vietnam is still in the early stages of its digital transformation journey, there is a strong shift and change in the mindset of many officials and personnel regarding the impact of digital technology In particular, digital transformation in the Finance - Accounting sector helps improve the quality and efficiency of many businesses in this field Thus, the essay “Understanding the digital transformation process of the Finance - Accounting Industry describes the impacts that affect the ” success of the digital transformation process in every field in general and the Finance - Accounting industry in particular However, the essay also proposes some solutions to help businesses succeed and accurately carry out digital transformation, contributing to the development of the national socio-economic

Keywords: Digital transformation, Finance - Accounting, Factors affecting digital transformation, Successful digital transformation solutions

PART A: INTRODUCTION 1 Reason for writing

With the rapid development of science and technology, up to now, the advent of Industry 4.0 requires industries to adapt to the changes brought about by technological advancements, including the powerful development of digital transformation The field of Finance and Accounting also needs to change and develop alongside the advancements in technology Thanks to technology and digital transformation, the Finance and Accounting sector is gradually transitioning to more modern forms through

internet-based accounting software such as cloud computing or blockchain technology, gradually replacing traditional methods Faced with this demand, businesses are compelled to modernize and upgrade their financial and accounting domains, thus initiating an increasingly vital trend in accounting debates What advantages and challenges does digital transformation bring to the Finance and Accounting industry? What are the influencing factors in the digital transformation process, and what solutions can help the Finance and Accounting industry seize opportunities and overcome challenges in the current context,

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enabling successful digital transformation for businesses? This report will research digital transformation to meet the requirements of technological development, while also examining the digital transformation process of the Finance and Accounting industry in the present stage

2 Aims of the study

Analyzing the impacts on the process of digital transformation in the Finance and Accounting sector, understanding the factors influencing successful digital transformation, and exploring the implications of data security management policies From there, proposing solutions for businesses to achieve successful digital transformation

3 Research methods

The essay is researched by a group of authors based on reality, with specific objects and combined with many different methods:

Methods of Analysis and Synthesis Method of Induction and Interpretation Logical analysis method

4 Structure of the study

In addition to the introduction, conclusion, and references, the essay consists of three main chapters:

Chapter 1: Analysis of the impacts influencing the digital transformation process in the Finance and Accounting field

Chapter 2: Factors influencing successful digital transformation and the Implications of data security management policies

Chapter 3: Proposal of solutions for businesses to achieve successful digital transformation

PART B: CONTENT

CHAPTER 1: ANALYSIS OF THE IMPACTS OF THE DIGITAL TRANSFORMATION PROCESS IN THE FINANCIAL -ACCOUNTING FIELD

1.1 Overview of Digital Transformation

1.1.1 Concept of digital transformation

According to Microsoft, digital transformation is a business innovation driven by the explosion of Artificial Intelligence (AI) and the Internet of Things (IoT), providing new methods to understand, manage, and transform business operations Digital transformation involves applying digital technology advancements such as cloud computing, big data, etc., to all organizational and business activities, aiming to achieve high efficiency, boost revenue growth, and enhance the brand

Digital transformation in the Finance-Accounting industry involves applying digital technology to accounting tasks such as big data, IoT, cloud computing, etc., to automate accounting processes, enabling quick and efficient deployment of accounting operations, improving efficiency, and reducing costs for businesses

1.1.2 Digital Transformation and its

Urgency in the new era

Reports from major market research companies like Gartner and IDC have shown that digital

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transformation has brought significant benefits to all aspects of business operations, from management to research and sales

The most apparent benefit of digital transformation for businesses is cost reduction in operations, attracting more customers over the long term, and making faster and more accurate decisions through systems Timely, transparent reporting systems, optimized employee productivity, and all these factors help enhance operational efficiency and increase the competitive capacity of organizations and businesses

For individuals, digital transformation has changed the way of living, working, and conducting transactions For countries, digital transformation means using data and digital technology to change users' experience with services provided by the government, altering business processes and the methods of government operation

In summary, according to experts' analysis and market research, the five ultimate goals pursued by businesses in digital transformation include: accelerating time-to-market, strengthening competitive position in the market, driving revenue growth, increasing employee productivity, and expanding the ability to attract and retain customers

In this digital transformation, the financial-accounting field is one of the most profoundly impacted areas of the Fourth Industrial Revolution, especially in terms of the digitalization trend

Digital transformation in the financial-accounting field can be simply understood as applying digital technology to accounting tasks, enabling quick, efficient, optimized execution of accounting operations, and saving resources, time, and costs for businesses

