Successfully converting to in-house tax processing.
This past tax season our firm changed the entire tax preparation process for individual 1040s by converting to in-house processing. For the past 15 years, the returns were prepared on input forms, keypunched by in-house computer operators, and transmitted via modem to the area processing center. The returns were printed at the processing center and delivered via common carrier back to the office. After installing a LAN network in Fall 1991, we purchased interactive tax preparation
V software that enabled in-house calculating, processing and printing. All our accountants, staff through partner, input the information directly into the computer (bypassing the input forms and the keypunch operator), view the forms on screen and print the return on nearby laser printers.
Fortunately, our 1992 tax season and its conversion to in-house processing can be remembered as more of a "boom" than a "bust." In retrospect, the success of the conversion was attributable to the immense amount of planning and organizing that went into the purchase, training and support of the software.
Based on our successes and failures, we have compiled suggestions for those who are considering a similar conversion to in-house processing.
* Determine the objective in converting, and buy the program
V to meet them: Changing to in-house processing was prompted by a desire to streamline the tax preparation process by eliminating duplicate handling of the tax return and to enhance the preparer's understanding of tax law.
The preparation process is streamlined by having the accountants input the information directly into the company, thus eliminating many of the clerical steps involved in transmitting, tracking and delivering the returns. This has the added benefit of enabling the accountants to prepare returns when it is beneficial for them; they do not need to depend on anyone else or coordinate with anyone else's schedule. Moreover, they are bale to complete the return at one sitting. This not only eliminates duplicate professional time incurred in the repeated handling of a return, but also eliminates the mental stress associated with repeatedly seeing the same return.
The successful use of interactive software, by its nature, is facilitated by experienced preparers who understand the flow of the tax return. Inexperienced preparers put blind faith in checking boxes and the pro forma information when using programs that utilize on-screen input forms. The understanding of the tax return is enhanced if the software uses the actual IRS forms or worksheets as the main source of input.
* Understand the program's capabilities and decide if they are worth the cost: There are a multitude of software programs available, all with varying degrees of sophistication, complexity and price. A firm with a standard 1040 practice may not need to invest in a program that calculates alternative minimum tax, passive loss carryovers and net operating losses. However, if a firm's clientele consists largely or real estate investors, it will need this type of sophisticated software.
Moreover, many programs contain multiple modes of input and various hot keys that add to their complexity and price. The more features (or flexibility, as the vendor will call it) a program has, the harder it is to implement standardized preparation procedures and train the staff. Unless all staff members have the time and comfort level to experiment with the computer, many of the costly features may go unused.
* Get the names of firms that are already using the software; join (or form) a users' group with these firms: It is helpful to network with others who used the system the previous year and to obtain their in-house training and procedure manuals. Although no two firms use the same procedures, these manuals can provide a solid starting points. They also include creative solutions to problems that are likely to be encountered. In this way, it is possible to avoid duplicating their costly mistakes.
The firms should be asked for a list of programs enhancements they would like in the next year's software release. These lists reveal the software's problem areas and the vendor's responsiveness to its users.
Meeting and discussions should include computer technicians. They can exchange tips and ideas regarding the required equipment, installation and maintenance. Smaller firms that do not have extensive computer support departments generally gain particular benefit from this interaction.
* Designate one person to become "the expert" on the software: This person should have a very strong background in taxes and enough computer knowledge to communicate with the software's support technicians. It is also advisable for this individual to be experienced in the firms' current policies and procedures and understand the personality of the firm and its members.
The firm expert should review all of the available training manuals workbooks, video tapes, etc., and pick out what is appropriate. Too much printed material will overwhelm a staff and go unread. Only select material should be photocopied and mass distributed; certain sections can be highlighted with cursory comments placed in the margins.
The installation of the software includes formatting the client instruction letters, firm and preparer information, billing information, etc. Therefore, the computer technician will need to rely on the expert's knowledge of the program and its features.
