2024 tax firm technology report

A new report from the Thomson Reuters Institute reveals that while tax and accounting firms view technology as a central part of their strategy, gaps remain in their workflows and personnel plans.

As technology has become more commonplace in the business world, the need to become tech-savvy has taken increased importance among tax & accounting firms. Leadership at all sizes of firms has pinpointed technology as a significant or central part of the overall firm strategy, and next-generation technologies such as generative artificial intelligence (GenAI) are firmly on firms’ radars.

At the same time, however, leadership focus on generative AI (GenAI) has not translated into practical applications, according to a new report from the Thomson Reuters Institute. The “2024 tax firm technology report” has found that many tax and accounting firms still have a way to make sure technology works in the firm's best interest. The report shows that even if firms are increasingly purchasing software solutions, few firms have the personnel, workflows, and leadership strategies to ensure they’re getting the most out of their technology usage.

Overall, the firm leaders surveyed said they feel relatively mature in technology usage compared to their peers. More than half of survey respondents rated the tech competency of their firm personnel at a 7 or 8 out of 10, indicating that while there was some room for improvement, they felt generally positive about how they’re using technology. Similarly, when asked about their firm’s overall position on the technology maturity curve, nearly half called themselves proactive — not to the level of optimized or predictive — but still generally positive.

However, these positive beliefs may not hold up to close scrutiny at many firms. For one, there is a lack of personnel within these firms whose role is to guide broader technology decision-making — just more than half of respondents (55%) said their firms had a person formally charged with tax technology strategy. Outside the United States, that proportion dropped to less than half.

Further, few tax and accounting firms are measuring their technology. Only one-quarter of respondents said their firms were using metrics to track technology success, and at small firms, that percentage dropped to just 10% of respondents. Even among those utilizing success metrics, the most common metrics were more qualitative — employee and client satisfaction, for example — rather than more quantitative metrics like return on investment or usage rates.

Perhaps most revealing when it comes to their approaches to technology, there are stark differences between the “haves” and “have nots” in the tax and accounting world. It’s perhaps unsurprising that large firms have more monetary resources and personnel to address technological needs. Those differences are placed in sharp relief when we see that the average large firm’s technology budget is about 30 times the average compared to small firms’ technology budget. This statistic raises the question of how small firms will keep up at all, particularly as clients come to expect technology usage that’s more sophisticated and more fully embedded into work processes.

“I don’t know what I don’t know,” said one small firm owner from the U.S. “And working on my own, I’m only implementing changes that I hear about and approve.”

Of course, as the tax and accounting profession moves into the future with GenAI and other technologies, a lot is subject to change. Perhaps nowhere is this more evident than in Latin America, where survey respondents said they expect massive growth — not only in technology usage but in the budgets and personnel required to support that usage.

Throughout the world, however, there is still a sense that tax and accounting professionals are poised to move into a new technology-sound age. Now, firms just need the infrastructure to get themselves there.