1.2 Overview of Digital Transformation in

the Financial and Accounting Sector 1.2.1 Current Situation of Digital

Transformation in the Financial and Accounting Industry

From 2019 to 2021, due to the complex developments of the Covid-19 pandemic, our Party and State have issued many directives related to digital transformation to build a digital government, a digital economy, a digital society, and digital citizens According to the Department of Accounting and Auditing Supervision (Ministry of Finance), the assessment of the impact of the Fourth Industrial Revolution on the financial and accounting industry and the digital transformation process in this field shows that Vietnam is in the early stages However, surveys on the interest and understanding of professionals in the financial and accounting field regarding the impact of digital technology on their professions indicate a significant shift and change in mindset

Proactive engagement in digital transformation has helped the financial and accounting industry improve the quality and efficiency of financial and accounting management, administrative reforms,

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cost reduction, and convenience for citizens and businesses This has been highly appreciated by ministries, sectors, people, and businesses In practical applications, many financial and accounting enterprises have actively applied information technology to their work and business processes Currently, many digital technology applications have been implemented, such as electronic invoicing software, electronic accounting software, electronic sales software, electronic office software, etc In addition, businesses have allocated resources to invest in technology and human resource training to best serve their professional activities and service delivery

In state management activities, digital transformation in the financial and accounting sector is strongly emphasized by the Ministry of Finance through the creation of a legal framework that encourages businesses to adopt digital technology The Development Strategy for the Financial and Accounting Sector until 2030 reaffirms the orientation and goals of digital transformation: “Promote the appropriate application of information technology in the digital transformation process for the construction of legal frameworks and implementation in units; build databases related to finance and accounting to serve the activities of units and accounting and auditing management and supervision ”

For seven consecutive years, from 2013 to 2019, the Ministry of Finance and Accounting ranked first in the readiness index for the development and application of information technology (Vietnam ICT Index) among ministries and equivalent agencies Most recently, on August 8, 2022, at the 3rd meeting of the National Digital Transformation Committee, the Ministry of Information and Communications announced the results of the department-level and provincial-level digital transformation evaluation in 2021 (DTI 2021) In this evaluation, the Ministry of Finance and Accounting once again ranked first in the level of digital transformation in 2021 among the service-providing ministries This is also the second consecutive year that the Ministry of Finance and Accounting has led in digital transformation This achievement is the result of the persistent efforts of the entire financial and accounting industry in implementing the digital transformation strategy

Until now, 100% of administrative procedures under the jurisdiction of the Ministry of Finance - Accounting and its subordinate units have been provided with online public services Currently, the Ministry of Finance - Accounting has 464 online public services at levels 3 and 4, achieving a nearly 60% rate Among them, the number of integrated level 3 and 4 online public services on the National Public Service Portal is 296, reaching a nearly 64% rate Over 99% of businesses nationwide have used electronic tax declaration, tax payment, and tax

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refund services The electronic invoice system, Etax-Mobile, has also been implemented nationwide Recently, the Tax sector has launched a dedicated electronic information portal for foreign water providers to register, declare, and pay taxes, creating convenience, fairness, and transparency in tax registration, declaration, and payment according to international tax management trends It is expected that in the future, the Tax sector will continue to integrate data from domestic e-commerce platforms into its operations

In the customs field, 100% of basic customs procedures have been automated, and 100% of customs departments and customs branches carry out electronic customs procedures with 99.65% of participating businesses Consequently, customs declaration, information reception, processing, and customs clearance decision-making are highly automated, with customs dossier processing time taking only 1-3 seconds These significant reforms have facilitated import-export activities, bringing great benefits to the people, businesses, and the economy

It can be seen that the Finance - Accounting sector has been determined to transform into an effective digital Finance - Accounting system, meeting the requirements of development, maximizing support for people, and businesses, and enhancing management capacity, ensuring transparency and professionalism However, alongside the self-efforts of the Finance sector, the

coordination of the political system and the companionship of the people and businesses are crucial

1.2.2 Challenges Faced by the

Finance-Accounting Sector in the Digital Transformation Process

However, in reality, the digital transformation process in the Finance - Accounting sector still faces many difficulties and challenges, as follows:

Inadequate Information Technology Infrastructure: The Information Technology infrastructure for the Finance - Accounting sector in Vietnam has been invested in but has not kept up with the latest trends and has not been adequately addressed However, the challenging issue is that expanding digital infrastructure investment is not an easy task and cannot be implemented immediately, while the application of Industry 4.0 technologies in the Finance - Accounting field is rapidly progressing

