Practice Technology Alan Salmon

Small accounting firms struggling with technology decisions

A new public practice technology survey reveals contradictions in IT planning

Author: Colin Ellis

TORONTO, July 31, 2018 – Technology is one of the top challenges facing small accounting firms but very few are addressing it. That’s one of the contradictions revealed in a new survey from K2E Canada on technology practices among sole practitioners and small accounting firms. 

According to the Accounting Operations and Technology Survey from K2E Canada, more than one-quarter of sole practitioners cite technology knowledge as one of their three major challenges, yet 86 per cent report that they alone are responsible for making all decisions. 

Similarly, 56 per cent of small firms report that their partners make all decisions, with just 10 per cent including a firm administrator. Less than one per cent of sole practitioners and small firms involve external consultants in their decisions. 

The results suggest that Canadian accountants are in danger of falling behind technology trends and opportunities. For example, just 33 per cent of sole practitioners and 26 per cent of small firms have changed their firm’s tax software in the last five years. 

As the survey asserts, “Tax software is a very competitive market and it has become relatively easy to migrate client files from one vendor to another ... firms should evaluate the options available today in tax software and the integration with client portals, ease of updating, speed of return processing, client management and workflow.” 

K2E Canada survey
Accounting Operations and Technology Survey, K2E Canada 2018.

Managing workflow is an opportunity for firms

The management of workflow reveals another contradiction. Workflow and efficiency was cited as the “biggest technology challenge” faced in public practice in the next one to three years. And respondents cited the fixing of workflow efficiencies as the most effective cost control. Yet 43% of respondents were not using workflow software. 

As the survey says, “With workflow and efficiencies a major concern for people, it is surprising that over 43 per cent do not have a workflow solution in place and of that only 11.5 per cent are considering a workflow solution.” Plans to evaluate workflow software in 2018 were strongest in firms with 11 or more partners. 

“The big question is will organizations and firms use the survey as guidance to solve the issues of workflow and efficiencies or use it as an excuse to do nothing,” says the report. “The old saying ‘If it ain’t broke, don’t fix it’ assumes you know enough about current technology and software to be able to determine if it is broken or not.” 

While Microsoft Excel was cited most often by sole practitioners and SME firms as the most popular workflow software, Client Track was a popular option among sole practitioners and firms of two to three partners, while CCH ProSystem fx Practice Management was popular among medium-size firms. CCH iFirm and Doc.It Workflow were also popular choices. 

Are firms moving to the cloud?

Despite considerable talk around cloud-based solutions these days, small accounting firms are not rushing to the cloud. Just 12 percent of sole practitioners reported that they were very likely to implement a cloud-based SAAS version of accounting applications over the next two years. 

Enthusiasm for cloud-based solutions climbs higher as the number of partners increases. More than half of all firms with 11 partners or more are considering cloud-based solutions, with 33 per cent very likely to make the move. The survey reported, however, that none of these firms had a cloud-based solution in place. 

We’ll see if the firms stay true to their word. Just 29 per cent of respondents reported a technology and training budget over three per cent of annual revenue. Twenty-four per cent reported none at all. Most small firms do not have an annual per person technology purchasing budget, while one-third of firms with 11 or more partners reported a per person budget. 

As the survey points out, technology training appears to be a low priority for many firms, despite the oft-cited pace of change in technology. For those firms who may see a competitive advantage in technology advancement, the survey has some suggestions: 

•  Prepare a Technology plan and budget, which will likely require the assistance of an outside consultant.
•  Prepare a training plan and budget to keep current and upgrade skill levels.
•  Evaluate the state of your hardware, software, and services.
•  Automate where it is available and effective; for example, retrieving of statements, processing of invoices, tracking of time, and receiving of payments.
•  Evaluate, select, and implement a workflow solution.
•  Evaluate your current security practices.
•  Evaluate, select, and implement a document management system that will allow for collaboration with people in and out of the office.

The “Accounting Operations and Technology Survey” can be purchased directly from Alan Salmon & Associates at We will have more from the report in the coming weeks, as we look further at practice technology among SME firms. 

Colin Ellis is the managing editor of Canadian Accountant.

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