Xpitax News Articles
A Change in Tools, Not the Process! A Paperless Office
Changing technology has “armed” the profession with new tools and applications to serve clients more efficiently, reduce operating expenses, and create a better work environment. The paperless office is a
change in the tools used to provide CPA services, and
a change in the process of conducting the work.
Instead of using manila folders, cardboard storage boxes and metal filing cabinets, CPAs can use a scanner, shredder, computers and a non-cheese eating mouse to conduct their work. To a professional use to doing work a certain way for thirty plus years, a paperless office will seem like a major change. It isn’t. The work is still done by applying your tax, audit and accounting knowledge with the end goal of producing a financial report assuring, analyzing or commenting on the mission at hand. However, instead of keeping, storing and moving mounds of paper, you now move bits and bites of electronic data.
It’s an 80/20 Rule
When evaluating a paperless office solution it’s important to look at the technology required to make it work. Conversion costs, compatibility, and training are significant considerations. The quality of the technology is a key driver in selecting a solution but, technology is only 20% of the success factor and change is 80% of the equation. If firms do not change their processes, the technology will sit on the shelf.
Outsourcing tax returns is a great way to ease into a paperless office. However, in evaluating an outsourcing provider, the factors to consider are reversed. In outsourcing, 80% of the consideration is your outsource partner and their technology/process. You want to ensure the outsourcing agent embraces most of your processes to ensure you do not have to retrofit your firm to outsource. However, firms need to acknowledge that outsourcing requires some change. Firms that realize 20% of the outsource process is dependent on how they adopt this new tool have historically been the most successful.
Can a company really do business without paper? To read more about outsourcing and workflow, read the article written by our CIO.
************************ Reprinted with permission by the American Institute of CPAs.
InfoTech UPDATE May /June 2004 Vol. 13, NO. 3
Newsletter of the AICPA Information Technology Section
http://www.aicpa.org/members/div/infotech/news/online.htm
DIGITALOPTIMIZATION
A Paperless Office or a World Series Title?
By Barry MacQuarrie, CPA
Barry MacQuarrie, CPA, is director of Technology at KAF Financial Group in Braintree, Mass, where he has overall responsibility for the technology direction of the firm. He also consults with CPA firms on their implementation of paperless office technologies.
As a lifelong fan of the Boston Red Sox, I have become very good at saying, “Just wait until next year.” When asked if the paperless office will ever become a reality, the optimist in me keeps saying, “Just wait until next year.” In Bill Gates’ book,
Business @ The Speed Of Thought , he writes, “The first use of the phrase paperless office appeared in a headline a quarter of a century ago in a trade publication for phone companies. The Xerox Corporation (although it never called it a ‘paperless office’) did more to promote the concept than anyone else. In 1974-75, the company was talking about ‘the office of the future’ that would have computers and e-mail with information online.” Will we ever find the “paperless office” that was the vision of these pioneers in the early 1970s? Can a company really do business without paper? For many of us, these questions remain unanswered.
Case Study—KAF Financial Group
In 1999, KAF Financial Group looked like most other CPA firms. Our office was filled with file cabinets. We had hundreds of binders with client related documents. Our computer system had thousands of electronic files in various folders and databases. Often, we maintained an electronic and a paper version of the same document. We spent thousands of hours each year sorting, organizing and filing paper documents. The system was adequate, but not efficient, and we were reminded of the inefficient nature each time we had to search for a paper document that was suddenly “lost.” We were ready for a change. Our pursuit of the paperless office began in 2000 with implementing a paperless engagement solution and document management system. I am often asked why we implemented two systems that appear so similar. While it’s true that these two types of software have many common features, our firm uses them to meet very different business needs.
Our Paperless Engagement Solution
We selected ProSystem
fx ® Engagement from CCH (
www.tax.cchgroup.com ) as our paperless engagement solution. Our goals were to improve the efficiency of our audit process and provide an organized method for storing electronic workpapers. At the time, the process of preparing financial statements and tax returns was labor intensive and involved a significant amount of data entry. We developed new procedures to exchange data between our audit-related applications and reduce the amount of time spent rekeying data. Our clients are encouraged to submit their data in electronic format allowing us to import it into ProSystem
fx Engagement. We also developed standardized procedures for preparing, reviewing and storing electronic workpapers. The result of the project is an audit process that is more efficient, organized and profitable. Although our paperless engagement solution was a success, we realized that it would not provide for the document storage needs of the other business units at KAF.
