Technology is Driving the Future of Tax: Is your foot on the gas or are you just along for the ride?

November 21, 2019

An Ignite Blog By: Susan Day, CPA, CGMA
Principal, Adams Brown Beran & Ball, Chartered (ABBB)

The KSCPA recently sat down with Susan Day for a Q&A discussion of technology and tax industry trends. Whether you find yourself in public or private tax practice, in this fast-paced technology-driven world, you can no longer be a passenger; you must be a copilot with technology. Take a look at our conversation below!

What challenges and opportunities for tax professionals do you see on the road ahead?

As accountants, our minds tend to go the challenges first, but to drive change, we must first focus on the excitement of opportunity. A few high-level opportunities come to mind: The ability to interact and connect with our customers in new ways; the opportunity to change not only how work is done, but where; and the ability to broaden the scope of solutions we can offer by tapping into resources outside the traditional “bricks and mortar”. Challenges include: analysis paralysis, the rapid pace of change, and developing a technology strategy mindset. There is a fear of the unknown or the lack of willingness to try something new. In my experience, the ability to adopt technology in private industry and smaller practitioner firms is not happening as fast as it could.

What technology strategies and trends are you currently seeing in your professional practice?

Our practice is similar to so many colleagues I have visited with this past year. Trends include: the expectation to access data wherever, whenever; the ability to analyze large amounts of data faster, and the continued focus on process automation. Strategies we see include: continuous process improvement, data security, and monitoring industry specific technology products. Changing our staff training mindset from compliance skills to analytical and advisory is also a focus.

Talk to us about automation and process improvement.

Automation opens doors to improving processes. It allows you to focus on improving efficiency while maintaining quality and data security. At Adams Brown Beran & Ball, Chtd. (ABBB), we are looking for tools to automate repeatable, repetitive tasks to move resources up the value chain. ABBB is looking at several projects throughout our service offerings to determine the ROI of automation.

One automation project is estimated to free up about 800 hours, and another would free up approximately 1300 hours. We are committed to the approach that we can’t sit on the sidelines. We start small, try something, learn along the way, and if it doesn’t work out – we fail fast and move on.

Do you have automation recommendations for our readers?

Finding the right partner to help bring automation in-house is key. Once you do, they’ll take the guesswork and intimidation out of the technology through training. That proper training will pay off. As your team works with the new powerful tool, you’ll see opportunities for automation that you can apply to more and more processes.

Devote time to watching what is going on in the profession. I’m curious to see if the large firms and other technology providers will build automation and AI into turnkey solutions and monetize these resources for smaller firm use.

Data analytics, data gathering tools and scan and populate technology are also great examples of areas that continue to evolve in the tax world. New developments in these areas help provide efficient communication with clients, quickly process large amounts of data and standardize processes.

For tax departments newer to technology, start small with tried and true solutions. I’d suggest looking at scan and populate technology, paperless data storage and a work-flow solution.

How are advances in tax technology impacting how you provide services to clients? Are clients along for the ride?

Client expectations and how they are accessing data are also changing. They are as much a driver of change as the technology itself. At ABBB, we strive to make the client experience as convenient as possible.

Society wants and expects 24/7 access to products, services, and data that make our lives easier. As trusted advisors, we must continually adapt our processes and automate our tasks so we can free up time to focus on the client experience. We focus on how technology is going to change, the importance of training staff, but involving clients in the journey is also essential in planning. A big part includes educating our clients too.

What resources do you need to become Future-Ready?

Just as tax professionals should and are required to stay up on new tax laws and developments, we should be just as responsible for staying up on emerging technologies. It is our job to stay on top of possibilities, be very open and on the lookout for new opportunities.

The best resource you can have is a good team that places importance on developing a technology strategy mindset. In our organization, we have a cross-section of our operation, industry and service teams that meets to focus on strategic technology issues. Our goal is to be forward-thinking. It helps us make sure we are sharing ideas and not operating in silos.

