By Chris Livingston, director of operations, Vertex Inc.
When automation and jobs are considered together, the initial reaction is almost always negative. There is a fear of a human job being eliminated by a robot, and this fear isn’t completely unwarranted. McKinsey Global Institute estimates that, by 2030, between 400 million and 800 million current jobs will be automated. The headline is scary, but the reality is that automation isn’t replacing 400 million positions; it’s changing what individuals in those roles can achieve. For CPAs, automation will drive an evolution in their role, and they will become more essential to the organizations they serve.
The job of the CPA is demanding. CPAs must keep pace with constantly changing tax rules to prevent their clients from falling victim to an audit. At the same time, they recognize the need to provide greater strategic value to bolster their clients’ overall business success.
This is where automation can elevate the CPA, particularly in the area of tax. Calculations, filings, adjustments, and reporting processes take up a significant amount of time. For many CPAs, it’s the majority of their job. Yet, all these tasks can be automated to a degree. However, the CPA’s role will remain essential, as the time that is freed up can be used to help clients look at tax strategically.
Tax calculations are a moving target. In the first half of 2018, there were 318 changes to sales and use tax rates in jurisdictions within the United States. This doesn’t even account for changes remote retailers need to plan for as states institute new sales tax regimes based on the U.S. Supreme Court’s South Dakota v. Wayfair ruling. A CPA can spend nearly all of their time trying to keep up. Automated tax technology can help: both by saving the CPA’s time and ensuring greater accuracy.
In addition, automation streamlines monthly sales tax filing, which can be a consuming process. Automation also helps organize data for audits, smoothing a potentially stressful process and encouraging a more paperless approach.
Aside from tax rates and rules, adjustments can be another important, yet tedious, task. When a CPA goes to file income tax, they may look at the result and see that a change needs to be made. If done manually, the process is repetitive and makes poor use of a CPA’s time. Automation can apply adjustments in bulk, streamlining the process.
Lastly, automation simplifies reporting, improving accuracy and efficiency. Technology enables CPAs to use standard reports or create user-defined versions, ensuring they fit each client’s needs. This simplifies compliance and makes it easier for CPAs to gather and use data, putting necessary information at the CPA’s fingertips in the event of an audit.
In this vein, tax automation can ultimately help prevent an audit. The folks that are currently responsible for manual processing and reporting will be free to become experts in the system and system output, analyzing data for anomalies that could trigger audit flags. Tax automation systems need people to run and maintain them at the same pace that business processes change.
With a bulk of tax chores largely accomplished by automation, CPAs can devote their time to more strategic purposes. In the past, small and medium-size businesses would focus largely on tax compliance. Now that many of the time-consuming tax tasks are supported by technology, CPAs can serve these companies as broadly informed business advisers.
It’s an important time for CPAs to take on more strategic work.
Larger organizations benefit from having in-house tax experts, all of whom understand the global complexities of tax. These individuals align tax with business objectives, providing greater value for the organizations they support and acting as a resource to the C suite. They help business leaders make decisions that can improve return on investment and reach corporate goals. This type of tax function was previously accessible only to large corporations, but thanks to automation, CPA firms can begin to offer these high-end resources to all of their clients.
While some may feel the prospect of automation is scary, the reality is that it’s a huge asset to CPAs. Technology not only makes it easier for CPAs to do their jobs, but it also makes them a more vital resource to the organizations they serve.
Read more about accounting automation in the summer 2018 Pennsylvania CPA Journal feature, "Accounting Automation: A Threat to CPAs or an Opportunity?"