ACCOUNTING FIRM OPERATIONS
AND TECHNOLOGY SURVEY
Delivering critical decision-making data
Solo and Small Firm Edition
Accounting Firm Operations
and Technology Survey
by
Randolph P. Johnston
Leslie Garrett, PhD
Brian Tankersley
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© 2015 Network Management Group, Inc. & Insight Research Group
Computer Hardware and Operating Systems
Application Software
Copyright 2015 Randolph P. Johnston, Leslie Garrett, PhD, and Brian Tankersley. All rights reserved by the authors. No part of this publication may be
reproduced or transmitted in any form or by any means, electronically or mechanically, including photocopying, recording or use of any information storage
or retrieval system for any purpose without the express written permission of the authors or the authors designated agents. Disclaimer: Neither the authors
nor publisher, nor their sales or distribution agents, make any representations or warranties with respect to the accuracy or completeness of the contents and
specifically disclaim any implied warranties or merchantability or fitness for a particular purpose. As appropriate, competent professionals should be consulted.
Publishing services provided by CPA Trendlines, an imprint of Bay Street Group LLC, PO Box 5139, East Hampton, NY 11937 USA. | cpatrendlines.com |
baystreetgroup.com | Phone (631) 604-1651
Library Data
Johnston, Randolph P.
Garrett, Leslie, PhD
Brian Tankersley
Accounting Firm Operations and Technology Survey
Randolph P. Johnston, Leslie Garrett, PhD, and Brian Tankersley
Bay Street Group LLC
ISBN-13:978-0-9827147-9-9
BISAC: Business & Economics / Accounting / General
1. Accounting firms - Technology. 2. Accounting firms - Management. 3. Accounting firms - United States.
Design by Lori A. McKee, www.loriamckee.com
Printed in the USA
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Letter from the Founders
Dear Stakeholder,
Thank you for your interest in the solo and small firm booklet featuring the results from the Accounting
Firm Operations and Technology Survey from NMGI and Insight Research Group.
We remain steadfast in our commitment to share with you factual, actionable items and insights that are not
available from any other source. The information contained in this eBook is a highly valued commodity.
This survey and eBook delivers the most complete information about accounting firm operations and
technology U.S. accountants are using in their practices.
This eBook serves as a reference tool accounting professionals leverage when making operational and
technology decisions. We achieved nationwide participation from firms of all sizes in all 50 states which
further validates the results. The Second Annual survey features several new survey questions including
three questions that will reveal the software applications that respondents identify as having the greatest
impact on productivity, profitability and the mitigation of risk.
We would like to thank our editor Brian Tankersley, our sponsors, Conarc, Doc.It and Thomson Reuters,
and especially our advisory board members, who provided guidance lending their expertise to ensure we
were kept intellectually honest. We are also thankful for our survey promotion partners AccountingToday,
AccountingWEB, CPAacademy, CPA Practice Advisor, CPATrendlines and TheProgressiveAccountant.
This research project cannot succeed without them.
We are pleased to present you with our 2nd Annual survey eBook containing a collection of the survey
questions, participant responses, expert analysis and new Trend Watch commentary.
Respectfully,
Randolph P. Johnston, Chairman and CEO
Leslie Garrett, PhD, CEO
Network Management Group, Inc.
Insight Research Group
[email protected]@gmail.com
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Letter from the Editor
Dear Reader:
Technology has changed significantly, and the accounting firm of the 1970’s looks very different from the
firm of today. Desks, with two or more large LCD monitors, look more like personal home theaters than
places to sort, organize, and write on documentation. Actual, physical “books” of original entry have been
replaced by digital software like QuickBooks and Sage 50. The “ticker” mechanical pencil and pads of
columnar paper have joined the desktop ashtray, the armband, and the green eyeshade in museums. It is
safe to say that a firm of the 1970’s would be unrecognizable today.
The computerization of accounting isn’t the end of change in the profession. Intuit reported that over
100,000 companies adopted QuickBooks Online in the quarter ended January 31, 2015. FreshBooks and
Wave Accounting report that they serve over 7,000,000 users combined. Market-leading toolsets like
GoSystem Tax RS, XCM Solutions, Bill.com, SmartVault, and Microsoft Office 365 offer today’s firms the
option of accessing their work and client data in a web browser from anywhere. It is easier to serve clients
around the world from anywhere you have an internet connection – and change is the only constant when
dealing with accounting firm technology.
