Trim the Fat Off of Your Workflow

This article was featured in the Quarterly Report of Moore Stephens North America (MSNA) News | Spring 2014

by Chris Liebtag, Lean Six Sigma Black Belt

When economic times were good, your clients paid you regardless of how inefficient you were. That is not the case today when inefficiencies can be the difference between a profit and loss. Add to the equation fierce competition and fee pressure, and the need to focus on operational costs and create effective processes that deliver maximum value to clients is even more imperative.

Lean Six Sigma is a discipline that revolutionized the manufacturing industry. Today, accounting firms are turning to this process improvement model for help in eliminating inefficiency, decreasing errors and re-work and busting through bottlenecks. Lean principles, tools and techniques are used to uncover the root cause of inefficiencies in any process and eliminate them. As a result, firms see faster turnaround times and increased value for the client. Six Sigma, on the other hand, is a team-based problem-solving methodology that focuses on quality. By emphasizing consistency, accountability and controls, the quality of the work produced is improved dramatically. Used together, firms can create better processes and people who provide more value to your clients.

Why is This?

Lean does not deal with quality issues in the manner of Six Sigma. To the extent that poor quality has a negative impact on value to the client, Lean would address it — but an intentional byproduct of a Lean initiative would not be higher quality. Likewise, Six Sigma doesn’t directly address inefficiency. Some inefficiencies would be improved because it would elevate quality, but it’s also possible that additional inefficiencies could be created. It’s not black and white. Both are good and worthwhile in their own right, but are better when combined.

As a result, firms see faster turnaround times and increased value for the client. Six Sigma, on the other hand, is a team-based problem-solving methodology that focuses on quality. By emphasizing consistency, accountability and controls, the quality of the work produced is improved dramatically. Using Lean and Six Sigma together, firms can create better processes and people who provide more value to their clients.

While no two firms are alike and neither are their processes, there are some trends that can be seen. The following looks at some areas in which you, too, may be able to improve.

Tax Return Processing

In your rush to get work out the door and keep clients happy, you may actually be doing the opposite. Many inefficiencies in CPA firms stem from not controlling the process. You can eliminate variation by:

1. Managing the Front Door. There is a continuous flow of information coming in your door, but is it being collected in an efficient manner? Or does it come in batches or even piece-by-piece? The key is making sure you have everything you need before you begin production. 

2. Avoiding the Pick Up-Put Down Syndrome. What happens when you begin a tax return with insufficient information? You start the work and then have to stop when you uncover incomplete or incorrect data. Additional time is needed every time you pick something back up after a break, increasing inefficiency, as well as time spent on the job. 

3. Conducting Timely Reviews. How many returns are waiting to be reviewed in your firm right now? How long have they been sitting there? Throwing another resource at the problem may not solve it either. By ensuring that each tax return is completed to the same specifications for review and that everyone is handling review notes in the same way, you can get your returns completed and out the door faster.

Audit Management

Audits are getting more competitive and it’s harder for firms to make sizeable profits on these engagements. By improving yourself from within, you can compete at a different level and become invaluable to your clients. You can:

1. Eliminate Block Scheduling. Why are all audits 
scheduled to start on a Monday and end on a Friday? Perhaps Monday morning is not the best day to start an audit. And do you schedule your entire team there for the week? Could you move a team on to the next engagement to ensure that client is ready when you arrive? Consider using dynamic, flexible, staggered and responsive scheduling to increase efficiency. 

2. Manage the Project With a Plan. Have you walked into a client’s office to find out it was not ready for you? Or had a client call a few days before you were to arrive and reschedule? If so, you need a better plan and you need to better manage the process. And if you are using the planning meeting to actively plan out the 
engagement, you’re already behind. Think about how much money you have wrapped up in that meeting. It’s not the time or the place to waste valuable resources. Use this meeting instead to discuss the plan, generate buy-in and detail everyone’s roles and responsibilities.

3. Prioritize Wrap-Up. Are you great at completing 80 percent of the job, but struggle with the rest...right up until the deadline? You are not alone. If you don’t prioritize the wrap-up, you’ll keep rolling from one job to the next. You’ll fall victim to the pick up-put down syndrome. You’ll have increased stress resulting from this open responsibility. This is where you also lose your profitability. And if your client thinks you’re done when you leave the field, shouldn’t you be?

Does any of this sound familiar? If so, there are probably additional inefficiencies in your firm that you should address. Lean Six Sigma principles and methodologies can help your firm get to the root cause of these issues. It can also assist you in building tools, resources and controls that 
lead to more efficient and effective processes. Trim the fat and you will be more profitable, too.

Lean CPA
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