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Manuscript SubmissionThe CPA Journal20 Questions on the Sharing Economy and Mobile Accounting AppsByCommunicating AuthorThomas Tribunella, PhD, CPAProfessor of AccountingSchool of Business, State University of New York at Oswego209 Rich Hall, 7060 Route 104, Oswego, New York 13126-3599Voice: 585.217.7194, thomas.tribunella@oswego.edu, Fax: 315.312.5440Thomas Tribunella, PhD, CPA, is a professor of accounting in the school of business at the State University of New York (SUNY) at Oswego.Heidi Tribunella, MS, CPAClinical Associate Professor of AccountingSimon Business School, University of RochesterCS-3-145 Carol Simon Hall, PO Box 270100, Rochester, New York, 14627-0100Voice: 585.275.3757, heidi.tribunella@simon.rochester.edu, Fax: 585.442.6323Heidi Tribunella, CPA, is a clinical associate professor of accounting in the Simon Business School at the University of Rochester, Rochester, New York.SummaryThe sharing economy and mobile commerce are becoming popular ways of conducting business. This article explains the new Internet based economy and the mobile accounting apps that allow entrepreneurs to compete. CPAs need this information to assist their client’s when they make decisions regarding technology products and services. Below is a list of twenty relevant questions and answers that related to these important innovations.20 Questions on the Sharing Economy and Mobile Accounting AppsThe sharing economy and mobile commerce are becoming popular ways of conducting business. This article explains how CPAs can assist their small business clients when they make decisions regarding technology products and services in the App-based and social media based world. A CPA’s broad business knowledge can be used to help clients choose what product will work best for them, whether it is an app for doing basic bookkeeping and a social-media campaign designed to draw customers to the business. A CPA’s consulting practice should be aware of the sharing economy and mobile accounting apps. Below is a list of relevant questions and answers that relate to these important innovations.1. What is the sharing economy?The?sharing economy?(also referred to as the peer-to-peer economy, mesh economy, collaborative economy, and collaborative consumption) is a socio-economic system built around the sharing of human, financial and physical capital. It includes the shared production, distribution and consumption of goods and services by different people and organizations.? These systems coordinate the sharing of excess capacity in goods and services by connecting those with excess capacity to those with need. According to the article “The Mobile Revolution: How Mobile Technologies Drive a Trillion-Dollar Impact” at mobile technologies accounted for 3.3 trillion in revenues of the global value chain in 2014. Examples of sharing economy companies are listed below:Mobile CompanyGood or ServiceUber and LyftCar rides – users can drive for the company or users can get rides.GetaroundCar Rentals – users can either rent their cars out or users can rent a car when they need itPark at My HouseParking spaces – users can offer their driveway as parking or can park their car in someone’s driveway.Airbnb, VRBO, FlipKeyRooms/vacation condos/homes – users can rent a room, condo or vacation home to vacation in or users can rent out their rooms, condos or vacation homes when they are not using them.SpinlisterBikes, surfboards and Ski Equipment – users can rent equipment to use or rent out their equipment when they are not using it.EatWithMeals – Users can host a meal in their home or users can sign up to eat a meal in someone’s home. DogVacayDog sitting – users can offer to babysit dogs or users can find someone to assist their dog while they are awayAt its core, the dynamics of the sharing economy are not new.? The sharing economy involves Peer-to-Peer transactions where two individuals conduct business without a third party, such as a company that sells goods, involved in the transaction. These Peer-to-Peer transactions operate in a way so as to make capitalism more efficient.? It adds to the supply and demand of goods and services. This gives consumers access to otherwise unused capacity or idle assets. Instead of representing an entirely new economy, the sharing economy allows capacity to be added, fueling micro-entrepreneurs, while driving down prices for consumers. For instance, a couple who has excess capacity for their home can now rent that access capacity through Airbnb. These new micro-entrepreneurs will need services from CPAs. Consider a couple who just had salary income and now rent out part of their home through Airbnb. Their tax return will become more complex and will be seeking tax services. Once the CPA firm wins the tax service work, they can look to assist the couple with other consulting services to help expand their business or plan for their retirement. 