Technology trends for accounting firm leaders

By Sarah Ovaska-Few

Technology advances can help today’s accounting firms satisfy the demands to be faster, smarter, and less costly.

But the choices can also be overwhelming, with no shortage of new accounting software and upgrade options coming to market, said Brian Tankersley, CPA/CITP, CGMA, a Tennessee-based accounting technology consultant.

Firms that don’t embrace change put themselves at risk of being left behind.

“CPA firms have become too comfortable with just staying with what they have and not dealing with change,” he said.

Tankersley, a consultant with K2 Enterprises, gave a presentation Wednesday at the AICPA ENGAGE conference in Las Vegas on what the internet of things can do for accounting firms.

During an interview before the conference, Tankersley shared some of his observations on which technology trends accounting firm leaders need to know about.

The cloud

Tankersley said he expects to see CPAs continue a steady but slow migration to the cloud, with a transition period lasting 10 years or more. Why so long? Because while the push is still there to transfer information to cloud-based applications, he said, it’s difficult to be completely in the cloud because of high costs and limited functionality as compared to the more mature, legacy on-premises applications.

“The reality is that many of the cloud apps are more expensive and, in many cases, they have less functionality,” Tankersley said. “It’s definitely the future, but it’s a matter of figuring out when your firm is ready and safe to jump.”

In the meantime, many firms are following a hybrid model in which they’ve shifted some of their data to cloud-based providers but kept other information on more localized servers.

Staffing

Finding capable, dedicated accounting staff is a challenge at many firms, and it affects technology choices.

“You have to do more with less,” Tankersley said.

That makes workflow management and client engagement software attractive to many firms.

Tankersley expects to see several new workflow management systems come out in the next two years with features that will be able to track the status of a project similar to the way package-delivery companies such as FedEx and UPS can track packages around the world.

Tankersley said each system will have advantages and drawbacks, and that firms need to think carefully when adopting them.

He jokingly compared it to choosing a life partner.

“You better like what you’re going to pick because you’re going to be with that partner for a long time,” Tankersley said. “And it’s going to be expensive to switch.”

Because so many firms frequently experience staffing shortages, Tankersley expects to see more basic work outsourced, a process that he said is already happening at large firms using overseas offices. He thinks that will happen more in midsize and small firms.

Technology and workflow management systems will be key in making sure that transition goes smoothly and that client information remains protected.

Cybersecurity

With cyberattacks getting more sophisticated by the day, firms need to continue to be diligent about how they protect sensitive information.

That means having policies that emphasize safe technology practices (no putting clients’ data on open networks, no clicking on links in email messages) and vigilance at ensuring firm networks aren’t open to attack, Tankersley said.

Outsourcing IT

One of the recurring questions Tankersley gets is whether firms should outsource their technology assistance or build up an in-house department. The answer depends a lot on size, he said.

A firm with a few associates can get a better value by hiring an off-site company to help with technology needs. But the larger a firm gets, the more financial sense it makes to have in-house help.

“When you’re getting past 100 [employees], it almost always makes sense to have some IT in-house,” Tankersley said.

Contracting with an IT firm that specializes in the accounting profession can be hugely advantageous to a small or medium-size firm, he said.

“What you’re going to see is that it makes a lot of sense for the smaller firms to go to a hosting situation where someone else who knows your industry is handling the IT,” he said. “Most local providers have never heard of your tax software, and fewer have actually spent time supporting those solutions.”

Several IT support groups have emerged with specialties in accounting, and many of those professionals end up having incredible insight about how accounting programs work, he said.

Artificial intelligence

Robots won’t be taking over. Yet.

Tankersley said artificial intelligence, or AI, has the potential to disrupt the accounting profession, as it will in many other industries. But he thinks it will still be several years until AI is deployed in the marketplace in a major way.

“We’ve not really seen a lot of it make its way into the marketplace yet, but it’s starting to trickle in,” he said.

A major reason is that CPAs tend to deal with a lot of gray areas when it comes to evaluating assets and calculating tax liabilities. The current AI doesn’t yet have those capabilities.

“It’s going to be a significant amount of time before an initial year complex tax return with multiple positions is reviewed and approved by a machine,” Tankersley said.

Talk to colleagues

Every firm is grappling with technology changes, and Tankersley said there is a huge benefit to finding out what has worked at other firms.

Conferences offer great opportunities to talk with other practitioners about their experiences, and a chance to hear what technology upgrades others are considering.

Tankersley also cautioned that any major upgrade or technology transition will come with hiccups, and that firms and practitioners should not be discouraged if new products take a bit to master.

“We’re out there, and we’re doing the best we can with what we have,” he said. “Everyone is going to stumble.”

Sarah Ovaska-Few is a freelance writer in Chapel Hill, N.C. To comment on this article or to suggest an idea for another article, contact Jeff Drew, senior editor, at Jeff.Drew@aicpa-cima.com or 919-402-4056.

SPONSORED REPORT

Cybersecurity threats proliferating for midsize and smaller businesses

This report details how SMBs can properly protect private information from breaches, design and implement a cybersecurity policy, and create safeguards for training and education.

QUIZ

News quiz: Senate health care bill in the spotlight

Reports related to the Republican bill to repeal many provisions of the PPACA, other tax issues, and the giant AICPA ENGAGE Conference offered a diverse reading list for June. See how much you know about recent news with this short quiz.