DURING THE 1997 TAX SEASON,
Atlanta firm Habif, Arogeti & Wynne
LLP (HA&W) suffered so many technical
problems that afterward about one-third of its
professionals left. The firm decided to revamp
its tax function and better manage its resources
by developing a technology plan. The initiative
led to a paperless office and information
technology consulting engagements.
REPLACING 10 SERVERS AND 75
WORKSTATIONS that autumn at a cost
of about $250,000 was the beginning of a
five-year period of investment in paperless
THE FIRM SET UP A COMMITTEE
to champion technology projects to
generate firmwide efficiency. Its mission was
to reduce manual and repetitive tasks, file
retrieval time, trips between the office and
work sites, wasted office space and to offer
better client service.
HA&W ANALYZED WHO GENERATED
and handled work documents,
identified best practices for how long to
retain records and when and how to back up
files. It identified model documents to use as
templates and imposed uniform file-search
THE FIRM RESEARCHED THE
requirements and professional standards of the
IRS, other federal agencies and state and
local governments before it made technology
choices and commissioned proprietary software.
“Profiling” warehoused documents for e-storage
and retrieval required the informed judgment
of managers and partners.
HA&W MOVED QUICKLY AND
PERFORMED 100% paperless audits in
1998 and achieved a 100% paperless tax season
in 1999. Management is relentless about
training, which is the key to a successful
transition to a paperless office.
|SARAH E. PHELAN,
JD, is a New York-based attorney and writer. Ms.
Phelan was formerly a senior manager with
Deloitte & Touche and a technical manager in
personal financial planning at the AICPA. Her
e-mail address is
n the late ’90s, Atlanta’s Habif,
Arogeti & Wynne LLP (HA&W) wasn’t aiming for
an information technology (IT) sea change when it
moved to upgrade electronic tools to tighten its
operations. Few CPA practices considered a
digital-only workplace realistic, and the 25 partners
of the 50-year-old, 168-employee firm were no
exception. HA&W partner and executive committee
member Dan Simms, CPA, says the “paperless” approach
the firm took wasn’t about flexing technology muscle
but meant simply to improve traditional accounting,
audit, tax and consulting services to clients in real
estate, construction, retail, health care and
manufacturing. This article describes how HA&W
embraced IT to organize common CPA office procedures
and in doing so virtually eliminated office paper (and
gained a new revenue stream). For more about other,
smaller firms’ use of scanning technology, see “ Paperless to a Degree .”
THE LOW POINT
Tax season 1997
was the absolute pits, Simms says. As many firms did,
HA&W prepared tax returns electronically, and that
year its servers either crashed two to three times a
day or had to be brought down so technology staff
could rebuild corrupt files. Chronic inefficiencies
were rife, and locating job data wasted time because
the firm didn’t have a uniform system for naming or
storing files, says CPA Leslie Lowthers, auditor, who
oversees HA&W’s IT training.
|At the end of
the ’97 tax season, about one-third of the
firm’s professionals left, more than double
normal yearly CPA firm attrition. “They had
been putting in 70- and 80-hour workweeks,
including lots of Saturdays and Sundays,”
Simms says. A concurrent management problem
was the cost of storing paper: Off-site file
storage was more than $40,000 a year, and file
cabinets claimed 15% to 18% of office floor
space. HA&W decided it was time to revamp
its tax function and better manage its
resources. To stop wasting both talent and
money, the partners agreed on a multipart
goal: to develop a technology equipment plan
to improve efficiency, both short-term and for
five years ahead, and an IT budget. Going
paperless wasn’t even on the horizon.
|The Firm—In a Nutshell
|Average CPA hours
$14 million. ||More
than $20 million.
Source: Habif, Arogeti &
Wynne LLP, Atlanta.
WHEN THE GOING GETS TOUGH
The firm hired CPA technology consultant L. Gary
Boomer to advise it on a plan to fix its tax function.
