E-Commerce Overview Series - Accounting

Publication Date: October 2003

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The accounting, tax preparation, bookkeeping and payroll services (NAICS 5412 ) industry consists of firms that provide a range of accounting services. This includes auditing accounting records and financial statements, designing accounting systems, preparing financial statements, developing budgets, preparing tax returns, processing payrolls, bookkeeping and billing.

This web page is designed to demonstrate usage of the Internet by accounting firms.

e-Commerce Overview

In 2002, 21.6 percent of accounting enterprises had a web site on the Internet.  The trend is relatively flat for the past 3 years indicating slowing adoption by the industry.

e-Commerce Focus

Web sites typically include digital products and services, interactivity,  offer online payment, have some level of privacy, and offer access by wireless mobile devices and online payment.  Chart A shows some source variability in service offerings over time.

Access to the Internet is still relatively rudimentary though Chart B shows firms have moved quickly from telephone and standard modem to cable modem or high speed line.  Only 4.9 percent of firms have high capacity T1 lines or better.

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As indicated in Chart C, accounting firms use a wide range of technologies but the most common are personal computers, e-mail, the Internet and wireless communication.

Over one third of firms purchase items over the Internet, a marginal increase over the past 3 years from 25.9 percent in 2000 to 35.9 percent in 2002. Only 2.6 percent of firms sell over the Internet sales in the range of three million dollars (Reference: Statistics Canada, Table 358-0011).

Chart D shows the reasons firms use the Internet is to access supplier data bases, interactive training, to perform collaborative work and to a lessor extent, to access customer data bases.

The benefits of using the Internet are shown in Chart E and include lowering costs, reaching new customers, co-ordination with suppliers and to a lessor extent, reduced time to market.  Lower costs seems increasingly to be the leading reason for Internet use.

Barriers

It is widely felt that the service does not lend itself to Internet transactions because the service is personal in nature and security is important for financial matters.  Maintenance and development costs, uncertainty about benefits and competitive concerns are minor factors (Reference: Statistics Canada, Table 358-0010).

Future Trends

Filing income tax returns electronically has been the biggest benefit for the accounting industry.  File transmission speed at lower cost is a significant benefit.  Accounting firms consulting practices have realized similar benefits due to the ease of transmitting audit information and routine accounting data.

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Sources: Statistics Canada

The Canadian Customs and Revenue Agency indicates that 28.3 percent of taxes are e-filed by third parties while 10.1 percent file their own returns via the Internet.  A very small 2.7 percent are tele-filed while 58.9 percent are still submitted on paper.

Associations:

• Canadian Institute of Chartered Accountants
• CMA Canada (Certified Management Accountants)
• Certified General Accountants of Canada

Visit us at http://strategis.ic.gc.ca/sicp