The Evolution of an Accounting Practice: The Impact of Technology
The journey to digital business is the key theme of Gartner, Inc.'s report, "Hype Cycle for Emerging Technologies, 2014." As its Hype Cycle report celebrates its 20th year, Gartner argues that as enterprises set out on the journey to becoming digital businesses, identifying and employing the right technologies at the right time will be critical. If they get it right, accounting practices and their clients stand to leverage the opportunities and meet the challenges presented by the pace and pervasiveness of technological change. To help practices get it right, Giancarlo Attolini, Chair of the IFAC Small and Medium Practices (SMP) Committee asked five distinguished practitioners from the SMP Committee and IFAC Board—Raymond Cheng (Hong Kong), Monica Foerster (Brazil), Alex Hilman (Israel), Gail McEvoy (Ireland), Mats Olsson (Sweden), and Florin Toma (Romania)—what technologies have and will most impact them. Below is a summary of their responses.
1. Which technology has impacted you most during your career?
Cheng: The use of emails for communication and Excel for accounting and financial reporting purposes have impacted the profession most. In terms of systems, the use of remote access to an office server is particularly helpful to auditors, especially when they are carrying out overseas audits.
Foerster: I felt the most impact during the initial adoption of electronic tools, in particular, Lotus and, more recently, Excel. The ability to have information linked, together with a permanently maintained database, improved our ability to test and facilitated analysis based on more consistent information.
Hilman: No doubt computers in general! When I started my career, computers were big metal creatures; I guess that gives my age away. But above all, the Internet and emailing have made the biggest impact. It’s hard to imagine computers without these.
McEvoy: The biggest impact has been from accounts software, client relationship management (CRM), and email/internet. All have proven to be a huge learning curve but the result has been smarter and leaner practice management and practice promotion.
Olsson: First email, and second smartphones.
Toma: I would say email and the Internet, in general. However, presently we are feeling the biggest impact from cloud computing, which is greatly influencing our work with clients.
2. Do emerging technologies present a threat or an opportunity for you and your practice?
Cheng: There is opportunity in the ability to carry out audits in a more effective and efficient manner, for instance, conducting multiple audits simultaneously. When auditing more sophisticated financial products, it is virtually impossible to carry out the audit without technology. On the other hand, there are threats—cyber security, confidentiality of clients’ information and our audit working papers, and the risk of accidental loss of data or leak of information by staff and hackers.
Foerster: They represent both a threat and an opportunity to accounting practices. A threat because it´s always challenging to learn and adopt new routines and tools but an opportunity because improvements in technology usually enhance the efficiency of processes.
Hilman: I believe it’s an opportunity. Emerging technologies enable small- and medium-sized accountancy firms to enter into new and different markets, and to learn more about clients, both current and potential.
McEvoy: An opportunity most definitely. It will change what services we offer and how we deliver them over the next ten years. Apps and smartphones will be the new delivery mechanism for our reports.
Olsson: An opportunity, 100%. However, I think the pace of change sometimes creates an unhealthy pressure.
Toma: Emerging technologies represent an opportunity rather than a threat. At my firm, we realized that we had to change our mindset and thoroughly evaluate all options in order to be ready to adopt and adapt to new technologies, and to do it successfully across all generations of staff.
3. What emerging technologies will most impact your work in the next decade?
Cheng: Given the fast-paced development of technology in financial markets, the development of computer-assisted audit techniques (CAATs) for carrying out computer and system auditing will have significant implications for the work of auditors.
Foerster: First, cloud computing, which will allow us to perform accounting and auditing procedures irrespective of the location; and second, the emerging enterprise resource planning (ERP) software which will enable access to complete databases for audit procedures. This will help modify our focus as accounting professionals toward consistent analysis instead of narrow mechanical procedures.
Hilman: First, the internet and email will continue to grow as the leading way of communication and data exchange over the next decade, albeit increasingly accessed on smartphones. Second, remote technologies for accessing data and cloud computing. These will both be leaders in the accountant’s daily and routine use.
