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Art of Accounting: Fixing tax season problems

Tax season was rough for many of my colleagues. My column here on April 15 provided some comments on what could have been done to alleviate some of the tax season problems many readers have shared with me. However, I heard from some colleagues who were particularly upset and expressed overwhelming despair from unbearable pressure during tax season. From my talks with them, I identified a common trait and want to share it here, as well as some of what I suggested to them.

Tax forms
Tax forms

I isolated a common trait of their feeling of being out of control. The reality was that things were pretty bad for them. Returns were put on extension that should have been completed. Some returns that were completed and sent to clients were not e-filed as they should have been. Extension payment calculations were prepared in a haphazard manner. Some extensions were missed, and some prepared but not filed. The tax control was not updated and returns that were completed and e-filed were not put in the clients’ paperless file folders. In effect, it was a mess. Two of the three people I spoke to never sounded so terrible. A third one I did not know, but she sounded equally as bad.

I think they would have felt much better and would have had much more control if they worked a little less time preparing or reviewing returns and spent that time instead on managing or supervising their staff and the workflow. In all three cases, there was a breakdown in two areas — reviewing the returns and with the admin support.

There were myriad examples, but the overriding one, in my opinion, was the out of control feelings. This is especially upsetting since accountants, in general, are control freaks. When I spoke to them, it was after the fact so there was nothing that could be done to fix what happened. However, my concern was to try to calm them down and get them to feel back in control, as well as to recommend how to make sure this doesn’t occur in next year and later years. The following is a plan I spoke to them about.

To be done immediately:

1. Create an inventory of work that needs to be done in May and June. This requires everyone in the firm to prepare a list of what they know that they have to get done. This should include all their work, not just tax returns.

2. To assist in the inventory, an admin person needs to update the tax control and then print out five lists: 1) May due dates, 2) June due dates, 3) work that is past due, 4) work with no due dates, and 5) work that has been completed for the current period or year.

3. The past due and no due dates lists need to be followed up as soon as possible to find out the actual situations. In some instances extensions and returns were filed but were not entered in the tax control. Some work with no due dates was long past due and some were no longer clients.

4. To facilitate reviewing the list, I suggested the clients be grouped together and the listing be reviewed that way. I find it easier to keep track of what needs to be done by looking at the groupings. Note that the accountants who were way behind with the tax control skipped the grouping and said they will catch up on that after they are comfortable with the updated list.

5. Once the list was prepared, I suggested the work get scheduled to see if it’s possible to get it all done by the end of June.

6. I cautioned them to have some flexibility in the scheduling for returns and work that was not entered and for new work that would arise.

7. I also suggested scheduling actual dates for each item that needed to be done to determine if there was enough time available and to get a snapshot of each staff person’s schedule.

8. When scheduling, the criticalness of the work needed to be considered. Also, the importance. Some work might be extremely urgent, but is just not important, and decisions would need to be made to work on the most important items, not just the most urgent.

To be done as an ongoing process:

1. To monitor the performance, I suggested a process we used before we merged with Withum. We gave our admin person a copy of each person’s schedule, and they were to be emailed or called by 9:30 each morning about whether the scheduled work was done, or not.

2. If it’s not done, then an explanation of what was done was necessary and a new date scheduled. This way, we felt we would not lose track of work that was agreed to be done.

3. Just because something was not done didn’t mean there was a problem. Two examples are that the scheduled client’s bookkeeper could have called in sick and another client scheduled for a later date was moved up; or the owner or partner could have shifted the schedule so a new client could be worked on.

4. Some of the work that was done could present a problem such as the client asked for help in reconciling the accounts receivable and that took all day, or the staff person decided to do a project for the client that the client had not agreed to previously. This type of work could have been done without clear fee agreements, plus it pushed the regular work forward, possibly causing a bunched up schedule later in the month.

5. By 10:00 the partners received a memo with the info for each staff person for the previous day and a notation of the revised schedule if necessary. We found this method provided us with a degree of control that we previously did not have.

6. While this could be the best method in the world, it would be completely worthless with wasted costs if it was not reviewed on a timely basis by the owner or partners, or not acted upon as called for.

The above is a triage plan to calm down and reduce the post-tax season blood pressure of the owners and partners I spoke to, and seemed to help them somewhat. They said they would keep me updated on their progress, and I’ll pass it along if I think it would be helpful to you.

Do not hesitate to contact me at emendlowitz@withum.com with your practice management issues or questions.

Edward Mendlowitz, CPA, is partner at WithumSmith+Brown, PC, CPAs. He is on the Accounting Today Top 100 Influential People List. He is the author of 24 books, including “How to Review Tax Returns,” co-written with Andrew D. Mendlowitz, and “Managing Your Tax Season, Third Edition.” Ed also writes a twice-a-week blog addressing issues that clients have at www.partners-network.com along with the Pay-Less-Tax Man blog for Bottom Line. Ed is an adjunct professor in the MBA program at Fairleigh Dickinson University teaching end user applications of financial statements. Art of Accounting is a continuing series where Ed shares autobiographical experiences with tips that he hopes can be adopted by his colleagues. Ed welcomes practice management questions and can be reached at (732) 743-4582 or emendlowitz@withum.com.