The accounting profession faces many issues in a fast-changing world, and cloud usage with all of its attendant requirements ranks among the most important.

AccountingWEB spoke with Erik Asgeirsson, president and CEO of CPA.com, whose mission is “empowering CPAs and businesses for the digital age,” about the progress being made in embracing the cloud.

AW: The CPA of the Future report released in December 2014 indicated that 90 percent of CPAs believe digital business processes will be a key differentiator among accounting firms in the next five years. Yet, only 8 percent indicated the profession is ready for the future. Why is technology and, specifically, cloud services apparently so difficult to accept?

Erik Asgeirsson: I actually think there is some strength in that data point in the fact that CPAs are self-aware. They need to do a lot more. When we looked at this in 2010, you wouldn’t have the 90 percent saying that it would be the key differentiator. So, that’s great, and now they are saying they aren’t where they need to be. They aren’t saying they are there when they aren’t, and that’s very important.

We’re seeing a lot of that 90 percent who need to do more being very focused, much more involved, and engaged in how to leverage these new cloud accounting capabilities. So, they are accepting it. Now they are really working on putting in place plans to more aggressively adopt it. The challenge is putting in place the business and practice plans to adopt it.

AW: Have you determined how many CPAs also are hesitant to do anything in the cloud, such as online banking, shopping and purchasing, booking travel, streaming TV, and so on? Or is the concern specific to their type of business and security issues?

Asgeirsson: I think it’s a very high percentage, similar to what you’d find in the broader consumer market, who have moved to online banking, shopping, purchasing, and streaming. This technology revolution we are living in started on the consumer side with Google, Facebook, and online banking.

The business marketplace in the past few years is absolutely making a more aggressive move to cloud services. I think one thing that’s changed when you look at the past decade is the ubiquitous nature of high-speed Internet access. That’s really important because as firms move from doing things on desktop applications or in their server environment to moving it all to the cloud, it is very important that the services work in a very efficient manner. I think that’s taken some time. Online banking is absolutely there; streaming videos is there.

In cloud accounting, QuickBooks got online and working at a first-year level with their big relaunch about 18 months ago in fall 2014. Now, QuickBooks is turning up over 100,000 businesses per quarter onto QuickBooks Online and clearly surpassed the turn-ups related to QuickBooks desktop. There’s no comparison. That’s occurred over the last couple of years and that’s why this is slightly behind online banking and purchases.

As to the security point, it’s not just about the CPA firm moving to cloud accounting. Their business clients have to as well. High-speed access is like electricity. You have to have it to be in business. The firm can support them in the cloud accounting environment. I do think the firms have moved in a more measured fashion than on the consumer side due to questions about security. Fundamentals had to change, and they have. And the firms had to get more comfortable with the data being stored at these cloud vendors.

AW: One cloud issue that’s been frequently mentioned in industry publications concerns not just cloud security but the security of SaaS vendors. How can firms verify what vendors’ security measures are and that they stay up-to-date?

Asgeirsson: Firms need to make sure that the cloud services they use are following security best practices. That means that they have SOC [Service Organization Control] 2. There’s a big difference between SOC 2 and SOC 1. With SOC 1, the internal controls in place were around financial reporting. SOC 2 reviews the principles and those are the security that’s in place, confidentiality in place, privacy rules in place, processing integrity in place, and availability in place. You look at those because that’s what you want reviewed. It’s not about “will the data be breached” or if the data will be available. It’s how that company is addressing the confidentiality and privacy of that information.

What I’ve seen in the marketplace is that sometimes companies try to pass off a standard like SOC 1 to look like it’s SOC 2. A firm should absolutely know this and look for appropriate standards in their due diligence and a review of cloud standards. And SOC 2 has to be current, not done two years ago. They should be very familiar with these standards.

AW: Much has been discussed and written about succession planning as many older accountants prepare to retire. How does cloud usage factor into that when they are trying to attract younger managers and CPAs?

Asgeirsson: I hear from firms all the time about this. If they want to attract millennials, know what they are looking for. They are looking for flexibility, to work in a modern way, which means that it’s not always in the office. You are supporting remote work, and when you do that, you need to do it in an effective fashion. And it all starts today with cloud technology: attending internal meetings, using things such as video, desktop-sharing tools, meeting with clients in that fashion, managing workflow in the firm with cloud-based tools, and automating the inputs.

