"Ultimately, everyone manages tax workflow," according to Jordan Kleinsmith, product manager for enterprise in the Tax & accounting businesss of Thomson reuters, creators of Workflow Manager (part of the GoFileroom product line). "The question is, how consciously, and how well?"

That's a concise summary of the state of tax workflow software, one of the most critical solutions used by accounting and tax preparation firms, and one of the less developed classes of software in the marketplace. Not that there are not good vendors -- it is simply that so many vendors of "workflow" software -- and their customers -- don't fully understand the tax preparation process.

"Tax workflow is about predictability, repetition and efficiency," said John Sapp, vice president of strategic development for Drake Software, makers of the GruntWorx line of tax workflow solutions. "The firm that clearly identifies its processes positions itself to achieve higher adoption rates and become more efficient and profitable. Those who do not understand their internal processes, or think of tax workflow as just automating documents, will struggle to gain efficiency."

"Many companies have developed basic tax return tracking software within their applications. These applications do not integrate well with the firm's practice management workflow solution, which tracks other tasks that are required for the return to be completed," agreed Katrina Geety, CPA and president of Geety, Blair & Araya PA, as well as Accountants' Workflow Solutions Inc. "Many are trying to improve the front-end scanning process, but until there is some control and consistency applied to the documents themselves, a successful scan rate can't be achieved. Also, many companies are moving in the direction of having the software determine which step in the process you are in and when to move to the next step. But that is not realistic. Tax preparers need to be in control of when they are ready to move to the next step."



Last year, Accounting Today's survey of tax workflow systems concluded: "Converting such an elegant process to the computer should have been relatively easy, but it wasn't. In fact, the process has become so convoluted that few providers of tax preparation software offer a workflow product that can do the entire job well. Making things worse is the fact that in other areas of an accounting practice, such as trial balance and audit engagements, there are fairly robust workflow systems that have built a niche for themselves on the accountant's software bookshelf."

Practitioners and vendors agree that progress has been made. "There has been a continuing evolution out of the paper environment," said Angela Askew, manager of the CCH Tax Product line that includes CCH Axcess. "The industry is focused on how information can be brought efficiently into the return, and how we will be better able to ingest data like brokerage information directly into the return."

"SaaS and mobile capabilities will significantly increase productivity within the office, as well as with how the accountant interacts with their clients," said Amit Walia, vice president of product management for Intuit's Accountants and Advisors and ProTax divisions. "From the use of core SaaS products to the use of mobile devices to communicate within the office and with clients, the evolution of technology is leading a platform shift that will impact how accountants do their work. Additionally, the growth of these SaaS applications and data in the cloud will lead to new opportunities to further consult with and advise clients, as big data will yield insights that will change the services that accountants offer their clients."

"Practitioners have made more strides in automating their tax workflows than any other area of the firm," said Erika Schonberg, director of marketing and alliances for XCM Solutions. "The tax department has led and continues to lead the way toward paperless processes. Almost a quarter of public accounting firms have implemented an end-to-end digital workflow for tax preparation, including scanning on the front end, storing files electronically, moving work digitally, online review and e-filing. Some early adopters have taken this a step further - fully utilizing OCR technology, a complete workflow management system, and using portals to bring clients into a fully digital process. Adoption was slow initially, but I think we can expect to see the number of firms implementing a digital tax workflow double in the next few years."

For many vendors, the issue is not just automation, but managing the process to make it fit the needs of the accounting firm. These vendors are looking to solve basic problems in how tax workflow differs from accounting workflow, and how to bridge the gap.

"It is less about translating documents into electronic format than about predictability," said Drake's Sapp. "Tax workflow is driven by one process, which is always the same, so it should in theory be easy to find efficiencies. Software must drive efficiencies in order to prove its value to the accounting firm. Something simple such as software that will organize source documents the same predictable way every time can lead to tremendous gains in productivity."

"We have seen in the past how technology can shift very rapidly, and we need to be sensitive to that shift. Remember when a new PC was obsolete within 90 days?" asked CCH's Askew. "The focus also needs to be on how we will help firms grow, manage and protect the practice through new technologies. That is a very real concern as the industry becomes more mobile, and as we move into the cloud."

