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Technology and CPAs: Visions of the future

Experts foresee how mobile, cloud, and analytics will transform accounting.

BY JEFF DREW

Please note: This item is from our archives and was published in 2012. It is provided for historical reference. The content may be out of date and links may no longer function.

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Technology and CPAs

With the accounting profession undergoing perhaps its biggest technological sea change since the introduction of the personal computer three decades ago, CPAs are faced with a slew of questions.

To help provide answers, the JofA asked a distinguished group of experts to identify the key technology trends that CPAs should keep top of mind over the next decade or so.

The experts who participated are:

  • Sarah Ostendorp Bezugly, CPA/CITP, owner and managing partner of Oak Capital Accounting Group PLLC and a member of the AICPA Business Intelligence Task Force.
  • L. Gary Boomer, CPA/CITP, CEO of Boomer Consulting Inc. and past chair of the AICPA IT Executive Committee.
  • Jim Bourke, CPA/CITP/CFF, partner in charge of internal technology at accounting firm WithumSmith+Brown and chair of the AICPA TECH+ conference from 2012 through 2014.
  • David Cieslak, CPA/CITP, CGMA, principal with computer consulting firm Arxis Technology, former chair of the AICPA IT Executive Committee and a noted technology speaker known as “Inspector Gadget.”
  • J. Carlton Collins, owner of ASA Research and writer of the JofA’s Technology Q&A column as well as the “125 Technology Quick Tips” article in this issue (page 130).
  • Randy Johnston, executive vice president of Network Management Group Inc. and K2 Enterprises, and a prominent speaker on all things accounting technology.
  • Janis Parthun, CPA/CITP, senior technical manager overseeing the IT Section and CITP Credential programs at the AICPA.
  • Rick Richardson, CPA/CITP, managing partner at Richardson Media & Technologies and former director of technology at Ernst & Young.
  • Donny Shimamoto, CPA/CITP, CGMA, managing director at tech consulting firm IntrapriseTechKnowlogies and chairman of the AICPA IT Executive Committee.
  • Amy Vetter, CPA/CITP, CPA Programs Leader at Intacct Corp., former key accounts manager for the Southeast at Intuit, and former president of AV Accounting Services Inc.


Below is a summary of the panel’s opinions on numerous technological topics of interest to CPAs. To see answers from each panelist to the survey’s questions, click here.

TOP TECHNOLOGIES

Mobile devices and cloud computing dominated the discussion of the most important technologies for CPAs. “(The) cloud and mobile devices (phones, tablets, ultrabooks, etc.) will continue to help further integrate technology into all aspects of a CPA’s daily duties,” Cieslak said. “We refer to this as pervasive computing.”

With pervasive computing, CPAs increasingly will use mobile devices to access cloud-based applications, communications, and data. This connectivity will help CPAs work more efficiently and exchange information with clients more effectively, Vetter said.

CPAs also can expect to gain access to more robust business intelligence and data analysis tools, according to several of the experts. Collins, for example, said, “These new tools will likely use XML and XBRL tags, large databases, and sophisticated algorithms to quickly analyze a company’s financial activity—sliced, diced, and stratified by many criteria to identify risks, concerns, and potential improvements and opportunities.”

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Shimamoto also foresees more advanced business intelligence tools, in addition to “audit data analysis tools to help shift the auditor’s job from gathering data to analyzing data to provide assurance.”

Boomer and Johnston both predict that relationship management and content management tools will grow in importance over the next decade.

“In my opinion, relationship, knowledge, and content will become blurred and someone will name, package, and deliver this data in a useful format,” Boomer said.

Ultimately, Bourke said, all of these advances will result from CPAs’ leveraging the growing power and reach of the internet in everything they do. “Today it has a name, cloud computing,” he said. “Tomorrow, it will simply be how we do business. Applications, data, systems, (and) our clients, customers, and vendors will all be connected in multiple ways using the backbone of the internet as our pipeline.”

REVENUE STREAMS

The experts foresee technology automating most data entry and data aggregation work while commoditizing lower-margin services such as tax preparation. This will push CPAs into higher-margin, knowledge-based jobs, such as consulting, information analysis, and CFO and controllership work, both as employees in business and industry and on an outsourced basis. Parthun sees technological advances resulting in more startup businesses. This will increase the client base—and job opportunities—for CPAs, who also will have more chances to perform attest engagements such as Service Organization Control reports.

