At the end of the ’97 tax season, about one-third of the firm’s professionals left, more than double normal yearly CPA firm attrition. “They had been putting in 70- and 80-hour workweeks, including lots of Saturdays and Sundays,” Simms says. A concurrent management problem was the cost of storing paper: Off-site file storage was more than $40,000 a year, and file cabinets claimed 15% to 18% of office floor space. HA&W decided it was time to revamp its tax function and better manage its resources. To stop wasting both talent and money, the partners agreed on a multipart goal: to develop a technology equipment plan to improve efficiency, both short-term and for five years ahead, and an IT budget. Going paperless wasn’t even on the horizon.

The Firm—In a Nutshell   1999 2002 Head count 168 138 Average CPA hours 2,550–2,600 2,200 Revenues About $14 million. More than $20 million. Source: Habif, Arogeti & Wynne LLP, Atlanta.

HA&W’s partners agreed the committee’s decisions would be binding as long as it stayed within budget, and they gave it the green light. The group has evolved from handling technology-only issues to touching every process in the office. At her firm, Lowthers says, “if you want a say in how things are done, get on the committee.” Internally, the committee planned to make better use of IT to reduce Manual and repetitive tasks (such as creating audit binders or updating tick marks each time someone modified a workpaper, for example). Time professionals spent waiting for file retrieval. Time administrative staff spent searching for files in filing cabinets, in storage rooms, on other peoples’ desks or in off-site storage boxes. Trips between the office and work sites. Office space requirements. Externally, the firm planned to offer better client service through Streamlined work flow. Customizable templates for frequently used documents such as client letters. More consistent work product. Simultaneous access to workpapers by multiple users. Enhanced collaboration among staff members, both on-site and from nonoffice locations. Easier tracking of time and billing. Development of new products, services and features.

FAQs on How the Technology Committee Works A firm needs a committed core group to steer the process of becoming digital. Here’s how HA&W uses its team: Who runs the committee? Dan Simms, CPA and partner from the firm’s executive committee, leads it. Who’s on the committee? There are, informally, seats for representatives from each of the firm’s groups, tax, audit, each of the firm’s industry groups (such as real estate, retailing and small business), IT, the administrative staff and the firm’s full-time trainer. Simms brings in another of a sector’s members if, say, the person who represents audit starts traveling too much to attend meetings. How does a staff member join the committee? Lead partner Simms appoints members and interviews volunteers. The committee welcomes members from all ranks in the firm. Young members have a fresh perspective; they are often the ones who point to original solutions, he says. When and where does it meet? The group meets every Monday at 8:30 a.m. for an hour and a half at the office. People attend meetings or are replaced. How big is it? There’s no cap on the size of the committee, but it usually has seven to nine members. Who decides what it deals with? The firm’s executive committee manages the budget, and the technology committee, working with the manager of IT, creates short-term and long-term plans and monitors how the technology money is spent. It uses its budget (about 5% to 6% of the firm’s cash collections) to optimize work processes such as procedures for reviewing tax returns, how to market extranets or how to cope when a vendor no longer sells a product the firm needs. The committee works with an agenda, but does not keep minutes. Anyone in the firm can place an item on the agenda and attend the meeting at which it comes up for discussion. What kinds of homework do committee members have? They do research on legal issues, emerging government policies (for example, the IRS’s positions on electronic filing of tax returns), new and improved products, document-retention periods and new technology. They also test products, attend technical conferences and read accounting technology journals.

