Technology plays a vital role in empowering small- and medium-sized practices (SMPs) in the accounting sector to thrive. To provide insights into the current state of technology adoption by SMPs in Hong Kong’s accounting sector, the Institute published a study titled Navigating the Tech Wave: A Study of Technology Adoption by Small and Medium Accounting Practices in Hong Kong.
This study utilized qualitative research to gain a comprehensive understanding of technology adoption among Hong Kong’s SMPs. Interviews were conducted with SMP representatives and technology vendors to capture diverse perspectives and identify common themes. The study also incorporated literature reviews and industry reports for broader context and validation. This multifaceted approach ensures a balanced and robust understanding of technology adoption trends, forming the basis for the insights shared in the study.
The report categorizes SMPs in Hong Kong into three tiers based on their technology adoption. At the foundational level, SMPs have implemented basic operational software like Microsoft Office and virtual meeting platforms. Moving up the spectrum, more SMPs are using specialized accounting software to automate processes and generate reports.
Larger SMPs leverage practice management software for business management, improving efficiency and collaboration. At an advanced level, a few SMPs have implemented audit management software, digitizing the audit process and providing tools for task management and progress monitoring. The report specifically focuses on the adoption of audit management software.
Respondents found that the use of technology can enhance efficiency by automating audit processes, such as planning, execution, and report generation, saving time and reducing errors. It also improves risk management and compliance by providing templates, checklists, and centralized storage for easy access and review.
Respondents reflected that technology adoption can enhance the brand image of SMPs, attracting tech-savvy professionals and demonstrating a commitment to efficient and modern practices. The use of technology in audit benefits clients as well, including more accurate and faster results. Collaboration and oversight are improved through real-time access to audit files, facilitating seamless information sharing and centralized monitoring.
Technology adoption also allows SMPs to transform their operations and streamline processes, leading to cost savings and organizational change. Being early adopters of technology can provide a competitive edge, while also enabling SMPs to offer value-added services beyond auditing.
One major hurdle in the adoption of technology for SMPs is the cost associated with implementing new technology. For smaller firms with limited financial resources, the initial investment and recurring costs of technology can strain their budgets. Additionally, setting up new systems often requires extra manpower, which adds to the overall cost.
Another challenge is the time commitment required for technology adoption. Converting existing working files into a compatible format and ensuring the smooth functioning of the software demand significant time and effort, not to mention time lost to technical issues that can also arise.
Staff training and development pose additional challenges. Beyond adding to the time and resource commitment for training, especially during periods of talent shortage, high turnover rates increase training costs and create a continuous need for training new hires.
Implementing new technology also requires a cultural shift within the organization. Resistance to change, particularly among senior staff, can disrupt established routines and workflows. Change management initiatives and sustained efforts are necessary to support the cultural shift.
Lastly, the complex and rapidly evolving technology landscape can make it challenging for SMPs to identify the right solutions for their specific needs. The knowledge gap between technology vendors and SMPs can hinder the development of systems that effectively meet the needs of SMPs.
The report’s key recommendations include starting with basic operational software to establish a foundation, developing a technology roadmap aligned with business goals, investing in comprehensive training programmes for employees, seeking support from professional bodies like the Institute, fostering a culture of innovation, and continuously evaluating and adapting technology adoption efforts.
The report also outlines a wish list of support SMPs hope to receive to help them navigate this complex situation, such as financial support, educational opportunities, and favourable government policies and incentives, among others. The Institute’s initiatives to support SMPs in their technology adoption journey are included in the report for SMPs’ reference. It provides a framework for SMPs to understand the types of technologies available and offers guidance on how to overcome challenges and leverage technology for their competitive advantage.
The Institute believes that technology is the key to the future of accounting, and is committed to supporting its members who work in SMPs in their digital transformation journey, providing them with the resources, support, and guidance they need to successfully navigate the tech wave.