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James C. Bourke CPA.CITP on Workflow Automation and Data Security

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Several Ways to Protect Your Firm and Your Clients from A/P Fraud using Cloud Computing

Some firms are using cloud computing to offer clients new consulting models. Is this the future of the CPA profession?

According to the 2010 Report to the Nations on Occupational Fraud & Abuse from the Association of Certified Fraud Examiners (ACFE), organizations around the world lose an estimated five percent of their annual revenues to fraud. To that end, it's not surprising there have been so many recently published internal fraud-related articles from well-know resources such as AccountingWeb, CPA Success, and CPA Insider.

Has internal fraud become more commonplace for your clients? Has it simply being talked about more openly through social media channels and with the mainstream media?

In a recent interview, Jason Blumer, from Blumer and Associates, suggests small- to mid-size firms leverage the cloud, or web-based solutions, to help mitigate internal fraud with and for their clients. "Small businesses — those who don't have, or can't afford it — are disproportionately affected by fraud and lack the processes in place to prevent fraud," he said. "Preventing fraud on the front end is far less expensive than detection on the back end."

In a recent CPA2Biz webcast, featuring Jason Blumer and co-host Jeff Schultz from Bill.com along with a video clip from Bob Harris, several tips were shared on ways in which a firm can leverage a cloud-based bill pay solution to help reduce fraud within its clients' workplace, including:

• Establishing prevention procedures: Be aware. Identify key areas where your firm is most vulnerable and know who is accountable for each area. Determine the types of fraud that may occur and how they would likely be concealed. Then establish internal controls to keep these possibilities from becoming realities.
• Going paperless. By preventing "lost" bills and invoices, you reduce the risk of manipulation and information theft, while maintaining an audit trail of access.
• Enforcing separation of duties & payment control: Clearly define user access to the data, ensuring one single user does not authorize, process, and record financial transactions within the business. For example, an employee who enters bills into the accounting package should not have the ability to authorize payments for those bills. By segmenting role-based controls, you make sure that no one person has access to information and the ability to edit accounting data (vendor addresses, etc.).
• Automating work processes: Enable different members of your staff to access client bill workflow, from data entry to verifying amounts to collaborating and providing transparency to the client. By automating payment deadline reminders and an audit trail, you ensure that nothing falls through the cracks.
• Eliminating checks (incoming and outgoing): A single check contains every piece of information needed to access your money. By doing away with paper checks entirely, you protect client and firm account numbers, eliminate risk of lost, stolen or manipulated checks, and can access archived checks securely on Bill.com instead of via email.
• Performing more regular internal audits: Automated systems make regular audits much easier, creating an online audit trail with full remittance data, cleared check images and approval confirmations.

What are you doing to help your clients prevent fraud within their small- to mid-sized business?

Share your success stories here.

Will Cloud Computing Help Your Practice Comply with the New IRS E-filing Requirement?

How is your practice planning to comply with the IRS mandate that will require all professional tax preparers to file electronically?

While the IRS recently announced that the requirement for all tax-preparers to e-file would be phased in over two years—requiring all preparers who anticipate filing over 100 returns over the year to make the transition by January 1, 2011, and for all providers who anticipate filing 11 or more returns to comply by January 1, 2012—it is clear that the IRS is following its Congressional mandate to make the process of tax filing primarily electronic.

For many tax preparers who have already adopted e-filing, this deadline will pass unnoticed, and may even provide a competitive advantage. For other preparers who have put off adopting, or simply have not seen the need for a digital workflow, this is a crucial time to make long-term strategic decisions about technological adoption and cost management.

If your firm is faced with a need to upgrade its workflow in order to maintain current levels of efficiency while complying with the IRS e-filing regulation, the preferable strategy might be to spend as little as possible until the technology begins to truly benefit the practice.

Increasingly, firms and preparers are meeting this challenge by adopting cloud financial solutions.

One of the best reasons to start doing business in the cloud now is that cloud-based solutions can accommodate a paperless workflow. In this scenario, administrative support staff may scan incoming documents, which are then identified, labeled, and bookmarked by an automated, cloud-based software platform, where the tax preparer can quickly access the information to save valuable time.

“Smart Scanning” has been around for a while. In a recent study, 70 percent of firms reported that they were scanning tax documents. However, while scanning is the first step to a paperless workflow, cloud-based financial solutions, such as Copanion GruntWorx for tax document automation, and XCM for firm-wide tax workflow, help tax-preparers to leverage this practice, making them more efficient during the busy tax season.

Mandatory e-filing means that all tax preparer workflows will end in the digital space, so consider the ROI implications of using cloud financials to implement a streamlined, paperless process for your entire firm. Some of the questions firms should ask are:

• Will adopting a cloud-based workflow solution pay off by increasing productivity; and
• Will choosing more user-friendly solutions mitigate training costs?

