Survey Highlights Emerging Tools for Firms of All Sizes


One of the clearest ways for firms to increase profitability is to become more efficient.


Because technology can enhance productivity, the 2010 PCPS/TSCPA National MAP Survey asked firms how they are keeping up with software and hardware developments, including paperless systems, multiple monitors, time and billing software, client portals and social media, among others. (For a breakdown of survey results, see Exhibit 1.) For information about other sections of the survey, see “Hitting the Target: National Survey Looks at How CPA Firms of All Sizes Stack Up,” in this issue, page 22.


Unlike other portions of the survey, the technology questions that are asked change each time it is conducted based on current trends, so information from previous years is not included in this article.


Time and billing software was the No. 1 most-used technology, reported by 76% of all firms. Although this is not surprising, according to Jim Metzler, AICPA vice president–Small Firm Interests, he said what is surprising is that 24% of firms don’t use it.


“They could benefit in a huge way if they just used it as an estimating or cost system,” he suggested. (For examples, see the “Time Is Money” section of this article.)


Larger firms—those with at least $750,000 in revenue—reported even higher use (94% of firms in the $750,000 to $1.5 million revenue range and 100% of firms with $10 million and up, compared with 66% of those with $200,000 to $500,000 in revenue and 37% of those with less than $200,000).


Multiple monitors was the second-most popular technology, at 71% overall; and an “active/maintained” website came in third, at 66% overall, though the percentages again were much higher for the larger firms (see Exhibit 2).


The least common technologies were those used to enable the outsourcing of write-up work and tax returns at 2% each—though 7% of the largest firms reported outsourcing tax return work. Only 4% overall reported having blogs (including 20% of the largest firms) and 14% using social media (see Exhibit 3). The use of social media by larger firms is significantly higher—24% of firms with $5 million to $10 million in revenue use it compared with 44% at the largest firms with $10 million and above.


If blogs turn out to be a cost-effective way to promote firm expertise and reinforce client relationships, smaller firms may begin to use them in greater numbers, according to Metzler.


“It’s reasonable to expect that smaller firms will branch out into social media based on what they learn from larger firms’ efforts,” he said.


Coming in at the middle of the pack were allowing remote access to the firm’s network (62% overall use), having a paperless work environment (52%), accepting credit cards (45%), having client portals (28%) and using scheduling software (16%).


The JofA interviewed CPAs about how they are using some of these technologies to gain efficiencies and improve business. Following are some of the anecdotes and advice they provided to others who may be considering investing in these tools.



The survey did not define paperless, and most CPAs interviewed for this article said that the move to “paperless” took a few years. Only 35% of the smallest firms reported they have a paperless work environment, compared with 86% of the largest (see Exhibit 4).


The term “paperless environment” isn’t just about document management and retrieval but also about the ability to automatically identify bottlenecks and decrease cycle time, especially in the seasonal tax preparation business, Metzler said.


For example, using electronic workflow applications to track the status of tax returns can let a partner see what stage of the process each return is in and who in the firm is currently working on it instead of walking around the office searching for client folders and piles of paper. If the bulk of the returns are in review stage, for example, the partner can shift some of the preparers to that stage.


“The quicker you can move things through the system, the more profitable you’ll be,” he said.


Five years ago, when Jacquelyn H. Tracy and her partner started their Providence, R.I., accounting firm, Mandel & Tracy LLC, they knew the importance of standardizing the tax preparation process before moving to a digital environment. This would ensure that all seasonal employees could follow the same procedure—from the receipt of client workpapers to electronic storage of the returns in GoFileRoom, a Thomson Reuters product that integrates with their tax prep software, GoSystem Tax.


“You need to sit down and think about what you want to do and what makes sense for your practice and your client. [But] make sure you get the people involved who are going to be using it,” Tracy said. “Draft a plan and present it to them so they can ask questions, otherwise they won’t use it. Preparers are the ones who are going to live in it every day and will tell you the steps that don’t need to be there, and you need to be willing to listen. People will support what they help make.”


During the first year of moving toward a paperless environment, one of the biggest challenges Tracy experienced was figuring out how to use the electronic system and grasping its capabilities.


“It was apples to oranges, things didn’t look the same. We had dual monitors and were getting accustomed to that,” she said. “Staff people [adapted] more easily because they hadn’t worked for years and years with paper and pen. It wasn’t as painful for them because they weren’t as tied to the way it had always been done.”


By the third year, the process was easier. Tracy and her partner knew how to define and identify items that were stored on their computers versus physical filing cabinets. They were electronically tracking workflow for returns to know how many still needed to be prepared. The assembly process also was easier because instead of making two copies of the return—one for physical files—the firm’s copy now lives in GoFileRoom.


ZS Consulting Group LLP, a two-partner CPA firm in Melville, N.Y., has been gradually moving to paperless for the past four years. A lot of it has been driven by IRS electronic filing requirements.


The firm’s managing partner, Dov Zaidman, CPA/CITP, estimates the firm saved 15% to 20% in time just by eliminating the need to look for files, folders and papers. This type of benefit is something Metzler said is key in firms of all sizes and not to be taken lightly.