Despite the hyped rhetoric, the “cloud revolution” in many ways represents a partial return to the technology
architecture of the past. Tax preparers in the 1980’s filled out input sheets and sent them via overnight
mail to service bureaus, which entered the information, processed/printed the tax returns, and returned
completed tax forms via overnight mail. We are moving back to centralized shared computing resources,
but the biggest difference is that data is now transmitted via the internet in milliseconds, while the 20th
century service bureaus required expensive overnight shipping for each change to the input data to be
updated in the forms being prepared for the client.
These changes mean that today’s firm competes against both others across town as well as countless
providers around the world. Firms cannot expect to survive in the long term if they do not focus their
efforts on situations where they have a larger number of clients in a smaller number of industries. Most
clients want very specialized insight into their business which the generalist does not have the skills or
perspective to deliver. Over time, firms with an industry specialization or niche are likely to be more
successful than those who remain generalists.
In a larger sense, successful businesses of all kinds specialize in a smaller number of industries and are
finding that cloud-based workflow and collaboration tools make it possible for them to provide advisory
services to a market niche anywhere in the world. NMGI now manages IT services to 150 mid-sized and
large accounting firms from Boston to Honolulu out of a small city in rural Kansas, and its niche expertise
in accounting firms and community banks means that their network engineers are now being consulted
by major software publishers seeking to solve problems with their own software. By specializing and not
just serving as generalists, the NMGI team now provides managed technology advisory services to clients
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unlike almost anyone in the industry. The change was painful – and scary, but this long journey has made
NMGI more profitable and its customers more successful than any time in its 30 year history. If your firm
isn’t following this model to serve fewer clients at a deeper level of competence and engagement as a trusted
advisor, aren’t you just selling a commodity service?
The lesson to take away from these changes is not that you should spend the most money so you can have
the fastest computers, nor should you necessarily change from your reliable, on-premises applications to
cloud applications immediately. Change is painful, and for that reason, many of us avoid change altogether,
resulting in stagnant and inefficient processes – and lost clients. Market leaders win by getting better at
anticipating and solving our clients’ problems – like specialized, industry-specific accounting and tax issues
– every day, and turning those problems into opportunities for profits using this expertise. The changes
we’ve seen over the last half century didn’t happen instantly – the leaders took a series of small, calculated
risks to improve their operations. More effective use of technology made them provide more value to
customers in less time every day. Those that didn’t adapt to these changes were often so busy doing things
the old way that when they finally realized that they had to change, they had been left behind.
I’m honored to work with Randy, Leslie, the respondents, and the project sponsors, and wish each of you
safe travels as you plot your firm’s course for success. If we can help your firm along the way, please don’t
hesitate to reach out to us through NMGI at 620-664-6000 x 131.
Sincerely,
Brian F. Tankersley, CPA.CITP, CGMA
Editor
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Accounting Firm Operations and
Technology Survey Advisory Board
Rick Richardson, CPA.CITP, CGMA, CEO
Richardson Media & Technologies, LLC
Jim Boomer, CPA, CITP, CIO, Senior Consultant, Shareholder
Boomer Consulting Inc.
Joe Woodard, President and CEO
Woodard Consulting Group
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Accounting Firm Operations and
Technology Survey Promotion Partners
AccountingToday
Daniel Hood, Editor-in-Chief
www.AccountingToday.com
AccountingWEB
Richard Koreto, Managing Editor
www.AccountingWEB.com
CPAacademy.org
Scott Zarret, CEO
www.CPAacademy.org
CPA Practice Advisor
Gail Perry, CPA, Editor-in-Cheif
www.CPAPracticeAdvisor.com
CPA Trendlines
Rick Telberg
www.cpatrendlines.com
The Progressive Accountant
Bob Scott, Editor-in-Chief
www.TheProgressiveAccountant.com
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THOUGHT LEADERSHIP
Communication: More Powerful Than
Any Software
By Richard J. Koreto Managing
Editor, AccountingWEB
I once interviewed a CPA
who was a partner in a
small accounting firm with
his father. The father was a
“detail guy” who knew every
detail of the IRC and made
sure their clients paid no
more than the legal minimum. The son was more
“front office.” He personally delivered every return
to their high-net-worth clients in their homes and
went over each form and schedule: “What are you
unclear about? Based on changes in your family
situation, there will be some tax implications. Let’s
discuss what we can do about them…” He realized
that handling the numbers was not enough—he had
to explain what they meant. And he had to listen.
