The evolution of the Internet is making technology an even larger factor in the CPA profession in 2005. So much so that firms that do not respond to the newest Web trends risk losing business.

Financial managers, practitioners, vendors, academics and consultants responding to our survey (launched with an interview with AICPA Chair Bob Bunting) about the New Year show that advanced Internet technologies are driving the following trends:
  • More direct communications between vendors and suppliers, companies and customers, and practitioners and clients.
  • The weeding out of fraud in financial reporting.
  • Improved marketing to the point that the technology itself generates new business.

"As clients become more and more comfortable with Web-based banking, brokerage (and other services), they will naturally begin to expect similar services from their accountants," said Greg LaFollette, executive editor of CPA Technology Advisor magazine and president of the consulting firm Accounting Technology Resource Network.

"Internet savvy and connectivity will be the rainmakers of the 2000s," LaFollette noted.

He particularly advised practitioners to become familiar with instant messenger (IM) technology, which enables parties to correspond real-time in e-mail, so e-mail dialogue is more like a telephone conversation than a letter. It accelerates communication from hours or days to minutes or seconds.

Bruce Clark, chief executive of New Clients Inc., a Mullica Hill, N.J.-based provider of marketing services, says that some smart firms are already utilizing Internet-based media such as interactive Web sites, e-mail marketing, electronic newsletters, "e-advertorials" and Web-based seminars, while others are learning about cross-marketing and bundling techniques.

Barry J. Friedman, chief executive of BizActions, a Potomac, Md.-based developer and manager of newsletters for professional services firms, foresees a re-emergence of push technology that enables information to download directly to someone's desktop and bypass e-mail. For CPAs, this could be used to distribute newsletters and financial reports.

Technology market analysts Aberdeen Group support Friedman's expectation, noting that the clogging of e-mail systems will add demand for push technology in more industries than just accounting.

Dana R. Hermanson, accounting professor at Kennesaw State University in Kennesaw, Ga., is hopeful that accounting fraud will be significantly contained as the Internet allows software developers to create systems that provide for real-time financial reporting. He noted that he is advising the developer of a "continuous monitoring software" designed specifically to detect fraud and other misstatements in financial reports.

When it comes to fraud prevention and technology, there is much to keep up with. A Google search for auditing software turns up 47,000 links, and a search for fraud prevention turns up almost 1 million.

While vendors are developing new and more sophisticated systems every day, accounting and finance professionals must also be ready to cope with some vendors' plans to simplify their existing software products in 2005.

"Our expectation is that the year ahead will be about simplifying the lives of accountants and their clients," said Richard Walker, director of accountant and advisor relations for QuickBooks developer Inuit Inc. "Technology has over the past few years created some of the exact problems that it was trying to solve -- to help users be more productive by performing complex tasks quickly and easily."

CPAs, anxious to cash in on an expected boom in business, are waiting and trying to keep up-to-date with the ongoing technology advancements. Said Charles Larson, CPA, of St. Joseph, Mo., "This is a year that I am focusing on re-looking at options in technology to see if there is any way to further upgrade or re-think my approach to any activity. I will be looking especially close at communications as an opportunity."