Millennials don’t want to do data entry. You have to use the technology or practice to automate inputs for cloud accounting in your tax area, and now automation is occurring more in the audit space as well. That’s almost a must if you want to engage and attract younger managers. In the CFO area when you have bank feed automation, automating of the bill payment process, you are focused on setting up dashboards and reports for your clients that they view in an online fashion. For small firms, all they need is Internet access and it doesn’t matter where their staff is located, and that’s important.

I think firms will have a lot more value by adopting technology. Firms will have a much bigger return if they automate. You don’t know what you don’t know. The last thing you want to say is “I sold my firm but didn’t know my value and the buyers modernized it and dropped another 10 percent on the bottom line.” Some of these really laggard firms are attractive just for that reason – there is up potential. That’s an embarrassing reason to be bought because you don’t understand your own potential.

AW: At last year’s Annual Executive Roundtable, you were quoted as saying “to be successful, firms need to rethink what their business strategy is. The technology is the easy part.” But apparently it isn’t. It seems that it’s going to take firms longer than five years to differentiate themselves digitally. Realistically, how long do you think it’s going to take for the majority of the profession to be in the cloud?

Asgeirsson: It’s hard to say. I think you’re right. To be totally in the cloud, we’re in the early majority. We really need to look at the adoption curve, which the book Crossing the Chasm made famous. You start with innovators, then reach a chasm with the early majority, and the early majority really gets going once there is a pragmatic way to build out new capabilities. We’re in the early majority in every part of the firm – from virtual CFO controllership services, the modern ways to support your tax business, to audit. Audit I see as slightly behind, but virtual controllership is leading from the digitalization standpoint. We’re there in the early majority. There might be one system that doesn’t make sense to migrate into and you want to do it in components.

To get to that full adoption, we could be five years out, but the real statement to make is that we are clearly in the early majority, clearly have great vendor training and case studies of best practices on how to go about this. That takes the early majority to late majority, which is getting well above 50 percent of the profession. We’re under 50 for the profession right now that are clearly 100 percent cloud-based. But we’re well on the road to full cloud adoption.

It’s a question now of when, not if. When I give talks, it’s not “I’m not sure about this” that I hear. It’s “I’ve got to get on this, have to get my talent better and practice better, and I need to be vigorous in vendor selection.”

But to do this right is not easy and will take time.

As accounting firms increasingly rely on cloud-based technologies and services, they are also seeking tools that can help them optimize their workflow and streamline and automate client services.

The winners and finalists for the 13th annual Tax & Accounting Technology Innovation Awards reflect this focus on workflow and automation, which allow firms and their small business clients to operate more efficiently and profitably. The awards were presented on June 1, 2016, by CPA Practice Advisor during a reception and ceremony at the California Accounting and Business Show & Conference in Los Angeles.

CPA Practice Advisor provides a variety of independent digital and print resources for accounting professionals, including practice resources, technology reviews, interactive tools and content that helps firms achieve greater productivity.

The 2016 Innovation Award winners are:

• Avalara, for TrustFile,
• Bill.com, for the new Bill.com iOS App,
• CPA.com and Confirmation.com, for the Rivio Clearinghouse,
• cPaperless, for SafeSend Returns,
• Sage Software, for Sage View,
• Sageworks, for its Electronic Tax Return Reader, and
• Thomson Reuters, for Onvio.

Six Innovation Award Finalists were also recognized by CPA Practice Advisor:

• Confirmation.com for its Legal Confirmation Services,
• Doc.It for the Doc.It AutoFiling Service,
• Karbon, for its Task Management system,
• Sage Software, for Sage Impact,
• Fujitsu, for the ScanSnap iX100 mobile scanner, and
• Xero, for Xero Tax Touch.

The Innovation Awards were first presented in 2004, and honor new or recently enhanced technologies that benefit tax and accounting professionals and their clients through improved workflow, increased accessibility, enhanced collaboration, or other means.

“We are constantly seeking new technologies that can benefit tax and accounting professionals, and their clients” said CPA Practice Advisor Editor-in-Chief Gail Perry, CPA. “As the profession continues to embrace new workflows and processes that optimize the potentials of these technologies, firms are improving their efficiency and focusing their practices on more profitable service offerings that, at the same time, are more beneficial to the small businesses that rely on them for advice and strategy." Perry also manages a tax practice and is the author of more than 30 books, including Mint.com for Dummies, and Idiot's Guide to Introductory Accounting.