Shortage of highly qualified Finance - Accounting personnel: In accounting work, human resources play the most important role as they possess extensive knowledge and are closely tied to the interests of many stakeholders The reality shows that the Finance - Accounting sector in Vietnam not only lacks quantity but also lacks quality in terms of human resources According to statistics from the Vietnam Association of Certified Public Accountants, up to two-thirds of graduates in the Finance - Accounting field fail to meet the

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requirements of employers in many aspects Moreover, in the current digital age with the emergence of new technologies, the demand for Finance - Accounting professionals is high

Data security concerns: The emergence of technology in the Fourth Industrial Revolution has completely changed traditional accounting methods and processes All data will be digitized into electronic information, and blockchain technology will become a colossal “ledger” However, in a network environment, the risk of financial and accounting information theft is high, requiring personnel and officials to be aware of these risks and be prepared for potential issues in implementing new technologies If security policies and measures are not implemented, information leakage or theft can easily occur

Outdated mindset and corporate culture: The mismatch between outdated thinking and corporate culture with digital technology innovation has a significant impact on the success of digital transformation A new culture must be established within organizations to ensure that employees trust the potential of digital transformation and accept changes to work towards the company's common goals

1.3 Analysis of VOS viewer on factors

influencing the digital transformation process in the Finance - Accounting sector

The digital transformation process in the Finance - Accounting sector refers to the application of digital technology and information technology in the financial and accounting activities of an organization or business It involves changing the way financial and accounting information is collected, processed, stored, and transmitted from traditional forms to digital forms The transformation process typically includes new methods, tools, and procedures aimed at improving efficiency and accuracy in collecting, processing, and reporting financial information Digital technologies and information technologies are applied, such as accounting software, asset management systems, data analytics tools, process management systems, automated financial reporting systems, electronic payment systems, and more

The digital transformation in the field of Finance and Accounting is influenced by various factors, both subjective and objective However, in general, the process of digital transformation in the Finance and Accounting field is an essential part of the Fourth Industrial Revolution, as humans shift from manual work to machinery, technology, data, and digitization

Based on the information from 55 articles collected by the team and the VOS chart below, the team has decided to select eight factors that influence digital transformation in the field of Finance and Accounting for research and analysis

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These factors are Innovation, application, cloud computing, cost, blockchain, organization, analytics, and management

Source: Graph from Vosviewer of the team

1.3.1 Innovation

Factor: Innovation, Source: Graph from Vosviewer of the team

In the field of engineering and technology, ‘innovation is understood as the process of ’ creating and applying new ideas, technologies, methods, or products to generate value and improvement in the areas of technology, science, and information technology Innovation is the driving force behind the overall digital transformation or specifically the digital transformation in the field of Finance and

Accounting, which has a significant impact on this process Technological innovation has contributed to the automation and improvement of financial and accounting processes Technologies such as Robotic Process Automation (RPA) and intelligent automation have replaced manual tasks, reducing errors and enhancing efficiency Additionally, innovation has provided technologies and methods for more efficient financial data management Big data technology and data analytics help organizations collect, process, and analyze financial information comprehensively, thereby providing accurate management information and supporting business decisions

The emergence of technologies such as blockchain, Artificial Intelligence (AI), and machine learning in the field of Finance and Accounting has also played a significant role Blockchain technology has provided data security and integrity, ensuring transparency and safety in financial transactions Blockchain allows for secure distributed data management Instead of storing data on a single server, accounting data is distributed and stored across multiple nodes in the blockchain network Blockchain can reduce costs and processing time in financial accounting processes The use of smart contracts on the blockchain automates accounting procedures and eliminates many manual tasks, saving time and reducing reliance on intermediaries

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Artificial intelligence and machine learning have improved data analysis, financial forecasting, and enhanced business decision-making Previously, many people assumed that accounting and financial tasks had to be performed within a company, but now innovation has facilitated the integration and access to financial data more easily and conveniently For example, analyzing value chain data in financial accounting helps identify and evaluate value-generating processes and activities in a business By analyzing data from various accounting processes, businesses can understand the factors influencing financial performance and seek ways to improve them Analyzing customer data in financial accounting helps gain a deeper understanding of customer behavior and needs By analyzing data from financial activities, businesses can develop marketing and sales strategies to optimize customer value, increase sales revenue, and enhance customer loyalty

