Achieving a Paperless Office In 2005
By Scott H. Cytron, ABC
When a colleague or co-worker talks about the “paperless office,” what thoughts first comes to mind? A futuristic traffic-in-the-sky environment with absolutely no paper, or something with a bit less paper, yet automated at the same time?
If you’re thinking of the second scenario, you’re much more realistic about the paperless office, or more specifically, a less-paper office. While the technology to go paperless does exist, word on the street indicates that many accounting firms and organizations that want to go paperless end up with less paper than before, but still not a completely paperless environment. | |
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Cost + HR = Ambivalence
There is a great deal of cost associated with the matter of physically locating files, changing systems and buying optical scanning/storage equipment, as well as the human resource (people) factor associated with “change.”
Consider what happens when you get a phone call from a client and have to begin looking for the client’s file. How long would it take you to lay your hands on the actual documents?
According to Robert E. Reynolds, CPA, director of Accounting and Assurance Services for Brady Ware in Dayton, Ohio, the typical CPA firm has 20 percent of its operating facility devoted to storing and retaining paper files.
“Storage and retention of excessive files cost money,” says Reynolds, “While going paperless does not mean ‘no paper,’ it more realistically means ‘less paper.’ Some clients will still provide manually prepared documents during an engagement, and most will continue to issue financial statements and tax returns in a paper format.”
Reynolds says firms that made the transition to a digital environment report marked reductions in administrative support personnel.
“These valuable people do not necessarily need to be terminated; they can be re-tasked with more profitable assignments,” he says. “Today’s accounting software packages are designed to help eliminate or significantly reduce clerical tasks, such as typing financial statements and other engagement reports.”
Regarding the HR factor, the culture in a firm is predominantly risk-adverse, overly analytical and focused on controlling resources. Technical competence is more important than creativity. This culture has helped the typical CPA firm excel in times gone by, but the world has shifted and change is required. Most firms have classical organizational hierarchies; change is often slow and protracted.
“If the system is not fundamentally broken, why incur additional time and resources to change it, particularly if these costs cannot be immediately passed through to clients?,” asks Reynolds. “The reality is that if a firm does not review systems and processes, the firm is probably not maximizing its profits. If we fear what we do not know, this fear must be managed to move forward. Focus must be placed on education and communication. Learning new skills takes time, patience and an open mind. We should always be open to finding a better way to do business. Working in a digital environment is a better way to do business!”
Trends in Paperless
With advanced technologies at our fingertips and a more-informed profession ready to take the plunge, many firms have gone paperless with great success. In 2004, Tom Davis, CPA, head of T.C. Davis and Associates in Valdosta, Ga., says the accounting profession is moving a bit more swiftly toward resolving the paperless/less paper conundrum.
“The biggest paperless-enabling factor is the increased number of firms that have or are in the process of increasing their efforts in moving to a paperless environment,” says Davis. “More experience and the increased discussion on this topic has helped move paperless further that the ‘early adopter’ stage. The decline in hardware costs has reduced another barrier to getting into a less paper environment.
For the future, Davis believes the somewhat-crowded field of vendors will be narrowed down even more than it already has been over the last few years, based on vendors who present a turnkey solution.
“The major accounting firm software vendors will enter the market with full-blown document management tools,” he says. “For example, CCH just purchased the HA&W’s Sian product and renamed it ProSystem Document. Other vendors will follow suit.”
For the future, Davis suggests firms who want to consider the paperless office talk to firms that have already made the move, because they are increasing in number, and their experience on the planning and process will make the move much easier for other firms.
“Many accounting firm associations will offer ‘paperless’ as central topics at their 2005 conferences,” says Davis. “Another thing to do is to implement a paperless approach for preparing 2004 individual tax returns. There is still plenty of time to do this at some level. Individual tax is the easiest area to implement paperless and will pay immediate benefits.”
Four Considerations to Going Paperless
Reynolds sums up a firm’s approach to going paperless by looking at four areas: the engagement approach, internal procedures and systems, hardware and software requirements, and training.
For example, he believes an important goal in creating the digital audit and tax practice is gaining engagement efficiencies. Careful consideration should be given to establishing required engagement documentation, standardized workpaper structure and content, and uniformity, wherever possible.
“We all know if a firm has five partners, then often there are five ways to do the same task; individual partner preferences are a sure-fire way to kill any efficiency initiative,” says Reynolds. “Many firms underestimate the impact of technology on engagement efficiency. If a firm’s engagement approach is inefficient or ineffective, then technology by itself will not correct the problem.
In internal procedures, Reynolds advises firms not to overlook the “little things,” where, at this stage, the devil is in the details.
“Consider the details surrounding the typical engagement to prepare an individual tax return. We must determine where and how the client’s source data will be obtained, what data will be kept to support the tax return, and how the source data will be stored. How will supervisory review of the tax return be handled, at what stage will the tax return be printed for delivery to the client, and how will the firm’s copy of the tax return be maintained? Recognizing each individual step greatly increases the likelihood of a successful change.”
Although hardware is a major consideration, Reynolds says this investment required to transition to a digital environment greatly depends on a firm’s current system. For example, many firms with best practices invested in laptop computers configured into a small local area network (LAN) for field use. Portable printers are often replaced by printer-scanner combinations. In addition, there is an increase in the number of firms providing wireless access to the Internet and remote connectivity to the firm’s main servers.
“The options are seemingly endless,” he says. “A word of caution; the digital office does not have to be bleeding edge. As we know, bleeding edge is not always leading edge when it comes to technology. When researching, remember that system stability and security are very important, and the latest and greatest techno-toys are not always practical.”
In terms of available software, there are several accounting software alternatives available to enable a CPA to conduct its client engagements in a digital environment.
“To enhance efficiency, engagement software should allow client data to be accessible to multiple users, and be portable or accessible in and out of the office,” says Reynolds. “Software should promote automation of clerical tasks, including keying financial data or typing financial statements, and should allow for data to be easily imported from or exported to other software.
Lastly, consider training. Moving to a digital environment is not a one-time undertaking, but rather a fundamental paradigm shift for the entire firm.
“Technology advances rapidly and the digital firm must be willing to embrace these changes. The digital firm is tenacious in its commitment to training and professional development. The investment in training and education is as important as the investment in hardware and software.”
Note: Thanks to the Ohio Society of CPAs for part of this content.
About Author:
Scott H. Cytron, ABC, is an accredited communications and public relations consultant working in the accounting, healthcare, high-tech and finance industries. He can be reached at scott@cytronandcompany.com or through his Web site, http://www.cytronandcompany.com .
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