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CPA TECH INSIDER ™

“Insider Tips to Make Your Firm Run More Profitably” June 2016

“As a managing partner or firm owner, you don’t have time or money to waste on technical and operational issues. That’s where we shine. We are your IT department!”

Michael Tompkins, CPA CPA Technology Group

June 2016

How Will CPAs Stay Relevant in the Next 10 Years ............................. Page 1

Separating Yourself from the Start-up Pack ......................................... Page 3

CamCard: Ditch the Stash of Business Cards .......................... Page 3

Shadow IT: Ignore at Your Own Risk ................................................ Page 4

Inside This Issue…

I recently got back from the

TSCPA's Leadership Day in

Dallas as part of being on the IT

Committee. One of the overall

themes discussed was, “How

will CPAs remain relevant over

the next ten years, or even 100

years?” While my mind is too

limited to think 100 years out, I

do have some thoughts on

changes we’ll see in the next 10

years.

Shifting Value Proposition

First off, firms are going to have

to shift their value proposition

to benefits over features. CPAs

who stay relevant will empha-

size that they can make compa-

nies more profitable with their

advice and expertise, not be-

cause they can prepare month-

end journal entries. So many of

the traditional accounting func-

tions are becoming automated

such that individuals and busi-

nesses can do them with ease.

Let’s take tax prep for example.

While, as you know, much of

this software is currently geared

for less complex returns (and

even then doesn’t always get it

right), that will change over

time. The software will continue

to improve until only the most

complex of returns can’t be pre-

pared by an individual on their

How Will CPAs Stay Relevant in the Next 10 Years?

computer or smartphone at home. A

study by Oxford University estimates

a 98.7% chance that tax prep will be

replaced by automated systems in the

next 20 years.

Look no further than robo-advisors

as an example. Financial advisors

would have previously said some-

thing along the lines of, “There is no

way the services I offer could be au-

tomated.” Wrong. I personally use

Betterment, an automated investing

tool, and love it. Not only does it au-

tomate the investing for me, I can set

it such that I have different risk levels

for different goals (e.g. Safety Net vs

Retirement), pull in data from other

financial accounts to receive holistic

advice, and even automate tax-loss

harvesting. Wash-sale rules are

avoided by buying a similar, but not

the same, investment. All this at a

Google announces Google Home. Google announced a voice-activated device, similar to Ama-

zon’s Echo, that allows you and your family to get answers from Google, stream music and video to

your TV and even change the temperature in your house. It’s expected you’ll also be able to make a

restaurant reservation or order an Uber, all with your voice. Expect release later this year.

LinkedIn breach much larger than previously thought. When LinkedIn was hacked in 2012,

around 6.5 million passwords were posted online. However, it turns out that there were actually 117

million records stolen with emails and passwords that were easily decrypted. Affected users are

being sent emails to change their passwords.

ADP hit hard by identity thieves. In a sophisticated move, identity thieves were able to ex-

ploit ADP’s process to register accounts and their clients’ mistakenly publishing sensitive account

information online. Doing so, they were able to obtain individuals payroll information, including their

W-2s. No surprise—this information will likely be used to file fraudulent tax returns.

CONTINUED ON PAGE 2….

What’s News

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June 2016 CPA Tech Insider

fraction of the cost of a traditional

financial advisor.

Another example: Xero. If you have-

n’t heard of Xero,

it’s, in their words,

“Beautiful ac-

counting soft-

ware” and I’d tend

to agree. It takes

previously tedious

processes like run-

ning payroll or

doing a bank rec-

onciliation and makes them easy for a

business owner to do. Not only that,

but it gives a lot more real-time visi-

bility into the company. Business

owners don’t have to wait until the

middle of next month to figure out

how profitable they are.

Technology

Secondly, firms that want to stay rele-

vant are going to have to embrace

technology. I recently heard about a

tax preparer that, although she files

over 11 returns per year, mails in

copies of all her clients’ returns. She

has them sign a statement stating that

they want their return filed on paper.

Wow! The wool can only be pulled

over those clients’ eyes for so long

before they realize they’re waiting a

few extra weeks to receive their re-

funds for no reason.