with your client, but with her other professionals:
financial advisor, estate planning attorney and
insurance specialist. You can’t get ahead having a
heart-to-heart with a spreadsheet.
Talking and listening go beyond client work. You
likely have colleagues, juniors and assistants in your
firm. Even if you’re the managing partner, you still
rely heavily on your staff. You may do a pro forma
review each year, but have you listened to your staff?
Have you spoken with them about what they want?
They might want flexible hours, occasional workat-home days or increased vacation during the offseason. You won’t know until you talk with them—
or until they suddenly give notice.
Doubtful? Just consider Luca Pacioli, the founder
of the accounting profession. Did you know he
befriended and collaborated with Leonardo da
Vinci? To capture the attention of the most brilliant
This type of skill is more important now than ever, mind of the Renaissance, Pacioli must’ve been one
and a way for accountants to clearly differentiate heck of a communicator.
themselves from increasingly sophisticated and
inexpensive software. Yes, there are programs out Richard Koreto has been covering the accounting profession for 20 years. He
there that help individuals and small companies previously was senior editor at the AICPA’s Journal of Accountancy, where
manage their taxes and expenses, but who can he created the Online Accountant column, and online content editor for the
provide the analysis? An experienced accountant New York State CPA Society. He is the author of “Run It Like a Business: Top
Financial Planners Weigh In on Practice Management” (Dearborn, 2004).
who has seen the same problems again and again,
and can turn data into actionable advice.
Consider the high-net-worth client whose returns
you prepare. Do you fill out the Form 1040 and
say “have a good year”? Or do you ask about
the implications of her decisions and the ways
she can minimize her tax bite? Perhaps she has
grandchildren for whom she can fund 529 plans.
Or charitable interests—maybe a CRT is a solution?
These items involve talking and listening, not only
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A New Core Competency
By Daniel Hood, Editor-in-Chief,
Accounting Today
services, like Web-based Client Accounting
Services or data analytics.
If you’ve gotten this far, the •It’s a selling point for clients. They’ll like
reams of data in this report
knowing that their accountant is using the latest
should have convinced
technologies – and that their trusted advisor will
you that it’s great for firms
be able to advise them on their own IT needs.
looking to benchmark
themselves against how • It’s a selling point for staff. The much-sought-after
their peers in the profession
young accountants are used to using the latest
are using technology – highlighting the areas
technology, and will expect to find it at work.
where they may be falling behind, and the steps
• It’s a selling point, period. If an acquirer or merger
they need to take to catch up.
partner has to come in and do a major upgrade of
What it may not have made clear is why keeping
a target firm’s systems, they’re likely to pay less –
up to date with technology (or better yet, getting
or not do the deal at all.
ahead of the curve) is so critical these days.
There are myriad other benefits to getting up
The simple fact is that the role of technology at
to speed, and with the wealth of information
accounting firms has moved from the realm of
available in this report, firms are well-positioned
mere office tool to core competency, with a firm’s
to get started.
ability to deploy new IT tools efficiently almost
as important as your core technical skills in tax,
Daniel Hood is the editor-in-chief of Accounting Today, and has been
audit and accounting.
covering accounting for almost 20 years.
As firms consider the data in this report and
think about how to apply it to their practice, they
should consider these reasons for getting ahead
of the cure when it comes to IT:
• It’s not overhead anymore. It’s a force-multiplier,
a competitive edge, and a source of new service
offerings. Properly used, IT can not only improve
a firm’s bottom line exponentially by letting them
deliver their current services much more efficient
– it can also let them turn old loss-leaders like
payroll into profit centers by automating them,
and open the door to entirely new, more profitable
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THOUGHT LEADERSHIP
Think Beyond Average
By Jim Boomer, CPA.CITP, MBA
CIO & Shareholder,
Boomer Consulting, Inc.
the workflow tools and process improvement
methodologies to address this challenge.