Through mobile applications and cloud technology, employees can access and manage financial data from anywhere and on any device, increasing flexibility and efficiency in their work Cloud computing allows businesses to store and manage accounting data on secure and reliable cloud platforms Instead of storing data on internal servers, businesses can store accounting data on cloud services Cloud computing enhances the availability, security, and backup of critical accounting data Businesses can use cloud-based

data analytics tools to efficiently analyze financial accounting information and generate detailed financial reports Cloud computing enhances information management capabilities and enables real-time data-driven decision-making

1.3.2 Application

Factor: Application, Source: Graph from Vosviewer of the team

Applications and computer software play an extremely important role in the digital transformation process in the financial economy They serve as powerful tools to facilitate the rapid advancement of digital transformation in the field of economic and financial activities Financial applications allow users to easily conduct transactions and communicate online A typical example of the difference between banking operations in the past and present is that several decades ago, transactions such as money transfers, deposits, or issues like forgotten passwords or password changes required people to visit the bank and wait for their turn to be resolved However, now, through the creation and provision of SmartBanking applications by banks, users can

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quickly and conveniently perform payments, money transfers, account management, and stock trading through the functions provided on mobile applications or websites This helps reduce transaction time and eliminate barriers, creating convenience and flexibility for users

Intelligent financial applications utilize technologies such as artificial intelligence (AI) and machine learning to provide automated and intelligent solutions in the financial sector For example, financial applications can analyze financial data, provide investment suggestions, predict market trends, and optimize business decisions This enhances decision-making capabilities and improves efficiency in financial management processes

Furthermore, financial applications provide tools and processes to enhance data management and security in the economic and financial sectors These applications allow organizations to store, manage, and process financial data securely and efficiently They provide security features such as data encryption, access control, user authentication, and activity monitoring This ensures the integrity and security of financial data while complying with security regulations and standards such as GDPR (General Data Protection Regulation) and PCI DSS (Payment Card Industry Data Security Standard) The applications also enable organizations to perform regular data backups and quickly restore data in case of emergencies Strengthening data

management and security significantly increases the trust and value of customers and investors during the digital transformation process

For example, Enterprise Resource Planning (ERP) software is an exemplary financial planning and management software Dong Nai Hydropower Company has implemented and utilized web-based ERP software, one of the most modern management software in the world, for the Finance and Accounting field This software helps optimize work efficiency and plays a crucial role in the rapid digital transformation process Firstly, the company standardized data and unified work processes for digitizing information ERP provides an intelligent data storage and analysis system, creating synchronization and transparency in data As a result, managers can make accurate and effective business decisions Currently, the company is optimizing subsystems and business processes for a comprehensive digital transformation

At the beginning of 2022, the company registered for electronic invoicing and directly integrated it with the ERP system This helps the business conveniently and easily manage invoices while reducing costs associated with paper, ink, transportation, and invoice storage By eliminating the risk of loss, damage, fire, or misplacement of paper invoices, the use of electronic invoices increases efficiency and reduces environmental impact

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Source: Power generation corporation 1

1.3.3 Cloud Computing

Factor: Cloud Computing, Source: Graph from Vosviewer of the team

The next significant factor that deeply impacts the digital transformation process in the finance and accounting field is cloud computing Cloud “ ” computing technology has experienced remarkable development in recent years and is now used by almost every business, organization, and individual So, how has cloud computing affected this process?

Cloud computing enables data storage and management, replacing the traditional approach of storing information and data on local machines, which required businesses to incur significant costs to purchase additional storage capacity With cloud

computing, data can be stored on remote servers and accessed via the Internet This eliminates the need to maintain dedicated infrastructure and helps businesses reduce operational costs Financial documents, customer information, and other critical data can be securely stored and easily accessed from anywhere and on any device

Cloud computing improves efficiency and flexibility It allows finance and accounting professionals to utilize applications and services on an “as-a-service” model Instead of deploying and maintaining internal systems and software, companies can access services provided on cloud computing platforms This creates greater flexibility in scaling, reduces deployment time, and provides quick response capabilities for financial and accounting requirements

Furthermore, cloud computing provides an environment for efficient data sharing and collaboration in the finance and accounting field Organization members can access and update data directly on the cloud computing platform, facilitating easy information sharing and interaction among team members This improves teamwork processes, enhances collaboration, and reduces time wastage in workflow

Many people have concerns about the security of storing information and data on the cloud, fearing that it may be prone to hacking or unauthorized access However, cloud computing offers robust data encryption technologies, ensuring that