The change in technological trends affecting how financial services are delivered in Deloitte’s latest annual life sciences accounting and financial reporting update. Overall the report addresses issues affecting finance professionals, especially those engaged in biotech, medical device, and pharmaceuticals.
Accounting for the pharmaceutical and life sciences industries is a specialist area that requires expertise and an understanding of the sector. There are also complex rules to follow, such as those from the International Financial Reporting Standards.
The report notes that emerging technologies hold the promise of transformative opportunities for life sciences companies. This could be through fostering new scientific breakthroughs, for example.
One way by which accountancy and financial reporting are changing is through the use of artificial intelligence; these platforms particularly suit the complexities of the pharmaceutical sector.
Artificial intelligence systems can be very powerful and the available technologies are improving quickly. Platforms can provide outputs that can be extremely accurate; moreover, they can replace and, in some cases, far superseding human efforts.
In light of this finding, major accounting software vendors (Intuit, OneUp, Sage, and Xero) currently offering capabilities to automate data entry and reconciliations. Here artificial intelligence is being used to digest and analyze large volumes of data at speeds well beyond what any person or team of people could do.
Another area of consideration for major companies in the healthcare and pharmaceutical space is how to address changing accounting standards, such as new requirements for revenue recognition, leases, and the definition of a business. The area of research and development, for example, is mired in complex financial rules. This includes consideration of acquisitions and divestitures; plus, consolidation, contingencies, income taxes, and financial instruments.
Technological changes from within
Changes in technology also affect the way that internal costs are affected in pharmaceutical companies. The Deloitte report describes how life sciences entities need to enhance their existing information technology systems in order to be competitive in the future. Here each company will need to consider the business ramifications (including the impact on existing processes, systems, and controls) and the requirements of system users (such as the entity’s legal, tax, financial planning and analysis, real estate, treasury, and financial reporting functions).