“Small leaks will sink a great ship. Fix the leaks first.”
Even the most diligent CPA firms, no matter how accurately they work, often find themselves battling hidden workflow blocks. According to the 2024 Rightworks Accounting Firm Technology Survey, about 60 % of accounting firms admit not achieving maturity in their digital transformation journeys. As a result, many accounting firms face challenges, especially when it comes to adopting the latest automation tools. Nonetheless, keeping up with deadlines and staying competitive in an industry where a lack of efficiency and inaccuracy can be a question of survival for the CPA firm.
However, in a climate of ever-changing technology goalposts, some CPA firms consider delaying adopting their systems until the dust settles. This wait can prove costly in the long run. Every passing tax cycle brings in a layer of inefficiency, drains billable hours, and increases the risk of compliance errors. Firms that thrive are those that confront bottlenecks head-on, streamlining processes and leveraging automation before small leaks become costly floods.
This blog points out the common bottlenecks that CPA firms encounter in their daily operations and how they can be easily eliminated through automation in accounting workflows, saving firms precious time and resources.
Common challenges for CPA firms that can be eliminated through automation
1. Delayed Bank & Ledger Reconciliations
Challenge: Manually reconciling ledgers with bank statements can take several days each month, especially for high-volume transactions. Mistakes often go unnoticed until month-end or quarter-end, delaying reporting and limiting timely financial insights.
Solution: Automated reconciliation tools match ledger entries with bank transactions in real time, flag discrepancies, and even suggest corrections. For instance, if a payment is recorded in the bank but missing in the ledger, the system immediately alerts staff to investigate, streamlining the reconciliation process and reducing errors.
2. Time-Consuming Tax Calculations
Challenge: Tax preparation is complex, involving frequent changes in tax rates, deductions, and compliance rules. Manual calculations increase the risk of errors and can result in fines for clients.
Solution: Tax automation tools can pull data directly from accounting records, calculate accurate tax liabilities, apply deductions, and even generate filings. For instance, a CPA firm can run automated pre-tax reports to see if clients qualify for end-of-year deductions or incentives, ensuring optimised tax outcomes with less manual effort.
3. Tax Compliance and Filing
Challenge: Keeping track of filing deadlines, preparing multiple returns for clients, and ensuring accuracy is labour-intensive. Missing deadlines or errors can lead to penalties and reputational damage.
Solution: Automated tax platforms track filing schedules, generate pre-filled forms from client data, and send reminders for upcoming deadlines. Staff can quickly review and submit returns, reducing human error and maintaining compliance.
4. Payroll and Compliance Risks
Challenge: Processing payroll manually, calculating withholdings, and meeting regulatory requirements can be time-consuming and prone to error. Mistakes of this nature will also lead to fines or disgruntled employees.
Solution: Payroll automation tools calculate salaries, taxes, and benefits automatically, generate payslips, and ensure compliance with employment laws. Automated reminders for tax filings and benefits reporting further reduce risk.
5. Audit Preparation (Internal, External & Regulatory Audits)
Challenge: Preparing for an audit requires gathering large volumes of client documents. Manual processes can cause delays, stress, and missing evidence. For example, internal audits may require tracking dozens of approvals, while external audits involve hundreds of documents across departments.
Solution: Audit management software centralizes documents, tracks requests, and automates approvals. AI flags high-risk transactions or missing items, allowing teams to resolve issues proactively. This makes internal, external, and regulatory audits faster, more accurate, and less stressful for both staff and clients.
Types / Levels of Automation for CPA Related Tasks
Automation in CPA firms can be implemented at various levels, depending on the complexity of tasks, the use of intelligence, and the scope of the automation intended. These levels help firms choose the right approach for each workflow, improving efficiency, reducing errors, and freeing staff to focus on strategic activities.
1. Basic / Rule-Based Automation
Basic automation is the most accessible level for CPA firms. It focuses on repetitive, predictable tasks that follow set rules. For example, include automatically categorizing expenses, sending reminders for tax deadlines, or generating recurring invoices.
By eliminating manual intervention in these routine tasks, firms can save hours of administrative work, reduce human error, and free staff for higher-value tasks. While basic automation doesn’t involve intelligence or decision-making, it provides quick, tangible benefits and is often the first step toward broader digital transformation.
2. Robotic Process Automation (RPA)
Robotic Process Automation, or RPA, takes automation a step further by allowing software robots to mimic human actions across multiple digital systems. For CPA firms, RPA can copy data from emails or PDFs into accounting platforms, transfer client information between tax and accounting systems, or automatically generate standardized financial reports.
The key advantage is that RPA works across existing systems without requiring extensive IT changes, reducing errors in repetitive processes while saving significant staff time. RPA is ideal for tasks that are rule-based but involve multiple applications or steps.
4. Cognitive / Intelligent Automation
Cognitive automation leverages artificial intelligence (AI) and machine learning (ML) to go beyond repetitive tasks and provide decision-making capabilities. CPA firms can use this level of automation to detect anomalies or potential fraud in everyday transactions, predict cash flow trends, or identify tax optimization opportunities based on historical data.
Cognitive automation not only reduces errors but also enables staff to make smarter decisions, as the system can highlight risks and insights that may not be immediately visible through manual review.
5. Hyper automation
Hyper automation is the highest level of automation, integrating RPA, AI, workflow automation, and analytics to automate processes end-to-end. For CPA firms, it handles reconciliation, from scanning invoices and data entry to transaction matching, discrepancy flagging, and payroll with compliance checks. It also automates audit prep by identifying high-risk transactions, tracking documents, and managing approvals.
Hyper automation eliminates bottlenecks, speeds up operations, and provides real-time insights, transforming firms seeking operational excellence and a competitive edge.
Conclusion
Numerous studies show that accounting firms tend to be more hesitant or slower in adopting technological automation. This is evident by the late adoption of technology when compared to other industries that have already crossed various stages of the technology lifecycle.
This cautious approach, while understandable considering the high stakes—read: compliance overwatch and overall client trust built over time—can leave firms struggling with inefficiencies, errors, and bottlenecks.
Firms that act proactively and leverage accounting workflow automation will transform small operational “leaks” into strengths, enabling staff to focus on advisory services and strategic client support.
Acobloom applies its compliance expertise to assist clients with adapting to changing regulations. Utilizing current technologies and emphasizing data security, the company provides consistent support to accounting firms and businesses. The combination of regulatory knowledge, technological advancement, and security aims to promote efficient, compliant operations.