McEvoy: I think the biggest changes will be that we will receive information, such as the books of prime entry, from clients via the cloud. Similarly we will deliver our reports and financial information via the cloud. This will allow us to spend more time advising clients and helping them develop strategy. I also see attracting new clients via digital marketing becoming more streamlined.
Olsson: Skype and other VOIP (voice over internet protocol) conference calls, followed by smartphone apps and greater use of smartphones.
Toma: Everything that is linked to secure mobile communications and data analysis stands to have the most impact. Our teams will need to be as mobile as possible, while being able to respond to clients’ requests as quickly as possible based on sound, highly efficient data analysis tools.
4. What technology skills will accountants in practice need to be successful over the next decade?
Cheng: An understanding of new accounting software and other business and financial models will be necessary if practicing accountants are to effectively conduct audits and discharge their responsibilities. Continuing professional development and education in this area will be necessary for auditors.
Foerster: Accountants in practice will need to improve their understanding of and practical ability to use and leverage technology. For example, integrated enterprise resource planning (ERP) with virtual access using mobile devices, communication through social media, and customizable user-friendly websites with up-to-date content will be fundamental aspects of practice.
Hilman: No special new skills; they don’t necessarily need a better understanding of how to use new technology. They will certainly need to stay up-to-date with any new technology trends that are relevant to their business environment and be open to adopting rapidly changing technologies.
McEvoy: As the most trusted business advisors [who] will be the first point of contact regarding digital queries, we will need to develop our own skills regarding the digital options available to clients so that we can point them in the right direction.
Olsson: We need to be more open-minded about emerging technologies as our work will likely become even more computer-based. Ultimately what will differentiate one accountant from another is not their ability to manage IT but rather their ability to better communicate with clients, to use the time saved by technology to develop client relationships and become a successful trusted business advisor.
Toma: Data communication and analysis, as well as cloud computing, will be critical areas. Use of social media will continue to be important, especially as platforms evolve and improve.
5. What technology improvements would you most like to see?
Cheng: Further development in technology that enables auditors to carry out their audits in a paperless environment, enabling auditors to achieve a paperless trail of audit evidence for external audit purposes.
Foerster: I’d like to see improvements related to virtual and cloud computing and to detailed data analysis tools.
Hilman: Further development of mobile devices like phones, tablets, and data storage devices would enable us to work remotely more effectively anytime, anywhere—provided, of course, it does not ruin our work-life balance!
McEvoy: Further improvements to data management and storage allowing us to operate in a paperless environment. I’d also like to see the integration of all software such that it “talks to each other” so avoiding duplication.
Olsson: Apart from continuous development, perhaps fine-tuned software handling language like Google Translate for accountants. More and more often our clients go international and, as a result, we increasingly have to deal with other languages. While I much prefer physical meetings, VOIP such as Skype can help save a lot of time, energy, and environmental impact without eroding our client relationships. These technologies are not difficult to use but I suspect many small business clients avoid them for fear of the costs and the fact they are used to face to face contact. Old habits die hard.
Toma: Collaborative platforms to support our accounting teams with full monitoring and communication capability are crucial if we are to have a single, integrated tool to support efficient response and analysis.
Learn More & Join Us at the World Congress
To help practices leverage new technologies, IFAC and its member organizations provide a wealth of Practice Management resources on the Global Knowledge Gateway (especially the subcategory IT) and a Practice Management Guide (in particular, Module 4).
IFAC and Consiglio Nazionale dei Dottori Commercialisti e degli Esperti Contabili (CNDCEC) invite you to join us at the World Congress of Accountants 2014 in Rome, for “SMPs 2020” (Parallel Session 2.2) in which technology and other issues impacting SMPs in the coming decade will be discussed. Learn more at www.wcoa2014rome.com.
Join the Conversation below and take the IFAC SMP Quick Poll 2014 (due to open November 3 at www.ifac.org/SMP). What technology improvements would you most like to see?