(taken from the Mar/Apr 2006 issue of On Balance magazine)

The path to paperless
By Stephanie Barganz, CPA, SPHR

 

The paperless office sounds great as a concept. It’s politically correct, on the cutting edge and environmentally friendly. However, this idea runs smack into the core of changing human behavior among people with a history of embracing green columnar paper.

Accountants are taught to be critical thinkers, do audits and dissect financial statements. To change this approach so that we think about how we can do something instead of why we can’t is not inherent. Therefore, this concept is easy to dream about but hard to implement.

I would like to share a real-world example with you which I lived through. Three years ago, when we began the venture of opening Bodilly CPAs & Consultants LLP, the partners did a fair amount of preplanning and engaging in discussion as to how we would be different from other firms. We were all fortunate enough to bring existing clients with us, which meant a semi load of records. At the time, converting paper documents to electronic documents via scanning had just become a storage alternative and an investment in server space was reasonable.

In our industry, graphite and paper are highly regarded as sacred tools. Work papers and lengthy forms called permanent files (for a reason) just add to our years of historical paper gluttony. Paperless goes against everything accountants have been taught. So when this nontraditional accountant proposed that we begin our venture by being paperless, the reaction was to “pat the girl on the head.”

It sounded good, but could it really be done, how and by whom? Between sheer persistence, good humor and listening, common sense prevailed. Once our partner team broke down the process, we could begin to see how this goal might be realized. We constructed a flow chart outlining a simple process, followed by action steps and who would be responsible for implementation. 

And so the process began. . . . We obtained a short-term lease for a copier with a scanner built in—in fact, we ended up leasing two in order to gain increased efficiencies. Staff scanned in all of the existing work papers and hard files for more than 800 clients. Some clients had files going back 16 years or more.

We developed a simple filing system on our server and had decided on common folders to organize data as it was scanned. This took eight days in all to accomplish, with four people working full days. Once we had scanned all of the information, it took our IT guru a few more days to re-sort some of the data and organize it for access.

As accountants, the fun part was to calculate how much this new system would save. We took one process: the tax return. We calculated that we historically printed a tax return, on average, 14 times from start to client copy. Average returns run 25 pages. That was the easy math: 280,000 sheets of paper. Our file room is smaller than most people’s closets, so we added in savings for space (which is not inexpensive), a file clerk, click charges, toner cartridges, paper costs, elimination of duplicate data entry, etc.

Outcome: We now print only one return, the client’s copy. When the client brings in permanent documents, we scan them and return the originals (except for W-2s and 1099s) to the client. We can move the return through the creation and approval process via our software and even mark its status in the process. Upon completion, returns are saved to a portable document format (PDF) file type for ease of retrieval and distribution to third parties upon client request.

Keeping track of all our client’s permanent files is a value-added service we are happy to provide. Clients can even complete a tax organizer on line and submit it confidentially to us from our Web site.

The initial groan has now turned into the realization that not one of us would have it any other way. The time savings alone and the ease of access and referencing are undeniably enhanced. Does this increase our IT costs and hardware? We did purchase a copier that has high-volume scanning capability. We dedicated a laptop for a scanning station and we purchased additional hard drives for our file server. So, the short answer is, ‘yes’. But, in no way does it compare to the costs we would have incurred in information retrieval time and storage space.

In regard to record retention, data from the past two years and the current year are kept on a file server. Additional older data is archived and available when needed. 

Paperless concepts have lead to improvements in many other areas in our practice: 

• We require everyone to have electronic calendars. We did not approve the purchase of daily
• planners, much to one partner’s dismay. In fact, this partner created the biggest challenge in converting our daily planner addicts. Now, her portable digital assistant (PDA) is used daily and she vaguely remembers the days of old. Isn’t that something!
• We save client files and records to our PDAs or thumb drives and take them with us to client sites. No more hauling those big brown briefcases around. 
• We utilize an internal intranet for forms, employee time sheets and reimbursement submissions, as well as professional resources.
• Everyone has remote access to the firm’s intranet and calendars, making time entry a daily requirement. 
• Our internal drive, to which everyone has access, consists of shared resources that benefit all of us. Commonly used tax forms and engagement letters are all electronic. 
• This tax season we will utilize two monitors for tax preparers. One screen will display the prior year and the other the current year.
• This year, to celebrate our third anniversary in business, we purchased iPods for everyone working in the firm. We want people to use their computers and listen to music if they feel it makes the working environment here more comfortable. We allow them to keep a library of music on their work stations if they desire. 

As a result, technology improvements are on every meeting and planning agenda. We are fortunate enough to have an individual who assumes leadership in this area on our team. One challenge for us is that if our computers are down, we are in a holding pattern until the issue is resolved. We have taken this potential problem seriously and therefore have dedicated significant resources to ensuring network “up” time.

We utilize additional surge and power supplies at each work station and server, a daily scheduled backup system which is also stored off site, virus protection software, spy ware protection software, daily automated software updates and network firewalls. In other words, we keep our operations covered in the realm of security.

Many options must be considered in establishing a paperless office. The foundation for the process is key. However, the biggest aspect of setting up this type of environment is the ideological buy-in from those who will utilize it.

We were lucky enough in our firm to have people willing to listen and focus on why we should versus why we can’t. Maybe you can teach old dogs new tricks after all.

Stephanie Barganz, CPA, SPHR is a partner at Bodilly CPAs & Consultants LLP in Madison. She can be reached at Stephanie.Barganz@cpamadison.com or (608) 664-1047.

 

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