Tax Season Debrief: 6 Admin Questions to Consider

While clients seem to bring data in later each year and erroneous 1099s/K1s further increase workload compression, the 2016 tax season was actually one of the better ones from a technology perspective, with minimal changes being pushed by the government and tax application providers.  This stability can lead firms into a lull thinking that their processes do not need to be re-evaluated, particularly in the administrative area which may get less attention when things seem to be going well. Summertime actually provides one of the best opportunities to re-evaluate administrative tax processes so new innovations can be piloted during the extension season and standardized by year-end.  Firms should formerly debrief after each tax season and ask your administrative staff the following six questions to see if your firm can improve tax production processes.

  1. Can we collect client source documents more efficiently?  Many clients assume they have to deliver a physical packet of documents to the firm, which takes the client additional time and can delay receipt by the firm when compared to using digital processes.  Digital delivery through portals and secured email systems are more efficient and secure once the clients have been taught to use these tools.  While some clients are technology adverse and will cling to paper, the more clients the firm converts to using digital tools, the more efficiently the firm will collect source documents in the long run.  Also, remember that buying and installing a portal/secure email solution is only the first step; constantly targeting ways to make it easier for clients to work with your firm, educating them on using those tools more effectively, and regularly reminding them of how these tools work will foster digital adoption.
  2. How do we capture a client’s change of contact information more timely and consistently?  Incorrect mailing or email addresses can cause the firm embarrassment and lead to wasted time trying to communicate with clients and reissuing tax documents, so it is imperative that updated information is captured as soon as the firm is notified of such a change.  Once someone is aware of a name, email, or physical address change, what is the process to update your practice management, tax program, Outlook and marketing databases?  In too many firms different people make these changes instead of centralizing them to one person.  Yes, you will need to train that person on each application and give them access rights, but it is the most effective way of capturing this data timely.  The administrative person can still notify others of the change via email, but by then the changes will have been completed.
  3. Are our tax workpapers optimized for production?  Firms should have a standardized process and format to organize tax source documents, particularly 1040s.  While many firms use their audit engagement binder and a standard index for business returns, 1040 source documents are often organized towards a specific partner or reviewer’s preference.  This should instead be a standard firm format, which can be done best with today’s digital bookmarking tools.  Applications such as CCH FxScan, Thomson Source Document Scanning, Drake Gruntworx, and SurePrep automate the organization of recognized tax documents to a single standard.
  4. Do we have a centralized way of managing tax workflow?  Tax workflow is comprised of many functions including due date tracking, assigning returns, updating return status, linking source documents, and delivering them to the client. Unfortunately, many firms have developed individual processes for each of these requirements which traditionally were not integrated.  This is where today’s workflow tools bring all these processes into one application such as XCM, Thomson Reuters FirmFlow, CCH Workstream, Doc.It Workflow or your practice management project application.  Take a look at any manual spreadsheets or ancillary tax tracking applications that your personnel are using and ask if those processes can be done within your existing practice management tool or consolidated into a single workflow application.
  5. Are we delivering tax data the most effectively?  When you consider the time and cost to print, bind, and mail a tax return, and then have clients also wanting a digital copy, you quickly realize that digital delivery results in significant savings.  Firms should make a proactive effort to educate clients on using a secure portal or email solution before the next busy season so that it becomes commonplace and clients begin to expect invoices, engagement letters, and organizers to be delivered the same way.
  6. Where can we find tax best practices and solutions?  While staff are good at identifying bottlenecks, they may not always know what production solutions are available.  Best practices point to having your firm administrator or tax application champion network with peers either within your CPA firm association or at conferences.  The AICPA Practitioners Symposium and Tech+ Conference (June 5-8, 2016-Las Vegas, NV) and CPAFMA National Practice Management Conference (June 27-30, 2016-Baltimore, MD) provide the first opportunities of the summer, followed by the Vendor User Conferences in the fall.

Firms understandably focus their tax production improvements on preparation and review, but can also gain significantly by looking at the administrative components.  Take time to sit with your administrative staff and go through the above questions to make a more productive firm.

Roman H. Kepczyk, CPA.CITP, CGMA, LSS BB is the Director of Consulting for Xcentric, LLC and works exclusively with CPA firms to implement today’s leading best practices and technologies incorporating Lean Six Sigma methodologies to optimize firm production workflows. Roman is also the author of the 2016 Edition of “Quantum of Paperless: A Partner’s Guide to Accounting Firm Optimization” which is available to members of the PCPS section.