2007 Review of Engagement & Trial Balance Systems

Article Tools

• August 2007 Issue
• Print This Article
• Email This Article to a Friend
• Save This Article
• Order a Reprint

From the August 2007 Issue

Improving engagement efficiency is a topic of huge importance to accounting firms. In every part of the country, staff resources are scarce, and costs are escalating rapidly.

When you are assessing opportunities for improving engagement efficiency, start with the big dollars first. This means identifying the services that produce the most revenue for the firm as well as the tools that can help the high-value firm members do their jobs faster. For many firms, financial statement preparation and business tax returns are the core services offered. Additionally, these are relatively complex services and are performed by the highest costing firm members. Since these services generate high revenues and have high costs, they are good candidates for getting a good return on your efficiency improvement efforts.

Almost every firm has experience using some sort of electronic tool for manipulating the client’s general ledger balances that serve as the basis for financial statements and business tax returns. The problem is that many firms are doing nothing more that electronically handling the grouping and adjustment of GL account information. They are not taking advantage of the tools and features that promote collaboration, standardization, accuracy and communication that can make a huge difference in engagement profitability.

• The first step on the road to improved efficiency is to evaluate your firm’s current business processes for handling these types of engagements. Typically, you will find that different team members will be handling similar processes differently. So your first opportunity is to standardize processes, wherever it makes sense. Some words of warning: Many firms will try to build one single process that will be applicable to all financial statement/business tax engagements. Watch for opportunities to create different “standards” for different types of services. This approach will result in fewer “not applicable” steps and, therefore, less training and less review time.
• Next, train team members on the new standard approaches. Emphasize training here. While education is important in gaining the knowledge to set the standards (and continuing education is critical to continue the process), team members should clearly understand the steps, workpapers, formatting rues, sign-off procedures, etc. that have to be followed.
• Third, look for integration and template opportunities.
  Features that allow you to create information in a particular form and then re-use it on future or similar engagements are important. Three of the vendors in this article — CCH, Intuit and Thomson Tax & Accounting — are in the process of developing suites of tools that exchange data with a high degree of automation. Additionally, there are also many opportunities to create information in an application from one vendor and then use it in another vendor’s package. Best-of breed tools can trump suites in many instances.

ENGAGEMENT WORKPAPERS VS. TRIAL BALANCE TOOLS
This year, this article has separate evaluations for engagement workpaper applications and trial balance tools. This was done to acknowledge the significant differences between the two types of tools. Some firms may need trial balance features but not the engagement management and collaboration tools found in workpaper tools. The new evaluation format will provide a more accurate evaluation of the applications. The following five elements of workpaper applications have been considered in this review: