The concept of the paperless office was first introduced as a futuristic vision at Business Week in 1975 and 30 years later, its realization remains elusive. Although the evolution to a paperless office has been slower than predicted, there has been recent momentum fueled by the development of electronic tools with specific functionalities that drive productivity. The introduction of these products has created some confusion about the roles that each play and has raised questions about how best to integrate these tools. This article offers a glimpse at two emerging software products, Document Management Systems or “DMS” and Automated Workflow Applications, both critical to the implementation of the Lesspaper Office.

Document Management Systems
A Document Management System is a centralized electronic data repository used to track and store electronic documents or paper documents that have been converted to a digital image. A DMS is a virtual file room that not only provides storage and retrieval of data, but also addresses the issues of security and record retention. The key function of a DMS is to eliminate a firm’s reliance on physical pieces of paper by providing electronic access to the document from any local or remote location.

DMS systems vary based on needs. They can be as simple as saving client documents in a folder setup within Windows Explorer, or as sophisticated as a full blown DMS system specifically designed for the accounting industry that provides for extensive controls and search capabilities such as Profx Document (www.tax.cchgroup.com). From a professional end user standpoint, the key to Document Management Systems lies in their ability to facilitate the search and retrieval of documents with the end goal of improving client service and becoming more productive. From the administrative user standpoint, DMS’s are all about versioning, archiving and control.

Automated Workflow Applications
Workflow is the movement of documents, tasks, work and responsibilities throughout the office.  Workflow identifies the particular process by which work is to be completed by defining the tasks, determining the order in which they are undertaken and assigning the person responsible for completing them. Workflow applications are designed to consider the time consumed at each phase of the process and collect information that is essential to completing the task. Automated workflow solutions increase efficiency by providing employees access to a standardized process that can be used both locally and remotely. This increased efficiency ultimately results in increased profitability. 

While DMS systems have been available to CPA firms for over 5 years, automated workflow applications are new to the industry. Up until now, workflow processes established at CPA firms consisted of moving piles of files throughout the office. The appearance of a file on one’s desk implied responsibility for completing a step in the process. Movement of the file from one desk to another implied the shift of responsibility from one person to another. This paper-based workflow lacks control and unless a firm is extremely disciplined about documenting the movement of files from place to place, it is extremely difficult and time consuming to locate files or to determine the status of a given task. Chaos and disorganization are the obvious by-products of this manual process, especially during the busy season.

Automated workflow solutions like XCM (www.xcmsolutions.com)  allow CPA firms not only to standardize the workflow process within the firm, but also to minimize the chaos and disorganization. Automated workflow solutions route work through the office. Employees work within the application, recording their questions, review points, assembly and shipping instructions and any other information necessary to complete the return or task. Tracking information is automatically generated within the application, allowing instant access to the status of a project. The benefits of automating the workflow process are staggering when considering how much time a firm wastes manually shuffling and searching for files throughout the office. Implementing an automated workflow solution will result in better reporting, metrics and compliance for the firm administrators–all in a real time environment. This electronic workflow substantially reduces non-billable time, resulting in increased profitability.

Automated Workflow Applications can be implemented without a DMS, but DMS are most effective when paired with Automated Workflow Applications. Firms that are investing in DMS are finding that converting documents into a digital format before the work is completed yields huge efficiency savings. However, once the documents are digitized, there are no longer files to move around the office to establish workflow. The integration of Automated Workflow Applications with Document Management Systems solves this problem. Once documents are stored in the DMS, the automated workflow solution digitally routes the work throughout the office toward completion, while simultaneously allowing the users instant access to a project’s status.  Successful integration of the emerging technologies of Document Management Systems and Automated Workflow Applications allows firms to control the workflow process while maximizing profitability and improving client service.

Mark Albrecht CPA is a tax partner with KAF Financial Group and is CEO of XCM Solutions. For more information visit www.xcmsolutions.com or call 781-356-5152

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Firms that have integrated an outsourcing component to their tax and/or bookkeeping workflow processes need to keep abreast of both their legal and professional disclosure responsibilities.  This article will provide a brief history and update as to current developments in this area.

In conjunction with political and economic discussions around the concept of outsourcing, the history of the disclosure of the use outsourcing has been driven by security concerns with the primary issue being identity theft.  Even though surveys in the United States from 2003 to 2006 showed a decrease in the total number of victims and that 73% of those impacted indicated that the crime involved a thief acquiring a credit card, identity theft and outsourcing continued to be linked. This linkage has been the impetus for all of the disclosure requirements.

In May 2005 The American Institute of Certified Public Accountants issued disclosure requirements for members utilizing third party service providers. These rules were effective July 1, 2005. The AICPA adopted these disclosure requirements within their Code of Professional Conduct Rule 102. The rule requires that prior to sharing confidential client information with a service provider, the AICPA member must inform the client, preferably in writing, that he or she may be using a third-party service provider. http://www.aicpa.org

In December of 2005 the Internal Revenue Service, in response to Congressional pressure, within Notice 2005-93 issued Proposed REG-137243-02 Regarding Guidance to Facilitate Electronic Tax Administration – Updating of Section 7216 Regulations. These proposed amendments to the regulation under Section 7216 if the Internal Revenue Code specifically require that the tax return preparer must not disclose tax return information to a third party prior to obtaining a consent from the taxpayer within a separate written document of which the IRS will prescribe the form and content of such consent.

This proposed regulation has not been implemented and the AICPA has provided extensive comments that oppose this proposal.  http://tax.aicpa.org/

As this national debate continues, certain state CPA societies are making decisions for their memberships. The NYSSCPA Code Rule 101 states “A member in public practice shall not disclose client information without specific consent of the client.” North Carolina is now requiring a written disclosure. California’s Board of Accountancy requires written notice and written consent.

At Xpitax we are committed to information security and full disclosure. We will provide guidance and assistance to users in implementing appropriate disclosure. If you would like sample disclosure language or more information, please contact info@xpitax.com

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