2. What are microenterprises and micro-entrepreneurs? defines a microenterprise as: “A small business that employs a small number of employees. A microenterprise will usually operate with fewer than 10 people and is started with a small amount of capital. Most microenterprises specialize in providing goods or services for their local areas.”A micro-entrepreneur can be thought as the person or persons who start that small business. Many of the micro-entrepreneurs are people without a formal business background or training. This growth in the economy provides ample opportunity for CPA firms to lend the small companies and entrepreneurs their business expertise. CPAs can assist these small business with choosing the best bookkeeping solutions, assisting with their tax return, helping to provide internal controls, etc. 3. How does mobile commerce (m-commerce) work with the sharing economy?Many companies in the sharing economy are small companies or individuals with limited funds for IT infrastructure. Many of these entrepreneurs and small companies are utilizing apps and mobile devices which connect to the cloud and are able to provide basic accounting system services at a much lower cost than investing in a full blown accounting system. This will occur more and more in the future. Accountants will need to know how to design an accounting system that incorporates these apps, control mobile transactions and audit the cloud. There is an opportunity for CPAs to expand their practices into providing Service Organization Control Reports for the companies that provide apps and cloud based services. These reports lend creditability to the apps and providers of cloud based services. Moreover, these new businesses may be created by folks with little accounting background. These new entrepreneurs are a new opportunity for CPAs to lend their expertise in the areas of tax, internal controls, audit and review services. Apps can also work with the other features on mobile devices. For example, field workers (sales person, repair man, etc…) can be located via the GPS in the mobile device. 4. What is a mobile accounting app?The term "app" is a shortening of the term "application software".? defines a mobile app as “a software application developed specifically for use on small, wireless computing devices…, rather than desktop or laptop computers. Apps have become very popular. In an article entitled “Apple’s App Store has passed 100 billion app downloads” by Nathan Ingraham from the Verge, Apple in announce in June 2015, that it passed that mark in downloads in the seven years since it first announced it app store. A mobile accounting app is a computer program commonly written in JavaScript.? The Script is embedded in a Web page’s HTML and can be downloaded directly from a Web site to a mobile device.? The program is designed to run accounting functions on mobile devices such as smartphones, IPads and tablet computers.5. What device operating systems do mobile accounting apps run on?Accounting apps must not only run on Windows for PCs and IOS for Apple computers but they must also run a on a variety of smartphone operating systems:AndroidiPhone and iPadWeb-basedWindows and Windows PhoneLinuxOpen-sourceRIM-BlackBerry6. What are the unique features of an accounting app?Accounting apps are connected to functional accounting systems. Some of the features are listed below:Online Accounting - Login from anywhereBank Rec - Automatically import and code transactionsMobile Invoicing - Create and send invoices automatically - anywhere, anytime from a mobile deviceAdd-ons - Pick from a wide range of addition software, such as 1009 e-filing and e-delivery, processing of international foreign currency payments or filing of sales tax returns.Dashboard – Download important accounting information such sales statistics, cash balances, so that you can quickly track how your business is doing in real time. Files - Attach documents to your financial dataLists – For example, sort contacts based on purchase historyContacts - Keep track of customers and suppliersMobile Payment - Accept customer payments through a mobile device7. What are the most popular app stores app?The most popular app stores are listed below:Amazon AppstoreGoogle PlayWindows Phone StoreSamsung Apps StoreApple App Store8. How much does an app cost?An accounting app usually involves a subscription fee. Prices range from free to $70 per month per user depending on the features and the number of transactions. Obliviously a large business with a high number of users and transactions will have much higher costs than a freelance individual proprietor. Most apps have free trial periods that range from one week to one month. The real advantage of apps for the micro-entrepreneur is the savings one can achieve by using an app instead of make large capital expenditures for IT infrastructure, that have economies of scale issues for micro-businesses. For a more in depth discussion of these savings refer to question 12.9. How does an app work?Apps work like most other computer processes which have five stages:Install or Download app from the Web: this installs the app program (native app) or a link to a mobile Web site on a mobile device.Input: putting data into the app’s user interface. The app then delivers the data to storage (real time or batch).Storage: usually a relational database in a cloud computing environment or the app could store data on the mobile device.Process: manipulation of the data into usable information. For example, summarizing scores of sales transactions into a monthly sales report. Processing programs are usually located on the cloud but could be on the mobile device.Output: send information to the user via the app interface.10. What’s the difference between a native app, mobile Web site, and widget?Apps are typically programs you tap open and run. Apps can be multifunctional, like a program that lets you create and edit spreadsheets right on your phone. A native app is a small piece of software that needs to be