Paperless Engagement Systems Give Your Firm Big Five Efficiency.

UNTIL RECENTLY, ONLY A HANDFUL of the largest accounting firms have been able to enjoy the benefits of paperless engagement systems. Using proprietary software applications they developed in-house, the Big Five has increased its efficiency and reduced the bulk of hardcopy paperwork. But with the advent of new technology, now paperless engagement solutions are available to the entire public accounting industry, making it possible for all firms to reach a new level of engagement effectiveness.

WHY GO PAPERLESS?

Going paperless can reduce costs and increase productivity by eliminating manual tasks, streamlining engagement workflow, and reducing the need for physical office space, since employees can gain access to work documents from any location.

"Not only are we more efficient since going paperless, but we're more consistent," says Tom Sulewski, a principal with Seattle-based Clark Nuber, a 90-employee accounting firm that specializes in auditing and taxation work. Sulewski says 90 percent of Clark Nuber's workpapers are electronic.

Further, Sulewski says going paperless has streamlined many office protocols that had become inefficient. "The whole conversion to the paperless environment has helped us rethink our process of doing the work," he says. "Why take a bad process and make it electronic? It's the perfect excuse to change some of those things."

WHAT IS PAPERLESS?

Paperless engagement systems are an electronic alternative to physical files and workflow procedures. They combine documentand project-management functions into a single application, customized to meet the specific needs of accounting firms. The document-management function is your electronic file room and engagement binders. The project-management function is the electronic equivalent of review notes, open-item lists, sign-offs, and other workflow-related items.

ELIMINATING MANUAL TASKS

In general, the most basic way technology automates an accounting firm is by eliminating manual and redundant tasks--in much the same way as using a spreadsheet program rather than a 14-column pad of paper streamlined workpapers. Similarly, firms now can automatically create engagements from customizable templates that include all of the workpapers, programs, checklists and other forms that would otherwise be included in a paperbased file, which eliminates time spent manually assembling binders. And because workpapers are never printed for inclusion in a physical file, no time is spent printing, mounting, reinforcing and redoing tick marks and other handwritten documentation every time a workpaper is modified.

Sulewski notes that a typical engagement during Clark Nuber's pre-paperless days generated three-to-four manual paper files. "Now that's been revamped, and it's really just one," he says. "Now all we keep is the hard copy of engagement letters."

STREAMLINING WORKFLOW AND COLLABORATION 

Streamlining workflow and collaboration among team members is a significant benefit of the paperless engagement system. Time that team members normally spend searching and waiting for files now can be spent doing other things, because each member of the engagement team has simultaneous and instant access to all workpapers.

In addition, paperless engagement systems facilitate collaboration by enabling team members to exchange notes, sign-off workpapers, and perform other collaborative tasks online. With these capabilities, reviewers and preparers can effectively work together on a daily basis even though they are in different locations. This shortens the engagement life cycle and eliminates many trips between the client site and the office.

"There is always pressure to be efficient," says Sulewski. "We were doing all we could to cut corners to add value, but we had 20 different people cutting corners 20 different ways." But, paperless, Clark Nuber is more efficient. "People enjoy working this way. The ability to review and sign off on workpapers online is a new feature that we've played with and really like."

CHOOSING THE RIGHT TECHNOLOGY

While paperless engagement systems can be evaluated on multiple levels, two important criteria are the software's ability to work with the other applications your firm uses and its methodology for sharing engagement files.

Because a paperless engagement system ideally holds all the documents previously held by your physical files, it is important that it integrates well with the applications you use to create those documents (Microsoft Word, Excel, tax and trial balance are some you might need to integrate). Integration in its most basic form means that the paperless software can hold documents created by those applications. In a more advanced form it means the software adds capabilities to your existing packages. For instance, a paperless engagement system might have features that reduce data entry by allowing you to link client or engagement data directly into Word and Excel workpapers. It might provide the ability to file tax-return images directly from your tax package. And finally, it might have cross-referencing and online-review features integrated with the software applications you already use.

