
Today’s narrative in the accounting profession is often about automating manual tasks for certain compliance processes like tax preparation and bookkeeping. Bots, OCR and auto-population for 1040 returns, AI, and machine learning are a few of the technologies developing at an increasingly rapid pace that save hours of time performing functions that used to require humans.
Since technology can be used to save time in compliance processes, the logic follows that you should be then be able to take that time saved and reallocate it to higher value services that clients need, right?
Sort of.
There are some important considerations that must also be addressed for this argument to work correctly.
First, let’s consider the assumption that the hours saved by automating tax return preparation will be redirected to business development or advisory services.
- Whose hours are truly being saved? Tax preparers’ hours? OK. That’s fantastic if you are able to redirect those hours saved for entry level staff into revenue producing activity for the firm. But, is that feasible to expect? Assuming staff won’t necessarily be downsized, are tax preparers skilled and/or prepared to take on more accountable roles in the firm?
- Second, if the hours are indeed being reclaimed at the partner level where business development should be taking place, are those partners and managers equipped with the marketing and sales skills to drive new services and new revenue? Consumer behavior has changed, rendering it necessary for the highest levels in accounting firms to hone some level of sales and marketing skills.
Second, despite automation, newer accountants still need to learn and understand the tax code.
Why? The article entitled Put Bots to Work for You by Jody Grunden nails it: “Technology is turning accountants into reviewers rather than doers. While bots may be able to automate processes, people will always be needed to do the analytical, critical thinking and strategic functions that bots simply cannot do.”
In order for accountants to become critically thinking trusted advisors, they must understand the tax code. Therefore, a very important part of the tax preparation automation process that cannot be overlooked is learning about what’s in the return as well as being held accountable for accuracy of the ‘product’ that is sent up for final review.
This is the gap…the how behind turning ‘doers’ into ‘reviewers.’
Third, the dreaded bottleneck at manager and partner levels must be addressed.
I can’t count the number of firms who have told me that automating the tax preparation process via scanning and auto-populating returns is 100% a best practice. I firmly believe it is a best practice and that it is more of a “when” vs. and “if” for firms who are still hand-keying data into tax software. However…all of those returns that go through the preparation process still have to be reviewed. Most firms have more preparers than reviewers thereby creating a natural bottleneck.
Moreover, countless reviewers I have worked with express frustration with the simple mistakes and overlooked errors they spend time correcting. Time is invested when managers and partners write up review notes that begin the back and forth correction process. Time is also invested when explaining errors and/or why corrections need to be made. And, as the tax deadline nears, it becomes faster (and easier) for some partners and managers to correct mistakes themselves and move on…only to have that preparer repeat the mistake again.
It’s also natural to expect that increased compression and longer hours can lead to relaxed review standards. Which can lead to tax notices, unhappy clients, and non billable time on the backend to amend or correct.
Close the gap. Turn your tax preparers into advisors in training, and ensure that the time savings resulting from automation will be felt at the right levels in the firm.
The 1040 review process is the most time consuming part of the tax prep process, and it’s arguably the least value for the client. It is also critical to ensure accuracy.
While automation is available for most of the preparation process, you can’t teach robots how to independently review a 1040 for 100% accuracy and advisory conversations. There is still a level of critical thinking that belongs solely to humans.
Expect accuracy from your first line.
There is no reason returns should land on managers’ or partners’ desks that have mistakes on them. That is expensive time that can absolutely be eliminated from the process. Empower preparers and first line reviewers to deliver accurate returns for final review, reducing final review time to minutes.
How?
Use technology that allows for either a preparer or reviewer to quickly re-create an independent expectation of the tax return. Have a peer preparer or a first line reviewer own a step for validating the accuracy of 1040 returns from your tax software against that independent expectation. Any errors or discrepancies will appear immediately- without tediously (and mind numbingly) ticking and tieing every input.
Independent verification not only ensures quality control, but it also educates preparers (and new reviewers) on the tax code. If something doesn’t match, it’s on them to dig in and figure out why. Countless errors are easily caught and corrected, with the final, independently verified return becoming the ‘product’ that lands on the managers’/partners’ desk for final review. The product that is complete (with an audit trail of notes), accurate, and ready for a final quick look and signature.
The same technology fills both the training and the errors gap so that hours saved via automation can truly be reclaimed at the level in the firm that needs those hours.
You can turn your preparers into advisors in training with TaxExact.
Bottom line.
Automation is more than critical for the accounting profession to advance- it’s essential. Used strategically, it can be deployed to add capacity at manager and partner levels. It can also attract and develop talent that finds meaning in their work, has critical thinking skills and business acumen, and who can become trusted advisors for firms to grow and compete in today’s competitive environment.