downloaded to a mobile device. Accordingly, they must to be periodically updated and will come in different versions to run on various operating systems such as Android versus iPhone. Some native apps work without a live Internet connection. These apps can integrate with features on the mobile device such as cameras and GPS. A mobile Web site does not need to be downloaded or updated. However, they require a constant live Internet connection. They will run on any mobile device without the need for different versions. Their development costs are less expensive and the design is less complex. They may run slow if the Internet connection is poor.Widgets and apps are separate types of programs that run on an Android phone. Widgets are basically self-contained mini programs that run on the phone. They perform simple functions such as the clock widget showing the time and temperature dynamically with automatic updates. In addition to showing current information, widgets can serve as control switches. For example, a widget can be used to turn on or off the phone’s Bluetooth function. Some apps include their own widgets. However, running a lot of widgets that constantly check the Internet for fresh information can run down the battery.11. What are the general types of mobile apps?Apps can be classified as static (offline), batch (connect periodically) or dynamic (online real time). A static app is a system that does not need to reference constantly changing information. Some types of static apps and related examples are listed below:Calculator appsContent checklist such as an audit check listHow-to manualRecipe bookSome apps will batch data (e.g. several transactions) and then upload it to an online cloud service. These apps only need a periodic connection to the Internet.Database input and output appSimple bookkeepingRetrieving information periodically such as sports scoresDynamic RSS (Really Simple Syndication) Apps reference constantly changing information so they require a real-time feed from the Internet. These apps need a stable and high speed Web connection. Some examples are below:Dynamic transaction execution apps such as buying stock, paying for goods and services as well as accepting credit cards.Dynamic content apps such as those that deliver the financial news, stock prices and weather reports.12. What is cloud computing?Cloud computing is the delivery of computing as a service rather than a product. Cloud computing users take advantage of on-demand self-service which are shared by many other users. Accordingly, shared resources such as software, applications, data, and information are provided to computers and other devices as a utility over the Web. Cloud computing provides computation, security, data storage, data backup, and storage privacy without requiring cloud users to know the location and or maintain the computing infrastructure. End users access cloud based applications through an app, link or Web browser on a computer, pad, phone, or mobile device. The software, services and data are stored on servers at the cloud provider’s computing facility. Software as a Service (SaaS) allows the consumer to use the provider’s applications and services running on a cloud infrastructure. This gives many users computing power that they could not afford individually.Resource pooling allows for rapid elasticity and metered services that only charge you for what you use. This gives micro-entrepreneurs the power of scalability while holding down costs since the computing resources are shared among many people. Cloud services can also include an entire computing platform. This platform allows the small business user to develop programs using the provider’s platform without having to make a large IT investment. In other words, it can use the resource pooling of the computing platform to customize an app to the user’s needs. 13. What is a computing platform?A?computing platform is a pre-existing environment that a software program is designed to run within. A?mobile?enterprise?application platform?(MEAP) is a comprehensive suite of products and services that the enable development of?mobile?applications. Platforms may include hardware, operating systems and application software such as the?Microsoft Office?suite, Google Apps, Apple apps and Android apps. These platforms can host apps written in an application-specific languages such as Java. The programming can be facilitated by a software development kit (SDK) like Android Studio.Platform as a Service (PaaS) allows the consumer to deploy onto the cloud consumer-created or acquired applications using programming languages and tools supported by the cloud provider. For example, relational database designs or JavaScript programs. The consumer is able to use processing, storage, networks, and other fundamental computing resources on the cloud infrastructure. The consumer is also able to deploy and run software, which can include operating systems and apps.14. What software products are the most common accounting apps?There are scores of mobile accounting apps. A few of the most popular accounting apps are listed in Table 1 along with the intended users and the platforms they run on. In table 1 below, Open API (Application Programming Interface), refers to a publically available, or open, API that allows one application to interact with another application. An open API also allows two applications to share data. Table 1: Popular Mobile Accounting AppsProductIntended UsersSupported