December 2001

CPA2Biz and Application Services

By Linda B. Specht

CPA2Biz, the recently launched web portal, aspires to meet the technology and business solution needs of both CPAs and their clients. An outgrowth of the AICPA Vision Process, CPA2Biz is intended to provide particular assistance to small CPA firms and their clients. The initiative, still in its startup phase, is one that will bring together the resources of the AICPA, participating state CPA societies, and several other heavyweights, including Microsoft, Thomson, and Aon. It will contribute to the public perception of the e-CPA and could have significant consequences on more traditional CPA services.

What Is CPA2Biz?

The CPA2Biz overview describes the site as "an easy, safe, and secure way to take advantage of technology without having to be a technologist." The web portal has two units: a professional services division, to offer technological and technical resources to CPA firms themselves; and an application solutions division, to offer web-based business solutions to clients of CPA firms. The former is largely intended to provide CPAs with the products and services previously provided by the AICPA, including professional standards and continuing education. Although the professional services division has much to offer in terms of convenience, it cannot match the wide-ranging implications of the application solutions division.

Application Solutions: Background

Whether a CPA signs on with CPA2Biz or one of the pre-existing application solution providers, it appears inevitable that the e-CPA of the future will be expected to provide value by-

• assisting in the selection and integration of accounting solutions,
• helping the client or employer become "e-enabled," and
• providing real-time advice and service through monitoring and proactive interaction.

Accounting applications-from the basic general ledger, accounts receivable, accounts payable, inventory control, and tax applications to enterprise resource planning software-are nothing new. It has been noted, however, that companies often underutilize the technologies to which they have committed significant resources. In some instances, the momentum of growth or magnitude of change has been the obstacle. Other problems commonly encountered by users include gaps in technological knowledge and unmet needs for other types of information not provided by their current applications.

Web-accessible, hosted accounting services have stepped into this void. During 2000, application service providers (ASP) increasingly focused on online accounting applications and services for small and mid-sized businesses. The usual offerings included basic software provided free or for a nominal fee, with Internet access to more complex versions and hosted applications available at a monthly rate. These offerings focused on accessibility and specialization and were particularly suited to small businesses with otherwise limited IT resources. Subscription-based services, such as NetLedger, offered weekly upgrades, accessible data, and professional troubleshooting.

Although Sage (formerly State of the Art) had been the first company to involve CPAs as software resellers for one of their early products, a recent alliance with CPAs was not based upon sales, but upon recommendations. The proliferation of recommender programs may be attributed to widely held beliefs that CPAs can influence decision-makers' software purchases and will recommend software they know and use themselves.

From the CPA's perspective, recommender programs allow expanded services. The programs vary in the level of participation: In some, the CPA simply recommends a provider; in others, the applications solution can be co-branded and offered online. Various programs also allow the CPA to access the client's data in order to provide real-time accounting services online. The one thing that all of these recommender programs have in common is that each has been designed by the ASP to utilize the CPA's influence in marketing a product to the business community. This is perhaps the most significant difference between the ASP programs and CPA2Biz.

The CPA2Biz Program

CPA2Biz rather has been "designed, developed, and engineered by CPAs, for CPAs, and for the clients and employers of the CPA." CPA2Biz is not simply a recommender program, and the CPA is not simply a marketing ally. The CPA is at the center of this program, as alluded to in CPA2Biz's universal principles:

• Be ethical in all that we do.
• Any product, service, or initiative will be made available only through a CPA [whenever possible], and should increase the CPA's value while enhancing the bond between themselves and their business client or employer.
• CPA2Biz will provide the most compelling value proposition in the marketplace for the CPA and their client or employer.
• Establish win-win relationships with our partners, channels, and customers.
• Look for opportunities to create value for the AICPA, the state CPA societies, and their members.
• Constantly look to the user to provide us with feedback on the services we offer.

During the summer of 2001, CPA2Biz launched its pilot program. By the end of August, it had released version two of its pilot program website, sponsored the first of a series of web-seminars, and scheduled a two-day seminar on e-enablement engagements.

Through the pilot program, CPA2Biz enlisted the assistance of qualified CPAs to do the following:

• Identify and determine pitfalls and hurdles in … [their] ASP approach in order to fine-tune … [their] solution prior to rollout.
• Test the acceptance of the service extension … [from] hosted back-office offerings … to the incorporation of other offerings such as payroll, purchasing.
• Develop and test the readiness of … [their] support infrastructure. In order to participate in the pilot program, a firm was required to-
• be engaged in the full-time practice of public accounting or an IT consulting firm with a minimum of 50% ownership by at least one CPA engaged in accounting systems consulting;
• have adequate Internet access;
• be committed to the CPA2Biz strategy and agree to support the pilot program. By partnering with a number of application solution leaders, the web portal will offer a wide range of "best of breed" choices. The sponsorship of these efforts by the AICPA and the participating state societies, through CPA2Biz, takes on particular relevance when one considers the predictions that most ASPs will fail or be acquired within the next year.