3. Although a majority of respondents spend 25% or
This year’s survey provides
less of their time away from the office, firms need
some great insights on
to prepare for this growing trend. Technology
where firms stack up in both
is facilitating and fueling expectations among
practice management and
current and future employees. Managing this
technology. I encourage you
will require a greater investment in collaboration
to view this as the starting
tools like video conferencing, instant messaging
point though. Strive to be better in all areas
and presence.
regardless of whether you are below, at or above
average. After all average is where the best of the
4. Too many firms are still lacking basic management
worst meets the worst of the best.
systems like document management, business
Break Away From the Herd
intelligence and workflow automation tools.
Whether it is technology, processes or new service 5. With 85% of firms lacking a per-person technology
lines, we, as a profession, have the tendency to
budget, too many firms are still taking a reactive
follow the herd. Large firms look at peers and do
approach to technology spend. This often leads to
what they do. Small firms tend to look at other small
investing in maintenance rather than innovation
firms. I challenge you to look beyond the firms of
(the things that move you forward).
similar size for additional ideas on how to support
your firm’s continued improvement and growth. Think 10X
We’ve found that small firms can learn a great deal
Ask yourself what you would need to do to if your
from those that are larger and vice versa.
firm was 10X the size it is today. This question
often creates excitement, change, innovation and
Key Insights
exploration rather than striving for average or
Although there is a wealth of information included
doing exactly what similarly sized firms are doing.
in this year’s survey results, here are the insights that
By thinking differently, you can transform IT from
stand out to me.
a cost of doing business to a competitive strategic
1. Firm leadership is still spending too much time advantage in your firm.
working in the business rather than working on
Jim Boomer is a shareholder and the CIO for Boomer Consulting, Inc. He
the business.
2. Improved workflow is both a goal and challenge
for many firms, yet not enough are adopting
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is the Director of the Boomer Technology Circles, The Producer Circle and
The CIO Advantage. He also serves as a strategic planning and technology
consultant and firm advisor to CPA firms across the country.
Technology Management
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© 2015 Network Management Group, Inc. & Insight Research Group
Computer Hardware and Operating Systems
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Maybe This Is your Father’s Accounting Practice
process in the background so it is not obtrusive
and disruptive, and then maybe we can talk.
As a person who still prefers Meanwhile, I’ve got clients to serve and I’ve been
books to e-books, who serving them well for over 20 years, and I continue
chooses a landline over my to get referrals and new clients, and none of them
cell phone, who cherishes her are complaining about the services I provide.
collection of vinyl albums, and Sure, that attitude breeds complacency and ignores
who enjoys writing letters in innovation and opportunity, but in small towns
longhand (BTW I’m writing and large cities across the country you will find
my first draft of this document in longhand), and, these small accounting firms – thousands and
(full confession) as a CPA who maintains a small thousands of them – perfectly happy with the
tax practice of my own and who manages her books way things are. Instead of asking our accountants
in Excel (in spite of the fact that I know many when are they going to change, perhaps we should
accounting software programs inside out and have focus on what factors would make them choose to
written myriad books about financial software), I change and what do they think that change would
can completely relate to the results of this survey look like? The solutions they are being presented
without a trace of the surprise and disappointment with may well be viable, but viable doesn’t go far if
expressed by my journalistic colleagues who shared the accountants don’t perceive a problem in need
their points of view in this impressive publication.
of a solution.
By Gail Perry, CPA, Editor-in-Chief,
CPA Practice Advisor
Accountants aren’t clueless about technology and
they’re not stupid when it comes to making decisions
about how to operate their business. What they are
is busy. Maybe they’re busier than they need to be,
and maybe they could gain some extra time in their
days by adopting more modern technology, but
for the most part they already work full time and
then some. Finding the time to explore, study, and
compare new technologies is low on their priority
list and also not part of their skill set.