One Knoxville, Tenn.-based firm that handles accounting work for a client with 33 franchises was able to quantify time savings into dollars. As part of that service, exchanging client source documents and handling it was costing both the firm and a client a great deal of time and money.


So the firm convinced the client to foot the bill for a document management system to allow it to electronically exchange daily accounts payable invoices with the firm rather than sending paperwork out via FedEx once a week on average, with each of the 33 franchises spending $24 each time they sent a package. Switching to a document management system saved the client roughly $41,000 a year in mailing costs plus the cost of paper and ink. The firm, Pinkstaff, Simpson, Hall & Headrick PC, sent the client’s store managers instructions about how to process the information using the system, CNG-SAFE, which works with a plug-in called CNG-Books that integrates with QuickBooks, and had each store buy a $300 scanner to send the information. It paid for itself in shipping costs alone, according to Sharon Conder, a CPA at the firm.


With the physical mailing system, not only was the firm three days behind on the client’s cash flows, but because all of the franchises had the same vendors, it was easy to misfile the paperwork. As a result, the firm had to pay someone $15 an hour for eight hours of filing every week—more than $6,000 a year—some of which was spent just searching for documents.


“Logistically, finding a document was horrible, and we couldn’t charge [the client] for it,” Conder said.


In addition to the time saved looking for lost paperwork, another benefit was that it saved the firm $150 a month it cost to store information at an outside facility, according to Conder.


Space is clearly another important consideration, even for larger firms that already have offices established. Martin Starnes & Associates, CPAs, PA, reduced the number of file cabinets in its 45-person firm in Hickory, N.C., from 20 to three when it began using ProSystem fx Document, a CCH product, a couple of years ago. That opened up space for a computer training lab and hoteling areas for remote employees to dock their laptops when they are in the office, said Josh Ledford, the firm’s IT director and technologist.



Another way accountants are giving clients electronic access to their files is through client portals.


Portals can be used for dozens of purposes—from exchanging QuickBooks files that are often too large for e-mail to entering payroll information—and an increasing number of accountants are using portals to receive client source documents and post their completed tax returns, which can be a significant timesaver by eliminating the process of hunting down copies of old returns every time a client calls looking for one and can also be viewed by the client as an additional, convenient service. (For more on portals, see “Client Portals: A Secure Alternative to E-Mail,” JofA, Feb. 2010, page 36.)


Martin Starnes & Associates began sending tax returns through its client portals in 2008. Most clients requested the digital format, but the firm still uses an FTP site for some larger files because it’s faster, according to Ledford. Also, some clients either don’t have computers or their systems are too old to be compatible with the online portals, so the firm mails them the returns the traditional way.



CPAs interviewed for this article said the use of multiple monitors promotes efficiency in a paperless environment. (For more on multiple monitors, see “Increase Productivity With Multiple Monitors,” JofA, Feb. 2011, page 28.)


“It increases productivity. It is easy to work on one and look at information on another— whether it’s a PDF of the prior-year tax return or audit papers or multitasking on two screens, one screen [displaying the] audit program and one screen Excel files,” Zaidman said.


The survey didn’t delve into the number of monitors. While some accountants such as Tracy and her partner believe two monitors are sufficient, an increasing number of practitioners are using three or more.


At Diel & Forguson LLC, a 15-person CPA firm outside St. Louis that went paperless in 2002, everyone has at least three monitors on his or her desk, and most employees have four—one for Outlook, one for the prior-year return, one for the current-year return, and a fourth for either Microsoft Word or Excel.


“If you don’t have a 30% efficiency gain, something is wrong,” said Kenneth Diel, managing member at Diel & Forguson. “Monitors cost $100. I will pick up $100 worth of efficiency in the first week.”


The bigger the monitors the better, Diel said. His firm has upgraded from 15-inch monitors to 17- to 19-inch monitors, and now 22-inch monitors—although not everyone has all 22-inch monitors. He said the width allows him to see more on the screen, especially in Excel spreadsheets. Turning the screens into portrait mode (by rotating them 90 degrees) also helps him gain efficiency by not having to spend “dead time” scrolling up and down.



While the MAP survey asked about the use of emerging technologies and trends, Metzler pointed out it is also important to look at how CPAs are using their existing tools in new ways, particularly time and billing software. Some firms are moving toward value billing. For these firms, instead of being a time-recording mechanism, time and billing software becomes a tool to refine the firm’s estimating to know whether it’s making money, he said.


David Potts, who owns a small firm in Fort Smith, Ark., has used his time and billing software, which is now Practice CS—a Thomson Reuters product—for roughly 15 years. Although he is trying to move from time billing toward value billing, Potts said the software gives him insight into how much time he’s putting into each job as well as how much help his employees need if one person takes more time on a project than he or she should, for example.


He said the system paid for itself in the first year, and he has continued to benefit from it every year because he analyzes the information contained within it.


Potts never considered charging a minimum fee for income tax returns before, but he had an employee run a report in the system and was shocked to learn that more than 100 of the previous year’s returns were billed at less than $200.


“We either don’t need to be doing those or [we need to charge] a minimum of $250 to $300, then step it up,” he said.


Alexandra DeFelice is a JofA senior editor. To comment on this article or to suggest an idea for another article, contact her at or 212-596-6122.





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