He was there only a few days, but his input had an
impact, Simms says. Boomer was able to convince the
partners they needed to spend liberally to obtain
significant operational change, a bite-the-bullet
approach that would have been hard for them to get to
on their own. They acted: Over Labor Day weekend 1997,
the firm replaced 10 servers and 75 workstations at a
cost of about $250,000, Simms says.
suggested HA&W look into replacing its audit and
tax software, too, but the firm chose not to rock that
boat and stuck with familiar vendors: CaseWare
International’s CaseWare for audits and CCH’s
ProSystem fx Tax (see “
Paperless Resources ”). HA&W had no separate
document-management software, but the firm vetoed a
program designed for larger businesses (it was too
expensive), and off-the-shelf document-management
software “couldn’t handle our volume,” Lowthers says.
In fact, the firm’s audit and tax software had
paperless capabilities its staff did not then know how
…THE TOUGH GET GOING
A firm’s leaders don’t have to turn themselves
into tech gurus to handle an IT overhaul, Lowthers
says, but they do have to get excited—and entrust
someone qualified to do it. With the major hardware
purchase in place, in early 1998 Simms suggested the
firm set up a technology committee to handle other IT
improvement projects such as figuring out how to get
more from the resources they had—and how to turn
HA&W into a paperless business. The group’s
mission was to create firmwide efficiency and persuade
partners to view being electronically based as an
asset. “About 75% of the impediments to change involve
office culture, policies, procedures and training,”
partners agreed the committee’s decisions
would be binding as long as it stayed within
budget, and they gave it the green light. The
group has evolved from handling
technology-only issues to touching every
process in the office. At her firm, Lowthers
says, “if you want a say in how things are
done, get on the committee.” (See “ FAQs on How the Technology
Committee Works .”) |
committee planned to make better use of IT
Manual and repetitive tasks
(such as creating audit binders or updating
tick marks each time someone modified a
workpaper, for example).
Time professionals spent
waiting for file retrieval.
Time administrative staff spent
searching for files in filing cabinets, in
storage rooms, on other peoples’ desks or in
off-site storage boxes.
Trips between the office and
Office space requirements.
Externally, the firm planned to offer
better client service through
Streamlined work flow.
Customizable templates for
frequently used documents such as client
More consistent work product.
Simultaneous access to
workpapers by multiple users.
Enhanced collaboration among
staff members, both on-site and from
Easier tracking of time and
How the Technology Committee Works
A firm needs a
committed core group to steer the
process of becoming digital. Here’s
how HA&W uses its team:
Who runs the committee?
Dan Simms, CPA and
partner from the firm’s executive
committee, leads it.
Who’s on the committee?
informally, seats for
representatives from each of the
firm’s groups, tax, audit, each of
the firm’s industry groups (such
as real estate, retailing and
small business), IT, the
administrative staff and the
firm’s full-time trainer. Simms
brings in another of a sector’s
members if, say, the person who
represents audit starts traveling
too much to attend meetings.
How does a staff member join
Lead partner Simms
appoints members and interviews
volunteers. The committee welcomes
members from all ranks in the
firm. Young members have a fresh
perspective; they are often the
ones who point to original
solutions, he says.
When and where does it meet?
The group meets
every Monday at 8:30 a.m. for an
hour and a half at the office.
People attend meetings or are
How big is it?
There’s no cap on
the size of the committee, but it
usually has seven to nine members.
Who decides what it deals
with? The firm’s
executive committee manages the
budget, and the technology
committee, working with the
manager of IT, creates short-term
and long-term plans and monitors
how the technology money is spent.
It uses its budget (about 5% to 6%
of the firm’s cash collections) to
optimize work processes such as
procedures for reviewing tax
returns, how to market extranets
or how to cope when a vendor no
longer sells a product the firm
needs. The committee works with an
agenda, but does not keep minutes.
Anyone in the firm can place an
item on the agenda and attend the
meeting at which it comes up for
What kinds of homework do
committee members have?
They do research on
legal issues, emerging government
policies (for example, the IRS’s
positions on electronic filing of
tax returns), new and improved
periods and new technology. They
also test products, attend
technical conferences and read
accounting technology journals.
Development of new products, services and
MANAGEMENT BEST PRACTICES
The technology committee’s mandate to improve
work-flow efficiency (that is, process reengineering)
required it to address related software, hardware and
training needs. The firm began with
Process engineering. The
technology committee talked to professionals and staff
to obtain answers to simple but important
document-management questions such as “Who generates
what paper? How much? How and where is it stored? For
how long?” It also
| Identified best practices to use
to develop standards for how long to retain
records and when and how to back up files. The
firm researched government and professional
standards, client expectations and
technology-industry standards and chose
systems suitable to its practice. |
Picked model documents to use
Imposed uniform rules for
naming and categorizing files.