Technology will deliver real-time information that CPAs, whether in public practice or the business world, will need to interpret to support better real-time business decisions, Vetter said. Boomer predicts that real-time information management (electronic banking) will reduce work in progress and accounts receivable for CPA firms to $0. However, this is more of a behavioral than a technological issue.

BYOD

The experts recommend that organizations embrace, or at least accept, employees’ using their personal technology devices for work purposes. Such policies make employees happier, Boomer said, and employers that oppose the trend are fighting a losing battle that could result in employees’ leaving, according to Vetter. What organizations need to do is implement a multipronged approach designed to reduce security risks while maximizing the potential benefits of allowing a bring-your-own-device (BYOD) policy.

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The experts offer several approaches to the issue and actions required to accommodate greater use of personal devices:

  • Management needs to balance new ways of working with risk, according to Shimamoto, who said that mobile devices will become simply a means to access cloud-based applications. Organizations will need to implement controls to manage the employee devices, cloud applications, and critical data, whether on the cloud or on an in-house server.
  • Organizations that allow BYOD should consider requiring, in exchange for granting employees access to organizational IT infrastructure with their personal devices, the right to remote-wipe those devices when one is lost or stolen or an employee leaves the organization, Bourke and Bezugly said. “Employers should have the ability to remote-wipe employee devices if the employees are using those devices to connect to firm resources (i.e., email),” Bourke said. “Those devices could contain confidential and private client information that MUST be protected.”
  • Management needs to understand how BYOD will affect the bottom line, Richardson said. Firms that already have distributed mobile devices, such as BlackBerrys, to employees could incur extra costs implementing the policies and controls needed to accommodate other types of mobile devices. On the other hand, organizations that have yet to set device standards could achieve significant savings with BYOD because employees would be using devices they already own, saving organizations the cost of buying devices for employees. Often, employees would pay for their own data plans as well. In addition, productivity should increase because employees would be working with technology they already know how to use efficiently and effectively.
  • Organizations need to make sure employee devices are compatible with other tools used in the organization and do not cause file format conflicts or other problems, Collins said.
  • Johnston would allow BYOD but warns that organizations should expect to increase their technical spending to deal with potential security risks.
ACCOUNTING SOFTWARE

Bourke said he believes that the term “software” will go away as customers instead pay for access to applications, data, and other resources. Collins predicted that transactions will record themselves, using logical and database references to assign account numbers. Boomer offered a similar vision, one in which he foresees the end of data entry, with all transactions being automated and aggregated into accounting software. As the recording of transactions becomes more automated, the focus of accounting software will shift to analyzing trends and improved reporting, Shimamoto said.

Johnston anticipates better integration between different software applications. Vetter, who has spent years on the front lines of the accounting software market, shares that view. “Rather than building out features that aren’t the vision of that particular software, integrating seamlessly into other applications that specialize in those niches is going to become more and more important,” she said.

Richardson likens this era to the shift from Lotus 1-2-3 to Excel in the late 1980s and early 1990s, and he envisions the impact of cloud and mobile technologies radically revamping the accounting software marketplace. “Traditional service providers may seize the moment and succeed or fade to newer, more agile competitors in the space,” he said.

Despite all these changes, Shimamoto doesn’t foresee accounting software changing at its core. “Debits and credits will be debits and credits for a while,” he said.

ROLE OF SOCIAL MEDIA

Collins and Bezugly view social media sites such as Facebook, Twitter, and LinkedIn as essential parts of the CPA’s work tool kit in the years to come. “Social media is today’s foursome on the golf course,” Collins said. “If you are not on the inside, you are on the outside.” Bezugly asserts that CPAs looking to grow their firms and engage clients have “no choice” but to embrace social media.

Social media will grow in importance, Vetter said, because it is a different skill set—one that appeals to the younger generation, which has grown accustomed to it and, in Parthun’s view, “thirsts” for it. So it’s important for CPAs to learn best practices for networking over social media.

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Bourke and Boomer see social media as a tool that will continue to evolve and provide CPAs with a valuable marketing and sales platform, one that can instantly connect CPAs to an unlimited number of contacts. Richardson anticipates a split among CPA firms, with some embracing social media and others avoiding it and touting that fact to clients and potential clients.