Show me a turnkey solution that’s going to
make my workday easier, include a minimal to
non-existent learning curve, demonstrate – not
speculate – exactly how the cost of this product is
going to add revenue to my bottom line, and take
care of the installation and the implementation
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Gail Perry is a CPA and the editor-in-chief of CPA Practice Advisor magazine.
She is also a well-known public speaker and is the author of more than 30
books (including Mint.com For Dummies and Surviving Financial Downsizing:
A Practical Guide to Living Well on Less Income). In addition, she maintains
a small tax practice. Gail is a graduate of Indiana University where she
earned her bachelor’s degree in journalism. After returning to school to study
accounting at Illinois State University, Gail earned her CPA and worked for
Deloitte’s Chicago office as a state and local tax specialist. She is a former
tax columnist for the Indianapolis Star newspaper, has taught college-level
accounting principles, and was on staff for 10 years at the Indiana CPA Society
as a computer applications instructor. Gail was the publisher and editor-inchief of AccountingWEB before joining the CPA Practice Advisor team.
Technology Management
Technology Governance
© 2015 Network Management Group, Inc. & Insight Research Group
Computer Hardware and Operating Systems
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THOUGHT LEADERSHIP
The Risks Accountants Would Rather Ignore
Study reveals widespread weaknesses in accounting firm technology strategies
firms have deployed sound security policies or installed
Accountants aren’t known the systems necessary to safeguard client and firm data.
for their risky decisions. In fact, 55 percent of firms don’t support tablet
Quite the opposite, in fact. In devices. That’s bad on two counts. Count one:
most things, accountants are Tablets are awesome tools for getting work done and
paragons of caution and care. more firms should be supporting their use. Count
two: That means 55 percent of firms have no way of
That’s, “in most things.”
managing the security of employee tablet use or any
But as the “Accounting Firm hope of developing a technologically progressive
Operations and Technology Survey” shows again and strategy for adoption.
again, accountants are taking sometimes potentially
disastrous risks with their firms and – worse – with But firms aren’t just gambling with client data and
security. They are also playing Russian roulette with
their clients.
their own business operations. For example, 10
These risks go beyond merely “falling behind” the percent of firms have suffered a network failure or
technology curve because of traditionally penny- software lock-up that caused “major” down-time in
wise, pound-foolish spending. At one time, “falling the past year. That’s a lot of billable hours at stake,
behind” risked obsolescence, or worse, maybe not to mention potentially catastrophic fallout from
irrelevance – either of which was a business risk, but missed due dates or surprised clients.
a risk that could only be measured by benchmarking
The appalling paradox, of course, is that most
against “the competition,” whatever that was.
accounting firms aren’t blind or deaf to the issues.
Today accounting firms are taking on a whole new They fret about them all the time. The problem is
category of risk – the risk of sudden, unforeseen, that too few are doing anything about it.
and irrecoverable disaster. The black swan event.
The study clearly shows that firms understand
This year’s survey lays it out in stark and frightening the imperatives of improving workflows – for
detail. For instance, 22 percent of firms are delivering effectiveness, efficiency, speed and cost. But too few
client tax returns by email, despite the broadly have any real plans in place to move forward.
known risks to client privacy.
The study also shows that firms are happy to have
Lesser security breaches have wreaked catastrophic employees work from home, sometimes on their
consequences on global corporations. Accountants are own hardware. But few have any idea on how
fooling themselves of they think themselves immune. to manage the phenomenon, benefit from it, or
The vast majority of accountants are working while minimize all the obvious risks.
By Rick Telberg, CPA Trendlines
on-the-go. This isn’t new, of course. But the risks of Too many firms don’t back up their email safely. Too
something going wrong are only escalating. Not enough many have no policy to purge old files. Or, if they
have a policy, too many don’t follow it.
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Most firms don’t even have a regular upgrade
schedule for their most critical servers. Most
firms have no professionally designed document
management system. (And what is an accounting
firm but a living, breathing document management
organism?)
A third of firms are still relying on spreadsheets
to run their audit work. Who wants to defend that
practice in a liability trial?
The vast majority of firms can’t even budget
effectively for their technology. A whopping 85
percent fail to break down their tech spend to a perperson metric. Firms certainly calculate per-person
metrics for all sorts of other activities, ranging from
rent to pencils to health insurance. Why not tech?
