The automobile industry has changed substantially in the last ten years. Today, vehicles are more fuel efficient, more durable, and arguably, easier to drive. Can the same be said for accounting software?
A decade ago software packages were, by most accounts, adequate and suitable for basic tax returns. But limitations in the quantity of data each could incorporate, not to mention the speed in which that data could be processed, restricted software practicality while slowing down the entire system.
Any accountant who has been in the business a few years, especially small practitioners, is well versed in worksheets. Cumbersome? Perhaps, but worksheets gave, and still give, accountants total control over the look and feel of their data. Data prepared in Excel or Lotus was consolidated then entered into tax programs which served as little more than a vehicle for the final figures.
Today, manual worksheets integrate into accounting software in a way they couldn’t ten years ago. Software also works with programs such as desktop super which given recent changes to superannuation legislation is now crucial for accounting practices. It’s also easier than in years past to cross-reference information from previous tax returns, payment summaries, BAS, and other financial data. For the most part, paper reconciliation has disappeared as well.
Technology, of course, has played a major role in the development of accounting software. But so has tax legislation.
Ten years ago accounting software was effective for basic capital gains calculations. Since then, tax laws have become more complex to the point where it would be unwise to not use an accountant for tax returns and compliance-related documentation. Inaccurate returns bring unnecessary risks and the potential for unwelcome advances by the ATO.
One recent example is tax reforms impacting superannuation. Specifically, Reportable Employer Super Contributions (RESC) and total net investment losses now count as income for income testing purposes. Previously, employee salary sacrificing and overtime pay, amongst others, clouded the ATO’s view of how much money any one individual was contributing to their superannuation.
Beginning with the 2009/10 tax year, RESC amounts now include everything from those made under a salary sacrifice agreement to those submitted in addition to the minimum contributions employers must make under a range of other arrangements. These include superannuation guarantee laws, industrial agreements, trust deeds or governing rules of super funds, or federal, state or territory laws.
Accounting software packages such as QuickBooks encompass the latest tax changes to simplify tax filing. The software is now easier and faster to use than in years past.
Technological advances have stimulated the desire for greater efficiencies within the profession. On the flip side, the advent of improved practice management software has played a role in reduced headcounts at many accounting firms.
KPMG, PricewaterhouseCoopers and Ernst & Young, amongst others, have let staff go this year. Yes, most were attributed to the financial crisis and perhaps over-hiring in first place. But one can’t discount how technology has contributed to redundancies, particularly entry level and junior positions. For example, personal assistants have in many cases been eliminated with the increased ease of use, reliability and dependence on, for instance, e-mail or electronic calendars.
Senior level positions have not escaped the financial crisis either but what the sluggish economy has created is greater opportunities for advisor and consulting work according to Kevin Johnson, senior software engineer & taxation specialist at software provider Advanced Professional Solutions in North Sydney. Similarly, the rising salaries across the accounting industry mean much of the work is now passed off to those accountants with less experience (translated, cheaper) and even offshore for the same reason.
Will those trends continue? For a while, yes, but as the economy starts to recover staffs will expand. Accountants will, however, continue to offer more consulting services, Johnson says.
While some won’t have the patience or justification to wait for a return to the good times, exercise caution before dropping the axe on staff in preference for technology.
Human interaction remains a key element to success. It’s just the nature of that interaction which is changing, that is, it’s more sophisticated now. Instead of meeting with clients to simply transcribe information and enter data, accountants are using their time for other revenue and value-generating tasks such as discussing strategy, long-term business planning and growth techniques.
Simultaneously, accounting software’s new functionality has enabled accountants and accounting firms to cross sell other services and improve their own productivity. These software packages include such everyday tools as tax calculators, appointment diaries and client notes as well as more complex processes such as registering companies and tracking self managed super funds. All help practices expedite their operations by encouraging consistency, efficiency, and ease of understanding.
With each new release, accounting software suppliers trumpet products that are easier, faster and more productive. Does that mean fool-proof? No, but the software is less error-prone than in years past. Anyone who isn’t competent in basic accounting practices won’t be able to immediately realize maximum benefits from the software.
Then again, the best car in the world won’t automatically make you a better driver either.
– Gavin Dixon is the CEO of Reckon Limited’s Business Division. Reckon is the supplier of QuickBooks accounting software. http://www.quicken.com.au
