The Accounting Firm Operations and Technology Survey – for Firms of All Sizes

Delivering critical decision-making data to firms of all sizes.

By Randolph P. Johnston and Brian Tankersley

Guidance on Technology Spending, Decision Making, Annoyances, and Trends, in more than 170 pages and eight big sections:

  1. Practice Management
  2. Technology Management
  3. Operating Systems
  4. Computer Hardware
  5. Application Software
  6. File & Data Storage Management
  7. Remote Access & Internet
  8. Telecommunications

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Top challenges, year by year


By Randolph Johnston and Brian Tankersley
The Accounting Firm Operations and Technology Survey

The 7th Annual Accounting Firm Operations and Technology Survey delivers valid data revealing many vital details on how firms of all sizes operate.

We are confident you will find data and trend lines that interest you in this report. We completed the survey before the COVID-19 pandemic and wanted to publish the results after the US tax deadline, which was unusually extended to July 15 this year. We expect to see notable changes to the responses in the future on workflow, document management systems, and remote work based on our contacts with firms during 2020, helping them deal with the stay at home orders and restrictions on travel leading to virtual CPE.

We believe the data has validity for firms of all sizes. This survey tool, and how it is administered nationally through multiple outlets and an independent database not affiliated with one organization, makes this survey data the most reliable data in the profession. Every year we caution you to scrutinize all studies and survey data where the demographics of respondents are not revealed, or the survey results are for one membership-group only. Data measuring one subset of a whole population may be useful data for that subset population. However, it is not representative of the status of the accounting, tax, and bookkeeping population.

A total of 141 respondents completed the survey this year. While this is down slightly compared to last year’s numbers, we specifically targeted larger firms, and in the previous two years, the percentage of respondents reporting that they are solo practitioners or small firms with 1-10 employees has dropped from 63.8% in 2017 to 39.4% in 2019.

Firm Size Groupings

When analyzing survey results for the preparation of this survey results book, we stratified firms into five groupings:

  • Solo practitioner in survey = Solo practitioner in analysis
  • 1-10 employees (excluding partners) = Small firm
  • 11-50 employees (excluding partners) = Medium firm
  • 51-100 employees (excluding partners) = Large firm
  • 101 or more employees (excluding partners) = Extra-large firm


Survey respondents were asked a series of demographic questions that covered services offered, the number of partners in the firm, and who is responsible for major operational decision-making in the firm. They were further asked about the number of full-time employees, the firm’s annual revenue, and if the firm has an administrator.

Key Findings

97.2% of the respondents are a full-time partner or staff member at a public accounting firm that generates most of its revenue from some combination of tax, auditing, client accounting, non-CPA firm consulting, and advisory services. 3.6% work in the internal tax/audit department of a large firm.

Service Offerings

Tax preparation, at 92.4%, was the top service offered by survey participants for the second year in a row. Accounting and bookkeeping were in the second spot at 91.7%. Tax planning at 88.3% and business advisory service at 74.5% were the third and fourth most common service offerings.

The number of solo practitioners (with or without staff and no partners) stayed flat at 27.6%. There was a 6% decrease in firms with six to 10 partners and a 4% increase in firms with 21 or more partners.

79.3% of participants have a firm administrator; this key executive was present in 92.1% of medium-sized firms, 95.0% of large firms and 100.0% of extra-large firms.

Revenue was down slightly for firms billing under $200,000. Revenue for firms billing between $500,000 and more than $100 million was up slightly.

Practice Management

Survey respondents were asked about practice management questions. The questions explored how much time is spent working from remote locations, the top challenges of managing the firm, what channels bring in the most new clients to the firm, time spent managing tasks, and methods for controlling costs. They were also asked about initiatives that generate revenue, their biggest technology challenges, communications with clients, mergers and acquisitions, wireless networking, and plans for the firm’s website.

Key Findings

Accountants are not working from everywhere, although most are getting out of the office from time to time. While we have not seen a trend among survey respondents toward working out of the office most of the time, we have noted that over the survey’s seven-year history, respondents have slowly become more mobile. This year’s survey showed that only 9.3% of respondents reported not working outside their offices, as compared to 15.2% in 2014.

Top Challenges of Managing a Firm

Recruiting and retention have consistently been the top concern for the last two years for 33.6% of firms in 2020 and 28.8% of firms in 2019. Raising profitability at 23.4% and cybersecurity/data privacy at 22.4% were in second and third place in 2020.

Referrals – new clients who are referred to a firm by someone they trust – remain the top channel or source of new clients for firms. A higher percentage of firms report that they are receiving referrals from other sources, such as other professionals and firm website and search engine optimization, over each of the last three years.

