Top 10 technologies lists.
Move over, David Letterman, CPAs have developed their own top 10 lists, at least in the technology area. Tax practitioners were well represented when ranking the AICPA's 1998 top 10 technologies, and the resulting lists reflect their presence. CPAs used five functional filters to create the lists: 1) tax, 2) consulting, 3) accounting, auditing and assurance, 4) financial and operational management and 5) overall. This column will discuss the overall technology list (along with a few comments about how CPAs are using the technology), present the tax top 10 list (on page 494), and will highlight some of the differences between the two lists. In today's business climate, these technologies are very important; CPAs who keep up with them will have a competitive edge.
The Internet and Related Technologies
Tax practitioners are successfully using the Internet for research. For example, they can subscribe to a Web-based product, such as RIA's Checkpoint or CCH's Research Network, and access more up-to-date information than available with a CD-ROM subscription. The newsgroup "misc.taxes.moderated" Web address allows practitioners to exchange viewpoints with each other. In addition, many Websites include tax news; any practitioner with a site can post tax news and tips for client viewing.
A private (or corporate) network, such as a local area network (LAN) or a wide area network (WAN), is the foundation for many technologies on the top 10 list, such as e-mail, remote access, document management and intranets. An intranet is an internal corporate network that uses Internet technologies. One of the first uses of intranets was to reduce publishing costs; everything from phone lists and employee manuals to financial reports can be privately accessed in Web-like fashion. Websites are not necessary to benefit from an intranet, and, often, an intranet has a higher payback than a Website.
Extranets are networks that privately connect clients to a firm's internal network. Tax clients can fill out an online form or, more often, quickly access their accounting information, enhancing the firm's client service.
Year 2000 (Y2K) issues affect all CPAs, even though tax software may be less affected than other accounting software. CPAs should send letters to their clients alerting them to possible Y2K problems. As trusted financial professionals, CPAs' clients depend on them for critical business information. Further, CPAs should keep an eye on how their clients are progressing with Y2K compliance. As clients furiously continue to install accounting systems for dealing with Y2K problems and compliance, internal controls are sure to suffer; professionals should be aware that the information they receive from new systems may be incorrect, because the systems may still have bugs.
The IRS is under tremendous pressure to gain systems compliance: its Y2K architect recently left; Congress wants to overhaul all of its systems; the Taxpayer Relief Act of 1997 put the Service further behind last year; and the private sector is paying top dollar for programming talent. There is no way of knowing what effects these developments will have. However, the Service has done well at patching old systems when tax laws change (which is basically similar to what Y2K compliance requires).
Security and Controls
Security issues range from boring to exciting, and include topics such as computer viruses, key encryption, firewalls, computer hackers, employee theft, disasters (exciting), to passwords, backups, policies and procedures and disaster recovery or business continuity plans (boring).
Last year, data loss due to virus contamination was among businesses' most costly problems. This year's major security issue is employee theft, fraud and damage. Although a firewall may keep hackers out, they do much less financial damage than employees. Strong internal control policies and procedures and thorough employee screening practices help to mitigate losses from employee dishonesty.
CPAs who send customer files over the Internet should encrypt them. A desktop package, such as Symantec's Your Eyes Only, is an easy way to secure file transfers.
Training and Technology Competency
It is difficult enough for CPAs to keep up with tax changes, much less technology changes. Successful CPA firms have adopted the idea of continuous lifelong learning and have developed training plans for their employees. New media are available for learning; in addition to traditional conferences, seminars and classes, Internet-based courses, computer-based training and video and cable-delivered courses are popular.
Many new electronic commerce tax services are springing up; interestingly, however, this technology did not make the top 10 list for tax professionals.
The key word with communications technologies is "bandwidth"--the size of the "pipe" that data travels through to reach their destination. From slow, plain old telephone service to speedy dedicated lines, CPAs have a choice of cable, integrated service digital networks, satellites, digital subscriber lines and other technologies when designing their networks for speed and efficiency.
Telecommuting and the Virtual Office
If a talented tax professional lives in Michigan but wishes to work for a practice in Florida, telecommuting is the answer. Very soon, it will not matter where professionals are physically located; if they have the technology, they will be able to put together a tremendously talented virtual team. (The next three technologies discussed will enable a tax professional to set up a virtual office and achieve this goal.)
E-mail has completely changed the way CPAs work, and the speed at which they can communicate information and accomplish tasks. It is inexpensive, powerful and quick, and trillions of messages will be sent this year. E-mail still has a few kinks; attachments can create some headaches when they are difficult to open or read; spam or junk e-mail is cluttering mailboxes;, and e-mail etiquette still eludes some people.
A lot of CPAs love gadgets, and technology gadgets continue to proliferate. Laptops come in many flavors, from large-screened models to mini-notebooks, such as Toshiba's Libretto. Handheld PCs and palmtops are even smaller than mini-notebooks. Handheld PCs running Windows CE are popular, and 3Com has sold millions of its Palm Pilot.
Remote options are available for professionals who want to work from home, the road or another office location. These options range from a low-end solution, such as PC anywhere or other desktop connectivity package, to high-end solutions using hardware and servers, such as Citrix Winframe for remote servers.
Virtual private networks (VPNs) are a great way for firms to lower remote or WAN costs. VPNs offer a tunneling protocol that uses the Internet to deliver messages over a secure private network (such as a LAN). Most Internet service providers can provide this technology. A fun and useful remote connectivity package is Microsoft's NetMeeting, an inexpensive video-conferencing tool. Tax practitioners can use it to review tax schedules with clients over the Internet.
Top 10 Tax Technologies
The chart at above left presents a list of the top 10 tax technologies. Seven of the technologies are the same on both the tax list and the overall list. However, Y2K, electronic commerce and portable technologies are missing from the tax list. Instead, tax practitioners considered three document technologies (electronic document transmission, image processing and document management, and electronic document storage and retrieval) as more significant. It is clear that tax practitioners feel overwhelmed with the volume of paperwork they face and are looking to technology for answers.
RELATED ARTICLE: Top 10 Tax Technologies
 Internet, intranets, networks and extranets  Training and technology competency  Electronic document submission  Communications technologies--general  Mail technologies  Security and controls  Remote connectivity  Image processing and document management  Telecommuting and the virtual office  Electronic document storage
If you would like additional information about this article, contact Mr. Maida at (609) 882-6874 or wvhw76@prodigy. com, or Mr. Rubenstein at (202) 736-8411 or rrubenst@ sidley.com. Ms. Smith's book, Top 10 Technology Opportunities: Tips and Tools, is available by calling 1 (888) 777-7077, and specifying product number 042300KW.
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|Title Annotation:||tax technology|
|Author:||Rubenstein, Robert L.|
|Publication:||The Tax Adviser|
|Date:||Jul 1, 1998|
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