CENTRALIZED OR DISTRIBUTED

Two basic models by which paperless engagement systems enable people to work from any location are the centralized and the distributed approaches. With the centralized approach, everyone in the firm works off a central data server. With the distributed approach, everyone on the engagement team has a local copy of the engagement file and then synchronizes (or "replicates" for Lotus Notes-based systems) with a central data server to submit their work and receive the work of other team members.

The strength of the centralized approach is that it provides the most current data. Its weakness is that it requires users to maintain a connection to the server at all times. This can be inconvenient while at the client site or traveling in general.

The strength of the distributed approach is that it does not require users to maintain a server connection. This is especially convenient for firms that want the ability to work on an engagement from multiple locations without requiring a remote server connection. The weakness of a distributed approach is that you only see the work others have done--and they only see yours--since the last synchronization.

HARDWARE

Make sure your hardware supports the capabilities you seek to gain. For instance, since one of the main advantages of a paperless engagement is mobility and access, laptops are a basic must. Clark Nuber's employee laptops are equipped with infrared equipment that allows them to pass information back and forth instantaneously. "We point our computers at each other and do an infrared exchange, without having to hook up wires or find a disk."

Whether you choose a centralized or distributed system, it is important that the server used to hold the main engagement files have remote access capability. Without this, you will never be able to use the system while out of the office under a centralized approach, and you will never be able to synchronize while out of the office under a distributed approach.

ESTABLISH BEST PRACTICES

It's important to develop best practices while implementing a paperless engagement system. Best practices can cover a multitude of topics including policies and procedures for backing up and sharing files, scanning documents, and setting training guidelines. Notes Sulewski, "You need to spend the time upfront to think through your processes. Make it an opportunity to flush things that aren't working."

Best practices start out by determining the primary goals in going paperless. For instance, a firm that uses a distributed paperless engagement system and wants to be able to review work on a daily basis as it is completed might create the following best practices: At the end of each day of fieldwork, the field team creates a peer-to-peer network and each staff person synchronizes with the senior accountant. This process gives everyone in the field an identical set of workpapers and provides multiple back-ups of the engagement file.

After each team member has synchronized with the senior, the senior will perform a remote synchronization with the firm's server. This can be done from the client site or from home.

By following the above procedures, a firm addresses its backup needs and ensures that managers and partners have daily access to work done in the field. Without these procedures, one of the key goals of a paperless engagement--information access--might not be realized. It is therefore important not only to create these policies, but to enforce them effectively.

Another best practice area that differs from firm to firm is scanning policy. Some paperless firms scan all hardcopy documents such as confirmations, leases, and representation letters. Others, like Clark Nuber, keep a single physical binder for each engagement and use it to store all hardcopy documents. "We have the capability to scan, but we haven't come to the point where I think that's efficient," says Sulewski, who notes that his firm keeps hard copies of bank confirmations and the like in hard copy files. "I don't want to use the technology to become inefficient."

TRAINING

Adequate training is a necessary component of the overall paperless engagement implementation investment. Without it, the entire investment is at risk.

After the initial software roll out, which includes training, Clark Nuber holds weekly tech meetings during which people trade tips and ask questions. Some employees have become so proficient using the technology that they've turned software training into a consulting engagement. "We're offering training to other firms that have purchased the software but want to hire real CPAs to show them how we actually use it," says Sulewski.

NOT JUST PRODUCTIVITY

Moving to a paperless engagement will not only provide your firm with many productivity-related benefits, it will provide quality-of-life benefits that the entire firm will enjoy. The improved job satisfaction that can be achieved by eliminating many manual tasks, allowing an employee to focus on more value-added work, is an invaluable benefit in today's fast-paced business world.

Dave Wyle is president and founder of Newport Beach-based ePace! Software. The Company's flagship product, ePaceENGAGEMENT, is used by accounting firms ranging in size from sole practitioners to top-20 firms to increase efficiency and move toward a paperless engagement.