'How Do We Do That Around Here? A Question of Policies & Procedures'

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By Kenneth M. McCall, MBA, MCP

Put yourself in the position of a newly hired staff accountant in your firm. You've just completed the Human Resources orientation, received network login credentials from the computer department, and even had a little orientation training on the software that the firm uses for various job functions. Now it's time to go to work!

Will it be clear to you how the job functions of the firm are carried out? Whether you're an auditor or assigned to the tax department, will it be clear to you how the firm expects you to do your job? The answer to this question will depend on how well the firm has documented its standards, policies and procedures.

As we work with firms around the country, we at Boomer Consulting, Inc. still see far too many instances of poorly documented or fragmented standards, policies, and procedures. Jobs are being done in ways that have evolved over time with little regard to the capabilities of modern software systems. Too often a climate of “we've always done it that way” prevails over a well reasoned analysis of “why” each step of a job is performed. Worse yet, many firms still allow wide latitude in partner customization so that a new accountant or administrative person can't learn a single “firm way” of doing things; instead they must allow for doing it “Bill's way” or “Sally's way”. Sadly, firms that fall into these traps are giving up a lot of efficiency and quite likely some profit potential as well.

Think for a moment about tax processing. With the advent of offshore outsourcing as a tool for tax preparation, firms are moving rapidly to the digital capture (scanning) of client documents as they arrive in the firm. If a tax return is going to be outsourced for preparation this digital conversion is an obvious need. But, of course, even in firms that aggressively outsource there are many returns which will be prepared by internal staff. How are those returns handled from a procedural standpoint? The most streamlined process would be to handle all returns exactly the same way, up to the point of assigning them to a preparer. That would mean that all support documents are scanned at the beginning of the process when they are received, then passed electronically to the preparer along with the tax file, regardless of where that preparer might be located. Upon completion, the preparer passes the completed tax file and electronic support documents to a reviewer, and then on through the remainder of the process. The system is the same in all instances.

Interestingly, one of the side benefits to evolve from the outsourcing movement is a set of online workflow management tools. These are essential, of course, if tax preparation is occurring half a world away, but they can be of great use inside the firm as well. Most of the major outsourcing vendors have these online web-based tools available for licensing for internal use. The key though, no matter how the tracking is done, is to have the procedure the same for all situations.

On the audit side of the house many firms have adopted audit automation software such as CaseWare Working Papers, ProSystem fx Engagement, or CSI's Engagement Solution to move towards less paper in the audit process. The firms that have had the greatest success with these tools, though, are the ones who have spent the energy to clearly identify the step by step tasks associated with using these software packages and document these steps into policies and procedures. Every job begins and ends the same way, and in between the auditors can concentrate on the facts of the client case and not waste time trying to adapt to the software they are using.

So, how have these firms tamed the workflow challenge? In almost every case they have approached the task analysis like a puzzle: figure out how many pieces there are, how they fit together, and in what order they must be done. Then, with a clear step by step process in mind, they document it, disseminate it, and train on it. Sounds simple. Is it, really?

Many firms have adopted a Standards Policies and Procedures Task Force which is charged with doing exactly those steps. Composed of members who understand how things really work in their departments, this task force is charged with analyzing how things are done today, how they could be done better in the future, and recommending changes where necessary. They must be conditioned and empowered to ask “why” any time a step seems missing or unnecessary. They must watch for obstacles that might be built in as a cover for “turf protection” or to mask weaknesses in using the tools available. By the end, they will be able to clearly draw out the process in a flow-chart like fashion and describe it clearly and succinctly to a listener.

Sometimes firms find it difficult to document their revised policies. Often we get requests from one firm to view and copy the procedures worked out by another firm who has been down that road already. In practice this almost never works. While another firm's written policies might offer a layout or format guide to follow, the real value of such a study comes from actually doing the analysis. After all, if you want people to change their habits to a more efficient process, that process had better be the one that's tailored just to your firm. As for format, there is no right or wrong answer. A format we have discovered to work well comes from Stephen Page, and is found in his book “7 Steps to Better Written Policies and Procedures”. That book, along with “Best Practices in Policies and Procedures” by the same author, forms a solid foundation upon which to build a policy review. Both books are available from prominent online booksellers.

Once policies are reviewed and revised, and written in a chosen format, it is critical that everyone who will be expected to follow these policies learns and understands them. This again is often the role of the Task Force. Once a policy manual is adopted, the Task Force should arrange for comprehensive training to everyone who will be affected. In addition to training, the written policy guide must be made readily available. This is a great use for a firm Intranet where the policy guide can be posted one time and accessed as needed. This central repository also facilitates easy updating as required.

One high risk area that firms must be ready to deal with is non-compliance. Staff members are rarely the problem here. They understand that they need to follow procedures as they are taught and told. The greater problem often comes from Partners or Shareholders who are reluctant to give up their long held personal preferences. This is simply a function of leadership. In today's competitive environment the firm cannot afford the inefficiencies that come with multiple variations on a standard theme. If the firm has a strong corporate governance, with a Managing Partner or CEO, part of his or her job will be to ensure that everyone gets in line, including reluctant partners.

So, to answer the title question “How do we do that around here?” we can see that the answer lies in several steps. First, the firm must make a commitment to reviewing existing (and sometimes undocumented) workflow processes. Then they must analyze, revise as necessary, and document the preferred new process. Once approved, that process must be fully disseminated and trained to all concerned. Finally, there can be no allowance for those who want to “opt out”. These are firm policies and everyone in the firm needs to follow them.

While there will surely be plenty of difficult work and hard decisions which will go into carrying out this formula, the task itself is relatively straightforward. Decide now to move your firm forward and tackle the policy and procedure challenge. It will be worth your time and effort.

Biography: Kenneth M. McCall, MBA, MCP

Boomer Consulting, Inc.

610 Humboldt, Manhattan, KS 66502

Email: [email protected]

Phone: 785-537-2358 ext. 15

Toll Free: 888-266-6375 ext. 15

Fax: 785-537-4545

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