Moving Forward with Less Paper

By T. Rose Rovelto, CPA, CITP

Integrated Financial Reporting

One of the hottest issues right now in the CPA industry is dealing with redundant data entry and reducing inefficiencies in engagements. Although the technological advancements in our industry have been phenomenal and many firms have exchanged their hardware out many times over, many are still working with the same processes they used long ago. As a result, many are not getting a high enough return on their technology investment and therefore are reluctant to spend the money necessary to make significant changes! However, one thing is very clear, everyone sees the need for improved efficiencies.

As I said, most firms are still using the same processes they used ten years ago to produce financial statements and tax returns. There is an opportunity, if you are not careful, to enter the same information six different times. First, the client enters it into their accounting software. Then, most accountants still key balances into the work-papers. The reason most often given is they don't know how and therefore, it takes longer to download the balances than to key them into the trial balance. This is a training issue that needs to be resolved immediately. Next, it is entered into the depreciation package. The fourth entry point is into the tax software. Finally, in the financial statement preparation process, many firms still print out a copy of last year's financials and pencil in the numbers for the current year rather than preparing the statements in the work-paper software. They create the financials using a word processing and spreadsheet program, which are entry points #5 & #6.

In reviewing the above steps, it's easy to see that there has to be a better way that results in a significant savings of time. The idea of integrated financial reporting is to get rid of the redundant data input, decrease input error and reduce the incredible amounts of paper that is taking over our office space. Applications, such as ePace and Caseware use technology to help us go through the whole process from start to finish – electronically. They set up electronic files just as if you are working in paper! Everything we did with paper schedules, physical files, binders and trunks, we can now do electronically. Now, instead of lugging all this data around, we are carrying laptops equipped with printers, remote access, scanners and running our engagements in the field over a wired or wireless LAN.

As a professional in the field, instead of spending your time cutting and pasting lead schedules, physically creating binders, copying notes, carrying forward numbers and schedules, searching for the right folder and then the right document, even putting the little reinforcers on the holes of the paper so they won't tear off and get lost – NOW we are spending our time on evaluating risk and audit procedures and developing management recommendation letter items.

With these products, you could have individuals in the field working on files, managers back at the office reviewing the files as they become available for review and partners signing off on engagements – all at the same time and all electronically. The technology is here and the leading firms have jumped right in! And those that have not are considering it.

Benefits

Some of the benefits of improving the way we currently run engagements are obvious, such as the elimination of redundant data input. The real power in these systems is the efficiencies gained with working with the information electronically rather than on paper copies. Think of having all of this information at your fingertips rather than having to go to the file room to track it down, or maybe it was misfiled or has not been filed yet. Statistics show that an office makes 19 copies of each document; 15% of documents are misplaced and we spend 30% of our workday searching for lost documents. Even if this is only partially accurate in your office, the potential efficiency gains are incredible.

An additional benefit is the reduction in the amount of storage space needed if the majority of the information is maintained electronically. You would now house a few servers to take the place of your Central File Room.

Must-Haves

Leadership is the key factor in a firm's success. You must have someone with a high rank to champion this effort and enforce the new policies and procedures. You also must have an understanding that this is NOT an IT project. You cannot simply hand this off to your IT person. This has very little to do with the technical side of the equation and everything to do with the evaluation of your current policies, procedures and processes.

In addition, you have to be prepared to spend some money. Not just in dollars but in TIME. You will have to commit to a strong planning process and an intensive training program. Then, after you have spent all that money, you must insist that people use the system according to policy. This is the only way that you will see the proper return on your investment.

Planning

As in any project, in order to be successful, you need to properly plan. It is important to first look at the needs of your users. Every firm's situation is different based on its size, its clients and its resources. The next step is to evaluate and define your processes and procedures. You must ask yourself, "How should it be done?" rather than, "How has it always been done?" Then you must design your technology infrastructure to support those processes and procedures. It is important to document the workflow to ensure that you are aware of all the steps and bottlenecks. You will have to determine how you want to capture, manage and retain data during engagements. How will it be accomplished, what are the hardware and software needs to make it run smoothly and how will all of this integrate with the workpaper software package of choice?

Of course, with any system, you must concern yourself with the security issues involved with your new procedures. If you provide a digital environment to your staff, how will you ensure client confidentiality and adequate redundancy to safeguard against loss of data? You will also need to determine how you will share files in the field. Will you provide a network in the field or will you pass the information by the use of external drives? And what about providing a connection to the office – is that cost effective?

Training

Training has got to be one of the highest priorities in this type of a project. Without it, you cannot get the proper return on your investment. You cannot afford to have people flounder or even worst, circumvent the system and do it "the old way." Some will need to revisit their Word and Excel skills. Everyone will need to have an orientation on the new software, structure, policies and procedures. Backup and security now becomes an even more important piece of the puzzle and everyone must be aware and trained on the proper procedures to ensure data integrity and security. Finally, depending on the other capabilities you provide your people in the field, you may have remote access, network set-up, and "using network neighborhood" issues.

Conclusion

There are huge benefits associated with moving toward a digital engagement. But there are opportunity losses if you don’t understand the issues and properly plan the project and train your users. Don’t set yourself up for unrealized ROI!


T. Rose Rovelto is a Consultant with Boomer Consulting, Inc. She joined the company in 1997 and has ten years of experience in the CPA industry.

Rose assists CPA firms in the development of their strategic technology planning and budgeting process. Rose is a trainer for The Consultants Training Program™ - a program built to assist clients in developing a technology consulting practice. She is also a facilitator for The Boomer Technology CirclesTM (BTC). This program teams CPA firms from across the country and provides an environment for them to work together and continually provide solutions to their management and technical needs.

Rose developed and maintains the BTC's member-only Extranet; Internet based databases by which the members communicate among each other and gain access to many tools, checklists and guidelines to assist in the management of their technology and their practice as a whole. In addition, Rose manages and maintains the company’s own web site.

Rose is an accomplished speaker and has developed training programs, given presentations and written articles on technology management issues and solutions as they pertain to the CPA Profession. Presentations and article topics include: “Technology Best Practices,” “Developing a Technology Consulting Practice,” “Practice Management Software,” “Hot Technology Topics And Trends,” “Strategic Technology Planning & Budgeting,” “Web-Enabled Software,” “Hiring a Technology Professional,” “Communication Technologies,” and “Security.”

Previously, Rose spent two years with Varney and Associates, PA, Manhattan, Kansas and four years with Arthur Andersen in Kansas City as a Senior Auditor.

Rose received a Bachelor of Science degree in Business Administration from the University of Kansas in Lawrence and an accounting degree at Kansas State University in Manhattan.

T. Rose Rovelto, CPA, CITP
Boomer Consulting, Inc.
610 Humboldt
Manhattan, KS 66502
Email: rose@boomer.com
Phone: 785-537-2358 ext. 19
888-266-6375 ext. 19
Fax: 785-537-4545

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