Identified best practices to use to develop standards for how long to retain records and when and how to back up files. The firm researched government and professional standards, client expectations and technology-industry standards and chose systems suitable to its practice. Picked model documents to use as templates. Imposed uniform rules for naming and categorizing files. Developed standard practices for work flow and streamlined them as much as possible. Kept abreast of software developments (work processes change, for example, when programs gain new data-sharing capabilities). Policy considerations. A firm making management decisions for a changeover such as HA&W’s has to—as it did—meet professional guidelines to avoid potential lapses that may have legal consequences. A firm must Know the electronic recordkeeping requirements and professional standards of the IRS, other federal agencies and state and local governments. Determine whether to store client-supplied data. (Some firms scan client documents into electronic format, incurring scanning costs but discarding paper. Other firms keep physical records as backup, incurring storage costs. Storing signed original legal documents is always appropriate.) Organize the changeover and identify a time frame for reaching the goal. This could be a fast, complete switch during the lull between tax seasons or a longer process. HA&W committed resources to move quickly, and it performed 100% paperless audits by the end of 1998 and achieved a 100% paperless tax season in 1999. Some firms take seven years and simply let paper files age out of their offices. Decide how to “profile” paper documents (necessary for e-storage and efficient retrieval) from jobs that predate the switch. Simms says managers and partners have the best judgment for making authoritative profiles, but their time is a big cost factor. Profiling mechanisms are embedded in some software. A Microsoft Word user can click File, then Properties, to get to a field where he or she can assign key-word search terms for future retrieval. Once that’s done, a search by manager, category or key word(s) will locate the file.

Paperless Resources Adobe Systems Inc. San Jose, California 408-536-6000 www.adobe.com Adobe Acrobat Reader is free, but firms must purchase Adobe software to put documents into PDF format. Products include Acrobat 6.0 Professional, for control over document exchange and output, and Acrobat Capture 3.0, for converting large volumes of legacy paper documents into searchable PDF archives. Note: At press time, this information was available on Adobe’s Web site but was not confirmed by a company representative. CaseWare International Inc. Berkeley, California Info@caseware.com 800-267-1317 www.caseware.com CaseWare Working Papers provides real-time updates, annotation capability, task management and version control at document, cell and account levels. Users can plan, perform and review engagements on-screen, without paper. CaseWare Connector integrates with Word and Excel, allows annotation and has drill-down capability to supporting documents. CaseWare Time is a real-time, multiuser system for budget, time, expense, billing and client contact management. CaseWare Financials eliminates secretarial tasks and improves accuracy and compliance. CaseWare Review streamlines work flow by providing A snapshot of the engagement status at any point in time. Step-by-step guidance for staff to complete a file. One-click links to authoritative literature. Easy navigation to financial statements, work programs, lead sheets and workpapers. Engagement planning tools, a work program generator and automated analytical review procedures. Commerce Clearing House Inc. Riverwoods, Illinois 800-PFX-9998 www.cch.com ProSystem fx Office is for tax compliance, tax planning, office management, paperless engagement, accounting and auditing, and Web site design and management. One component is ProSystem fx Engagement. An integrated electronic workpaper and trial balance system, it’s designed for both audit and tax engagements. It also is fully compatible with Microsoft’s Word and Excel. Practitioners Publishing Company Inc. Fort Worth, Texas 800-323-8724 www.ppcnet.com Engagement Manager (CD-ROM) manages spreadsheets, word processing, GoSystem Audit documents, scanned tax returns and client correspondence and has built-in integration with PPC’s eWorkpapers and Interactive Disclosure Library. Its Guide to Paperless Engagements (via print, CD or Internet) addresses the benefits, costs and implementation. CPA Computer Report Madison, Wisconsin 800-260-1120 www.cpacomputerreport.com Accountant’s Guide to Going Paperless: Conserving Office Space, Buying New Communications Devices and Telecommuting, 2202-3 ed., by Franklynn Peterson and Judi K-Turkel. The Web site has a sample chapter.

To shop for scanners, HA&W compared cost-vs.-speed trade-offs of different types and the cost of training staff to use the equipment. It chose high-speed production scanners for the office, portable “field scanners” that staffers take out of the office on audits and laptops. To ensure image integrity, the firm uses Adobe Acrobat portable document format (PDF) to store documents so later users can’t alter them, and it converted each client’s final return to a read-only form of data storage. One vendor discontinued HA&W’s favorite scanners, causing the firm to scramble to choose and adapt to new equipment. Check vendors’ financial health by talking to people at trade shows and reading the trade press, which might offer early hints that a product or a vendor is sinking.