Developed standard practices
for work flow and streamlined them as much
Kept abreast of software
developments (work processes change, for
example, when programs gain new data-sharing
Policy considerations. A
firm making management decisions for a
changeover such as HA&W’s has to—as it
did—meet professional guidelines to avoid
potential lapses that may have legal
consequences. A firm must
Know the electronic
recordkeeping requirements and professional
standards of the IRS, other federal agencies
and state and local governments.
Determine whether to store
client-supplied data. (Some firms scan
client documents into electronic format,
incurring scanning costs but discarding
paper. Other firms keep physical records as
backup, incurring storage costs. Storing
signed original legal documents is always
Organize the changeover and
identify a time frame for reaching the goal.
This could be a fast, complete switch during
the lull between tax seasons or a longer
process. HA&W committed resources to
move quickly, and it performed 100%
paperless audits by the end of 1998 and
achieved a 100% paperless tax season in
1999. Some firms take seven years and simply
let paper files age out of their offices.
Decide how to “profile” paper
documents (necessary for e-storage and
efficient retrieval) from jobs that predate
the switch. Simms says managers and partners
have the best judgment for making
authoritative profiles, but their time is a
big cost factor. Profiling mechanisms are
embedded in some software. A Microsoft Word
user can click File, then Properties, to get
to a field where he or she can assign
key-word search terms for future retrieval.
Once that’s done, a search by manager,
category or key word(s) will locate the
Adobe Systems Inc.
Adobe Acrobat Reader is
free, but firms must purchase
Adobe software to put documents
into PDF format. Products include
Acrobat 6.0 Professional, for
control over document exchange and
output, and Acrobat Capture 3.0,
for converting large volumes of
legacy paper documents into
searchable PDF archives.
Note: At press time, this
information was available on
Adobe’s Web site but was not
confirmed by a company
CaseWare Working Papers
provides real-time updates,
annotation capability, task
management and version control at
document, cell and account levels.
Users can plan, perform and review
engagements on-screen, without
paper. CaseWare Connector
integrates with Word and Excel,
allows annotation and has
drill-down capability to
supporting documents. CaseWare
Time is a real-time, multiuser
system for budget, time, expense,
billing and client contact
management. CaseWare Financials
eliminates secretarial tasks and
improves accuracy and compliance.
CaseWare Review streamlines work
flow by providing
Commerce Clearing House
ProSystem fx Office
is for tax compliance, tax
planning, office management,
paperless engagement, accounting
and auditing, and Web site design
and management. One component is
ProSystem fx Engagement.
An integrated electronic workpaper
and trial balance system, it’s
designed for both audit and tax
engagements. It also is fully
compatible with Microsoft’s Word
Engagement Manager (CD-ROM)
manages spreadsheets, word
processing, GoSystem Audit
documents, scanned tax returns and
client correspondence and has
built-in integration with PPC’s
eWorkpapers and Interactive
Disclosure Library. Its Guide
to Paperless Engagements
(via print, CD or Internet)
addresses the benefits, costs and
CPA Computer Report
Accountant’s Guide to Going
Paperless: Conserving Office
Space, Buying New Communications
Devices and Telecommuting,
2202-3 ed., by Franklynn
Peterson and Judi K-Turkel. The
Web site has a sample chapter.
Shopping for software and hardware.
New software has to be compatible with
existing programs, and the firm advises taking great
care to avoid hardware and software products likely to
be orphaned or discontinued. Select software from
reputable providers and push vendors on their future
plans for particular equipment before buying.
|To shop for
scanners, HA&W compared cost-vs.-speed
trade-offs of different types and the cost of
training staff to use the equipment. It chose
high-speed production scanners for the office,
portable “field scanners” that staffers take
out of the office on audits and laptops. To
ensure image integrity, the firm uses Adobe
Acrobat portable document format (PDF) to
store documents so later users can’t alter
them, and it converted each client’s final
return to a read-only form of data storage.
