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CPA 2000: what's ahead for accounting software.

If you think the computer revolutionized the accounting profession in the past decade, hang on to your trusty columnar pads--you ain't seen nothing yet.

Until now, most CPAs used computers simply to automate the tasks they have been doing since the double-entry bookkeeping method long used by Venetian merchants was codified and published by Fra Luca Pacioli 500 years ago. That's about to change. As a result, the accounting profession is about to change, too, along with the way businesses are managed. The catalyst is software.

That's the view of Charles B. Wang, the 49-year-old chairman and chief executive officer of Computer Associates International, Inc. (CA). With annual revenues exceeding $2 billion, CA is one of the largest business and accounting software developers in the world.


The change that will affect accountants immediately--it's one CPAs clearly will welcome--is increased user-friendliness, Wang says. Much of today's software is not specially designed to make learning easy. As a result, considerable training and studying confusing manuals are needed to master a software product. It's estimated that the cost of such training usually exceeds the cost of the software itself. There are exceptions, of course, but most involve relatively new products that take advantage of the graphical user interface (GUI) found in software that runs under Windows.

To be sure, Wang says, context-sensitive help screens (where the help requested relates to the part of the program where the cursor happens to be) will be designed better and be more comprehensive. In short, they will help rather than hinder the user. But the software of the future, he adds, will go beyond that: It will have built-in voice and video teaching aids. In addition, most of tomorrow's software will be designed to follow the user's logic and intuitiveness. For example, it will be programmed to anticipate a user's next logical step and even anticipate errors. Further, some software will support touch-screen technology, in which the user touches the screen to launch a program or move text or spreadsheet cells in much the same way the mouse or trackball currently is used.

How will this new technology affect the way accountants work?

Says Wang: "Few CPAs--and few businesspeople, for that matter--use computers to their fullest advantage. Instead they use computers as tools to automate the jobs they always have done manually-- performing write-ups, calculating 1040s or running accounts receivable aging analyses. For the most part, the only advantages of computers as they're used today by most CPAs are their incredible speed and accuracy." While he acknowledges that such performance is highly prized by the profession, there are other, more important things CPAs should be getting from the computer, and, as a result, more important things they can do for their clients or employers.


Accountants, he explains, have what amounts to both a bird's-eye and a worm's-eye view of a business: They can examine an enterprise from broad, aerial perspectives and simultaneously look at it from the ground--a detailed view of any and all portions of the business. In addition, computers give CPAs instant access to an incredible amount of information, which is not limited to data generated by a client or employer itself: for example, federal government data or information from an industry trade group or even from customers or vendors.

He adds: "In the future, those accountants who today just set up the books, crunch the numbers and prepare the taxes will take on a greater management role: collecting, filtering and analyzing the data and using that information to advise management on how to run a business better. After all, accounting truly is the language of business."

But can't today's computers and software perform these functions right now?

"Certainly, but it's somewhat more difficult now," Wang says. "Tomorrow's software will make the job easier"--because users will not have to be computer experts to get the most from the technology.

Is complexity the only barrier to taking full advantage of computers and the information CPAs have at their fingertips?

"This is a delicate subject," he says, explaining that many accountants--mostly those over 40--did not grow up with computers. As a result, many are somewhat wary of the technology because they don't understand it. Not so the younger accountants, who usually are quite comfortable with it. So, while "computerphobia" is beginning to disappear, it still contributes to the slow adaptation of computers in recent years.


However, Wang adds, many accountants are anxious about the computer for another reason: "They are concerned the computer will take over some of their functions and possibly render them obsolete." They are mistaken, he says. Computers can't think. They can't perform accountants' most valuable functions: interpreting and analyzing financial information, legal developments or marketing trends.

What about artificial intelligence--research efforts to design computer systems that "think"?

That's still in the research stage, Wang says. Software engineers have been toying with such concepts for years. The technology is still a long way from being practical. It's not something accountants should worry about for some time. To be sure, he adds, the day probably will come when computers will be able to handle some "thinking" chores. But by that time, CPAs will have moved to a higher management role in which they will be figuring out the best way to present information to decision makers so it can be understood easily.

"That," he adds, "will be the accountant's future role. And while computers will not be able to perform all these interpretive functions, they will be the indispensable tools that CPAs will need to get these jobs done."

