Small- and medium-sized practices (SMPs) need to embrace technology to better serve clients and attract and retain top talent. This was evident from the results of IFAC’s survey of over 6,000 SMPs across 150 countries in 2018. In addition, 78 percent of the respondents were expecting that some of the most significant change over the next five years will lie in navigating new technologies that affect traditional accounting and finance roles in small businesses.
As clients move to the cloud environment, where services once delivered in person are now delivered through the cloud and on a real time basis, traditional service delivery may need to be refreshed. In this sense, SMPs have a huge need for collaboration with IT professionals to facilitate a more efficient and effective service delivery process.
Another important trend: with the rise of readily-available automated accounting solutions for small and medium-sized enterprises (SMEs), many SMPs would do well to diversify into advisory services.
SMPs have always been challenged by resource limitations. This is also true when it comes to technology. Almost half (46%) of SMPs plan to spend less than 5% of their revenue on keeping up with technology in the next 12 months. Fortunately, professional accountancy organizations (PAOs) are chiming in to help.
In recent meetings, the IFAC SMP Committee (SMPC) has been engaging with various PAOs to learn more about their technology initiatives to support SMP members.
The following is a summary of the initiatives shared with the SMPC.
IT Certifications and Programs, E-Mergers Register and Electronic Invoicing
Recognizing the need to develop accountants’ IT knowledge, skills and competencies, PAOs are introducing IT specific certifications. Examples include:
- The AICPA in the United States offers cyber-security certificate programs for their members to be able to help clients navigate threats and apply the AICPA’s cyber security and risk management reporting framework.
- The Institut der Wirtschaftsprüfer (IDW) of Germany launched an IT auditor qualification to enhance communications between statutory auditors and IT experts. The qualification is aimed at auditors as well as IT specialists outside of the profession with experience of assisting in audit engagements. The aim is to better facilitate collaboration by enhancing auditors’ knowledge of IT and IT specialists’ knowledge of audit. The IDW maintains a directory of its qualified IT auditors, which can help SMPs access high-quality IT expertise when needed.
- The Italian PAO CNDCEC assisted its members to become more digitalized by helping SMPs adopt the country’s electronic invoicing initiative. This initiative was strongly supported by the Italian government with the aim to improve the country’s fiscal position through better tax collection.
- The Malaysian Institute of Accountants (MIA) created a e-Merger Register to encourage small practices (especially audit firms) in Malaysia to expand their capacity to deal with the challenging requirements of the International Standards on Quality Control 1 (ISQC 1) and firm’s succession challenges.
Committees, Boards and Task Forces
To explore technology trends and their impact on the accountancy profession, businesses, and economies, many PAOs have established committees, boards or taskforces in this area. For example:
- The Institute of Chartered Accountants of India (ICAI) set-up a Digital Accounting and Assurance Board (DAAB), which assesses the impact of digitization on accounting and audit and shares its findings with ICAI members. The DAAB also negotiates with approved software and hardware vendors on behalf of ICAI members, enabling procurement of their IT needs at much lower prices.
- The Malta Institute of Accountants launched a Digitalization/IT Committee in 2017 that acts as a point of reference for all accountants in Malta on issues pertaining to artificial intelligence, blockchain, cybersecurity, and data management. Its responsibilities include monitoring emerging technology issues at European and international levels, participating in consultation requests issued by the Government of Malta and other governmental agencies, and working to increase its members’ awareness of ongoing changes as a result of technology and the impact on their work.
- The MIA has set up a Digital Economy Task Force to explore the impact of technology in the Malaysian economy. It has recently been converted into a permanent Committee. Included in its new terms of reference are to explore the funding needs of SMPs and to engage with policy makers on incentives and grants.
- The South Africa Institute of Chartered Accountant (SAICA) established a Technology Committee to look into all emerging technologies impacting the accountancy profession and other businesses in South Africa.
Thought Leadership, Guidance and Publications
PAOs conduct research on technology trends, survey their members to identify needs and challenges in relation to technology, and develop thought-leadership, guidance and other support tools. Examples include:
- CPA Canada, together with the standard setting Boards in Canada, initiated a series of initiatives to identify, explore, and analyze major issues and trends shaping the future of reporting and have produced a number of publications focused on the disruptive impact of technologies.
- The ACCA has undertaken a number of research studies on technology, the most recent of which, Audit & Technology, focuses on the drivers for technological change in audit.
- The AICPA set up an Information Technology Hub, a one-stop resource center for its members in business, as well as SMPs to access the latest technology information, tools and resources.
- The ICAEW, through its Technology Faculty has developed a number of resources for accountants to keep up-to-date with technology issues and developments.
- A digital technology blueprint was launched in 2018 by the MIA, charting the Institute’s vision for the next five years that will help prepare the profession to adapt to digital transformation. It covers accountants working in commerce and industry, public practice, academia and the public sector.
- SAICA has a dedicated technology page to highlight the latest technology news to their members. In November 2018, SAICA also launched a software guide for practitioners to help members evaluate accounting software that they can invest in to better service their clients’ accounting needs. In addition, a quarterly newsletter is circulated to SMPs in South Africa, which includes a dedicated section on technology developments and innovation.
Conferences, Workshops and Tech Talks
Physical and virtual conferences and events are a useful way for PAOs to keep their members up-to-date on the latest technology trends. Examples that include SMP relevant sessions are:
- At a regional level, Accountancy Europe hold their Digital Day conference on an annual basis, which for 2019 was themed: What does innovation cost?
- The AICPA Digital CPA Conference, which they have hosted since 2015, brings together CPAs and IT service providers to showcase the latest in technology to accountants, while challenging the profession to explore the transformation of practices and driving innovation across the profession.
- The ICAEW has created a series of Tech Talks, covering AI, blockchain, cyber and data. Since 2018, it has also been running a series of virtual technology events for free.
- The MIA run an annual conference, inviting high caliber technology experts to share their vision of the future in businesses and practices.
- SAICA has hosted an annual technology conference since 2017 focusing on SMPs and their technology needs.
The MIA is currently working on an electronic bank confirmation initiative that will automate the audit procedure and, in the process, facilitate a more efficient and cost-effective auditing process. This initiative has the support of the Malaysian central bank. The CICPA of China has also started such an initiative recently, albeit with a specific bank as a start.
Between 2014 and 2015, the CICPA awarded 15 firms up to RMB500,000 (more than US$70,000) per firm for their contribution to technology development within the profession. Since 2013, it has also spent a few million Yuans to build up an extensive database of macro economy information, industry and individual company database relating to the capital market, latest laws and regulations and make all these available for SMPs in China.
The SMPC will continue to explore technology trends impacting SMEs and SMPs. We also encourage PAOs to continue to share their initiatives through the Global Knowledge Gateway.
Further guidance for SMPs on technology is included in IFAC’s Guide to Practice Management for Small- and Medium-Sized Practices, specifically Module 5: Leveraging Technology.
Further Gateway Resources
The following Gateway articles and videos that have been published in the Gateway may also be of interest to the SMPs:
- IFAC TAG Webinar on Data Analytics by the IFAC Technology Advisory Group, October 2018
- Implementing New Technology Requires Strategic Thinking by Edmondson, January 2019
- IFAC TAG Webinar on Cyber Security by the IFAC Technology Advisory Group, March 2019