One vendor discontinued HA&W’s
favorite scanners, causing the firm to
scramble to choose and adapt to new
equipment. Check vendors’ financial health
by talking to people at trade shows and
reading the trade press, which might offer
early hints that a product or a vendor is
Firms Could Benefit More
Although most firms
have adopted certain efficiencies—for
instance, 84% use standardized file
names and directories on their
networks; 72% maintain their
contact/prospect list in electronic
format; and 69% use their firm’s
intranet to store firmwide information
such as human resources
manuals—there’s room for growth in
some areas. For example,
Only 44% store an
in-house copy of client tax
returns in a digital (PDF) format.
Just 31% store all
audit workpapers in
A scant 29% deliver
their own financial reports and
management reports using the
firm’s e-mail or intranet.
Source: Survey of
Association for Accounting
Administration members by InfoTech
Partners North America Inc.,
www.itpna.com , 2003.
Getting users on board.
Consultants recommend choosing change
champions from staff and making them visible role
models, which HA&W did with its technology
committee. The firm also had to
Train existing and incoming staff and
then—as systems developed and software gained new
features—train some more. Management must be
relentless about training, says Simms. It is the key
to a successful transition to a paperless office. At
HA&W each staff CPA has an annual budget of $6,000
to spend on technical training he or she chooses.
Consider human factors such as fear of
change. The firm’s previous IT staff had been let go
after the poor ’97 tax season, which minimized
employee balking. Furthermore, the firm urged
professionals and partners reluctant to work in a
paperless environment to leave. For those who hung in,
a significant incentive for coping with change was an
expected increase in profits, distributed to staff
through the firm’s profit-sharing plan. Another reward
was the opportunity to gain cutting-edge skills.
Keep users current. Simms says a big part
of employee performance evaluations now includes a
yearly technology skills review. If skill gaps
surface, the firm gives training tune-ups.
Professionals and administrative staff alike are
tested for competency in
How well they use the software that
applies to their jobs.
Overall usage of HA&W software in the
office and in the field.
Whether they follow internal policies and
procedures such as firm rules for backing up data.
| Talk to clients about the
advantages of the firm’s new capabilities,
such as the use of extranets for data
transfer—and give clients training and support
as needed. (Note: An intranet is a
Web site accessible to linked users such as
the HA&W staff. An authorized CPA in the
field can log onto the firm’s intranet to
share data with other users, who may be
off-site or at the main office. An
extranet connects such intranets
and can accommodate one or more firm-to-firm
or firm-to-client connections. A client can
log onto its own intranet and, via an
extranet, retrieve data from the firm’s
intranet, for example.) |
Ultimately, the HA&W tech
committee decreed there would be no “dead”
files or off-site storage, Simms says. From
a client-service standpoint, it didn’t want
to have some files as paper and some not,
and the firm planned a move to another
location so there would have been a cost to
maintaining paper files. To simplify how it
adhered to professional standards about
retaining client documents, the firm decided
to make all files completely electronic,
including legacy documents. Between the ’98
and ’99 tax seasons, temps helped staff
members and partners to scan 19 million
documents, with one audit constituting one
document. The scanning cost the firm about
$200,000, but having electronic files now
saves about $50,000 annually in off-site
storage costs and an additional $150,000 a
year in office space for file cabinets,
These steps help organize
the process of improving work flow
and developing document-management
protocols for a successful
Analyze how your firm
handles documents. Get answers to
questions such as “Who generates
what paper? How much? How and
where is it stored? For how long?”
practices for how long to retain
records and when and how to back
up files (check IRS, government
and professional regulations as
well as industry and tech Web
documents to use as templates.
Impose uniform rules
for naming and categorizing files.
Develop standards for
work flow and streamline them as
much as possible.
technology products likely to be
orphaned or discontinued.
Get users on board.
Choose “paperless champions” and
make them visible role models.
users” among staff to keep up with
program version changes.
The switch to a digital system was
expensive, but the firm says it paid for itself. It
takes fewer employee hours to perform an engagement,
and because the work gets done faster, the process is
more cost-effective. By moving from hourly billing
toward value billing and fixed fees, HA&W
increased engagement profit margins. Clients pay for
service, not time. An audit that formerly took 100
hours and billed at $15,000 based on per-hour charges
still costs the client $15,000 but now may take 70
hours to complete. Staff members save time they can
apply to other jobs.
