Technology In Practice

From the Jan. 2006 Issue

By now, firms have closed the books on the 2005 tax season, which naturally means it’s time to tune up our tax departments for 2006 by implementing evolutionary practices that made this last year more successful for the leading firms.

One of the technologies on the forefront is the transition to tax workflow tools that streamline the best of our due-date requirements with managing the status of projects, staffing levels and even integrating with the firm’s document management application. Tune-up priorities for the next busy season include evaluating the tax workflow tools that integrate with your tax or practice management application, standardizing practices and providing training for your personnel (and don’t forget to document the process on your intranet). In addition to tax and practice management vendors, Xpitax XCM, SurePrep Express, and RIA/Immediatech TaxFlow have rolled out tax workflow tools that are changing the way firms manage their information in an increasingly digital world.

If your firm is in the minority that has not implemented dual monitors, it is time to get on the ball and immediately pilot at least two dual monitor setups in your firm. In an Association for Accounting Administration (www.cpaadmin.org) survey run prior to this past busy season, 49 percent of firms (average size 64 members) had already implemented dual monitors. Some firms are claiming productivity improvements of 20 percent or more for individuals utilizing dual monitors. So whether or not you have implemented a document management application, your personnel will benefit from being able to simultaneously view two applications at once. After a few weeks of pilot use, the benefits become obvious. Firms should plan on standardizing on dual monitors for all professionals by year-end. While most firms utilize dual monitors in “landscape” mode, expect to see “portrait” setups that allow for the complete viewing of a tax return, as well as taking up less desktop space.

Practice management experts have pointed out over the years that the more services a firm provides an existing client, the less susceptible that client is to fee pressure. This hits home particularly for 1040-only clients that may only see their preparer once per year. To optimize this relationship, firms should evaluate which existing clients would have benefited from having a projection done and implement a formal plan targeting those clients. Increasing the number of projections by 10 percent or 20 percent is not an unreasonable goal. To optimize the use of projection software, it is important to remind end users of best practices to export client data, adjust it for local state tax reconciliation issues and, most importantly, explain which reports should be printed out and provide tips on interpreting them.

One of the first steps in planning for 2006 is the distribution of firm organizers. Many firms manually insert engagement letters, privacy policies and marketing materials. Today’s organizer applications allow for customization of the letter to incorporate some of these documents so they can be printed within the organizer. Reduce the time spent printing and collating, as well as the risk of accidentally inserting the wrong client information with the wrong organizer by printing them all out at once. Firms printing labels should consider utilizing window envelopes as the cost of these envelopes will be less than printing, matching and placing individual client labels.

Firms are transitioning all aspects of tax production into a digital environment, including providing clients with digital copies of tax documents for their review. Two of the most popular methods of distributing digital documents today are e-mailing a *.PDF document to the client or providing the client with access to a secured document portal on the Internet. Firms using *.PDF documents should use a password as a minimum and, preferably, should utilize one of the e-mail encryption systems. Companies such as VeriSign, AMPLock and CertifiedMail provide encryption programs to allow firms to securely send attachments to clients via e-mail. Firms have also been successful in implementing client portals on the Internet, which are also referred to as FTP (file transfer protocol) sites. While some firms have the technical resources to build their own, many firms are outsourcing their FTP needs to their web site maintenance company or dedicated solutions providers. It is imperative to document the procedures to set up a new client and train administrative personnel to utilize them before busy season so it becomes a natural process within the firm.

Tax practices rely on the Internet more than ever to access research, download updates, e-file and communicate with clients. Accordingly, firms should have a redundant Internet connection to ensure that the Internet is always available. The redundant connection must be on a different backbone provider than the primary connection, and procedures to cut over the connection should be documented and tested prior to busy season.

The lull before the busy season provides firms the opportunity to evaluate tools and technologies that other firms have already successfully implemented. Taking time now to objectively review current processes and compare to new opportunities will allow firms to optimize their own tax production in the year ahead. 

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Roman H. Kepczyk, CPA.CITP is president of InfoTech Partners North America, Inc. and works exclusively with CPA firms to implement today’s leading best practices and technologies.

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