Our DocumentManagement System
The process of purchasing a document management system can be very difficult. It seems that every vendor has a different definition of the same term. A document management system should provide the user with the tools to capture, manage, share, secure, index, find and retrieve documents. Our goal was to find a system that would allow us to control all the non-audit related documents that existed within our firm, including tax returns, consulting projects, correspondence, billing records and internal firm documents. We selected a solution called Xerox— DocuShare‚ (
http://docushare.xerox.com/ds30 ) that provided the software and hardware necessary to create and manage all of our electronic documents. We scanned two years of existing client documents and moved all electronic documents from our network folders to our new document management system. Our team also developed new procedures for converting all documents into an electronic format.
Improved Business Process
Implementing the document management system significantly improved our business processes, allowed us to better serve our clients and increase our ability to recover from a disaster. Everyone uses the same interface — DocuShare — to create, manage, search for and retrieve documents. We no longer have to search through numerous network folders or file cabinets to find client documents. We maintain a digital repository that contains all of the documents. DocuShare includes a powerful indexing system that indexes every word in every document. Their search tool allows us to scan tens of thousands of documents in seconds. Regarding improved service to clients, here are the details of how we conducted business prior to the new system. Each April, our partners and staff were busy preparing individual tax returns from the paper-based documents we received from our clients. Suddenly, the phone would ring and it was a client calling with a question about the tax return we mailed to them two days earlier. For some, “panic” would set in as they realized they needed the client’s tax file and they had no idea where it was located. Our clients would often hear us say, “Let me find your file and call you back.” This resulted in hours of non-billable time spent searching for files — not a model for good client service. Our procedures have changed. We scan the client’s organizer and source documents when they arrive. We convert them to Adobe PDF files, and add bookmarks and annotations to the PDF files as we prepare and review the tax return. Once complete, the tax return is printed in PDF format and stored with the electronic version of source documents in DocuShare.
Today, when the client calls in early April, we no longer panic. While we share our thoughts about this year’s Red Sox team, we are opening their tax return and source documents from DocuShare. We are ready for their questions and can provide quality client service. Often overlooked, a document management system also can help an organization with their disaster recovery planning process. In the paper world, it is impossible to maintain an off-site copy of every document in the office. A fire or flood would have a dramatic impact on a CPA firm. A digital repository allows us to reduce this risk. Each day, a copy of our entire digital repository is moved to an off-site location as part of our normal backup procedures.
Our Clients Benefit From Document Management Systems
CPA firms are not the only organizations that can benefit from a document management system. As an example, let’s look at how a general contractor struggles with paper in its normal business process. Most general contractors maintain a central office and have teams working at remote job sites. The project managers oversee the work performed at, and materials delivered to, remote job sites. Accordingly, the project managers are often called upon to review and approve vendor invoices. However, most vendors deliver the invoices to the general contractor’s central office. The paper — and the person who needs the paper — are in different locations. The general contractor is forced to ship the paper to the job site or the project manager must travel to the central office. Using a document management system, a general contractor could solve this problem. The staff at the central office would scan all vendor invoices on arrival. The system allows the project manager access to the digital version of the invoices from the remote job site. The system also can be used to handle the routing and approval process as the invoices move from one person to another, and the general contractor can also build a single digital repository for all job related documents.
It’s All About Process
Moving from a paper-based system to a digital storage repository will not happen overnight. It should be a carefully planned and executed process. A few of the lessons I have learned include the following:
• A member of management must champion the project
• Document your business process
• Select a solution that best fits your process
• Avoid being sold on the “features” of the new system
• Develop standardized policies and procedures
• Select a solution that integrates hardware and software
• Invest in quality products from quality vendors
• There will be resistance
• The results will be worth the aggravation
The impact our document management system has had on our firm is tremendous. We truly could not operate without it. The firm has improved as we have moved from paper-based storage to our digital solution. I believe that most CPA firms can benefit from the move to a digital office. Will we ever see a truly paperless office? Will we ever see a World Series Title in Boston? We should know by next year ….
Contact Barry MacQuarrie at bmacquarrie@xpitax.com.