Wang offers an example of such a function: Some accountants track inventory and pass the resulting information on to management. But with the right information system, a CPA can report not only current inventory levels but, based on customer purchase patterns, also the state of the economy, the resources of suppliers and any number of other pieces of information. As a result, CPAs will be able to forecast what materials will be out of stock in the future, the current state of what's in the supply pipeline and when to reorder.

"Of course, that kind of software and data are available now," Wang says, "but the software still is relatively difficult to use and requires a unique mind-set to adapt it to do such complex jobs."


What will it take to get CPAs to shift to a new mind-set, using the full power of the computer?

"One of the most effective ways to promote a change in that direction," Wang observes, "is to look at successful competitors and ask, What are they doing that makes them so successful? What kind of computer system do they have? Competition is a great motivator."

The goal, he adds, is to get a company to use its computer technology to do more than automate simple accounting functions. "Once that step is taken, a company nearly always becomes more successful."

When asked to comment about many companies' complaints about the expenses and delays routinely incurred when developing sophisticated computer systems, Wang responds: "It's because they probably made mistakes while they were planning the move. There are a lot of traps when it comes to buying and installing new software."

Here, in capsule form, are Wang's suggestions for avoiding such traps:

* Determine the types of computer systems being used by successful competitors. If such information is not available, call your management people--the accounting staff, the operations and line people--and get them to agree on what they want the computer system to do. Don't ask what software to buy; ask them only what they want it to accomplish. Once such a list is agreed on, convert the "needs" into a request for proposal and invite the leading software firms to demonstrate how their products can do the job.

* Buy only an "open" system--one that can be customized and added to as needed.

* Focus only on well-capitalized software firms. Since one of the most expensive components of software costs is maintenance--training, updates and support--be sure the vendor is available for these services when needed.

* Avoid "bleeding edge" technology--that is, technology that's not yet proven. While you should get up-to-date software for your needs, you don't need the latest and the fastest at any cost. There must be a balance between the latest and your business needs.

* Be prepared to upgrade software when you are convinced the upgrade suits your business needs--not just the desires of your computer staff. Remember, most "techies" are interested in getting the best, the hottest, the fastest. You must balance their desires and your needs.

* Be sure the software to which you upgrade can import the data from your current package. Also, be sure the data can be exported back to your old package in case the upgrade falls short of your expectations.

* If possible, buy a completely integrated package. Don't buy one module from one supplier and another from another supplier. You don't want the headache of trying to get the different modules to work together effectively.

* If a product can't do many of the things your organization needs and the vendor promises to "customize" the product, be wary. While some customization nearly always is necessary, too much customization leads to increased costs and interminable delays.

To accomplish all this, CPAs as well as their clients or employers' top managers, should become computer literate as quickly as possible, Wang emphasizes. "They should not think of computing as some sort of far-out technology. It's the lifeblood of a business and it's forever advancing. Keep abreast of the changes. Business success depends on it."


* MOST CPAs USE COMPUTERS simply to automate routine tasks. That's about to change, and as a result, the accounting profession is about to change, too. The catalyst for this change is software.

* THE CHANGE THAT will affect accountants immediately is increased user-friendliness.

* THE SOFTWARE OF THE future will have more than context-sensitive help screens; it will have built-in voice and video aids. In addition, most of tomorrow's software will be designed to follow the user's logic and intuitiveness.

* BECAUSE COMPUTERS WILL be easier to use, accountants will find them more effective. Tomorrow's CPAs will collect and then filter and analyze business data, using the information to advise management on how to run the business better.

* ACCOUNTANTS SHOULDN'T worry that computers will make them obsolete. Computers can't think. They can't perform accountants' most valuable functions: interpreting and analyzing financial information, legal developments or marketing trends and presenting the analyses to the decision makers.

STANLEY ZAROWIN is a Journal senior editor.

Mr. Zarowin is an employee of the American Institute of CPAs, and his views, as expressed in this article, do not necessarily reflect the views of the AICPA. Official positions are determined through certain special committee procedures, due process and deliberation.
COPYRIGHT 1994 American Institute of CPA's
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1994, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Author:Zarowin, Stanley
Publication:Journal of Accountancy
Date:Mar 1, 1994
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