E-Efficiencies: Firms Could Benefit More Although most firms have adopted certain efficiencies—for instance, 84% use standardized file names and directories on their networks; 72% maintain their contact/prospect list in electronic format; and 69% use their firm’s intranet to store firmwide information such as human resources manuals—there’s room for growth in some areas. For example, Only 44% store an in-house copy of client tax returns in a digital (PDF) format. Just 31% store all audit workpapers in paperless-audit software. A scant 29% deliver their own financial reports and management reports using the firm’s e-mail or intranet. Source: Survey of Association for Accounting Administration members by InfoTech Partners North America Inc., www.itpna.com, 2003.

Talk to clients about the advantages of the firm’s new capabilities, such as the use of extranets for data transfer—and give clients training and support as needed. (Note: An intranet is a Web site accessible to linked users such as the HA&W staff. An authorized CPA in the field can log onto the firm’s intranet to share data with other users, who may be off-site or at the main office. An extranet connects such intranets and can accommodate one or more firm-to-firm or firm-to-client connections. A client can log onto its own intranet and, via an extranet, retrieve data from the firm’s intranet, for example.) DISAPPEARING INK Ultimately, the HA&W tech committee decreed there would be no “dead” files or off-site storage, Simms says. From a client-service standpoint, it didn’t want to have some files as paper and some not, and the firm planned a move to another location so there would have been a cost to maintaining paper files. To simplify how it adhered to professional standards about retaining client documents, the firm decided to make all files completely electronic, including legacy documents. Between the ’98 and ’99 tax seasons, temps helped staff members and partners to scan 19 million documents, with one audit constituting one document. The scanning cost the firm about $200,000, but having electronic files now saves about $50,000 annually in off-site storage costs and an additional $150,000 a year in office space for file cabinets, Simms says.

PRACTICAL TIPS TO REMEMBER These steps help organize the process of improving work flow and developing document-management protocols for a successful paperless office. Analyze how your firm handles documents. Get answers to questions such as “Who generates what paper? How much? How and where is it stored? For how long?” Identify best practices for how long to retain records and when and how to back up files (check IRS, government and professional regulations as well as industry and tech Web sites). Identify model documents to use as templates. Impose uniform rules for naming and categorizing files. Develop standards for work flow and streamline them as much as possible. Avoid buying technology products likely to be orphaned or discontinued. Get users on board. Choose “paperless champions” and make them visible role models. Designate “power users” among staff to keep up with program version changes.

For firms considering paperless capability, HA&W offers these tips: Take advantage of off-the-shelf software. There’s a greater selection than there was in 1998, and it’s cheaper than building software from scratch. Learn from experienced practitioners. HA&W, for example, welcomes visitors. “If they like what they see, we can help them,” Simms says. Don’t allow users, whether staff or clients, to opt out of system protocol. Know that prolonging a transition just prolongs the pain—get it over with. Maintain a balance of followers. Many staff members will want to be leaders in the belief it will help their careers; spread the perks and the responsibilities.

Resources Go to www.aicpa.org and type electronic engagements and technology competencies into the search field for an extensive collection of AICPA articles and resources. Go to www.cpa2biz.com and type e-commerce assurance for best practices information. The site lists many articles and courses on doing business electronically and gives information about WebTrust and SysTrust consulting services. Suggested reading See Dan Simms’s new chapter, “Digital Environments,” in the MAP Handbook and e-MAP 219. Management of an Accounting Practice Handbook, vols. 1, 2 and 3, AICPA. www.cpa2biz.com. e-MAP: Management of an Accounting Practice Handbook, AICPA. www.cpa2biz.com.