In addition to the winners and finalists, more than 40 technology products and services were nominated for this year's Innovation Awards:

ATX Integrated IntelliConnect Browser Search Tool and Tax Research Menu

BEPS Global Currents

BigTime IQ Pro

BNA Income Tax Planner Web

BNA State Tax Analyzer

Canopy Tax, Inc Tax Resolution

CCH CodeConnect

CCH iFirm Practice Manager

Client Centric Communications

Depre123 Depreciation System

Eaglefiling

eFileCabinet SideKick

Exact for Accountants

FloQast

Gravity Software LLC

Industry Newsletters

Intacct Subscription Billing

Intelligize

Intuit Trial Balance

ONESOURCE Indirect Tax Certificate Manager 2.0

PPC’s Guide to Tax-Related Identity Theft

QuickBooks Self-Employed

ReceiptBank Practice Platform

Credits and Incentives Pinpointer: Statutory and Discretionary

Thomson Reuters myPay Solutions Direct

TSheets Scheduling

Winners of the Innovation Awards are selected from nominated products by CPA Practice Advisor’seditorial board and awards committee, which include thought leaders and professionals from across the country. The digital resource and print publication is the leading independent source of practice management resources and technology information for tax and accounting professionals in public practice. www.CPAPracticeAdvisor.com.

The nomination period for the 2017 Innovation Awards will open in February 2017.

For several years now, the specter of change has hovered over the accounting profession, driven largely by shifts in how its clients work and, of course, in technology and processes. But what haunts the profession most these days is not just change itself, but change management.

This was one of the main themes on accountants’ minds and discussed by CPA profession leaders, including AICPA Chairman Barry Melancon, here at the association’s Practitioners Symposium and TECH+ Conference.

In his own words, “change management, not just change itself, has become a major concern among CPAs,” said Melancon. He also stressed that, for small firms in particular, the AICPA and CPA.com were doing their best to ensure they enable relevancy in the marketplace.

As for how firms can best adapt and specifically manage the changes impacting the profession the most, Melancon advised that “the evolution of CPA core services is a must in order to keep position of trust relevant in a changing world.”

It has been hammered on accountants time and time again that simply providing compliance services may not be enough to sustain their relevancy to clients. But what tools are they given outside of trying out new products that will, in theory, help expand their service offering and “evolve,” as Melancon noted? This is likely where so-called “soft skills” or “success skills,” as some are calling it here at the conference, comes into play.

Author, speaker, and CPA Bill Reeb of the Succession Institute regularly works with accountants on the aforementioned skills and took the time to address attendees in a keynote here at the event. He touted CPAs as “natural overachievers” who often can’t get out of their own way and, ultimately, “get stuck.”

“Common wisdom is to develop your strengths and surround yourself with people whose strengths are your weaknesses,” said Reeb. “You can’t go through an evaluation of things you do when you are frustrated. As soon as you think I should be further along or I’m failing, that’s when you get stuck.”

Reeb went on to note that accountants need to take the time to understand what they are trying to achieve, and more importantly, if they do decide to make changes in their firm, to be realistic regarding expectations.

“If you are not failing at the things you try, you aren’t getting better,” said Reeb. “There will never be a ‘right time’ to make the changes you need for your firm.”

Useful sound bites aside, the fact still stands that no one in the profession is coming to a conference to say the same. In the same right, accountants don’t necessarily want to be constantly told “to change.” They want to know how and, moreover, how to manage that change. This again was a major theme here at the conference and I suspect at more to come.

As ever, your thoughts on the issue are what matter most.

Greetings from App Watch headquarters, where over the past week we heard about a new financial document clearinghouse from CPA.com; new fraud detecting capabilities from Incisive; and some international language and integration functions from FieldAware.

To be fair, this column is not out to break any news nor regurgitate press releases from the vendor community. App Watch is, however, a weekly snapshot of product vendor and service provider news as it pertains or is of potential interest to accounting professionals and their clients. We also provide a bit of additional insight into what the news means, or could mean, to you and your clients.

Comfy? Ok, let’s go...

