Tax Season Opportunities For Improving Efficiency

By, Tom Davis

As another tax season approaches, CPA firms should spend some time reviewing their current processes for preparing tax returns. Tax preparation is one of the success stories for CPA firm technology implementation. There is no question that returns are prepared faster today than they were two decades ago. However, for most firms there is still some substantial opportunities for improving the tax preparation process.

Standardize Review -

If there is an area of the tax preparation process that has lagged behind other areas, it is the review of the return. Tax prep software focuses on preparer efficiency, but tall packages have features that will aid the reviewer.

The first thing to focus on is that review needs to be done on-screen. This means that reviewers must be adept at using the tax software. If you have reviewers that lack on-screen skills, plan to train in the second week of January so that reviewers can immediately use and reinforce the reviewer training.

One point to stress when this on-screen review is introduced in the firms is that on-screen review does not do away with paper. A very efficient approach for reviewing returns is to compare the paper documentation to the onscreen return. Even if the firm plans to produce the “paperless tax product” described later in this article, a paper to onscreen approach is more efficient than trying to review completely from a paperless product and supporting information.

Next, consider standardizing the firm’s review process. Get all the firms tax return reviewers in a room and minutely analyze each reviewer’s review process (there will be many variations). Then, build single firm-wide review approach and document it. This single standard review process will be stronger than the process performed by the individual preparers. Additionally, it is easier to get all firm members trained in a single process.

Finally (but of extreme importance), train all the firm’s tax return preparers on the firm’s standard review process. The last step in preparing a return will be for the preparer to perform the same review that the reviewer will do. This approach reduces the number of “careless errors” that reviewers will have to handle. Also, it helps train new preparers by emphasizing the important aspects of a return.

Push-Forward Processing -

Sending work back to the preparer for correction can be very time consuming. If there is any gap between sending the work back to the preparer and the reviewer getting it back for re-review, the time spent re-reviewing the return can increase substantially. If at all possible, have the reviewer handle any changes to the work and never send it back to the preparer.

To avoid missing the opportunity to train the preparer to avoid future mistakes, first document the errors corrected by the reviewer and send them to the preparer. Consider accumulating all errors for weekly review by the tax department to identify any areas that may require firm-wide training to correct. Second, if the mistake is a “knowledge error” (as contrasted to a “careless” one) do individual instruction of the preparer to “train” them on the issues and the correct approach to be used in the future. This will improve the quality of the preparer much faster that just sending work back for “re-do”.

Paperless Tax -

Currently, one of the hottest topics in firms is the move to a paperless process environment at every service level. Tax return preparation offers some excellent opportunities to start this process in your firm.

Some tax return preparation applications have electronic organizers that can be sent to clients just like their paper counterparts. Information entered into this organizer will then automatically be transferred to the tax application reducing the amount of time spent in this area.

Tax returns packages offer good on-screen preparation and review features. Additionally, some applications like CCH Profx Tax and Creative Solutions UltraTax have features that will create an electronic image of the tax return that can be stored in the firm” electronic file room. For applications that do not create an image file, you can purchase a tool such as Adobe Acrobat that will “print” any document to an image file.

Probably the only “trick in the whole process is to develop standard processing procedures that define the documentation to be kept to support the tax return, how to review the return on screen, and what happens in the assembly process. A very natural point in the preparation process for scanning the information that will be retained by the firm is when the return is assembled. Use high speed scanners or digital copiers and store the supporting information in the firms electronic file room.

Tom C. Davis, CPA is a partner of TC Davis & Associates, LLP in Valdosta, Georgia. He also consults with CPA and law firms nationally and in Canada on technology and practice management issues. He can be reached at tcd@tcdcpa.com or at (229) 247-9801.


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