Modernizing the 1040 Review for Efficiency and Accuracy
It’s a bottleneck in almost every accounting firm…the 1040 review.
Indeed, many firms are actively shedding as many 1040s as they can to reduce workload. For those they keep, prices are increasing to justify the work. And, while it’s possible to reduce the number of 1040s your firm does, there will still be 1040 returns that every firm must do.
While outsourcing and automation address the front end of the 1040 workflow, a bottleneck remains at the review level.
So, what can you do to drive efficiency into the 1040 review portion of the workflow process?
Why review returns in the first place?
First, let’s consider this fundamental basic question…
The obvious answer? People make mistakes, and data isn’t always reliable. So, as tax accountants, you often use cumbersome checklists and must tick and tie your way through each return. Double checking inputs as you work your way toward finding errors and discrepancies.
Variations of this process exist in every firm, and they have remained intact for literally generations. Yet, everything else about the business of public accounting has changed across generations.
Legacy review processes no longer serve firms.
They are inefficient and cause bottlenecks for the most expensive people in the firm! The ones who should be focused on business development and advisory and consulting services- not reviewing 1040s.
The argument for modernization is not a difficult one:
- Standardization increases profitability.
- Over-auditing- how much is this costing your firm?
- Under-auditing- if you trust the data too much or don’t review simpler returns, what might you miss that will show up as troublesome notices down the road?
- If technology affords a faster, accurate review of the return- why wouldn’t you?
Opportunity cost (and mindset shift)
How much time do you spend double checking every calculation? Better yet, how much time do you spend double-checking every calculation that is correct? What if you could skip past all the numbers that are right and go straight to the ones that have errors, omissions, or transpositions? A crystal ball of sorts that instantly points you to what is wrong…
Two viable alternatives for a modernized 1040 review
There are two alternatives that modernize the 1040 review for efficiency (and increased accuracy), allowing you to focus on more proactive advisory services. They are:
- Proving outcomes
- Outsourcing the 1040 review
Alternative #1: Proving outcomes
Common models for proving outcomes include using a reconciliation spreadsheet (some firms have developed very elaborate ones that work) or using a verification tool like TaxExact®. Either way- the idea is to empower and challenge your more experienced preparers or first line reviewers to catch their own errors and fix them. We advocate starting the review by exposing landmines aka proving outcomes.
In this way, by the time the return gets to you – the final reviewer- you are only addressing complex questions or errors (if any) that are worthy of your time, and you get an independently and accurately reviewed return that you can view through an advisor lens. You have confidence in the data, assurance the return is right, and an audit trail for the clients who need “proof.”
TaxExact® was designed by a tax accountant for tax accountants. It is a comprehensive, cloud-based review tool that is used to independently verify the results of 1040s – from the simple to the most complex. If you’d like to learn more, request a demo through our website at https://taxexact.com/.
Alternative #2: Outsourcing the review
Even if your firm outsources the tax preparation, the return still must be reviewed. Commonly we hear that outsourcing is extremely helpful for preparation, but the returns still must be carefully reviewed when they come back into the firm. And by whom? The most expensive resources in the firm!
But, what if you could route a prepared return to expert tax accountants to do the 1040 review for you? How much time would that save you? What impact would it have for you to be able to invest that time into other areas of your practice?
What if you only had to touch the return at the very end of the process to do a brief exception review, knowing that the return was accurate? Wouldn’t this put you in a better position to see the big picture story inside the return and have higher value client conversations?
Verified by TaxExact is a service designed exclusively to address the 1040 review. It’s simple, secure, and accurate. Here’s how it works.
- You drop off the preparer’s copy of the return along with a pdf of client source documents in our secure portal.
- Our experienced reviewers perform the technical review using proprietary TaxExact® technology, verifying all totals that are correct and calling out any discrepancies. All discrepancies are accompanied by review notes with a link to the area where they were found.
- The reviewed return is delivered securely back to you via our TaxExact technology with notes.
Staying relevant
One thing you cannot scale is your time. A logical way to stay relevant with evolving client needs is to build even more efficiency into your 1040 workflow process. Efficiency beyond preparation and into the review. Touch data once. Check it once. Review by exception, have assurance that the return is correct, and extract key indicators for advisory opportunities all within minutes.
To be in the best position to grow your advisory business, you must find ways to let go of legacy processes for modernized methods that offer better efficiency and greater overall accuracy.
