Art of Accounting: Tax season retrospective

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The neverending tax season has ended. I’ve heard from many people telling me this was their worst tax season ever, while others told me it went smoother than expected. Whatever it was for you, I suggest having a retrospective review.

Considering how involved tax season is with its many moving parts, there is always room for some improvement. Further, an ongoing theme indicates that poor training and staff management are major causes of substandard performance. I suggest the first item on your agenda is to examine the quality of the returns the preparers passed upward to the reviewers. If this is not an issue for you, then good for you. However, if this is an issue, then I suggest your training methods be fully reviewed. I would place full blame for the errors on firm management and their oversight, and possibly the lack of insistence on adherence to firm policies and procedures.

Some of the problems occur when preparers are not qualified to work on some of the returns they are asked to do, when there is no “go-to” person to provide answers to technically difficult issues, or when the staff person is not taught how to relate to the client about the transactions recorded on the return. In some cases, the staff person feels rushed and isn’t given adequate time to do a deliberate job. Sometimes the preparer doesn’t follow the firm’s procedures or use the required checklists. The preparer might not compare the final return with last year’s return nor with any projections that were prepared for the client. There may be surprise results and the preparer can’t figure out why. Some preparers consider each completed return to be just another name to cross off their to-do list.

Staff members who make repetitive errors of any nature, or who fail to listen to instructions and follow through on missing information, are management’s fault. These people should not be permitted to continue working for you. I know the tax season pressures, but it is never better to have a body filling a desk doing substandard work than being short a person. Both are bad choices, but I always went with being shorthanded instead of being shortchanged by people who just do not have it, are duds, and who require substantial extra time correcting and redoing work that also raises the stress level more notches than you deserve.

Something that should be examined closely is the review process, including any big backlogs, the turnaround time for reviews, the ratio of review time to preparation time, the training of reviewers and preparers, and whether review time could be reduced or the review process changed and shortened.

I’ve heard from a few accountants that clients provided added informationafterthey received their completed returns. Some of this information was about things that occurred last year that the client “forgot” to tell the accountant about and that the accountant was unaware of. Examples are a residential move, the sale of a vacation home, a divorce, an adopted child, inherited assets, a new investment or a notice from the IRS correcting a return that had carryforward information that needed to be adjusted. These all required returns to be redone. Some re-dos were beyond the clients’ or accountants’ control such as corrected 1099s, but most of these omissions could have been avoided if there was some contact with the client during the year.

Some changes could have been obvious from the data that was submitted, such as work being done in multiple states, a marriage during the year, or income from a trust or an estate. However, since these were new, it necessitated a phone call from the preparer (or perhaps the partner) to verify those events, adding time to the process. In many cases, though, it was the reviewer who made the call to make sure nothing was missed.

Anyway, regardless of any specifics, tax season is a major undertaking and usually represents the year’s biggest interaction with clients. Time should be set aside to review the entire process and performance. To help you, I have a Tax Season Retrospective checklist I could send you, along with my 1/20^thmethod of keeping in touch with clients during the year and a suggested calendar of when to do it. Just email me at GoodiesFromEd@withum.com and put “Retrospective” in the subject line. No messages are necessary.

I hope you had a good tax season and here’s a toast to a better one next year.

Do not hesitate to contact me at emendlowitz@withum.comwith your practice management questions or about engagements you might not be able to perform.

Edward Mendlowitz, CPA, is partner at WithumSmith+Brown, PC, CPAs. He is on the Accounting Today Top 100 Influential People list. He is the author of 24 books, including “How to Review Tax Returns,” co-written with Andrew D. Mendlowitz, and “Managing Your Tax Season, Third Edition.” He also writes a twice-a-week blog addressing issues that clients have at www.partners-network.com along with the Pay-Less-Tax Man blog for Bottom Line. He is an adjunct professor in the MBA program at Fairleigh Dickinson University teaching end user applications of financial statements. Art of Accounting is a continuing series where he shares autobiographical experiences with tips that he hopes can be adopted by his colleagues. He welcomes practice management questions and can be reached at (732) 743-4582 or emendlowitz@withum.com.