News: CPA.com Unveils Financial Information Exchange for Private Companies

CPA.com, a business subsidiary of the AICPA, has partnered with Confirmation.com to officially launch the RIVIO (Repository of Intelligent Validated Inputs and Outputs) Clearinghouse, which assists with CPA source-validated financial documents such as audited financial statements to bankers, shareholders and other investors. RIVIO makes documents available through a secure, cloud-based platform that offers comparatively stronger fraud prevention and more sophisticated controls than existing delivery methods. The product also acts similarly to EDGAR for public companies, creating a secure, central repository for private company financial information. The RIVIO Clearinghouse is designed to validate that a financial document has been uploaded by a licensed CPA firm; allow companies control over who can view the information, so financial data remains private; and protect private company information with encryption and an IT architecture tested by security audits. The clearinghouse does not replace or compete with firm or bank portals, since it was designed specifically for transferring information between three distinct user groups with features relevant to each. In time, the RIVIO Clearinghouse can be integrated into these portals.

Views: OK so on first sight, you may say “what is the importance of this?” Knowing this product fairly well, I can say there are multiple scenarios where it could be of use to a CPA firm and its clients, but the most basic is this: You have a small business client going for some level of financing, be it through a bank, venture capital or some form of private equity. The financier is going to require that business to provide financial documents and an audit statement – which a CPA firm will likely be asked to provide. The issues here are both process and privty. The current process of gathering and exchanging these documents is by all counts antiquated, not to mention open to fraud. It is slow, it restricts certain parties from being able to communicate directly with each other (i.e. if the financier needs a certain document they can’t directly contact the CPA firm and vise versa). Then there’s the issue of these documents potentially being altered, say verbiage being copied and pasted from the Web or even a CPA firm logo pasted onto a document which is then either faxed, emailed or mailed to the lender/financier. I could go on, but the bottom line here is there needs to be a better way to do all of this, CPA.com via RIVIO is offering it.

News: Incisive Adds New Capabilities to Detect Spreadsheet Fraud

Spreadsheet management technology provider Incisive Software Corp. has new capabilities designed to make it easier for organizations to identify fraudulent behavior. The company’s flagship Xcellerator product is now enabled with automated detection capabilities that locate hidden and misrepresented data within spreadsheets. This update also delivers additional performance improvements designed to reduce the amount of time it takes to scan spreadsheets for risk. Xcellerator can now discover hidden cells by height/width, so that it identifies rows and/or columns that are significantly reduced in size; monitors merged cell activity to ensure data is not accidentally or intentionally hidden; and support for Windows 10 and Microsoft Office 2016. 

Views: Look, for good or bad, most of you still work in spreadsheets and, as such, errors can and will occur. This could be through no fault of your own, or your client’s, or…but then again, it could be. Either way some of these errors and misinformation can of course lead down the path to fraud. Having a tool that can locate, verify and “unhide” data and identify areas of risk doesn’t seem like a bad thing to have in your corner.

News: FieldAware Adds International and Integration Functions

The latest release from cloud and mobile field service automation tool maker FieldAware includes integration to several accounting software packages including Sage, Xero, QuickBooks Online and desktop, as well as French language localization. With the integration of FieldAware’s mobile solution the aforementioned accounting platforms, when a work order is complete, and a job is closed-out on a field worker’s mobile device, an invoice can be automatically generated in the back office. The invoice includes all costs related to the work order, such as the cost of service and any parts/inventory consumed, and can be sent to the customer immediately. Integration of FieldAware with a customer’s accounting system also means that new companies, contacts and parts can be created in either system and automatically synced to both platforms. In addition, French is the first language to be released as part of FieldAware’s language localization and international expansion strategy. Available on both the FieldAware web-based app and mobile app, it allows French-speaking businesses to immediately take advantage of the mobile-first field service offering provided by FieldAware. Additional languages will be added with each new quarterly feature release.

Views: OK I was probably going to let this one go, but with the increase of the mobile work force it is highly likely that you have clients this product would be relevant for. Maybe the French language component isn’t quite as relevant, but the fact that it’s moving more international has to be a plus. The real reason for this getting an App Watch mention too is the integration with many of the top accounting platforms your clients are likely using. How well that integration actually works is, of course, one of those try it for yourself moments.

Until next week, we welcome your feedback and submissions openly.

Change management is an indispensable part of today’s business landscape, yet it remains a difficult concept to grasp, or is, at worst, simply overlooked. Furthering one’s firm is always part of the equation, but whose responsibility is it to manage the schedule for change and evolution? Is it strictly a managing partner’s job? A shared responsibility among firm leadership? Or should the responsibility be more widely diffused?