The "integrated technology infrastructure" offered by the application solutions division of CPA2Biz will focus on the CPA Dashboard. Using the CPA Dashboard, CPAs will be able to monitor the client online, access solutions, and interact with the client's system. Although certain ASP recommender programs have offered real-time access, this has been limited to users that embrace their particular application solutions. Because CPA2Biz offers a group of integrated solutions compatible with the XML standard, CPA Dashboard users should not encounter the same limitations.

Ultimately, the strongest recommendation for CPA2Biz probably stems from its backers. The number of ASPs has shrunk through attrition or acquisition. CPA2Biz has a commitment of resources from the accounting profession and alliances with key players that might allow it to outdistance the competition.

Implications for the CPA

Regardless of whether a CPA chooses to affiliate with an ASP recommender program or participate in CPA2Biz, becoming an e-CPA brings with it a number of advantages and disadvantages. The advantages include opportunities to-

• bring added value to the services provided, through use of technology and real-time interaction;
• increase audit efficiency through a more complete understanding of systems and operations; and
• enhance the role of the CPA in a changing economic and technological environment.

At the same time, there are a number of potential disadvantages to the CPA's involvement in application solutions. The more apparent of these include increased exposure in the following areas:

• Practice management-straining resources such as time, accessibility, and billing
• Liability-issues resulting from software, advice, or monitoring problems
• Independence-drawing the line. There are also other, less obvious areas that may be affected by the CPA's decision, such as expert witness testimony.

Participation in the CPA2Biz pilot program has required significant resources, such as the dedication of a senior management sponsor (with commensurate resources) to the project and the implementation of web portal services with at least one client. Other commitments include participating in education sessions, developing and field-testing marketing and implementation strategies, and reporting feedback.

Client qualification requirements are similar to those for CPAs: the client must commit a member of senior management and resources, provide written feedback, and agree to use a business solution hosted by CPA2Biz. While these are perhaps the most demanding requirements in terms of resource allocation, CPA2Biz has agreed to provide a bundle of benefits to qualified participants, including no-cost or reduced-cost services, personalized and on-site assistance by CPA2Biz, and promotional support.

Future CPA2Biz participants seeking to leverage the experiences of pilot program participants, still face a number of issues:

• Personnel: Who will be the liaison to CPA2Biz or the ASP? Will the e-CPA's business advisory function constitute a discrete area of specialty? Will the small to medium-sized CPA firm be able to stretch its resources accordingly? Both pre-existing ASP programs and CPA2Biz anticipate the ability to monitor a client and to interact proactively online. Who will perform these functions?
• Independence: A member of the audit team may be monitoring the client and proactively responding to this information. When is the independence line crossed?
• Liability: Might the CPA be liable for recommending or co-labeling a faulty software product? Court decisions are mixed on whether the Uniform Commercial Code applies to software transactions, and agreements with the ASP or CPA2Biz may contain disclaimers. What about potential liability for failing to advise the client properly in conjunction with the monitoring process? Conversely, as the CPA's role develops in this area, might the non-adopter fail to meet the standard of care followed by a prudent practitioner?
• Expert witness testimony: After much controversy about the applicability of Daubert and its progeny, its standards have been deemed applicable to CPAs [see Daubert v. Merrill Dow Pharmaceuticals, 509 U.S. 579 (1993); Kumho Tire Co. Ltd. v. Carmichael, 119 S. Ct. 1167 (1999); E.I. du Pont de Nemours and Co. v. Robinson, 923 S.W. 2d 549 (Tex. 1995)]. CPAs not only have to establish their credentials in each case, but their testimony must meet certain relevancy and reliability standards. Would participation in an alternative ASP or CPA2Biz enhance the CPA's ability to do so?

A difficult decision. These questions are relevant to the CPA's decision to associate with an ASP or CPA2Biz, and there are no easy answers. Although the CPA2Biz initiative is an ambitious one, it brings together the resources of the AICPA, the participating state CPA societies, and the major players in the application solutions industry. In the face of uncertainty, the CPA may find no choice but to move ahead, into the electronic age. To fail to do so might well risk the CPA's role as trusted business advisor.

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