How long she can

manage that, I don’t

know. John Shar-

baugh, the TSCPA

CEO, said in his re-

marks that CPA

firms need to be the

leaders in technolo-

gy, not the follow-

ers. He added that technology must

be “part and parcel” of a CPA practice

and not viewed as “backroom” opera-

tion. I couldn’t agree more.

Too many firms are missing out on

opportunity because they view IT as

an overhead expense instead of a stra-

tegic asset. Not only are they not lev-

eraging IT, they’re not taking security

or cyber fraud seriously, opening

their firms up to massive liability.

Managing Change

Lastly, firms are going to need to

manage change well. While that

sounds obvious, it’s surprising how

many firms don’t do this. Whether it’s

Baby Boomer partners transition-

ing out of the firm to dealing with

proposed peer review changes to

competing in an increasingly geo-

graphically unrestricted environ-

ment, firm leadership needs to

plan for these changes. There’s a

tendency to be so busy that no one

steps back and thinks about how

these changes affect the firm’s staff,

clients, shareholders, strategy or

initiatives. And that’s a mistake.

Tim Armstrong, the CEO of AOL,

makes his executives spend 10% of

their day, or 4 hours per week, just

thinking. Warren Buffett estimates

80% of his time is spent thinking

and reading. If you’re the manag-

ing partner or owner of a firm, you

need to be spending time working

on your firm and managing the

impending change that’s coming in

the next few years.

Is all this going to change tomor-

row? No. But, as Bill Gates said,

“We always overestimate the

change that will occur in the next

two years, and underestimate the

change that will occur in the next

ten. Don’t let yourself be lulled into

inaction.”

CONTINUED FROM PAGE 1….

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June 2016 CPA Tech Insider

Shiny Gadget

Of The Month:

CamCard: Ditch the Stash of Business

Cards Ever attend a conference or event

where you meet quite a few

people, collect their business

cards, then toss them all in a

drawer somewhere, never to be

seen again?

Well, CamCard is looking to

solve that. Their app allows you

to take a picture of a business

card, extract the contact

information from it, and sync it to

your Outlook contacts. I’ve used

it myself and, while not perfect, it

certainly beats trying to manually

enter all of the information a

business card can contain. You

can even save an image of the

firm card in the Outlook contact.

To make it easy to remember

who you met where, tags can be

added as you scan that make it

easy to find (e.g. 2016 Tax Expo).

The Business plan starts at $5/

user/month with a 3-user

minimum.

Separating Yourself From The Start-up Pack

Many of America’s favorite companies began as a small start-up.

Ben & Jerry’s sold ice cream out of an old gas station when they first opened in 1979. Mark Zuckerberg created Facebook in his college dorm room. Starbucks started with just one location in Seattle, Washington.

The ability to scale up is a defining trait among companies that want to move ahead of the start-up pack. To do that, companies must learn how to lose the start-up mentality and focus on a few key areas. Building A Great Team Nancy McCord, chief talent officer at Netflix, said, “The best thing you can do for staff – a perk better than foosball or free sushi – is hire only ‘A’ players to work alongside them.”

Top talent likes to work with other top talent. Create a culture where team members challenge each other, learn together and propel the company forward. If your top talent is too busy managing disengaged, subpar workers, the work will get old very quickly. No one wants to go to work and babysit fellow team members.

To create a team of top-tier talent, focus your energy on engaging current members and improving the hiring process. Create a company scorecard for job candidates. Outline the type of person who excels in the position and the character traits they must possess. If an applicant doesn’t meet the criteria, politely decline to pursue them further. Choosing The Right Strategy Your company’s strategy is the roadmap

that tells you how to get from where you are to where you want to be. It’s the defined path that your start-up will take in order to grow and become a leader in your industry. You should live, breathe and make decisions based on this strategy.

This requires more than just vague goal-setting. What matters most to your organization? What’s your mission? All of these should be taken into consideration before you pick a strategy. Once this strategy is established, your senior leadership should meet weekly to discuss its progress.