About 38 percent of the people in charge of
technology strategies regard technology not as
a potential competitive differentiator capable of
providing competitive advantage, but, sadly, as a
mere expense item.
Perhaps the most alarming finding from the study
is that too many firms don’t know what they don’t
know. And what they think they know is wrong.
A third of firms believe they currently use nothing
that could be considered a cloud service. Psssst: If
you’re reading this, you’ve been using the cloud.
More astonishing, two thirds of firms say they aren’t
even considering a cloud solution. Another pssst:
if you’re thinking of upgrading your phone, you’re
already considering a cloud solution.
Rick Telberg is CEO and president of CPA Trendlines, which provides
actionable business intelligence to tax, accounting and finance professionals
through its members-only research service at cpatrendlines.com.
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THOUGHT LEADERSHIP
Tipping Point, What Tipping Point?
By Bob Scott, Executive Editor of
The Progressive Accountant
In much of the business
world, a substantial part of
the market has passed the
tipping point in terms of
cloud-based software. Even
if they don’t own business
applications that work via
the Internet, they are considering them. That is not
the case with accounting firms.
solve business problems, and technology is a major
part of that.
Besides, it’s hard to shake the belief that the small
firms, which are the majority of the business and of
the respondents to the survey, are using products
that work. Whether these applications and devices
are optimal or not, they get done what business
owners want done.
Clearly, the issues change as firms get larger.
Needs are more complex and larger firms have
more resources for evaluating, purchasing and
implementing all the news stuff.
It is pretty much the same story as last year. A
majority of respondents do not use workflow
applications, tablets of any size or have a But right now, many firms have things to do that
consume their time and attention—and that is
replacement cycle for technology.
focusing on running their businesses.
Sixty-percent of respondents in this year’s survey
are not even considering cloud-based application, Bob Scott has been informing and entertaining the mid-market financial
although 32 percent say they are somewhat or software community with his email newsletters, Bob Scott’s Insights, for 15
very likely to consider purchase of a SaaS-based years. And he has been covering this market for 22 years, first as technology
tax and accounting program over the next two editor of Accounting Today and then as the Editor of Accounting Technology
from 1997 through 2009. He has covered the traditional tax and accounting
years. (It would be interesting to survey how many profession during the same time and continues to address that as Executive
understand what SaaS standards for.)
Editor of The Progressive Accountant.
Part of this may be that one key application, tax
software, is still relatively new in its online editions.
Three percent reported using Intuit Tax Online and
less than one percent utilized Thomson Reuters’
GoSystem RS.
But again, accounting firms have rarely been focused
on technology for technology’s sake. They are
concerned with getting more clients—47 percent say
getting new clients is their number one priority.
There is an old adage that customers do not buy
technology; they buy products and services that
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Letter from the Founders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iv
Letter from the Editor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v
Advisory Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii
Promotion Partners. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . viii
Survey Sponsors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix
Thought Leadership. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi
Table of Contents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xviii
Survey Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xix
DEMOGRAPHICS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Consultant’s Counsel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
PRACTICE MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Consultant’s Counsel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
TECHNOLOGY MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Consultant’s Counsel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
TECHNOLOGY GOVERNANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Consultant’s Counsel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
COMPUTER HARDWARE & OPERATING SYSTEMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Consultant’s Counsel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
APPLICATION SOFTWARE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Consultant’s Counsel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
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Table of Contents
Thought Leadership
Demographics
Practice Management
Technology Management
Technology Governance
© 2015 Network Management Group, Inc. & Insight Research Group
Computer Hardware and Operating Systems
Application Software
DEMOGRAPHICS
FIRM DEMOGRAPHICS
2014 Results
2015 Small Firm (1-10) Results
Which of the following most closely fits your job title?
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Table of Contents
Thought Leadership
Manager
7.1%
0.0%
0.6%
4.3%
27%
Sole
Practitioner
Business
consulting
Payroll
Demographics
Practice Management
Professional
Staff
Tax preperation
Technology Management
Technology Governance
© 2015 Network Management Group, Inc. & Insight Research Group
Tax Planning
52.8%
32.7%
76.6%
62.4%
86.2%
49.1%
78.8%
77.7%
55.8%
Accounting /
Bookkeeping
27%
17.6%
Shareholder/
Owner
What type of services does your firm provide?