When our team explores new technology, we look at and discuss several key aspects including:

Not only what something can do now but what can it do in the future? What is the development path for the product?
What Application Programming Interfaces (APIs) are available to integrate with the program?
How does it fit in with our existing technology?
What problem does this solve?

Where do you see tax services heading in 5-10 years? What skills will be needed?

Given the pace of change, the “car” we are driving now won’t even exist in five to ten years! I do believe in the immediate future; however, the tax landscape will continue to transform.

We must continue to evolve to stay relevant. In public practice, there are pockets of opportunities in compliance work and the new tax law will keep tax professionals busy for quite a while. In the long run, however, it is a very narrow growth space. For example, a 1040 practice will continue to see increased commoditization. Integrating wealth management along-side a 1040 practice makes a lot of sense. Continued technology use and competition from non-traditional providers will continue to grow. In the last five years, the number of 1040s filed increased 6% and while professional preparation stayed flat, self-prepared returns grew by 14%.

In both private and public practice, data entry and similar tasks will be automated and enhanced with machine learning. This will free us up for more valuable use of time. Analytical, communication, and advisory skills will become increasingly important. Consulting is a different language and process than compliance. We will see the need to “retool” our talent to learn these skills earlier in their careers. As new talent comes up through the ranks, they’ll encounter a different profession than many of us grew up in.

Ten years out (or even further) – I’d like to think we will have continued modernization of the IRS and state/local taxing jurisdictions. The current IRS modernization plan is a 6-year, $2.3 billion-dollar plan. We are light-years behind many other countries in their push to modernization. Tax professionals as the “middle-man” may go away.

How can we stay Future-Ready in the ever-evolving accounting profession? Put the pedal to the metal!

Uncertainty is uncomfortable, and as accountants, we like to know that our debits and credits equal. With the rapid pace of change, it’s challenging to engage and not stick with the “way I’ve always done it” mentality. It’s hard to avoid becoming overwhelmed when we expect to find the perfect solution right off the bat. Try taking a different approach by making incremental progress with smaller, less-intimidating tasks to get you to that end-goal. Some actionable steps include:

Read, stay informed and stay curious.
You don’t want to be left in the dust. Stay informed on emerging technologies including blockchain, continuous auditing, cybersecurity, data analytics, and robotic process automation.

Join the Kansas Society of CPAs and network with other professionals.
You don’t have to do it alone! I have found our community of tax professionals are more than willing to “talk shop” and share what’s working for them.

Engage and encourage your team.
The best ideas come from those on the front lines and it makes change much easier. Technology is only as good as the people surrounding it.

Train your team.
Make sure you are adapting your training to meet the changing skillset needs and accommodate different learning styles.

Start small, but just start!
As one of my mentors used to say, “we aren’t doing brain surgery”. Fail fast and try again. ABBB has been paperless for many years and each year we find more ways to make it better. Start a pilot project! ABBB has 13 firm locations. Last year we started a new technology platform and piloted it in two locations. It has proven effective so this year we are using it in four locations. If it continues to work well, after this busy season, we will implement it firmwide.

Ask your clients.
It’s a novel concept but can often be forgotten. What do they value? Aristotle said, “The guest will judge better of a feast than the cook.” That makes me chuckle, but it’s oh so true.

Get a technology strategy and mindset.
What lens or theme will you use to look at all the options out there? For example, is it cost containment, efficiency, simplification?

Don’t forget security.
Security is sometimes an after-thought, or maybe just implied as a given, but it should be a key part of every technology strategy.

Any final words of advice?

We are missing the point if we feel threatened by technology. Robots are not going to replace everyone. Technology is a powerful tool that enhances our ability to share our knowledge and expertise, solve problems and advise others for the greater good. Embrace it.

“It is tempting, if the only tool you have is a hammer, is to treat every problem like it is a nail.” – Abraham Maslow

Finding the time to put a holistic strategy around technology can seem like a heavy load. It can be hard to get the right people to the table and agree on what lens to use to look at technology with. In my experience, even with all the challenges, it’s not only worth it but necessary to overcome the temptation to tap the brakes. Don’t be a passenger – help your organization be an active driver on your way to success.