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Public Accounting FirmsPublic Accounting Firms
C. Janie Chang,San Jose State University ́
Annette Nellen,San Jose State University ́Introduction 145
Internet and E-business Overview 145
Technology Trends for the Accounting Profession 145
Overview to Chapter 147
Key Applications 147
Enhancing and Expanding Services 147
Public Relations 149
Implementation Considerations 150System Reliability and Security 150
Training and Certification 150
Legal and Regulatory Issues 152
Future Potential—Trends and Opportunities 154
Glossary 154
Cross References 154
References 154
Further Reading 155INTRODUCTION
Internet and E-business Overview
In the last decade, the Internet and World Wide Web
(WWW) have changed the way people communicate,
conduct business, and manage their daily lives. Early
development of the Internet was supported by the De-
fense Advanced Research Project Agency (DARPA) of the
Department of Defense (Greenstein & Vasarhelyi, 2002;
Kogan, Sudit, & Vasarhelyi, 1998). The Internet came on-
line in 1969 for scientists and researchers to keep in touch
with one another and to share each other’s computers
(Deitel, Deitel, & Steinbuhler, 2001). At that time, the ma-
jor benefit of the Internet was the capability of quick and
easy communication via e-mail. The introduction of the
WWW occurred in the early 1990s. Part of the Internet, the
WWW allows users to locate and view multimedia-based
documents (Awad, 2002).
Advances in hardware and software have led to explo-
sive growth of the Internet and the WWW. In addition to
launching us into the information age, electronic com-
merce (e-commerce) brings universal access via the Inter-
net to the core business processes of buying and selling
goods and services. The Internet’s worldwide reach helps
businesses discover new markets and increases the speed
of access. Electronic business (e-business) is a broader
term than e-commerce. E-business includes not only the
exchange of information related to the actual buying and
selling of goods or services over the Internet but also the
circulation of information among employees and other
external information users (Greenstein & Vasarhelyi,
2002).
Given the nature of a certified public accounting (CPA)
firm’s activities—tracking thousands of pieces of data,
the need for up-to-date information, trusted client re-
lationships, and high-quality service—broader usage of
technology has long provided a benefit to CPAs. Vari-
ous types of technology have led to increased efficien-
cies in CPA firms and have made it possible for the firms
to provide new and enhanced services to their clients.
The Internet and e-business applications will continue to
improve and expand the range of services offered by CPA
firms.Technology Trends for the
Accounting Profession
Every aspect of the accounting profession is being per-
vasively affected by advances in information technology
(IT). IT has made CPA firms efficient in performing most
accounting, audit, and tax functions more accurately, re-
ducing the amount of paper they must maintain, and ex-
panding the range of services they offer to clients. Time
saved by using IT in making rote calculations (such as cal-
culating depreciation expense), calculating projections,
preparing tax returns and financial statements, and per-
forming audits enables CPA firms to have more time
to provide consulting services and personal attention to
clients. Via the Internet, CPAs have increased mobility;
that is, they have access to client information and ref-
erence materials 24 hours a day, 7 days a week (24/7),
and from any location, which allows them to better serve
clients and to have clients in many different locations. CPA
firms with real-time access to information can provide
more timely assistance to clients, which can improve effi-
ciency and decision making for clients. The Internet and
e-business also provide CPA firms with new promotional
opportunities and more efficient research capabilities.
As mentioned earlier, since the rapid evolution of IT has
had such a radical impact on the business environment,
public accounting firms have responded by applying In-
ternet and e-business in their daily operations. Each year
around April, the American Institute of Certified Public
Accountants (AICPA) Top Technologies Task Force pro-
vides the accounting profession with a list of what it
considers to be the current top-10 technology issues (see
http://www.toptentechs.com). From Table 1, we can see
that the Internet and e-business issues have grown pro-
gressively more complex and increasingly urgent during
the past few years. On the 1997 list, the Internet and e-
commerce were ranked four and seven, respectively; in
1998, they were ranked one and five, respectively. In ad-
dition, more complex issues had developed concerning
the Internet, such as intranets, private networks, and ex-
tranets. The Internet was listed as the number-two issue in
1999; e-business was listed number one and number two
for years 2002 and 2001, respectively. In 2002, the Internet145