The method of how accounting professionals deliver tax returns to clients is changing. Over time, we have seen a significant shift in how tax returns are delivered to clients – away from paper-based methods, and toward digital-based communication methods.

Portal products have become more robust, with most now offering tools for requesting and tracking schedule/data requests from clients, instant publishing from applications, integrated electronic signature and integration into document management systems. Some tools are now even offering the ability to integrate invoice payment into the finalization of an engagement.

Firms of all sizes agree on the most and least effective ways to control costs. Respondents share a similar belief that examining the firm for technology, process, or workflow inefficiencies are the most effective ways to control costs. Furthermore, respondents working in firms of all sizes also agree delaying or eliminating technology upgrades is the least effective way to control costs.

The most effective ways to generate revenue on an overall basis were

  • upsell existing clients at 21.6%,
  • raise fees 17.4% and
  • firm acquisitions 16.3%.

The most ineffective ways to generate revenue overall were social media, 16.9%, and payroll services, 15.0%.

The size of the firm impacts their view on the most and least effective ways to generate revenue. Solo practitioners and small firms, both limited by a small number of employees, are more likely than medium and large-size firms to be wearing many hats within the firm. Small firms believe adding more services to their already full plate is an effective way to generate revenue.

When it comes to technology challenges, security moved into the top spot as practitioners are concerned about how they manage their practice, with 28.0% of all firms selecting this option, up from 19.3% in 2019.

Workflow and efficiency dropped from the top spot to second this year. Workflow and efficiency were cited by 21.5% of respondents as their top technology challenge, up from 20.6% in 2019. Another category related to firm processes, getting your clients on board working with the firm in a digital way, was cited by 10.3% of respondents as their top challenge, down from 16.7% in 2019.

There is a notable increase in the number of firms considering expansion via merger. A total of 46.7% of firms are considering a merger or acquisition either in the next year (19.6%) or in more than a year (21.5%). Firms most likely to be making acquisitions in the future tended to be larger and included 63.3% of medium firms, 50.0% of large firms, and 56.3% of extra-large firms.

Handling communications with customers and prospects: It is not surprising that the top three methods that a firm uses to communicate with clients and prospects are phone and email at 96.3% and face-to-face meetings at 87.9%. The next three are postal mail and secure email at 63.6% and then a web portal at 53.3%. The use of social media has dropped 5% year over year.

Social media strategy for communicating with clients, recruits, and prospects: 35.5% have an internal marketing or recruiting person who handles social media for the firm. 27.1% of firms do not use social media to communicate with clients, recruits, and prospects.

Technology Management

Survey respondents were asked technology management questions concerning email and IT support, web portals, mobile devices, backup systems, and security. They were also asked about computer antivirus software, firewalls, and system downtime.

Key Findings

Email Challenges: Email is essential to our everyday lives. We guess that a vast majority of people reading this survey report heard about the survey via email, received this report from the survey founders via e-mail and handle the bulk of your business dealings using email. It can also be a formidable interruption in our work routine, keeping us from focusing on tasks at hand. We all know how essential email is to our everyday lives. Email is also a significant vector for malware, ransomware, phishing and other fraud scams such as business email compromises.

Overall, 21.2% of all firms host email internally, but the firms that are internally hosting their email tend to be the larger firms. 40.0% of extra-large firms host their email internally. Most solo practitioners – 53.8% – small firms at 76.9%, and midsized firms at 69.0% use a hosting company or a service such as Gmail for Business, Zoho or Office 365. Regardless of where email is hosted, firms should have spam and malware filtering, message archiving and data loss prevention tools deployed to help them manage their compliance with relevant laws and regulations.

Web portals are here to stay: Web portal use has continued to climb steadily in the history of this research study. 89.4% of all respondents indicate they use a web portal to share files or documents with clients, which is up from 52.2% in the initial survey five years ago. Most firm sizes use web portals (including solo practitioners). The real challenge for many firms is which of the half-dozen or so online file storage tools should be used, and how can we most effectively get our clients to migrate to the new web portal if we choose to change providers.

Cloud backup is the dominant method used for backup in all five firm categories. Do-it-yourself backups such as the use of USB hard drives, site-to-site backup, and personal-grade web-browser-based backups like Mozy and Carbonite are all down significantly from previous years.

More firms are using mobile device management (MDM) solutions, but firms with over 100 employees are the only grouping that has more than 50% of the respondents using mobile device management software. Not using MDM represents a significant risk for any firm not using a solution, as mobile devices are increasingly used for authentication to systems and are also frequently targeted by hackers and other cybercriminals.

The Accounting Firm Operations and Technology Survey – for Firms of All Sizes