Accounting, Business News

Technology leaps ahead of accounting practices

Accounting practices that offer SMSF services must consider an organisational reset in order to keep pace with the rapid growth of technology, according to an industry expert.

Smarter SMSF chief executive Aaron Dunn told the Class Connect 2018 conference in Sydney yesterday that technology is evolving exponentially or rapidly while organisations are changing logarithmically or at a much slower rate in comparison to the evolution of technology, adding the great dilemma of the 21st century is the relationship between the two.

Known as Martec’s law, Dunn said organisations need to strategically choose which technological changes to embrace, given the limited bandwidth for absorbing organisational changes.

“So how do we actually look to respond when it comes to this difference between technology and practice? So what Martec’s law then considers is we actually have to accept and understand that this is life,” he said.

“We’re never going to get to the destination anymore as practitioners in this space are we? So the fact we’re going to have to constantly deal with legislative change, education standards, technology [means] we are going to be in this constant flux of just being on this journey rather than focusing on where we’re going to get to as a destination.”

Quoting figures from Smarter SMSF’s 2018 Future of SMSF survey, he noted practices have been using SMSF cloud software for an average of 2.51 years, but the approach to their work has not substantially changed despite the adoption of cloud technology.

He said 47.45 per cent of practices now process fund data regularly, while 64.29 per cent of practices with less than 400 funds do the same and 31.25 per cent provide clients with up-to-date online access to their information.

Further, the survey found 28.54 per cent of firms respond reactively to regularity of reporting, indicating that while the technology is new, the thinking remains old.

Meanwhile, the survey found the transfer balance account report (TBAR) requirements have resulted in 31 per cent of practices moving to regular reporting, while 57 per cent believe TBAR will lead to increased client engagement.

“So how do we increase our engagement, actually look at how we’re going to add value, how’s that going to impact the pricing we have with our clients as well, so that we as an organisation continue to add value and can continue to charge for services required? For many others it’s going to require us to look at what’s called an organisational reset,” Dunn said.

“Think about if you’re an organisation that actually only incorporates SMSFs into your ordinary practice, is there a number of funds that is the right number before you start looking at dedicating specific resources to a specialist division? That in itself is of course going to set up some different considerations around a resetting of the practice.”

The survey also found projected change in SMSF revenue over the next three years is 22 per cent, which is more buoyant than the almost 14 per cent growth in the past three years.

Meanwhile, 39 per cent of practices are looking to increase exposure to the SMSF sector, while 30.31 per cent are looking to expand their service offering in the next two years.

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