PlatformsXeroFreelancers, Non Profits, Small BusinessGoogle Apps, Microsoft Dynamics, Open API, SalesforceFreeAgentFreelancers, Small BusinessOpen APIFreshBooksSmall BusinessiPhone, AndroidQuickbooksFreelancers, Non Profits, Small BusinessOpen API, Quickbooks Intuit, All devicesWave AccountingFreelancers, Contractors, Consultants, Small Business OwnersiPhone, AndroidZoho BooksFreelancers, Mid-size Business, Small BusinessGoogle Apps, Open APIFinancialForceLarge Enterprises, Mid-size Business, Non Profits, Public Administrations, Small BusinessOpen API, Salesforce15. What types of general accounting apps are available?If you want reliable and detailed answers to accounting questions there are apps for that. My Pocket CPA lets you ask a question, but charges a fee of approximately $10 per answer. Ask a CPA is a free app that gives some basic tips about taxes and other accounting issues in a number of categories. You can ask a question for free. CPAs need to know that these types of apps exist and be able to inform clients how there services exceed the services of these new apps that are available. Available topic categories are listed below:InsuranceRetirementInvestingLoansCollege PlanningCredit & BankruptcyExpense trackingThere are a wide variety of expense tracking apps that can help the micro-entrepreneur with basic record keeping. Here are just a few expense tracking apps:Cashbook Expense Tracker for AndroidExpenditure for iOSExpense Manager for AndroidExpensify for iOS, Android, Blackberry, Windows Phone and Palm16. Are there tax apps?Yes, H&R Block Tax Preparation allows users to prepare taxes right from the iPad or tablet and browser. The app offers a review process to make sure there are no issues with the return and promises full audit support should the numbers come into question. In addition, H&R Block guarantees accuracy and a maximum refund.MyTaxRefund will give you a good estimate of what your tax refund might be this year. However, this app does not work unless you have already filed your taxes. It only tracks the status of your return. This TurboTax app is also available on iPhone and Android.?With IRS2Go (from the IRS) you can check the status of your tax return after you have filed it and it provides tax tips should you happen to need any advice. You will also get access to the IRS Twitter feed. This app is also available on the iPhone.Intuit’s TurboTax is the most popular tax software. The iPad TurboTax app will guide you through the entire process of filing your federal and state returns, step by step. Like its simpler version app?SnapTax for iPhone?and Android phones, TurboTax for iPad allows you to scan your W2 and proceeds to complete many of the tax forms for you.TaxACT users get help from its Tax Central smartphone app. You can use TaxACT’s Free Federal Edition app. This app allows you to prepare, print, and e-file your tax return. There is a financial aid worksheet for college loans, bookmarks that allow you to add notes, and guidance for gray areas you may encounter. Filing through TaxACT costs $15.Some of the tax apps have mixed reviews to poor reviews and so they need to be considered carefully. CPAs should stay on top of the reviews of tax apps and be prepared to justify to their clients why their services are superior to these apps. CPAs should make their clients aware of the value-added activities that CPAs can perform if given tax preparation work. For instance, CPAs can do a much better job of tax planning and tax minimization. In addition, to tax services, CPAs can assist their clients with personal financial planning such as retirement planning and college savings programs. 17. What apps accept mobile payments?M-commerce requires micro entrepreneurs to make and take payments any-where, any-time (on the fly). There are a number of apps that can be used to process credit card transactions. One of the most popular is the Square that works with Androids and Iphones. The device plugs into the audio jack and can process credit card transactions anywhere. If you would like a credit card app that works with other devices, try RoamPay which works with just about any type of phone or Blackberry. PayPal Works with iOS, Android and Windows 8.1. Some payment apps integrate with accounting packages. For example, Square Works with QuickBooks and Xero. 18. What are the advantages of accounting apps?Smartphones create a distributed network among your employees, customers and vendors. As a result, a mobile accounting app can allow all users to interface with the accounting system any-time, any-where. This makes it easier to record transactions, book sales and track expenses on a real-time basis. For example, customers can make payments by phone at the point-of-sale. In addition, the users can synch-up their devices with the latest data contained on the cloud. So there is an online-real time aspect to apps.Cloud application providers that backup the app try to give seamless service and performance as if the software programs and databases were installed locally on end-user devices. The value of cloud computing is infrastructure convergence and shared services which are better than the end users could provide for themselves. This type of data center environment allows enterprises to get their applications up and running faster, with easier manageability and less maintenance. A cloud enables enterprises to quickly adjust IT resources (such as servers, storage, and networking) to meet fluctuating and