Software reviews

If you ask typical small or midsized accounting practices what their cornerstone applications are, chances are that they will tell you tax prep and write-up. Even with all of the businesses moving their accounting and bookkeeping in-house, write-up engagements are still the mainstay of many accounting firms' practice.Even when a client does most of their own bookkeeping, or has an in-house accounting staff, there's still a need for someone with in-depth accounting experience and knowledge - you. Even a full-time staff accountant probably doesn't have the time or inclination to keep abreast of the latest Financial Accounting Standards Board statements and Internal Revenue Service rules on depreciation and amortization. Closing and adjusting entries are another place where many accounting practices earn their keep.

Transitions are difficult for any class of software, but fixed asset management programs have had more than their fair share of adjustments in the past few years.What began as a simple spreadsheet noting assets and their depreciation information for tax purposes has now become a major class of software that can have a significant impact on the bottom line of a major corporation.

Even the best intentions sometimes have unexpected results. The Sarbanes-Oxley Act of 2002 was enacted in reaction to the Enron and WorldCom financial debacles, where poor internal controls resulted in dubious transactions being unchallenged. The result, as you know, was the collapse of several huge corporations, with many top executives facing considerable jail terms. Add in the document-shredding parties at Arthur Andersen, and in retrospect, SOX seems unavoidable.SOX was enacted in hopes of preventing something like this happening again. It not only holds management responsible for creating and maintaining internal controls tight enough to prevent or expose unauthorized or unusual transactions, but requires that publicly held corporations document how they are accomplishing these goals. There are numerous sections of the reform act, but the two that deal most directly with compliance are Section 302 and Section 404.

A year ago, payroll processing remained a class of software striving to serve both accountants and their customers. Still making the transition from service bureaus to the desktop and on to the Internet, the focus was less on how to help accountants than on how to get directly to their clients.There were exceptions, of course - AccountantsWorld, which worked only through accountants, and Payroll CS. But for the most part, the software reflected the ambivalence of the accounting industry itself in approaching payroll. For many accounting firms, payroll was a mechanical, time-intensive and low-margin business that was best outsourced. Three factors changed all that.

It's funny how quickly we adapt to new technology. Just a bit over two decades ago, Ken Olsen, the president of then-giant minicomputer vendor Digital Equipment Company, wondered, "Why would anyone want a computer on their desk?"Today, pretty much everyone has a computer on their desks, and DEC is long gone, having been bought by Compaq, which in turn was acquired by Hewlett Packard.

Outside of tax preparation, few facets of accounting are as complicated and change as frequently as retirement and estate planning. Partly that is because of the enormous implications of taxes on these two areas. But it is also due to the changing demands of clients with each new generation of retirees.At this, the outset of the Baby Boomer generation, it is clear that clients are less responsive to complex reports and more interested in simple processes which they can participate in and understand via their own computers or over the Internet. Vendors of retirement and estate planning systems have responded to this need with a host of new collaboration tools and a dramatic improvement in comprehension for both the process and its reports.

Many accountants have made the investment in a write-up package. With this investment already made, they often use the write-up software even when it may not be the best tool for the task.Many accountants think of trial balance software as a subset of write-up. After all, the ultimate product of both applications is a set of financial statements. The intent of each application, however, is usually quite different.

It's not just the Baby Boom generation that is heating up the markets for financial planning and wealth management. Across the industry, the software is getting tighter, more polished and more capable.Driving these changes are four basic trends:

Many practitioners use the terms "practice management" and "time and billing" interchangeably.While these applications have some features in common, time and billing is actually a subset of the practice management application. Exactly where to draw the line separating the two isn't easy, simply because they have a lot in common. With each new product generation, the line slips even more, as time and billing vendors continue to add features and functionality.

The major news in business plans and planning software in 2006 is that the plans are intended more for management than money.As most business planning software came into being, in the boom economies of the 1990s, the focus was on how best to launch new enterprises, secure initial funding or lure venture capitalists. While there is still extensive use of the software for these purposes, there is also a stronger emphasis on managing the company by implementing the plan.

