Due date control: a case for continuous improvement.
The practicing CPA already has developed a system that matches his organization's personality and takes into account the resources and level of technology available. However, a due date control system, like the organization, will not be static. As a firm grows, as technology changes, and as personnel costs rise and computer costs fall, the system should be reevaluated to ensure that it still meets firms needs in the most efficient way.
"Form follows function." This rule holds true in due date control as well as art. For a firm whose computers are not networked, it might be best to assign a single individual to be responsible for monitoring (either manually or on a PC) the due date control log. Caveat: Do not be drawn in by promises of software vendors who offer fancy databases to control information. For the small accounting firm, a manual log may meet the organization's needs. It will also give the firm the ability to evaluate the tracking process on a manual system before installing a sophisticated computerized system.
As the firm grows, due date control will also grow in complexity. A manual system will eventually move to a PC-based or network system. A network provides the option of completely decentralizing the monitoring process while assigning a network administrator (or another knowledgeable individual) for the "back-up" and "purge" functions.
The following scenario describes the due date control system of an accounting firm with more than 100 employees that wrote its own PC-based system (to meet its specific needs) and, after several years, converted the database to a network version. The system remained the same; the only change related to the network's capability to decentralize the input function.
The firm's due date control system tracks current year tax returns for corporations, partnerships, trusts, nonprofit entities, Keoghs, profit-sharing plans, pension plans, individuals and the current year personal state property tax returns. It also keeps track of the required May 15 payment due for fiscal-year S corporations.
The tracking cycle is monthly. Reports are generated first on the sixteenth of each month and again on the first of the following month to update the involvement parties (both partners in charge and managers on the accounts) of the status of their client work-in-process. All information due by the fifteenth must be confirmed to be either mailed or extended.
Extensions are also tracked; the system automatically "rolls" the return to the appropriate extension month. In addition, extra fields were created to deal with multi-state clients and final year returns.
To avoid an activity nightmare, the decision was made not to track returns on the system at each stage of the process; instead, a transmittal sheet that accompanies the file provides the documentation that a return was extended or completed and mailed. Only then is that return logged off the current year's system and rolled onto the next appropriate due date (extension date or the following year).
Internal forms route through the office and alert individuals to update the log on changes in client information (e.g., names, addresses, staff assigned to account, year-ends).
Whether a firm is currently reviewing its due date control system or considering one, it should chart the entire process in detail. It is not only a good way to identify redundancy in the system, but it will help determine which parts of the process need to be tracked and what would be involved.
If the firms is in the process of automating, there are several PC-based database packages on the market that provide a variety of features in addition to tracking individual and corporate tax return due dates (e.g., report production, reminder letters, mail merge, capability, notification letters, even birthday greetings to clients!).
The ultimate in technology is a decentralized, networked, paperless tracking system. This type of system also creates greater risk and the need for greater individual responsibility. However, direct access to "real time" information will reduce stress on partners and managers and increase staff "ownership" of work-in-process.
From Emelie Schwab, Tax Control Log Manger and Accounting Assistant, Walpert, Smullian at Blumenthal, P.A., Baltimore, Md.
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|Publication:||The Tax Adviser|
|Date:||Sep 1, 1992|
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