In Shimamoto’s view, the higher standard of conduct expected of CPAs will result in social media’s having two main effects on the profession: (1) increased blurring of personal life and professional life, and (2) increased need for discretion in making social media connections. “Because of the implied association of trust with someone who is a ‘friend’ (Facebook) or ‘connection’ (LinkedIn), CPAs may need to be more careful about who they include in their social networks,” Shimamoto said. “People evaluating a potential friend/connection may see the CPA associated with the person and thereby extend the trust associated with the CPA to that friend/connection. Additionally, friending someone on a Facebook may also give the appearance of a lack of independence, especially if there are a lot of personal interactions between the CPA and the ‘friend’ on the site.”

FIRM WEBSITES

On the subject of CPA firm websites, panel members were split for the most part into two camps.

For Bourke, Boomer, and Richardson, CPA firm websites will need to act as portals for clients. “They will become the primary portals for the delivery of work product and services by CPAs,” Bourke said. Richardson emphasized the importance of providing portals for mobile devices such as tablets, smartphones, and laptops, as well as for desktop PCs. “He who owns the portal will own the client,” Boomer said.

Collins, Parthun, and Vetter focused their attention on the content of CPA firm websites. CPAs should move from static websites to customizable sites with up-to-date content, including videos and blogs, Vetter said. CPA firms would benefit from adding “useful” content such as checklists offering tax or financial planning advice, according to Collins. Look for CPA firm websites to feature cleaner designs with fewer words and information presented in a more mobile-friendly format, Parthun predicted.

Mobile-friendly websites have become common enough that tools are available to help CPAs to quickly convert their existing websites into sites formatted to be viewed by smartphones and tablets, Bezugly said.

CPA firms will be more successful if they see their websites as part of an overall marketing strategy, according to Cieslak. “Firms need to have a strategy for engaging with their clients and prospects that involves email, websites, blogs, social media, and even text messages to phones,” he said. “Firms that are consistently engaging with their clients in valuable ways will strengthen and grow their client base.”

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CPA firms should engineer websites so that they incorporate touch technologies that allow users to interact with the site by touching their mobile device’s or computer’s screen, Richardson and Johnston said.

All of these ideas are white noise to Shimamoto, who doesn’t believe CPA firm websites are that important. “You have to have one to prove that your firm exists, and it does help to convey the firm’s brand,” he said. “However, when it comes down to it, I believe that most people select their CPAs based on referrals or on their experience working with the CPA during the proposal process. CPA websites therefore just need to focus on getting the clients to them, then it’s the CPAs themselves that have to seal the deal.”

A LOOK BACK

By far the most popular answer to the question of which technology had done the most to transform the panelists’ jobs was a combination of the internet, mobile technologies, and remote access to data and applications. The ability to do work from virtually anywhere has torn down office walls—at least in a virtual sense—and the internet has torn down virtual borders, giving small firms and businesses access to worldwide customer and talent pools that previously were available only to multinational corporations. Specific mobile technologies that drew mention are smartphones, tablets, and laptops. Other answers to the question included the personal computer and spreadsheets from the 1980s, improvements in database technologies, the growth in importance of CPA firm websites, and the ability to accept customer payments online, electronically through an accounting system, or through a mobile phone.

What Technology Improvements Would You Most Like to See?

Bezugly: More robust business intelligence application cloud offerings.

Boomer: Ubiquitous high-speed bandwidth.

Bourke: Take the current scan-and-populate technology utilized in the tax arena, perfect it, and expand it into the attest area of the practice.

Cieslak: Better, more seamless integration of data/information across disparate applications and ecosystems, i.e., Windows, Apple, and Android.

Collins: The “instant on” capability found in tablets and smartphones in my desktop computer.

Johnston: True virtual desktops hosted in cloud data centers. Higher-speed communication lines.

Parthun: More user-friendly and 3-D technology.

Richardson: Standardized telecommunications protocols for cellular networks (unlikely for 3G technologies, but possible for LTE 4G technologies).

Shimamoto: CPAs in business and industry starting to use more of the budgeting, planning, and reporting tools to improve the accessibility of information in their organizations.

