The last several years of tracking this software category, it has become obvious that there is a decline in the number of companies creating specialized software for either one. Equally obvious is that the function of creating a trial balance – and managing an engagement – have splintered into a range of differing activities that accomplish much the same result through different means.
On the high end of the market, just three companies are still active in publishing Trial Balance/ Engagement systems as distinct product categories. These are CaseWare International, with its Working Papers 2014 product; Thomson-Reuters, with its AdvanceFlow and Work Papers CS lines; and Wolters-Kluwer, which publishes the ProSystem fx Engagement and Trial Balance product. While still robust, all of these are mature products – highly profitable, with strong user bases but with limited future potential unless they are able to find a way to re-energize the product offerings and provide reasons for a growth in subscriptions and use.
The companies that produce these products believe such a re-vitalization is possible, largely because of their integration into the basic workflow of the accounting firm and their emergence as cloud-based collaboration tools.
"More and more firms are seeing the workflow and collaboration benefits of using engagement and workpaper management technology tools," says Scott Fleszar, Vice President Product Management & Emerging Businesses for the Tax & Accounting business of Thomson Reuters. "When these tools are used for tax return preparation, audit, or any other type of engagement, they become part of an overall end-to-end paperless workflow that provides firms with more efficiency and control. Our tools help centralize client information, processing, document management, and storage, and make collaboration across the firm easier than ever before. And because the tools are available with web and mobile options, firms can be assured of both flexibility and ease of use."
Workpapers CS from Thomson Reuters provides engagement and workpaper management with a focus on tax workflow designed to easily assign, organize, route, and sign off on workpapers and source documents electronically . It offers automated source document processing and source data entry to streamline individual tax workflow, and is offered as an on-premise, SaaS or Virtual Office CS solution. Workpapers CS integrates with UltraTax CS, GoSystem Tax RS, Microsoft Office and other accounting programs.
Price: Starts at $3,600 per year. Monthly subscription based on number of users.
AdvanceFlow, which was developed exclusively for professional firms with a large audit practice, leverages the GoFileRoom web-based platform for security, agility, and staff connectivity. GoFileRoom is already used by the majority of Top 100 accounting firms. It is integrated with PPC's Smart Practice Aids for audit methodology, and offers real-time, cloud-based access to engagements, workpapers and staff. It features built-in integration with GoSystem Tax RS, ProSystem fx Tax and Microsoft Office.
ProSystem fx Engagement and Trial Balance
Price: ProSystem fx Engagement starts at $1,920 (one license)
For CCH, technology and workflow are the critical elements of engagement and trial balance, according to Cathy Wright, CCH Product Line Manager for Accounting & Audit Solutions. "With the rapid improvements in technology over the past five years, firms are investing more in hardware, better products, and in improving their overall efficiency," notes Wright. "Our customers are beginning to really step back and look at their processes and eliminate bottlenecks. In the coming years, we expect to see that trend continue with more firms looking to mobile applications, SaaS-based solutions, and suite-wide solutions."
ProSystem fx Engagement and Trial Balance is designed to allow the accountant to synchronize work from any location, and email an entire binder with a single click via Outlook. It fits the needs for firms both large and small, with risk mitigation for physical damage and the compliance requirements of Sarbanes-Oxley and other regulatory regimes. Among key new features for 2014 is a new fund trial balance capability that provides the structure for fund accounting. Each fund is a self-balancing set of accounts, segregated for specific purposes in accordance with the laws and regulations or specific restrictions and limitations.
Users of the ProSystem fx system for Engagement and Trial Balance agree that a dedicated program makes sense for their practice:
"Everything we do for our clients starts with ProSystem fx Engagement and Trial Balance," says Kevin Krueger, founder of CPA firm Krueger & Associates. "We have quarterly binders in Engagement and use the consolidating trial balance feature to easily roll over quarter to quarter until we get to year-end. The most valuable piece for us, however, is the electronic workpaper feature, which enables any associate to access the necessary workpapers from the office or at home, which helps drive efficiency."
CaseWare Working Papers 2014
www.caseware.com / www.beyondthebalance.com
Price: $500 (single-user license); $1,500 (up to five users); $290 (each additional user). For SmartSync, add $100 per user. Annual renewal 50 percent of the license value.
The third major entry in the engagement and trial balance category is CaseWare's Working Papers 2014, a flexible engagement software system designed to enable accountants to plan, perform and review an engagement entirely on screen, completely eliminating paper documentation. Working Papers provides a full range of engagement tools, including trial balance, imports, exports, bookkeeping, consolidation, work paper analysis and financial statement generation. It is scalable to any size of organization, and also manages engagements for government and not-for-profit entities.
Working Papers provides automated annotations, document storage and management features, and includes built-in support for trial balance, including the ability to input from the general ledger for detailed analysis. Additionally, trial balance data can be imported from most engagement and trial balance products, including ProSystem fx Engagement and Engagement CS. Firms can import trial balance and/or detailed general ledger transactions from most major accounting packages including QuickBooks and Sage. Trial balance data can also exported to most major tax solutions.
While these three companies may hold down the top tier of the software marketplace for these two classes of software, there are signs that the lower end of the scale – where most accounting firms exist with a staff of less than 10 persons – have abandoned such dedicated software solutions.
A 2014 Accounting Firm Operations and Technology Survey of accountants published by Randy Johnston and Leslie Garrett notes that accountants retain a fondness for spreadsheets for a wide variety of tasks. According to the survey (as reviewed by the Progressive Accountant), 34 percent of the surveyed practitioners said Excel was their choice for engagement management/audit software, while tools designed for that job -- ProSystem fx Engagement, CaseWare Working Papers, and Thomson's Engagement CS -- were each used by only 6 percent of the base.
So the challenge is Engagement and Trial Balance software solutions must embrace three major types of products to meet the variable needs of different sizes and complexities of accounting firms:
• For firms that are heavily invested in more formal processes of workflow and engagement, one of the three major systems offered by Thomson Reuters, Wolters-Kluwer, and CaseWare International will provide the levels of sophistication and formality to support internal workflow systems and procedures. This will only encompass a minority of the industry, but importantly will include the largest of the accounting firms.
• Firms in the mid-range of the accounting industry will rely instead on the emerging classes of workflow management systems for their engagement support. As for trial balance, this capability is already built into the major accounting software platforms, and a dedicated program is no longer necessary just to prepare for more formal financial statements.
• The overwhelming majority of accounting firms will depend on internally-developed spreadsheets and procedures to handle engagement processes, as they have done for the past several decades. They, too, will utilize the capabilities of the basic accounting/general ledger software to create a trial balance.
The major publishers of formal systems for engagement management and trial balance are in little danger of obsolescence, due to the number of large firms that rely on such formality to ensure effectiveness in their workflow and engagement processes. But these are mature products that will eventually give way to competition from more agile processes – that may, in fact, include the humble spreadsheet. And they will be susceptible to further erosion from technology, which will streamline more workflow processes and offer more simple solutions to the need for organized engagement and trial balance systems.
It raises the question of how many engagement and trial balance software solutions will be available for review in 2015.