Accountants’ Risky Tech Habits
New study reveals widespread weaknesses in accounting firm technology systems.
Accountants aren’t known for their risky decisions. Quite the opposite, in fact. In most things, accountants are paragons of caution and care.
That’s, “in most things.” But as the new “Accounting Firm Operations and Technology Survey” shows again and again, accountants are taking sometimes potentially disastrous risks with their firms and – worse – with their clients.
These risks go beyond merely “falling behind” the technology curve because of traditionally penny-wise, pound-foolish spending. At one time, “falling behind” risked obsolescence, or worse, maybe irrelevance – either of which was a business risk, but a risk that could only be measured by benchmarking against “the competition,” whatever that was.
Today accounting firms are taking on a whole new category of risk – the risk of sudden, unforeseen and irrecoverable disaster. The black swan event.
This year’s survey lays it out in stark and frightening detail. For instance, 22 percent of firms are delivering client tax returns by email, despite the broadly known risks to client privacy.
Lesser security breaches have wreaked catastrophic consequences on global corporations. Accountants are fooling themselves if they think themselves immune.
The vast majority of accountants are working while on the go. This isn’t new, of course. But the risks of something going wrong are only escalating. Not enough firms have deployed sound security policies or installed the systems necessary to safeguard client and firm data.
In fact, 55 percent of firms don’t support tablet devices. That’s bad on two counts. Count one: Tablets are awesome tools for getting work done and more firms should be supporting their use. Count two: That means 55 percent of firms have no way of managing the security of employee tablet use or any hope of developing a technologically progressive strategy for adoption.
But firms aren’t just gambling with client data and security. They are also playing Russian roulette with their own business operations. For example, 10 percent of firms have suffered a network failure or software lock-up that caused “major” downtime in the past year. That’s a lot of billable hours at stake, not to mention the potentially catastrophic fallout from missed due dates or surprised clients.
The appalling paradox, of course, is that most accounting firms aren’t blind or deaf to the issues. They fret about them all the time. The problem is that too few are doing anything about it.
The study clearly shows that firms understand the imperatives of improving workflows – for effectiveness, efficiency, speed, and cost. But too few have any real plans in place to move forward.
The study also shows that firms are happy to have employees work from home, sometimes on their own hardware. But few have any idea on how to manage the phenomenon, benefit from it or minimize all the obvious risks.
Too many firms don’t back up their email safely. Too many have no policy to purge old files. Or, if they have a policy, too many don’t follow it.
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 per-person 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.
Article by Rick Telberg, Dedicated to providing actionable intelligence and practical advice for the tax, finance and accounting
Published on May 21, 2015