Entry-level accounting packages are terrific. They provide excellent features, and are frequently a good value. However, regardless of how good or cost-effective they are, they don't serve your clients' needs if the client has 25 or 30 users who need simultaneous access to the financial information, and the accounting system is limited to five or 10 simultaneous users.

Every time some industry pundit declares write-up dead, sales of this important application simply refuse to dry up. With more and more emphasis being placed on control and accountability, even some of your clients who have moved their accounting in-house have remained or become write-up clients.The reason for this is that there's a big difference between bookkeeping and accounting. Bookkeeping, especially with the sophisticated software now available, is pretty easy for your clients to perform. Unless your client is fairly large, however, they probably don't have an accountant on staff. Not many bookkeepers, even full-charge ones, are capable of calculating accruals, making the correct adjusting entries and redistributions, or computing depreciation and amortization. These tasks call for the judgment and experience that you, as the accountant, bring to the table.

It's not that Uncle Sam does not want your clients to deduct those big-ticket items that are critical to running almost any business. The less cynical among us would nod and agree with the Internal Revenue Service's position that the cost of big-buck expenditures should be matched with the useful business life of the asset.Then there are those who suspect that the government would simply prefer that you don't apply the full cost of that Learjet that your client picked up this year to offset their current fiscal year's revenue.

Three years after President Bush signed the Sarbanes-Oxley Act into law, the repercussions continue to resonate through the business community - with calls for reform, the explosion of compliance tools, and relief on the part of some shareholders.In the wake of the scandals at Enron, WorldCom and Arthur Andersen, Sarbanes-Oxley was created to improve the financial reporting systems of American companies subject to Securities and Exchange Commission reporting requirements.

First introduced in the late 1970s and early 1980s, microcomputer-based accounting has long been the Rodney Dangerfield of applications - often getting little respect. Some accountants and their clients have been somewhat dismissive of these packages, considering them "starter" accounting systems - good to get a client computerized and familiarized with the benefits and requirements of an in-house system, but ultimately just a stop on the way to a real application. While there are numerous clients that eventually will want to upgrade, the majority of entry-level accounting packages provide clients with a robust feature set and capabilities that will help them meet regulatory requirements and provide the information that they need to run their businesses better.

Time and billing software was one of the first applications to make the leap from paper to PC, with the earliest forms appearing in 1979. Normally, this is a simple and straightforward process - record the time, send the bill, track the receivables - that doesn't require much change from year to year.Until now.

No matter what else may happen in 2005, the markets for personal financial planning are set to explode. It's not just the Bush administration's announced plans to overhaul both Social Security and the income tax systems. Nor is it just that an economic upswing and low interest rates are pushing the stock markets back up to pre-2000 levels.There are certain fundamental changes taking place in the software industry, and in the markets for financial planning software in particular. Three trends are notable at the beginning of this year: * The software is going online. In addition to traditional application software provider eMoneyAdvisor, MoneyTree and EISI have both moved strongly into Web-based services. Other software vendors must carefully weave between the obvious advantages of an online service and the wishes of subscribers, who may not want to move so quickly onto the Internet. But the trend has an air of inevitability about it.

Ask five practitioners to define the term "practice management," and the chances are you'll get several different answers. Several of these would probably incorporate time and billing. To be precise, however, practice management and time and billing are related, but they aren't quite the same thing.No one knows how and why these two terms started being used interchangeably. Most likely, it's because time and billing is an integral component of practice management, and because many of the early practice management offerings on the PC were essentially time and billing applications.

Two of the hardest tasks in financial advising and planning are getting clients - and then keeping them. Software can help with the first, but success in getting new clients is largely a matter of marketing expertise.Keeping your clients also is difficult. As their advisor, your clients expect you to be able to help them not only establish their financial goals, but also to achieve them. These goals are not necessarily static - they can be a mix of maximizing capital, maximizing income, offsetting income realization, or any other application of wealth and assets that the client's imagination can come up with. The strategies for accomplishing these goals are what the client is paying you to come up with.

by Ted Needleman