92.2%
84.2%
Q2
Partner
69.9%
Managing
Partner
8.9%
1.8%
19.5%
4.2%
73.9%
Q1
2015 Solo Practitioner Results
Write Up
Computer Hardware and Operating Systems
Application Software
FIRM DEMOGRAPHICS
2014 Results
2015 Small Firm (1-10) Results
How many partners are in your firm?
I am a sole
practitioner
2 to 3
1.4%
0.0%
5.7%
4 to 5
6 to 10
Do you have a firm administrator?
9.1%
37.6%
62.4%
90.9%
Q4
0.6%
4.2%
36.9%
56.0%
95.2%
Q3
2015 Solo Practitioner Results
Yes
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Thought Leadership
No
Demographics
Practice Management
Technology Management
Technology Governance
© 2015 Network Management Group, Inc. & Insight Research Group
Computer Hardware and Operating Systems
Application Software
FIRM DEMOGRAPHICS
2014 Results
2015 Small Firm (1-10) Results
Is your firm administrator involved in technology
purchase decision-making in your firm?
No/not
applicable
Yes, with
limited
involvement
9.6%
6.1%
13.1%
1.2%
Yes, with great
involvement
Yes, with full
responsibility
How are MAJOR operational or technology decisions
made in your firm?
I am a sole
practitioner,
I make all
decisions
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Thought Leadership
One partner
makes these
decisions
Our firm
administrator and
partner(s) make
the decision as a
group
Demographics
Practice Management
Our partners
make group
decisions
Technology Management
Technology Governance
© 2015 Network Management Group, Inc. & Insight Research Group
IT Manager
makes decisions
with partner
approval
0.7%
1.2%
2.5%
0.6%
18.8%
3.0%
15.2%
0.6%
10.3%
1.2%
50.0%
93.3%
Q6
8.9%
1.8%
68.4%
90.9%
Q5
2015 Solo Practitioner Results
Outside
consultants
Computer Hardware and Operating Systems
Application Software
FIRM DEMOGRAPHICS
2014 Results
2015 Small Firm (1-10) Results
How many Full Time Employees (excluding partners)
are in your firm?
5 to 10
Table of Contents
Thought Leadership
$100,001 $200,000
Demographics
Practice Management
$200,001 $500,000
Technology Management
Technology Governance
© 2015 Network Management Group, Inc. & Insight Research Group
$500,001 $1,000,000
0.4%
0.0%
12.4%
0.0%
9.1%
12.4%
21.2%
$50,000 $100,000
35.5%
What is your firm’s annual revenue?
8.9%
5.0%
Less than
$50,000
24
1 to 4
30.9%
38.2%
Q8
0.0%
None/Not
applicable
0.0%
0.0%
31.9%
68.1%
100%
Q7
2015 Solo Practitioner Results
$1,000,001 $5,000,000
Computer Hardware and Operating Systems
Application Software
CONSULTANT’S COUNSEL
for Solo Practitioners and Small Firms
Demographics
This year’s survey highlighted that small accounting firms are the heart and soul of the profession. For
purposes of this book, we look at data from all firms with 10 or fewer employees, excluding partners. While
this may seem like a “niche” market, it’s actually the vast majority of practice units in the US. According
to The CPA Practice Advisor, which targets firms of that size, 90 percent of all accounting firms have 10
or fewer employees . The magazine also estimates that approximately one-third of the 140,000 accounting
firms in the US are CPA firms, and the other two-thirds of the firms are led by public accountants, enrolled
agents, and other non-CPA accounting professionals .
Unlike larger firms, smaller firms tend to have fewer owners and resources to help them manage the
business side of their practices. We classify firms with no employees as “solo practitioners” and firms with
one to 10 employees as small firms. For the 2015 survey, 68 percent of the practices we classify as “small
firms” had one to four full time employees (excluding partners), while the remaining 32 percent had five
to 10 employees.
