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Document Your Firm's Processes Before They Walk Out the Door


Without standard processes that are agreed upon and used consistently across a firm, chaos reigns. Staff members are confused when they get contradictory information, and morale slips, as evidenced by the 100 percent turnover in tax staff at my last firm.

Dec 19th 2019
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When people waste time and energy trying to figure out how a particular partner wants the work done, they don’t have the time or energy to think about actions a client could take to improve their business or finances. These firms are trapped in a compliance-only model, and may not survive much longer.

As Tom Hood, CEO of MACPA, told us during a session at the recent Digital CPA conference in Seattle, firms that stand still during a time of exponential change in the profession are falling behind. High-performing firms focus on firm strategy, culture and performance. This can’t happen when there’s no consensus on how the work should be done.

Additionally, Hood said that one of the attributes firms look for in merger candidates is “having one firm way of doing things, not different procedures depending on which partner you are working with.” A “one firm way of doing things” keeps the ownership of intellectual capital with the firm, not with the individuals working at the firm.

When a crucial person isn’t available – or leaves – the innovations and processes that person developed aren’t lost. Onboarding new staff is also easier when there’s just one way of doing things they need to learn.

Speaking From Experience

When I began my public accounting career in 2004, I did an internship at a firm that was piloting an onboarding process for new tax hires. This process was developed by managers who were frustrated by the ad hoc training that new staff typically received, so had put together a program to get the new people all on the same page.

Over a two-week period, four of us, all new to public accounting, worked through a set of simulated projects: a 1040, tax returns for a partnership, an S-corp and a corporation, tax research, and several bookkeeping exercises.

Through these small projects, we learned how to create workpapers and reference our work – skills that are not typically taught alongside accounting standards and tax code in accounting classes. We also learned how to import trial balances into Engagement, make adjustments and import those numbers into the tax software, how to use CCH ProSystem fx Tax and how tax work flowed through the firm.

My foreknowledge of those skills – especially how to use Prosystem fx – secured me my first permanent job as an accountant at a different firm. Over the years, at that second firm, we created an informal manual of processes and procedures to follow that ensured we were all doing the work the same way. This made our workpapers easy to create, easy to review, and easy for others to understand.

We developed spreadsheet templates and tools that helped us organize, reconcile and quickly complete our work. We had a Word document that contained additional paragraphs that we could copy and paste into transmittal letters for specific circumstances.

When we went paperless, we spent hours discussing what our tax workpapers would look like, how we would create them and the conventions we would use, right down to the colors of text boxes and our sign-off stamps. All those conventions also went into a document, which we regularly reviewed and updated.

Developing and documenting those processes meant that when someone new came on board, training them was simple. All we had to do was point them to that document so that we all started from the same knowledge base.

It also meant that if someone left the firm, we weren’t crippled by the loss of a particular skill or technique someone had mastered. We all knew how to do everything, at least as far as tax work went.

There were some exceptions, however. For several years, I was the one tasked with doing business valuations, so when I left the firm, I had to explain to the new person all of the workarounds I had devised to get the business valuation software to function after it was no longer compatible with the latest versions of Word and Excel.  But for the most part, the intellectual capital of how we got the work done remained with the firm, and did not vanish when someone left the firm.

When I moved to a smaller firm that was still largely using paper, I developed and documented a paperless workflow using Thomson Reuters products. Again, documenting my processes made it easy to teach others how to use the software tools and how to make sure that the workpapers made the reviewers’ work straightforward.

Fast forward 13 years and I was back at that first firm again, after the smaller firm merged into it. No one below partner level from my earlier stint was still there. The partners didn’t know anything about the standard training process I had been through earlier, and all those materials had long since vanished.

Even worse, nearly all of the time-saving automation steps I had learned when I was at that firm the first time had been lost. Simple tasks like how to update tax grouping schedules for a new tax year had never been documented. When the one person who did that for all tax binders left, that knowledge was lost.

Under intense pressure to get the work done, none of the tax staff members felt they could invest the time to figure out how to automate the work. It was more important to meet billable hour quotas than to do the work efficiently.

My co-workers had resorted to manually keying in trial balances and then typing those numbers into the tax software. This was something I had pretty much left behind in my first tax season.

Compounding the lack of technological know-how was a lack of standard processes across the tax department. One of my co-workers told me that she asked a question at a department meeting and got a different answer from each of the five partners.

Before I left that firm to write full-time, as a gift to the firm, I created a document with the processes I used to get tax returns done, using all the automation tools the firm had. I also included links to online resources for learning more.

My last day in public accounting, December 17, 2017, was spent leading a full-day course that covered the most important aspects of business tax law. I also went over my processes and demonstrated how easy it was to import numbers into the tax software.

But since I didn’t stay around for the next busy season and wasn’t able to act as enforcer to keep everyone in line, I’m not sure how much – or even if – those processes were used. According to reports from the tax staff I worked with, the first tax season at the merged firm was chaotic and stressful.

In the two years since I left, everyone below manager level has moved on to a new firm. So once again, except for that document I created, all the know-how for getting tax returns done quickly and accurately has walked out of that firm.

Having standard processes means you can tweak them to make them more efficient. It also leads to a greater feeling of unity and a more cohesive firm culture. Moving into the future is easier when everyone is rowing in sync in the same direction.

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Replies (2)

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By Tom Hood
Dec 23rd 2019 10:33 EST

Liz, Thanks for the recap. In fact, we at the MACPA and Business Learning Institute are in the midst of a major push for standard processes. We are using our own internal consultant, Bill Sheridan who is helping us implement the Entrepreneurial Operating System (EOS) which incudes standardization of processes and FBA (Followed By All) discipline. While we are not done, we have seen a remarkable impact on speed and cycle time to get things done.

Thanks (1)
Liz Farr
By Liz Farr
Jan 15th 2020 16:30 EST

Yay! I am all for standard processes! And especially when the expectation is that everyone will follow them consistently. Just adding mandatory workpapers for equity and fixed asset rollforwards made a huge difference in the quality of our work product, something I noticed when I reviewed work done by other firms.

Glad I got to meet both of you at Digital CPA, and I look forward to meeting both of you again!

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