"The overall goals are to maximize preparer efficiency, provide unique insight on tax strategy and planning, elevate client service, and ultimately drive firm profits," said Thomson Reuters' Kleinsmith. "We are addressing these through three strategies: First, anywhere, anytime access to Web-hosted tax compliance and tax workflow solutions; second, the direct capture of client source data from online sources and in other automated ways, using mobile devices, tablets, and other technology tools in innovative ways to improve the tax prep process; and third, continuing to solve problems facing our customers which are yet unsolved."

The key difference, according to a number of vendors, is that while the accounting firm has many simultaneous workflows, the tax side of the business has only one. But that one workflow is unlike the accounting workflows in its need for absolute efficiency, its time-sensitivity, and its dependence on the quality of the data that is input.

For some vendors, moving the industry to greater automation is not enough: "There needs to be a standardization of forms if front-end scanning is going to drive efficiency," said Katrina Geety. "Correcting a 25 percent rejection rate is more time-consuming than entering documents manually or correcting data entry errors. Forms, such as the W-2 and 1099, need to be standardized across the nation. They all contain the same data, but in a different location on the numerous formats being used today. The IRS should provide licensed preparers access to our clients' transcripts online, so we can ensure that the return matches the information the IRS has, rather than depending on the client to provide us with it."



Different vendors are approaching the future in different ways, but seem to have some consensus on where it leads. "Connecting with sources and clients helps create greater efficiencies, and leveraging innovation is critical," noted Intuit's Walia. "I also recommend that CPAs look for open platforms. These are systems that include more than just the core services that a company delivers (things like accounting, tax, practice management and payroll), but also enable third-party providers to provide integrated experiences with those core applications. Data analytics tools, online billing offerings, and other third parties will add significantly more value to the open platform, better enabling the accountant to customize and find the solutions that meet their specific firm needs and leverage greater efficiencies."

"We are focusing on portals to share confidential data and marketing efforts to educate our clients on the security of the data," said Geety of Accountants' Workflow Solutions. "We are also focusing on moving our small businesses' accounting database to a hosted environment where it will be accessible to everyone without having to get 'accountants' copies' or backups and without using remote desktop or terminal server. The database shuffle will be over. So to obtain financial statements to prepare estimated taxes, we can just log in."

"Specialization is key to radical productivity gains and higher profits," said Thomson Reuters' Kleinsmith. "Adam Smith, widely considered the father of modern economics, noted that it was the division of labor and the resulting productivity increase which made affluent countries wealthy. Similarly, the tax and accounting profession can drastically increase profit margins through further division of labor. Many firms are already doing this, as we've seen from the increased involvement of administrative staff at various steps of the tax workflow process. Specialization will only increase, and as it does, the profession will need robust workflow solutions capable of managing finer divisions of labor."

"Because we have our roots in tax prep efficiency, our workflow tools are built around making the tax process predictable and more efficient," said Sapp. "We continue to focus on providing features such as our integrated document manager that complement our existing tool set and provide a flexible transition to new technology - online portals, data gathering, organizing and populating client tax data, e-signature pads, cloud-based application hosting - it all works together to support the internal processes that drive a firm's efficiency."

And, of course, there will be the impact of regulation and tax policy - specifically, implementation of the Affordable Care Act.

"For better or worse, tax policy will continue to drive changes in the tax workflow in the next decade," said XCM's Schonberg. "One outcome of a more challenging tax season, like the one we just had, is that it can effect positive change for firms who look at what they'd just been through as an opportunity to refine their processes to work more efficiently. We've heard from practitioners that had a great season - those are the firms that will lead their peers to embrace new models."

"The ACA will directly impact tax preparers," said CCH's Askew. "Our industry is built on complex rules, mandates, and Tax Code changes, and the Affordable Care Act is no different. We are very aware of what's ahead and are working hard to provide our customers with information, publications and seminars preparing them to consult with their clients."

Tax workflow is not the same as accounting workflow. If there is a dominant theme in tax workflow software, it is that each vendor is focused on the issues their own customers are concerned about - automation, efficiency, compliance and profitability chief among them. To the degree that any single workflow solution meets those needs for a specific CPA firm, it will be the best software solution for that firm.

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