2007 Review of Engagement & Trial Balance Systems

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:

Ease of Use: In the context of a workpaper application,
ease of use is a very relative term. The work process of performing a financial
or business tax engagement is complex. Many steps, a lot of information and
multiple team members are involved in the process. The tools required to perform
these types of services in an electronic environment require planning, training
and constant review in order to be used in an effective and efficient manner.

Data Import/Export/Integration: Using detailed information
from a client’s system is a requirement of every financial statement
and tax preparation engagement. If it is easy to do, pulling the data electronically
costs a lot less in resources than having it manually keyed. Additionally,
a product’s features for using this information with other applications,
either through an export process or by directly linking to other systems,
has a lot of value.

Trial Balance Features: Creating, grouping and adjusting
a trial balance is the cornerstone for creation of the financial statement,
tax return and the documents that support these products. Features that make
it easy to create, review and edit the trial balance can make a substantial
difference in efficiency.

Financial Statement Preparation: In many firms, the creation
and formatting of financial statements is almost an art form. The problem
with this is that quality art carries a high cost. Systems that have features
that promote the standardization and preparation of complete high-quality
financial statements offer many firms an opportunity to greatly improve on
their current processes in this area.

Engagement Process Features: This is the big one. Workflow
technology is one of the hottest technology areas in today’s accounting
firm. An increased awareness of the benefits and possibilities combined with
the critical resource shortages most firms face have gotten firms thinking
about how to use technology tools to implement or modify existing processes
to increase engagement efficiency. Because the Engagement Process Features
are not relevant to the stand-alone trial balance applications, those particular
products have not been evaluated in this area.

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