Taming
the Paperwork
A Success Story
By
Ronald D. Kranzler
Three
years ago my firm, Held, Kranzler, McCosker & Pulice LLP (HKMP),
a 20-person CPA firm based in New York City, transitioned to a
paperless, automated work environment, a concept that is gaining
increased acceptance as accounting firms discover the efficiencies
that can be gained through technology. By implementing a technology-based
system for managing and processing audit paperwork, we increased
productivity, streamlined engagement workflow, reduced the need
for physical office space and outside storage, and enhanced client
satisfaction. Here’s how we did it.
Acknowledging
the Need
In 2001,
we decided to take a hard look at our processes for preparing
financial documents for clients. Two fundamental realizations
prompted our examination: our workpapers lacked consistency, and
we were amassing a tremendous amount of documents.
Our procedures
for preparing financial statements and related supporting workpapers
encompassed an amalgam of documents prepared by both our staff
and our clients. Of greater concern was that any partner could
produce a work product that substantially differed from other
documents he or she had previously prepared, or that differed
from the work products of other partners. Our goal, therefore,
was to automate the audit process in a way that would ensure greater
firm-wide consistency in the documents we issue. The desire to
improve the overall consistency of our documents, thereby minimizing
errors and increasing accuracy, drove our quest for finding the
right solution.
We discussed
our goals and realized that we needed to reengineer our processes
for preparing financial statements, tax returns and other documents.
In an effort to meet increasing client needs as well as regulatory
standards and deadlines, we decided that we needed a proactive
approach to data management and data output. We knew that if we
wanted to continue to be successful, it was critical that we standardize
our work processes and better organize client documents and files.
While we recognized that audit automation would lead to time savings,
our primary focus was to ensure quality and achieve greater consistency
in the documents we produced.
As the first
step, we assigned an objective nonpartner with technology expertise
to be the project manager. Our project manager began his search
for solutions at the American Institute of Certified Public Accountants’
Technology Conference.
Identifying
and Selecting Software Solutions
Our project
manager identified software packages that could provide us with
the necessary tools for managing documents, trial balances and
journal entries, as well as the import/export features we need
for tax return and financial statement preparation. Some of these
packages provided an open environment where users could easily
change their engagement files, while others offered controls that
prevented users from changing the standardized components of the
engagement file. We evaluated the systems and addressed a number
of other issues, including our firm’s old accounting software,
untrained users, the lack of a uniform culture, and budget constraints.
Deciding
on the right software solution was more than a technology decision.
It was a practice management decision, affecting data management,
quality control and audit quality and efficiency.
For the transition
to be successful, everyone would have to agree on all aspects
of document preparation and presentation, all the way down to
which line items would be capitalized, where colons would be used,
and how headings would look. Our goal was to create one consistent
format that would be shared across the firm. In the end, we selected
the system with the greatest potential to automate workpaper preparation
and workflow and eliminate manual and redundant tasks. In addition,
it was a solution that all partners believed would lead to quality
enhancements.
Document
Management: The Benefits
One of the
key benefits of being paperless is having every document available
with the click of a mouse. Our next step was to choose a document
management system that, integrated with the firm’s engagement
software, would provide total management of all documents.
Digital files
have functionality that simply isn’t possible with paper
files. For one thing, multiple people, even those working from
home offices or in the field, can access and work on files simultaneously.
However, better client service is probably the biggest benefit.
Files are never misplaced, so you don’t waste time looking
for information. You can answer a client’s questions immediately,
without having to go to the file room and search for and through
the client’s paper files, which may or may not be where
they should be. Also, we realized clear savings in printing and
copying expenses, and reduced the need for onsite storage and
eliminated offsite storage.
Training
We knew that
without a strong training program, the entire investment in new
hardware and software would be at risk. It was evident to us that
the more the staff knew about the system’s functionality
and capabilities, the more receptive they would be to the transition.
In addition to training our professional staff, we trained key
administrative staff, too. For each application, we designated
key individuals, or “champions,” as we call them,
for additional training. Our training plan improved teamwork,
and led to a sharp decrease in our reliance on technical support.
Looking
Back on a Well-Conceived Plan
In reflecting
on our transition to an automated work environment, we are pleased
with what we accomplished. Our firm has increased its efficiencies
on all existing engagements, and taking on new engagements now
requires a modicum of setup time. Because we are working with
a consistent set of workpapers and financial statements, the engagement-to-engagement
learning curve has been drastically reduced. This gives us more
flexibility in our staffing process and a competitive edge over
our peers. By eliminating manual tasks, we can focus more on value-added
work for our clients.
The change
to an automated paperless environment has provided us with obvious
cost savings, flexibility of staffing, ability to back up all
workpapers, tax returns and permanent files, and savings in space
requirements. In addition, as a result of the transition, our
employees and clients perceive us as a progressive firm with a
unified focus. We are no longer four partners sharing overhead
and staff.
Ronald D.
Kranzler is a managing partner in the firm of Held, Kranzler, McCosker
& Pulice LLP in Manhattan and a member of the NYSSCPA’s
Closely Held and S Corporations Committee and Mergers and Acquisitions
Committee.
Editor’s
Note: Notes from the Firm is a new column that The Trusted
Professional will periodically feature throughout the year. Written
by fellow practitioners, the column provides a first-person account
of the decision-making and steps taken by CPA firms to address professional
issues and concerns commonly encountered.
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