unpredictable business demand (scalability).19. What are the security issues of accounting apps?Most apps store data and information on the cloud. Therefore, the information is only as secure and reliable as the cloud service. If the cloud provider is hacked then the information is compromised. CPAs should advise their clients to ask for the cloud providers Service Organization Control Reports. Providers with such reports available are more creditable in regards to security than those without. In spite of the promise of cloud computing several problems still must be overcome:Hand held devices would have to be more water and shock resistant. Employees have to be careful not to lose their mobile devices. Wireless speed should be boosted. Wireless range is a problem for remote users. Wireless services must be more reliable. More content must be added to cloud databases and data warehouses. Security and privacy must be enhanced.The following are some practices to consider to minimize security risks:Make sure that employees have password protected devices so that if the device is lost or stolen, the device cannot be accessed.Limit the access to data to only users that need access. For instance in a college or university, only registrars and advisors should be able to access student transcripts. A general faculty member should not be able to access a student’s transcript. Add additional steps to access data when not on corporate property. For larger companies, accessing data off the companies premise should require additional security. Accessing data should require a second level of sign in. For instance, when on the companies premise the user may only need a user name and password. When off the premise, the user may have to put in a user name and password and then also have to receive a call that requires them to respond before they can have access to the data. This is called two-factor identification. Use encryption for databases to ensure that valuable data is not easily stolen.Be aware of laws and regulations regarding data in your industry or jurisdiction. For instance, in the healthcare industry there are specific rules in HIPAA (Health Insurance Portability and Accountability Act) legislation controlling the privacy of medical records. In some countries, there are specific rules regarding the data for bank accounts, not leaving their country. Build monitoring into your security system, so that you know who is accessing the data and make sure it is reviewed promptly. This way if there is a data breech you can address it quickly. 20. How can CPAs help their small business clients leverage apps?The number of small business apps that can be utilized by a micro-entrepreneur number into the thousands. There are accounting apps that can be used to keep track of accounting records as discussed earlier in this article. There are also tax apps that could be used for the filing of small business income tax returns such as a small business reported on schedule C. There are also a number of other apps that can be used to manage other functions of a small business. For example, if a small business uses social media as part of its marketing plan, Hootsuite and Buffer are two apps that allow you to monitor your social media sites. If your small business uses blogging, then two apps that help make blogging easier are WordPress and Blogger. If the business has a need for their employees to share/update files, have the business try Google Drive. Google Drive allows users to access documents and files from a variety of devices and also allows users to allow others to view and edit their documents stored on Google Drive. Fees will vary with these types of apps, so assist your client with evaluating which app would be best for them given the cost.CPAs should familiarize themselves with these technologies so that they can advise and help their clients make more informed choices. Advisors could follow the process listed below:Listen to your client and make a list of their needs (e.g. mobile payments (m-payments), accounting, tax, etc…).Match their needs with the appropriate apps based on their choice of mobile device.Investigate the maturity, security and stability of the app. Does your client want to use a product that was invented last week?Determine if the apps will integrate with each other.Estimate the cost of each app and determine a total pare the total budget with the client’s resources and make adjustments if needed.Make recommendations that will support your client’s needs.Make a list of value-added services that your firm can assist your client with. Care needs to be exercised in making sure that the client does not feel that they do not need CPA services anymore because of these apps. Be sure to stress how completed tax preparation services, helps the CPAs understand the business better to be able to provide superior tax minimization and planning services. Also tied into tax planning are services regarding retirement planning and college savings plans. Now and in the future CPAs will be asked by their clients to help them navigate the complex waters of the sharing economy and mobile commerce. With a rapidly changing economic environment, small business will look to innovative solutions to gain a competitive advantage. Therefore, it is critical that CPAs understand these technology products so that can provide their clients with value-added advice and services. ................
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