Fifty-six percent of firms with one to 10 staff report that they have no partners, and a significant majority
of both solo practitioners (91%) and small firms with one to 10 employees (62%) report that they do not
have a firm administrator to handle many of the business functions of the practice for the partners.
Because of the small numbers of staff per partner, many small firms struggle to make ends meet. Thirtyeight percent of solo practitioners had annual revenue of less than $50,000, 31 percent had billings of
$50,000 to $100,000 per year, 21 percent billed between $100,000 and $200,000 per year, and nine percent
billed between $200,000 and $500,000 annually. The small firms had a wider range of income, but we
noted that even five percent of these firms had billings of less than $50,000, which is generally considered
an indication of a “part time” practice. Because of the lack of support, solo practitioners and small firm
owners must perform all of client services and many perform all of the back office functions of their
practice. We believe that this lack of investment in back office assistance makes it harder for solo and
small firms to maximize their opportunities to find better clients and to practice enough accounting in the
limited remaining time to earn significant income.
The service mix for small firms tends to be more limited than that of larger firms, and these firms likely
work with smaller businesses , which would likely include more client bookkeeping, payroll, and tax work.
As one might expect, solo and small firms also are much less likely to perform audits, forensic accounting,
litigation support, international accounting services, or business valuation services than larger, more
diversified firms. The lack of staff to assist with client and back office tasks as well as the smaller average
size of most of these clients would lead to a different set of duties in a small practice than one might have
in a larger practice.
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Thought Leadership
Demographics
Practice Management
Technology Management
Technology Governance
© 2015 Network Management Group, Inc. & Insight Research Group
Computer Hardware and Operating Systems
Application Software
What type of service does your firm provide? Select all that apply.
Solo Practitioners (n=165)
Small Firms (n=282)
1
Accounting / Bookkeeping (84.2%)
1
Accounting / Bookkeeping (92.2%)
2
Tax preperation (78.8%)
2
Tax preperation (86.2%)
3
Tax planning (62.4%)
3
Business consulting (77.7%)
4
Business consulting (55.8%)
4
Tax planning (76.6%)
5
Payroll (49.1%)
5
Payroll (69.9%)
6
Write Up (32.7%)
6
Write Up (52.8%)
7
Financial planning (18.8%)
7
Financial planning (29.8%)
8
Other (please specify) (13.3%)
8
Estate planning (28.7%)
9
Estate planning (12.7%)
9
Audit (22.0%)
10 Technology services (10.9%)
10 Technology services (19.1%)
11 Forensic accounting (7.3%)
11 Business valuation servies (14.2%)
12 Audit (6.7%)
12 Wealth management (10.6%)
13 Business valuation servies (5.5%)
13 Litigation services (9.6%)
14 Wealth management (4.2%)
14 Forensic accounting (8.5%)
15 Litigation services (3.6%)
15 Other (please specify) (5.0%)
16 International accounting services (3.0%)
16 International accounting services (3.9%)
Many potential recruits are hesitant to take a job with smaller firms for reasons including a less clear path to
advancement, training and experience which is less transferrable to management accounting in a large company
(public or private), and more. While firms may attempt to offer additional flexibility to staff to compensate for
what is seen as lesser opportunities, balancing time off and client requirements is much more difficult for small
firms as they have fewer resources to cover ongoing workloads during vacations and frequently do not have the
economies of scale to support all of the technology needed to support efficient remote work.
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Thought Leadership
Demographics
Practice Management
Technology Management
Technology Governance
© 2015 Network Management Group, Inc. & Insight Research Group
Computer Hardware and Operating Systems
Application Software
About the Survey / How to Participate
in the Survey
For more information on the survey, contact Leslie Garrett
([email protected]), or Randy Johnston ([email protected]).
Related reports available exclusively from CPA Trendlines
Accounting Firm Operations and Technology Survey – for Medium and Large Firms
Accounting Firm Operations and Technology Survey – for Firms of All Sizes
Accounting Firm Operations and Technology Survey – Tax Software
For more, visit https://store.cpatrendlines.com and https://cpatrendlines.com
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Thought Leadership
Demographics
Practice Management
Technology Management
Technology Governance
© 2015 Network Management Group, Inc. & Insight Research Group
Computer Hardware and Operating Systems
Application Software