Art of Accounting: Understanding the goal

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I recently posted a blog post comparing being effective with being efficient, and when I reread the completed post I thought of a great contradiction between these two performance measures during tax season. This is in regard to a method of reviewing tax returns that I strongly recommend and which I believe many disagree with.

What I recommend: It is simple. I recommend that the person who makes an error should fix the error. Most firms have the reviewers fix the errors if it would “only take a few minutes.”

The goal of those that disagree with me: To get the return completed with as few touches as necessary and as quickly as possible.

My goal: To train and teach preparers how to prepare error-free returns that will elevate their overall quality and also that of the entire practice. My reasoning is that when someone is made to fix an error they have made, they will not make it again. If someone else fixes it and tells them about it at a later time, it is much less effective and it is likely the error will be repeated at a later time. A collateral goal is to conserve the time of the reviewers, who are more valuable and less available than preparers, and, in doing so, to reduce backlogs caused by the lower number of reviewers compared to preparers. Further, no one would be reviewing the corrections made by the reviewers. It is illogical to assume that the reviewers would never make an error while correcting the errors. And still it seems to me that when a reviewer fixes the error of a lower-level person, it is a form of upward delegation, which makes no sense from a business standpoint. I know that returning the return delays the processing of that return, but if you are in this for the long haul, this is a short-term cost and bother that is inconsequential when compared to the long-term benefits that are permanent.

Effectiveness and efficiency need to be measured against your goals. Those who disagree with me say that my way is not effective or efficient. They are right if I worked under their goals. But working with my goals, I am not only very effective and efficient, but I am creating better staff people and a better firm. Meanwhile, their goals are illusory, create no lasting benefit, do nothing to move them forward, and doom them to being no better off on any sustained basis.

You decide who is more effective and efficient:

  • If you believe they are, then OK, and you do not need to change anything or do anything about it.
  • If you believe I am, and you do not follow what I suggest, then when will you start? How about right now?

This article was adapted from Ed's new book: "How to Review Tax Returns: The Field-Tested Update."
You can download a Word file with 120 checklists by clicking here, or emailing GoodiesFromEd@withum.com.

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Tax practice Tax season Ed Mendlowitz Practice management Tax returns