Data analytics, forecasting software a necessity for accounting firms to stay relevant

Data analytics and forecasting tools are playing major roles in the work local accounting firms are doing, those in the field say, noting the technologies are here to stay.

“This is no longer a trend, but a necessity for companies,” says Anthony Mangiameli, a partner at Insero & Co. CPAs LLP. “CPA firms that are not in the space of data analytics and forecasting tools are behind the curve.”

The largest accounting firms, dubbed the “Big Four,” were the first ones using the technology, but now regional firms are turning to the tools more and more, Mangiameli says.

Mangiameli and other local accounting professionals say these tools help address areas such as monitoring and improving business performance, improving client experience, identifying and managing risk, generating higher profit margins and tracking cash flow analysis.

Using such tools in the accounting sector is expected both internally at a firm and externally from clients, he notes.

Insero has a team that focuses on technology and innovation that not only looks at emerging technologies, but also finds the best ways to use the large amounts of data that is now available to get the best insights.

Using data analytics and forecasting tools help the accounting firm gain valuable insights into clients’ financials — especially when it comes to risk management — and provide visuals that can better tell their stories, Mangiameli says.

The option allows the company to analyze data in real time and then, using predictive analytics, the accounting firm can make more informed predictions on what will happen in the future and adjust accordingly.

“It’s the difference between being proactive rather than reactive,” Mangiameli says.

In addition, tools such as robotic process automation take some of the mundane tasks away from employees, a move that increases efficiency and allows them to focus their efforts on more value-added services.

The result is an efficient process that can result in greater employee satisfaction, he notes, adding among the challenges moving forward is attracting the talent to the accounting sector when data analytics is now being used in a range of industries.

“This has changed the dynamic of CPA practices,” he says, adding firms are now looking for employees with experience in these emerging technologies.

The firm can also use data analytics when it comes to client consultations, he says. While accountants have traditionally been seen as advisors, they can sometimes be viewed more as service providers.

The newer technology, however, helps bring more of the focus back to being advisors to clients, Mangiameli says.

“Ultimately it’s about bringing value to our clients,” he says. “These tools enable us to do that.”

Jennifer Wood, director of audit innovation at The Bonadio Group, says data analytics and other emerging technologies are embedded in most aspects of the auditing process, noting the tools are changing the way accounting work is done.

“The accounting revolution is here,” she says. “Data analytics and artificial intelligence drive quality, increase efficiencies and bring more value to an audit.”

Data analytics, for example, allows for the analysis of full data sets, rather than a random sampling, which was standard in the past when such technologies were not available.

The process provides higher-quality audit information, since the auditor can now examine far more data than had previously been possible with audit sampling, she explains.

Bonadio has been progressive when it comes to using new technologies, Wood says.

The business is one of a select group of accounting firms around the country working with the American Institute of Certified Public Accountants on a uniform technology that would drive audit quality and add client value.

The goal is to develop a flexible and scalable, cloud-based platform that uses automaton, artificial intelligence, data analytics and updated methodologies to transform auditing.

Bonadio is conducting a pilot program using the software with select clients this fall, with the national accounting organization looking to have a marketable product in 2022.

‘We aren’t just reading the audit book, we’re helping to write it,” she says.

Wood says the increased use of data analytics and other technologies in the accounting sector could also lead to stronger client relationships, noting that employees who are versed in such technology are an asset, as is exposing CPAs to different tools.

“We don’t want to just be auditors; we want to be trusted business advisors,” she says. “These deeper insights could open the door to additional advisory services.”

Michelle Cain, a partner with Mengel, Metzger, Barr & Co. LLP, agrees tools including data analytics can sort through massive amounts of information and lead to more efficiencies and effectiveness in the auditing process.

“We are able to harness the data and get information we can then use to best serve our clients,” she says.

Using data analytics, she notes, can lead to better risk assessments, based on any anomalies and trends uncovered.

“We can look at trends over time to help with decision making,” she says, adding the data can show what happened, why it happened and help the accounting professionals make predictions on what will happen in the future.

On the client advisory side, these tools can be used when tracking cash flow and help lead to higher profit margins.

Using data in this way also requires new skillsets, Cain says, noting that accounting firms are now looking for employees who are versed in these emerging technologies, in addition to having CPAs on staff.

To help meet the need, several colleges and universities are now offering data science as areas of study, she adds.

Cain agrees data analytics can help with mundane tasks, allowing analysts and accountants more time to focus on other value-added client services.

She says MMB will continue to implement such programs, staying up to date with the latest technology.

Cain says the technology tools will complement and enhance, not replace, the work being done by accounting professionals who are now be able to apply that data and make more informed decisions.

“The human factor isn’t going away,” she says.

Andrea Deckert is a Rochester-area freelance writer.