Whizzy Stuff

ALLISON PLAGER examines recent trends in accountants' use of technology as reflected in a recent survey.

SLOWLY BUT SURELY, accountants are coming to realise that information technology is the way forward. Certainly, there a few recalcitrants who refuse even to consider doing a tax return other than using a quill, but most have seen the light. The Information Technology Faculty of the Institute of Chartered Accountants in England & Wales' third annual report 'IT usage in accountancy practices', published in autumn 2002, shows that technology is becoming firmly embedded in most practices, at least to some extent.

The survey obtains information from over 1,000 practices, and approaches all the practices contacted in the previous two years as well as new ones.

That Microsoft packages are used by nearly all practices, i.e., all except nine in the survey, will come as no surprise. 60 per cent of respondents use Microsoft Windows 95/98 as the main desk top operating platform, compared to 76 per cent in 2001; 30 per cent use Windows NT/2000 (21 per cent in 2001), seven per cent use Windows XP, and two per cent use Windows ME. The main changes since the 2001 survey are that users are moving gradually to NT/2000 and XP, with resultant decrease in those using 95/98. Again, it is not surprising to find that larger practices tend to use NT/2000, while the smaller practices have gravitated to XP. According to the survey results, nine per cent of one to three partner practices use XP, while only one per cent of practices with four or more partners do.

Windows 3.1 just makes the survey, with one practice continuing to use it. Apple Mackintosh is used by three practices. All of these are sole practices.

On the word processing front, Microsoft Office maintains its 2001 dominance, being used by 88 per cent of practices. Other packages used are Microsoft Works (11 per cent), Lotus Smartsuite (eight per cent), and Corel (Wordperfect) Office Professional (two per cent).

What conclusions can be drawn from this? There is nothing original to conclude really, except that the survey reiterates the almost complete domination of Microsoft in operating and word processing packages. If the purpose of computers is for them to speak to each other and everybody to understand and use any other computer, then this makes sense.

Whether it is healthy in terms of customer choice and service is another point, and not one to be pursued in this article.

E-mail has shrunk the world, metaphorically at any rate, and revolutionised business, for better or worse depending on personal opinion, so that instant action is expected. If the Revenue ever does get around to installing an e-mail system for every day communication with taxpayers and advisers, it will simply be creating another huge millstone for its neck, as taxpayers expect instantaneous response to their e-mails without even having the few days' grace that the Royal Mail provides. One wonders what target the Revenue will set itself for responding fully to e-mails … 87 per cent within ten seconds, and the balance within ten minutes? The mind boggles! However, this is wandering off into a world of make-believe, as the Revenue is nowhere near sorted out as far as this timebomb is concerned.

However, the Revenue is very keen on filing tax returns by Internet, having introduced a filing by Internet for accountants in 2001. Take-up for the service has not been overwhelming, and the Faculty of Information Technology's survey bears this out. 54 per cent of practices use neither the original electronic lodgement service nor filing by Internet, and do not intend to; 14 per cent use electronic lodgement service, with only a tiny two per cent filing by Internet. It seems that the Revenue has a lot to do to persuade accountants that filing by Internet is the way to go, although the fact that 23 per cent of respondents said that they intended to file returns electronically should provide some encouragement for the Revenue.

Accountants' offices, however, are a different matter with regards to e-mail use. The Faculty's survey shows that 92 per cent of practices questioned have external e-mail access, rising to 94 per cent intending to have it if they do not already. Only six per cent neither have nor intend to acquire e-mail, and these were 'nearly all sole practitioner practices'. Interestingly, the number of practices which say that external e-mail is vital to the smooth running of their business is 41 per cent, down from 43 per cent in 2001. Firms with over 20 offices, find e-mail most important at 76 per cent, while only 37 per cent of single office firms place so high an emphasis on its importance.

Where would we all be if we could not book our holidays, run our bank accounts and check the weather in Uzbekistan without the Internet? We might even use it to help us do our jobs. The survey shows that most employees have access to the Internet, rising from 63 per cent in 2001 to 76 per cent in 2002, and that size of practice in this respect has little effect.

Resistance to the presence of the Internet is low, with only seven per cent of practices neither having nor expecting to have access to the Internet.

As to the importance attached by firms to the Internet in the smooth running of the business, this has much to do with the size of the firm. 61 per cent of firms with over 20 offices felt that Internet access is very important, compared with only 24 per cent of firms with one office. The overall percentage is 28 per cent, so the Internet has still much to prove before it attains superstar status in most offices, although the percentage is gradually increasing year on year, from 20 per cent in 2000 and 25 per cent in 2001.

The relative lack of enthusiasm for the Internet could be said to be reflected in the number of firms in the survey which have a website. Only 39 per cent of practices have a website, an increase of only one per cent from 2001, and this is despite the fact that in the 2001 survey, 22 per cent of practices said that they would have a practice website by 2002.

The size of the practice is an important factor in whether or not it has its own website, with the larger the practice, the more likely it is to have its own site. Thus, of the firms, 99 per cent of practices with over 20 offices have a website, while only 47 per cent of those with up to two offices have one. Furthermore, the value of the site is not rated highly, even by the larger firms, as only eight per cent deem their website to be 'very good value', and 52 per cent considering it to be of 'little or no value'.

Overall, the survey showed that use of software was increasing, rather than the number of users per se. For example, use of corporation tax software has increased by 12 per cent, and that of personal tax software by seven per cent. However, the number of practices which do not use any tax, accounting or practice management software has remained static at nine per cent.

71 per cent of respondents use personal tax software, and of those, nearly a quarter use IRIS Personal Tax. Next most popular was Solution 6 PerTAX at 20 per cent, followed by Sage Personal Tax with 17 per cent, PTP TaxReturn 12 per cent and CCH Taxpoint with eight per cent. Both IRIS and PTP fared particularly well with regard to ratings, and 93 per cent and 94 per cent of their respective users would recommend them.

Corporation tax software is used by considerably fewer firms, with 45 per cent using it, up from 33 per cent in 2001. Two packages dominate their respective markets. These are IRIS Business Tax which is used in 34 per cent of practices, but especially in sole practices, and it is not reported as in use by any large practices covered by the survey. 25 per cent of practices use the various Sage corporation tax products, but these are mainly found in larger practices. However, whereas 96 per cent of users would recommend the IRIS product, only 47 per cent would recommend the Sage ones.

The Faculty's survey provides an interesting snapshot of the sorts of computer technology which accountancy practices are using in their work. The main, not altogether startling, conclusion is that the larger the practice, the more use it is likely to be making of such technology. Smaller practices rarely have the expertise to set up practice websites, and until those without practice websites are persuaded of their value, they are unlikely to set aside the resources to set one up.

It does, however, seem extraordinary that nearly one in ten practices does not use any specific software at all. Given the marketing by the software companies, it is surprising that some firms find it more efficient to do the work manually. Again, it is the small practices which shun such software, but one cannot but wonder why, when the variety of software available is so great in terms both of cost and functionality.