Software trends in public accounting
The tools of the trade are changing. In addition to supporting increased advisory work due to the pandemic, software publishers are changing the platforms of our practices. Randy Johnston, executive vice-president at K2 Enterprises, discusses tech trends for the accounting industry
he increase in Software as a Service (SasS) and Artificial Intelligence (AI) in pre-accounting are two examples of the trends that surfaced in our eighth annual Accounting Firm and Operations Technology (AFOT) survey.
Since you are living the trends, this may not come as much of a surprise. We are now forecasting that most of the software tools that are in use today will be upgraded or replaced by 2026.
The pandemic emphasised five glaring deficiencies of firm technology:
- The lack of a proper document management system (DMS)
- The lack of proper workflow management tools
- Not having the ability to work from anywhere
- Inadequate Voice-over-Internet Protocol (VOIP) forcing the use of lower-quality cellphone use
- Security risks including not always using Multi-factor authentication (MFA)
Randy Johnston, executive vice-president, K2 Enterprises
Our survey contained 63 questions, so we won’t cover all the details in this article. The biggest tech challenges include Security and Risk Management (19.4%), the ability to do all Digital Work (13.3%), and controlling Workflow/Process Automation/Standard Operating Procedures (11.4%).
Innovative firms have adopted automation technologies, while lagging-edge firms are just now considering them, or not at all. This is represented by the 10.6% of respondents who cited creating and implementing a more effective technology strategy as the fourth largest challenge.
Personal tax workpapers have become widely adopted, while pre-accounting technologies such as Sage Auto Entry, Hubdoc, and Vic.AI are beginning to get traction. While many firms were buyers of a suite of solutions in the past, best-of-breed is becoming more common in firms of all sizes as opposed to only the small and large firms in past surveys.
Advisory work continues to gain traction, but there are misconceptions about the meaning of Advisory and many 'fake Advisory' services promoted by vendors and firms alike. Advisory services include long-term strategy, succession planning, and risk management.
In the past five years, advisory services have grown in the profession. Many accountants already provide some level of advisory service to clients on matters outside of traditional services. However, many firm leaders are resistant to the concept of advisory work, possibly motivated by the historic profitability of compliance work.
AI is receiving some review and adoption by firms. AI eliminates repetitive tasks, increases the data at your fingertips, and frees accountants for higher-level work. Overall, 58% of accountants agree that AI will improve the future of their firm. AI allows a professional accountant to analyse large volumes of data with laser accuracy more quickly and affordably. Plus, you can look at historical data and predict future trends better than ever before.
Audit tools like those from Inflo and MindBridge are helping on the audit side of the practice, while Vic.AI is assisting on the pre-accounting side. Intuit’s QuickBooks Online and Xero also have machine learning efforts underway and are evolving to AI. It’s time to get on board with the AI trend.
While client accounting service offerings, including cash flow and planning, ranked highly in this year’s survey, the software tools used to provide this service diverged from prior years. The numbers indicate that firms are looking for a solution to specific issues in their client base and will work with innovative providers to find a viable product.
On the other hand, it is still early in blockchain and cryptocurrency with larger firms investing in this technology, but small and mid-sized firms support almost no evidence of this emerging technology.
The survey has routinely asked for information on monitors, scanners and other types of hardware. Also covered in specific questions are the applications used for practice management, tax, audit, document management, workflow, accounting and many more categories.
Of interest to us are the technology budgets, spending per person in the firm, and other trend information. Of note this year was that 63.1% of firms said their technology budget was unchanged, while 32.4% increased the budget and 4.5% was decreased. It looks like managing technology will be a significant cost for your firm for the foreseeable future.