As James Bourke, CPA.CITP, of WithumSmith+Brown, puts it, “Before deploying new technologies or replacing existing ones you need to ask yourself, ‘How will this deployment make us a better, more profitable firm, and is this technology aligned with our strategic plan?’”

With conventional, non-cloud-based software solutions, firms must consider not only the cost of the licenses, but also increased IT costs and the “planned obsolescence” model of traditional software, requiring additional large expenditures to upgrade.

Cloud financials, by contrast, are priced on a rolling per-user, per-month basis, with ongoing support, training, and upgrades to the platform included in the Service Level Agreement (SLA).

Some of the benefits of this model are:

• Ease of fitting cloud financials into a tight budget;
• Having new users trained as needed ; and
• Limiting IT expenditures

How is your firm preparing to meet the e-Filing requirement? Is your firm moving to a paperless tax workflow? Let us know by leaving a comment.

Increase Your Tax Workflow Through Automation

Here we are again. It’s November, and you are coming to the realization that another tax season is just around the corner. Doesn’t it feel like the 2009 tax season just ended?

Do you remember thinking in the spring that, “Next tax season, my firm isn’t going to …” or “Before next tax season, we better …” Many of those ideas often revolved around investments, such as technology, that would help you, your staff, and your firm to be more efficient, effective, and forward thinking during the 2010 tax season. Anything! As long as it would make the tax season, well…less taxing.

With less than three months until the full-blown tax season gets underway, what can you do at your firm to increase efficiency while continuing to offer the exceptional service your clients have come to expect? Below are some best practices, as well as reference links to tools and resources you still have time to invest in.

Best Practices

• Process Review and Improvement: Streamlining workflow is an ever-neglected to-do item for many CPA firms, especially as client demands and regulations increase. It may prove valuable to have someone internally or externally document your existing business process and identify tasks that can be eliminated or done more effectively. Preparing a graphical workflow of the steps your team takes to complete the process may enlighten you.
  
  Edward V. Jennings, CEO of Copanion, Inc., a tax document automation software company in Andover, Mass. and an AICPA Trusted Business Advisor partner, commented that firms that have moved to a paperless tax workflow, the efficiency gains have been phenomenal—some report time savings of up to 45 minutes per return. With the time saved, tax professionals are focusing on higher value activities and delivering better customer service to differentiate and grow their practices. Achieving results such as these is possible, and it's easier than many think.
  
  

• Create a Single Location for Digital File Storage:  Whether you are using a Windows® file folder structure, or a more sophisticated professional document management system, the goal is to keep digital files organized and easy to find for all your staff. Not only does it save time, it increases efficiency among staff members who need to search for client content throughout the tax season and workflow process. It also reduces the loss of a potential “roving” paper file.
  
  

• Invest in Technology/Hardware: Investing in a high-speed scanner and dual monitors may seem trivial, but think about how often you wished you had electronic files to work from versus paper files. And, remember the last time you had to keep switching back and forth from Excel™ file to Excel file to get the information you needed?  
  
   
• Implementing Worflow Tools—Now is the time to add workflow tools, such as a tax document automation tool and/or a workflow management tool, to help you be more efficient during the looming tax season.
  
  

Additional Resources

There are many resources to research if you’re considering taking the next step toward automating your tax workflow, including process efficiencies, paperless solutions, and technology investments.

• Cloud-Based Tax Workflow Solutions:
  • AICPA Trusted Business Advisor ™ Solutions
    • Copanion GruntWorx – Tax Document Automation Tools
    • XCM Firm-Wide Workflow Solutions
• Books:
  • Managing your Tax Season—an AICPA publication and new edition—This book will give you fresh insight into tax preparation—and very likely result in significant improvements to your current system. You will learn to analyze your existing tax season system and target problems so that work will be more efficient, errors will decrease, and personnel.
    
    
• Articles:
  • Five Tips for Smooth Tax Workflow Management
  • Will You Be Ready for the Next Boom
  • Tax Season is Only a Few Months Away
  • Workflow Automation on the Rise
    
    
• Free White Papers
  • A Tale of Two Firms: Indentifying the Rules of Rolling Out a Successful Paperless Tax Workflow
  • Building Your Bullet-Proof Plan for Paperless Practices
  • 10 Questions to Ask When Considering Tax Document Automation
  • Automating the Tax Process for Maximum Efficiency – Taking a Phased Approach
    
    
• Free CPA Firm Case Studies
  • The Evolution of a Paperless Tax Workflow—Importing Data from Scanned Tax Documents, Marcum LLP
  • Automating Workflow for Firm-wide Productivity, Sandersen Knox & Company, LLP
  • Taking Paperless One Step at a Time to Achieve Maximum Process Efficiency, J.R. Helms & Associates
  • Fuoco: Sharing “Better Practices” for Sustained Growth

As you contemplate the upcoming tax season, consider what you could accomplish if certain tasks were automated, files were structured electronically, client documents were easily accessible by your staff, and so much more. How much would all of that be worth to you?

There is still time to research and evaluate products. Share your thoughts and experiences here.