Include your entire team in the execution of the strategy and educate them on the “why” behind it. Each staff should have a solid knowledge of the company values, foundation and proposed direction of the company. This transparency will also aid in retaining the top talent you worked hard to recruit. Improving Your Cash Flow Your cash conversion cycle (CCC), or the amount of time it takes for a dollar spent to make its way back into your bank account, is one of the most important metrics to watch while scaling your business up. Growth requires money, and the faster you scale up, the more money you need. Learn how cash flows through your organization.

Scaling up is possible, but it takes focus and dedication to these three areas. Every industry-leading company started somewhere, and there’s no reason why your organization can’t be next.

Andy Bailey can cut through organizational BS faster than a hot knife through butter, showing organizations the logjams thwarting their success and coaching them past the excuses. After all, as he tells his clients, 100% annual growth is only 2% growth every week. It’s not easy. But possible. Andy learned how to build great organizations by building a great firm, which he started in college then, grew into an Inc. 500 multi-million dollar national company that he successfully sold and exited. He founded Petra to pass on to other entrepreneurs, firm owners and leaders the principles and practices he used to build his successful enterprise, which are rooted in the Rockefeller Habits methodology.

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June 2016 CPA Tech Insider

CPA Technology Group

277 W. San Antonio St.

New Braunfels, TX 78130

(830) 265-4200

www.cpatechgroup.com

This firm is not a CPA firm.

I t’s one of those little secrets

that nobody wants to talk

about…

The term “Shadow IT” refers to

apps and devices used at work

that operate outside your

company’s sanctioned policies

and protocols.

Shadow IT takes many forms, like

conversations on Facebook

Messenger, Google Hangouts,

Gmail or Skype. It can include

software from Excel macros to

cloud-based data storage apps

such as Dropbox, Google Docs

and Evernote. Or collaboration

spaces like Slack, Asana and

Wrike. And then there are

devices: USB sticks, smartphones,

tablets and laptops within your

network that you have no control

over. For example, when I worked

at Deloitte, people would store

non-public financial information

on Dropbox so they could work

on it elsewhere (for example, if

they were going on a trip but

didn’t want to take their work

laptop).

Robert J. Moore, CEO of

RJMetrics, relates how companies

like Slack and Dropbox craft their

pricing models to encourage rapid

proliferation. One day, a few of

his engineers were using Slack,

then all the engineers, then the

whole rest of the company was

using it. He said, “We reached a

point of no return and paying for

it was pretty much our only

option.”

The hidden dangers of

shadow IT

When users on your network

Shadow IT: Ignore at Your Own Risk

adopt apps and devices outside your

control, protocols aren’t followed,

systems aren’t patched, devices get

infected without people knowing it and

data breaches happen… As a result,

confidential information can be

exposed, accounts taken over, websites

defaced, goods and services stolen, and

precious time and money lost.

Not only that, you end up with siloed

information in unknown places and

compliance issues.

The obvious solution would be to crack

down and forbid use of all but

company-approved devices and apps.

Unfortunately, that tends to slow things

down, stifling productivity and

innovation.

Bringing your shadow IT out into the light.

Obviously, burying your head in the

sand won’t make the problem go away.

Here’s what you can do to not only take

control of the situation, but actually use

it to drive innovation and agility at

your company.

Cut loose the “control” mentality. It’s no longer feasible to simply ban

certain apps. If you don’t give staff

the software they prefer, they may

start using their own. They can

easily access a vast and growing

variety of apps, all without your

help – or control.

Recognize the delicate balance between risk and performance. Evaluate risk on a case-by-case

basis. Then take control of high-

risk situations and keep an eye on

the rest.

Foster open communication. Get staff involved in creating intuitive

policies. You can turn them from

your greatest risk to your greatest

asset by levering their input and

ownership of protective

protocols. This helps everyone

maintain security while keeping

practical needs for performance

in mind.

Finding the right balance

Focusing only on security and asset

protection can drag down firm

performance quickly. However,

balancing risk with performance

enables you to maximize your

return from investments in

detection and response. It also helps

you become more adept at adjusting

as the security landscape changes.

By developing your organization’s

ability to recognize threats and

respond effectively to incidents, you

can actually take risks more

confidently and drive firm

performance to a higher level.