Home for the Tax Days

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The long days and Saturdays tax preparers normally work during tax season may be less of an annoyance to Joe Fabiano than the rest of the 30 employees at Kirkland, Albrecht & Fredrickson. After all, he's single. But urged on by the staff, Fabiano led the movement to improve workflow at the company's tax practice. Except it wasn't discussed as a workflow problem and solutions-it was "Project Balance."

"Project Balance is trying to give employees a balance between their work lives and personal lives. During tax season, the typical CPA works mega hours from January to April 1," says Fabiano, an audit partner. Obviously, that's hardly a secret.

What the firm set out to do was cut down the work load. Employees often went home at 8 p.m. Wednesdays were set aside as "Family Night" and they worked few Saturdays, well, few by tax-season standards.

Partner Insights

"We didn't work any Saturdays during tax season, except the two before March 15 and the two before April 15. The only reason we worked those is that was the first time in the process and we wanted to make sure we didn't miss anything," he says.

That's not your father's or anybody else's CPA firm.


The secret was the XCM software the firm implemented last year-software that was developed by the firm and is now being marketed by its affiliated company XCM Services.

XCM starts with scanning documents, an increasingly common practice. But workflow software is not just concerned with providing scanned images-it tracks the process of a tax return, or other documents through the firm.

It is this capability that made Project Balance, and its promise of more dinners with the family, possible. Because the legendary hours of tax season were as much about finding and tracking files as were about preparing and reviewing returns.


"A few years ago, when you came in Saturdays during tax season, you made meeting after meeting to discuss 'What you do during the week? What will you do during the next week?"

Of course, not everybody wants to go home early, or work in the morning. Fabiano says the system also lets people tailor their schedules to their preferences. The result has been good for employees and generally good for business, especially when clients call to ascertain the status of a return.

"You took the phone call and walked around the office asking who had the individual return," Fabiano says. Now, he can just "hop on to the Web site and find out the status of the engagement." Not only that, it's easy to get missing information while the caller is still on the phone.

And XCM can help managers determine how long it takes returns to cycle through the firm, and whether any staff members are bottlenecks.

The review of staff performance "is done as the process goes through," says Fabiano. "I make a five-minute phone call saying, 'I thought we were further along.'"

Defining Workflow

Workflow is pretty much about who does what work in what order in any business. Given that broad definition, the kinds of software that can help improve workflow also cover a wide range.

Anything that automates data entry helps with workflow. Import tools, document management software and engagement applications all can be defined as falling into the workflow family.

"Workflow has changed tremendously in the last few years," says Liz Alexander, a sole practitioner based in Arlington, Texas. She points to the improvements Intuit has made in its Lacerte tax preparation software. "From client work, straight over to tax software, [everything] has been completely streamlined. I don't enter data on my clients' tax returns on anything."

And for small firms, where there aren't different paths that forms can take through the firm, improvements to data entry in tax software represent basic changes to workflow.

In Lacerte that involves the capabilities of SmartMap, which help Alexander process the roughly 150 returns that come to her firm each year, a firm that includes Alexander and a part-time technical person.

The company's Source Doc Auto-entry enables users to scan source documents such as W-2s and 1099s and to import data into Lacerte, where it is mapped to the appropriate tax lines. In fact, it's this capture of W-2 and 1099 data that is one of the major areas of development by software vendors.

Thomson Tax & Accounting implemented a barcoding system last year enabling forms to be coded with information, which can then be scanned into the UltraTax system. But despite its offer to share the technology with other vendors, none have taken Thomson up on the offer.

Not everyone has gone that far.

Charles Hoyman, managing partner of Hoyman Dobson & Co. is using the FirmWorks software from Valdosta, Ga.-based Knowledge Concepts to improve the ability to track returns.

FirmWorks, which includes project due and monitoring, is tied into the time and billing system of the Melbourne, Fla.-based CPA firm. Besides capturing billable time and changes to projects, the system generates a weekly report.

"We graphically present the information and we can see how we are progressing through the season," Hoyman says. Although that report isn't in real time, it can report on the status of returns such as "it's not in yet. It's in preparation. It's in review. It's ready to go."

The process has gotten more automated with corporate returns, with Hoyman tying ProSystem fx Engagement into the tax preparation system.

"In corporate tax, we are completely paperless, except for the job routing sheet," he says. Workpapers are created in Engagement, with the data then moved to ProSystem fx Tax.

Besides eliminating manual entry, Engagement streamlined auditing engagements, and the reports are more up-to-date.

"We have the ability to track the time by the segment of the engagement that's done on a real-time basis," he says.

The Real Deal

Besides systems that help improve workflow, there are the products that are billed as full-fledged workflow packages. Among the best known in this arena are XCM and SurePrep Express.

Both applications have their origin in companies whose first line of business was intended to be outsourcing preparation of tax returns offshore. The development of both was triggered by the same problem-the shortage of qualified personnel during tax season.

However, when outsourcing stalled because of concerns about security and complaints about jobs being shipped overseas, the vendors developed separate approaches for making the process of preparing taxes more efficient.

"This product [SurePrep Express] uses optical character recognition technology, which basically means taking an image of a page and turning it into an editable file. It's something a lot of people are familiar with," says SurePrep CEO David Wyle.

One reason SurePrep made the transition to workflow was that in collecting the information for data that was to be used in preparation, it also amassed a library of different kinds of forms, including a wide range of W-2 and 1099s.

That library proved invaluable as SurePrep developed software that could both scan and index forms, and also "learn" to recognize new forms, after encountering them for the first time, crucial because of the lack of standardization in form design, says Wyle.

Wyle positions his product as having more advanced capabilities than other packages on the market. He says CCH ProSystem fx Scan "sorts the documents. It doesn't read data from them. It will organize them so that all W-2s are together and will bookmark them." He says Intuit's SourceDoc Auto-Entry is that it "only recognizes six different types of W-2s and five different types of 1099s. They only recognize IRS format. Most documents do not come in IRS standard formats."

By contrast, SurePrep, Wyle claims, is the only package that can read data from brokerage statements, along with 42 different capital gains transactions and will also recognize handwritten data. As a result of receiving about 1 million pages of documents a year in the outsourcing business, SurePrep developed the ability to have its software recognize more than 1,000 different formats.

Wyle also describes capabilities that are designed to make a reviewer's life easier. The system creates a PDF of scanned documents that has reference numbers.

"The images are not only organized, the reviewer can see [which information] was entered manually," says Wyle. However, he warns the process does not end manual data entry. He continues, "It should eliminate about 60 to 70 percent of data entry, and it will show what data has been knocked out and what they still need to do."

Before installing SurePrep, firms should test it to make sure they are providing the right kind of image files. Source documents must also be checked for elements that can hamper scanning accuracy such as handwritten notes, holes and documents that are already scanned images.

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