Vetter: Auto-population of data into accounting systems, eliminating manual entry work. Additionally, more ways for optical character recognition (OCR) technology to scan documents and read them in more areas of accounting systems

What Technology Skills Will CPAs Need to Be Successful Over the Next Decade?

Boomer: Who knows? We don’t even know what the service offerings will be. CPAs who have change, knowledge, and project management skills will have a head start.

Bourke: Knowledge of the importance of data extraction tools in the mining of business intelligence.

Cieslak: Technology devices are tools, much like the prehistoric calculator. CPAs will be able to provide even greater value to their clients when they are better able to understand, master, and leverage the various devices. CPAs will need to have a better working knowledge of connectivity and IT security going forward.

Collins: The same skills that have always led CPAs to success will continue to dictate success in the future—a strong work ethic, intelligence, good writing skills, good communication skills, the ability to make a good impression, etc. Moving forward, the trick will be to convey these same skills and competencies through today’s newer media channels, such as email, text messaging, web publishing, social media, and video conferencing.

Johnston: Fundamentals: MS Office, Adobe PDF, Windows. Advanced: Industry-specific applications, project management, and systems integration understanding.

Parthun: CPAs should have the foundational understanding of information technology at a minimum and stay abreast of any new technology trends that can be applicable to their business environment.

Richardson: Understanding and utilizing client portals will be crucial, along with mobile device standards.

Shimamoto: Use of communications programs (such as email), word processing, and spreadsheets will all be considered must-have skills at the intermediate level. Additionally, use of tools that support data modeling, data analysis, and reporting will also become part of the CPA base skill set.

Vetter: Clients will be reliant on (CPAs) to understand how accounts are mapping together, where transactions are flowing from one application to another, and how to get as much data to “magically” appear from the web. CPAs with some knowledge on how applications integrate will be able to verify that the accounting is accurate.

To see the panelists’ responses to the tech survey, including questions not covered in this article, click here.

EXECUTIVE SUMMARY

Look for cloud computing and mobile devices such as smartphones and tablets to be the technologies that make the most impact on the accounting profession in the near future. These technologies, which allow for access to email, applications, and data on an anytime, anywhere basis, already have transformed the profession, enabling CPAs to work at home for employers based in other states and leveling the playing field for small CPA firms, which now have worldwide access to clients and infrastructure previously accessible only by large, multinational firms. In the near future, CPAs, clients, and vendors will all be connected over the internet via mobile devices and cloud-based applications and data, allowing for real-time interaction, analysis, and decision-making.

Tools that automate data-entry tasks and other lower-margin work will shift the focus of the CPA’s job from compiling data and reports to mining the data to find the nuggets of information that produce profitable business decisions.

Technological advances likely will create new CPA revenue streams in the fields of consulting, information analysis, and CFO and controllership work. Technology also could spur the launch of more startup businesses, establishing more potential clients and employers for CPAs and creating additional opportunities to provide services such as Service Organization Control reports.

CPA firms should look to add touch-screen capabilities and dynamic, original content to their websites, while also formatting the sites for access via mobile devices. Firms will need to provide fresh content in the form of checklists, how-to articles, videos, and blogs.

Social media will provide CPA firms with an efficient communication platform that younger employees and clients will demand. Some firms will reject social media and tout that fact to clients. Others will leverage it as a marketing tool that can drive new business.

Employers are encouraged to embrace the trend of employees’ wanting to use their personal devices (smartphones, tablets) for work tasks. The upside is a potential win-win scenario in which employees get to use the devices they want and employers shed costs because employees pay for the devices and, in many cases, the data plans. The downside is the employers will need to implement policies and controls that mitigate the legal and technological risks associated with allowing personal employee devices to access, or even house, confidential client or customer data.

Jeff Drew is a JofA senior editor. To comment on this article or to suggest an idea for another article, contact him at jdrew@aicpa.org or 919-402-4056.

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The AICPA Information Technology (IT) Division serves members of the IT Membership Section (ITMS), CPAs who hold the Certified Information Technology Professional (CITP) credential, other AICPA members, and others who want to maximize information technology to provide risk, fraud, internal control, audit, and/or information management services within their firms or for their employers. The division aims to support members and credential holders who leverage technology to provide assurance or business insight about financial-related information (direct and indirect financial data, processes, or reporting) to support their clients and/or employers. To learn about the IT Division, visit aicpa.org/infotech.