Technological changes in accounting mean added value for clients

While the nature of business and work has changed in many professions over the past few decades, especially in recent years, one of the most dramatic has been in the field of accounting.

“The biggest change by far is technology,” said Mark Kovaleski, CPA and managing partner of Rochester-based MMB + CO. “The technology advances in accounting have been unbelievable.”

When Kovaleski graduated from SUNY Geneseo and began working at a large international firm in 1993 in lower Manhattan times were quite different.

He’d have to take a shuttle to a satellite office of his firm in Brooklyn to look at clients’ expense reports on a microfiche machine. Fax machines, cumbersome laptops and printers were also heavily dependent on tools of the trade.

“Now, if I was doing your income tax return the technology is such that you could take a photo of your W2 on your phone, upload it to our portal and we could download that automatically into our tax software, complete your tax return and post it back to the portal,” Kovaleski said. “The days of printing out all of the information, sending it in and us sending you a bunch of paper back is over.”

A 2019 study by Sage of 3,000 accountants worldwide, revealed that 90% believe there has been a technology-driven cultural shift in accountancy. That increased use and embracing of the potential benefits of technology in accounting has grown even more post-pandemic.

The 2023 Intuit QuickBooks Accountant Technology Survey, for example, showed that 85% of surveyed accountants believe technology could help turn accounting’s current CPA talent shortage around by making way for more engaging work in the field.

“The pandemic was really a catalyst for some of these changes,” said Kovaleski, referring to the increased use of technologies like video conferencing and automation. “I think we were all thinking about it, whether it be accounting firms or any industry, but when we had to do it, it really was a catalyst for change.”

The pandemic also changed the role of accountants in how they’re viewed by the public, Kovaleski believes.

“Through the pandemic, we were looked at as a lot more than someone who is your compliance accountant to get your take return out the door,” Kovaleski said. “Helping clients through the pandemic, helping them navigate PPP loans and Employee Retention Credit; our roles became a lot more advisory and consulting than just the compliance role of the past.”

Tim Flaherty, CPA and managing partner of Rochester-based Flaherty Salmin LLP, has worked in accounting for 42 years, over which time he has seen tremendous changes which he attributes in part to the pandemic and continued advancement of technology which has really accelerated since the pandemic.

“The role of an accountant is continually evolving, and the pace has rapidly accelerated over the past few years due to the ever-quickening pace of information technology including robotics, automation and artificial intelligence,” Flaherty said.

When Flaherty began working as a public accountant for an international Big Eight firm, financial statements, tax returns, and other processes were done manually with pencil and paper.

“Now you have many former manual processes automated: voice recognition software, big data and artificial intelligence to name a few,” Flaherty said. “It really is amazing, the rapidly increasing pace of change these past few years.”

From his own personal experience, he has found that these technological advances have changed the role of the accountant from an estimated 80/20 data processor/vs. data utilizer and strategist to 20/80 data processor/vs. data utilizer and strategist.

While technology has been important to the development of the field — including allowing accountants to work from home full-time or hybrid — Flaherty notes technology is not the be-all and end-all for the profession.

“You’re always going to need the human element,” he said. “Technology is great, and you can do tremendous things with it, but you still need the experience and judgment of those who have been in the field.”

Pencils and multi-column paper were spreadsheet staples when Vincent A. Leo, CPA and partner in the Audit and Business Advisory Services Group at Rochester-based Insero & Co. CPAs, LLP, began in the profession three decades ago at a national firm.

When manual methods evolved into the industry adoption of software like IBM’s Lotus 1-2-3 and Microsoft’s Excel in the mid-1980s and 1990s, there was a marked technological shift that Leo compares to what the profession is experiencing currently.

“The AI type programs and new software we have now are what Excel was to the industry thirty years ago,” said Leo, who noted technological advancements allow accountants to spend more time helping clients in an advisory role, and less time with rote tasks like gathering data.

And the data that is gathered for the client now is much richer than ever before.

“Our role used to be very much looking backward vs. looking forward,” said Leo, noting it took a long time for accountants to pull data together manually. “Now we can provide more current and forward-looking data.”

Per the Bureau of Labor Statistics, more than 300,000 accountants and auditors left their jobs in the last two years. Leo is hopeful the profession’s technological renaissance will help attract new talent to the industry he loves.

“The two best parts of accounting are that you keep yourself young at heart because you’re constantly mentoring younger staff members,” Leo said. “And over the years we have really become a lot more advisory. We’re adding value rather than just delivering numbers.”

Caurie Putnam is a Rochester-area freelance writer.