In order for the expert to learn the software and design the training program, he will need to be allocated enormous amounts of nonchargeable time. It should be anticipated that the expert will spend a month or two working exclusively on these projects.
* Be alert for the "black box" syndrome when addressing training: Many "seasoned staff" can become apprehensive of the software change itself and, lacking a familiarity with computers, experience "computer phobia." Remembering that a computer keyboards is not synonymous with the typewriter keyboard, individualized computer keyboard training should be offered to point out the keys that are unique to the computer [such as the function keys "ESC," "ENTER," "RETURN," "ALT" and "CTRL").
Although not everyone requires this typed of training, it should be available to those who might experience frustration when reading material or attending group training sessions that contain "computer lingo."
* Have the software installed as early as possible, even if it is not the most current version: The expert and the staff can use the previous year's version of the program to rework several of the prior year's returns. They will already have the "right answer," and any mistakes will not be crucial or costly. Everyone will also be familiar with the program prior to the current year's release (hopefully in early January).
* Do not have the expert train the staff; select a group of competent individuals to do live training: The expert should be responsible for designing and implementing the training program, not for any actual training sessions. Select specific "trainers" who, along with the expert, will receive specialized training from the software vendor. To ensure that this training is both interactive and productive, limit attendance to these people and require everyone to try several returns prior to the training. This enables them to ask specific question or express concerns about the software.
To enhance the firm-wide training, split the staff into small groups and make a computer available to each person. The trainers, with an outline provided by the expert, should be responsible for instructing the small group sessions.
In this way, the trainers become valuable liaisons between the expert and the staff. The staff will automatically go to these individuals with their questions or problems, thereby providing the prepares with prompt support at a time when their frustration levels are high and reducing the demands on the expert's time.
* Set up standardized preparation procedures and require firmwide compliance: It is essential that information is entered into the computer in an organized and systematic manner if accountants perform direct entry. It is impossible to randomly enter information and expect an accurate return. Information may be entered twice or omitted altogether. This is especially true with a program that contains multiple modes of input or when information can be entered in more than one place.
To minimize such problems, institute standard preparation procedures. Standard procedures should include (1) tacking down source documents in a specific order, (2) preparing a written open points list, (3) running tapes for figure totals and (4) performing a
V return reconciliation by determining taxable income and balance due or refund. These should be performed before the computer is turned on. Furthermore, prepares should check off the source documents after each piece of information is entered. This practice enables to the accountants to quickly pick up where they left off after phone calls or other office interruptions.
Although many firms do not perform a return reconciliation, this practice readily identifies transpositions, duplications, omissions and program errors. It also enhances the preparer's understanding of the tax return.
* Find a specific technician at technical support: Identify one technician on the vendor's technical support staff who is competent at tax law and the software design. A specific technician who is called regularly will be more likely to return phone calls or help out during the heat of tax season.
Alternatively, with in-house processing, a firm will be totally self-sufficient. Technical support will not be able to call up a return and determine that it contains a specific input error. A good technician will be invaluable since he can predict where a problem might exist; conversely, a bad technician may not have a clue.
* Provide centralized in-house technical support: The expert can act as a clearinghouse for the software information by distributing memos on updates, program errors, program glitches, newly discovered tips, etc. This is a much needed service and it is imperative that a centralized person have this responsibility. With in-house processing it is very easy for the preparers to override input when the program does not appear to be working properly. Encourage the staff to investigate the causes of problems and to report them, not just override the incorrect line. This is the only way to determine if the problems are due to inexperience with the software or program errors. Also encourage staff to report newly found features and their timesaving techniques.
Finally, save all correspondence on the network in a common-use word processing file. This gives everyone immediate access to all information without having to call the expert.
From Ann A. Burke, Tax Supervisor, Walpert, Smullian at Blumenthal, P.A., Baltimore, Md.
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|Author:||Burke, Anne A|
|Publication:||The Tax Adviser|
|Date:||Sep 1, 1992|
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