Scan, Organize... and Now Populate: The Workflow Revolution Continues

From the Sept. 2008 Issue

Just a few short years ago, the paperless office movement started a new class of programs designed toward creating a digital professional environment. While there may be some environmental advantages to the paperless office paradigm, the major proponents of the effort were far from tree huggers. Instead, they were savvy professionals who understood the technological landscape and saw the many opportunities that such a digital revolution could provide.

These benefits included practical issues such as limiting the need for storage space, but they also allowed for more reliable document retention, instant access to client records and the ability to keep all client-related documents together by creating digital folders. As the technologies evolved, additional features became available, enabling professionals to create fully electronic digital workpapers that enhance collaboration between professionals or between the client and the firm, as well as offering dynamic links (drill-down functionality) from returns, financials and other work product to the supporting documents, spreadsheets, programs and other related materials.

Revolutions are not pain-free, of course. This substantial change caught many firms off-guard as they implemented solutions that required them to redesign their internal workflows. And when looking at the greater picture, the paperless movement was only a part of the larger issue of revamping firm processes to take full advantage of the productivity and efficiency-boosting capabilities of these new programs.

The most recent innovation in the workflow revolution is automated population of 1040 tax returns with data from source documents. Ever since the concept was first touted a few years ago, it has been generally embraced as a way to quickly eliminate much of the labor involved in data entry. But with optical character recognition (OCR) not quite reliable enough for truly hands-off automatic transfer of data into forms, technology vendors in the tax and document management spaces had to develop workflow methods that would optimize the automation aspects of the concept, while instituting efficient review processes.

Through several years of development, several products are now coming to the market. Much more than just add-ons to a tax system, these automated population utilities bridge between a document management application and a professional’s tax program. In most cases, the systems are offered as a part of a vendor’s document management suite, essentially making these systems into a new breed of programs that “scan, organize and populate.”

How the Process Works Each of the scan, organize and populate systems on the market works in different ways and has varying workflow processes, but at their base, they are designed for a firm that has a front-end scanning process in place.

In other words, the first thing to do when a client delivers a stack of documents is to put them in a scanner. Since the quality of the scanned document is greatly affected by the quality of the original, it’s best to scan the originals, not photo copies. After this, the systems manage the scanned documents in different ways, generally providing an electronic work folder or other filing system.

The systems then look at each form to determine what they are (W-2, 1099, K-1, brokerage statement, etc.). This is the hard part, and it’s the area in which most of the vendors concentrated since there are literally thousands of slight variations to even the most common forms — think about all of the different bank-produced 1099-INTs out there. The better a system is at recognizing these forms, the better job it does in the next step, which is pulling data from each of the fields and classifying it appropriately (as income, interest or other categories).