CPA Practice Advisor

NOV 2015

Today's Technology for Tomorrow's Firm.

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November 2015 • www.CPAPracticeAdvisor.com 19 TECHNOLOGY IN PRACTICE By Roman H. Kepczyk, CPA.CITP Improve Your Firm's Tax Production by Eliminating Muda Not surprisingly, the haphazard adoption of various technologies, a c c o u n t i n g a p p l i c a t i o n s , a n d work fow processes without training or fol low-up on new feat u res has c re ate d a s ig n i f ic a nt a mou nt of Muda i n f i r ms, so t he lu l l before yearend provides a great opportu- nity to take an objective look at your production processes and see where waste can be el im inated to ma ke your more efcient. I n a c c ord a nc e w it h L e a n S i x S i g m a t h i n k i n g , "a ny a c t ion or resource expenditure that does not contr ibute d irect ly to the goa l of creating value should be eliminated to the greatest extent possible." So where to begin? Below we list the eight most common categories of Muda and examples of production waste we discover during our con- sulting within accounting frms: 1 APPROPRIATE SKILLS: Does your frm have the right level of staf doing appropriate level tasks needed by the frm? Today's work fow tools allow for stratifca- tion of tax returns so that complex returns are routed to the optimal reviewer, whereas there is no need for the simplest returns to fol low that same route when they can be prepared, reviewed, and billed by a seasoned four year person in one pass. Seting up diferent work fows targeted towards the complexity of t he ret ur n m in i m izes t he wasted resource of hav ing partners doing si mple ret u r ns a l low i ng t hem to focus on those returns that are more in line with their higher billing rates. 2 M I N I M I Z I N G E R R O R S / REWORK: For any step to be considered value added from a lean perspective it must be done correctly the frst time. Tis means that preparers should be trained and mandated to do a qua lit y control review of any return prior to submit- ting it for review. Tis can be done w it h a n ex press rev iew check l ist covering the most common reasons that returns are being sent back for corrections. Today's work fow tools have the ability to store this check- list and require staf signof before submission for review. Mandating that every return be pre-reviewed by the preparer will teach that preparer to one day be a reviewer and at the same time produce the return at a lower overall cost as the reviewers should have fewer returns sent back for correction and "re-review." 3 TRANSPORTATION: Manu- ally moving tax source docu- ments from one location to another takes time and is considered Muda when compared to the alterna- tive of having the documents scanned and available in a digital format to a ny prepa rer f rom t hei r desktop, regardless of their location. Today's digital work fow tools can link the sou rce doc u ment s to t he ret u r n workfow so they are retrieved when the return is pulled up. Even w ith f ront end sc a n n i ng , ma ny f i r m s continue to move the physical docu- ments w it h a ta x lead sheet even though the data has been digitally captured. Tis is ofen a direct result of preparers not trusting that all items h ave be en proper l y sc a n ne d i n , pointing to the requirement of frms to have adequately trained scanning personnel that also must adhere to quality control processes to verify the scanning is done consistently and completely. Organizing the scanning workspace so that inbound physical documents are organized, processed, and stored in close proximity with a dedicated scanner instead of moving them to a duplicator in one room to be scanned and to another room to be reviewed is another example of wasted transportation. 4 IN V EN T ORY BACK L OG S: E x c e s s i v e W I P (s t a c k s of returns) slow down produc- tion compared to ef f icient ly pro - ducing smaller batches by personnel at the appropriate level. Usually the frst inventory backlog occurs in frms that require all source documents received from clients be sent to the partner in charge of that client to rev iew t he f i le for completeness, which can add days to the process. Work f low tools ca n d i rec t t hose d o c u m e n t s i m m e d i a t e l y t o a n appropriate level production pool, leaving only the most complex returns to those partners for review. We also see a la rge back log when ret ur ns stagnate at the review level, which can be alleviated by re-assigning work to appropriate level staf. 5 E X C E S S I V E W A I T I N G : A nother backlog is producing tax production invoices afer busy season instead of billing and collecting w ith ever y stand-alone return. Today's practice manage- ment and work fow tools allow for the previous year's amount and the projected current bill to be always ava i lable onsc reen (w it h today 's triple or dual oversize monitors) so t he re v ie wer c a n m a ke a bi l l i ng a mou nt deter m i nat ion. T h is ca n then be documented in the work fow tool, processed by administration and provided to the signer with the return for fnal approval. Roman H. Kepczyk, CPA.CITP is Director of Consulting for Xcentric, LLC and works exclusively with ac- counting frms to optimize their internal production workfows within their tax, audit, client services and administrative areas. His Quantum of Paperless Guide ( Amazon.com ) has been updated with 2015 paperless benchmark statistics and outlines 32 digital best practices all accounting frm partners need to understand today. E liminating Muda is one of the most efective byproducts of Lean Six Sigma analysis techniques which make any process more efcient and proftable. So what exactly is Muda? It is the Japanese term for waste, which is defined as "any human activity which absorbs resources but creates no value." CONTINUE READING ONLINE www.CPAPracticeadvisor. com/12127784

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