In 2016, there still isn’t a clear answer as to who exactly controls the pace of change in a firm. However, there are a number of factors that every firm can keep in mind to make sure that their rate of change is outrunning their clients’. When a firm recognizes what particular factors to pay attention to, they learn why change management is important for not only anticipating the future, but making themselves more marketable.

SQUARE ONE

Perhaps one of the biggest obstacles to change management is deciding how to first initiate a conversation. But getting the ball rolling can be easier than you think.

Carl Peterson, vice president of small firms at the American Institute of CPAs, argues that when talking change management in a place with limited resources, you should seek a connection with similar firms in order to move forward together: “I think the best thing they could do is participate in networking groups. The AICPA has networking groups, and change management is one of those things that comes up all the time, and when they find out what other people are doing and learn to implement it, that’s probably one of the best resources.”

Erik Asgeirsson, president and CEO of CPA.com, believes that the right state of mind is what drives change management inside a business. “I think, broadly, change management is all about having that progressive mindset,” he said. “What we’re seeing in successful firms — [no matter] what size or type — is it’s the progressive firms that are really making the most of these new opportunities that are possible due to this digital revolution that we’re in. They’re saying, ‘Let’s look at this through the different aspects of our organization: how we interact with clients, internal processing, how we’re delivering the service, the types of service that we’re providing.’”

Chris Alger, managing director in BDO Consulting’s Pittsburgh office, echoed this need for a progressive state of mind. “Strong, comprehensive change management programs are actually risk management programs focused on human performance and the human condition in the context of managed disruption,” he said. “Culturally, firms operating within a dramatically changing business environment need leaders that not only embrace change, but are capable of harnessing the value of the business opportunities created by these disruptive situations or forces. These firms will benefit from a formal center of excellence with core capabilities focused on providing the deep competence and methods that help institutionalize and cement the change culture.”

Alger says that such firms will be able to control change factors including, but not limited to, executive sponsorship methods and disciplines; stakeholder analysis and management (change preparedness); communications strategy, planning and execution; workforce development (training and education); and performance management, rewards and recognition.

WHO’S THE BOSS?

Since change management has not often been a conscious concern at firms, there’s rarely a single person identified as being in charge of implementing change. What may be more important than naming a specific spearhead of change, though, is to simply be open to evolution itself. If a leader, any leader, in a firm pushes a progressive mindset, it can set the tone for the firm and its future.

“Change management starts at the top, the idea of setting the groundwork for change,” said Peterson. “I think you have to have a managing partner make some of those hard decisions for the firm, but [there’s] really an opportunity to have inclusion of all staff levels. You can have input from all levels — it doesn’t just have to be the managing partner, it doesn’t have to be just the managers. If you think about the young professionals today, if they have input on what their future’s going to be, the environment or technology they’re going to use, it’s really going to build that team and that culture.”

Actively seeking out that champion of change in your firm may prove more fruitful than laying all expectations on the managing partner. When you find that open mind, our experts argue, it’s worth the investment.

“Your leaders can either act as defenders of the status quo or as enablers of the future way of doing business,” added Alger. “Positioning your firm as a proactive enabler of or catalyst for change can be a significant differentiator in the marketplace. But remember [that] the role of change agent or change manager is not in the DNA of most accountants. Thus, find out who are your natural change leaders and invest in their development and technical capability.”

“I think as you go to the larger firms, they’re having success with someone dedicated like an innovation officer in that role,” added Asgeirsson. “When you’re dealing with the small to midsized firms, you’re not going to have a dedicated resource, but I think you can identify a champion for innovation. I also think that it’s a good idea to have somebody who’s a younger member of the firm partnered with a more seasoned person who has the progressive mindset to doing things differently.”

THE ONLY CONSTANT

Change management doesn’t have to be as strenuous as many seem to think. A good leader with a progressive mindset — or one who seeks out that mindset internally — coupled with an awareness of how the business landscape is constantly shifting will lay the basic groundwork for successful firm evolution. Change starts not with an investment or practice, but a belief that it’s necessary.

“Humans are naturally averse to change,” said Alger. “Only a few fully embrace change in either their personal or professional lives. ... To an accountant, business change equals business risk, and risks are to be mitigated and managed. Seldom do you find strong agents of change in an accounting firm.”

“I don’t think we can follow that old path of every three to five years we’ll be making major changes,” said Peterson. “Change management should ultimately become part of your process as a firm. You do that every single year — you have a process in place where you can continually evolve and adapt and tweak. It’s an ongoing thing; you don’t want to be reacting to everything.”