KNOWLEDGE IS POWER
HA&W’s IT committee carefully considered
government requirements and the level of client
service it wanted to provide and integrated those
standards into a technology policy for the whole firm.
To maximize ROI, the firm took a holistic approach to
design new systems that address all aspects of the
organization. “You don’t get your true return on
investment if you take existing policies and
procedures and just overlay digital technology onto
them,” Simms says.
HA&W evaluates its
software to avoid buying capability it already has in
a program it owns. “A lot of products have great
features nobody uses,” Lowthers says, because software
companies’ trainers may teach as little as 20% of a
program. The firm designated “power users” (a
power-user team for a product includes both a staff IT
person and CPA) who study the manuals to learn what a
program really can do and to keep up with version
changes. Power user “perks” are skills valued in the
marketplace and visibility with firm management.
HA&W’s return on investment requirement for any
software product it buys is six months (the product
should pay for itself in time saved within six
months). Only its time and billing software had a
longer payback period, Lowthers says.
rejected several available software suites as
unsuitable, HA&W observed that a local real estate
client’s work-flow software had many desirable
features. The firm engaged the client’s developer to
design a program for HA&W that was Web-based, had
search capabilities, set file retention periods, could
accommodate discussion among several users, could
catalog documents in an original format such as Excel
and could scan client papers (for individual tax
The developer created HA&W’s
proprietary system, SIAN (Secure Information Available
Now), which the firm markets to other CPA practices
through its technology arm, HA&W Innovative
Technologies. HA&W IT evaluates other firms’ IT
systems, and it has worked with firms as small as 10
persons and as large as 700.
HA&W has a
secure SIAN-based Web site to which clients stream
information for easy communication. It also designs
and administers extranets and charges clients for
their creation, space and maintenance. Clients can use
the extranets to store large files and employee
handbooks, policy-and-procedure manuals and financial
statements. The system makes it easy for clients to
e-mail important financial documents in PDF format to,
say, a potential lender. Although the firm’s
development of an IT consulting niche is outside the
scope of this article, it is one more way the firm is
getting its investment back.
WAS IT WORTH IT?
HA&W says a paperless CPA workplace has many
benefits. Files are never misplaced, so the time spent
to find them is almost nil. Multiple users can access
any file from anywhere; if a CPA is off-site and a
question comes up, he or she can look at a document
via an Internet connection (that is, an
intranet-extranet hookup) and give the client an
answer to the question right away. Practitioners can
review documents online in real time, too. “We can
issue reports even before accountants get back in from
the field,” Simms says.
Recruiting staff is
easier, too. “People appreciate being offered
education and training at a high level,” Simms says.
The firm is retaining its staff, and some
professionals who left HA&W have come back because
they no longer have to work grueling hours and can do
their jobs from remote locations.
THE FILE CABINETS
firms still need a file cabinet or two for documents
that are not good candidates for electronic storage.
Those requiring signatures such as a firm’s own office
leases are prime examples; others include partnership
agreements, employment and supplier contracts,
blueprints and schematics.
clients are happy to get “paperwork” via e-mail or
extranet. “Clients love the capabilities we have now,”
Simms says. They “particularly like having private
portals, where they can view information as it appears
on the firm’s servers.” Individual clients are not as
“on board” as business clients, however, Lowthers
says. Some of them still don’t have computers and need
to get their tax returns as paper documents the usual
way—by regular mail, overnight delivery service or
messenger pickup. But the change process has been
analogous to the electronic filing of tax returns, she
says. Almost everybody accepts it when you say, “This
is how the firm is doing this now.”
considering paperless capability, HA&W
offers these tips: |
Take advantage of off-the-shelf
software. There’s a greater selection than
there was in 1998, and it’s cheaper than
building software from scratch.
Learn from experienced
practitioners. HA&W, for example,
welcomes visitors. “If they like what they
see, we can help them,” Simms says.
Don’t allow users, whether
staff or clients, to opt out of system
Know that prolonging a
transition just prolongs the pain—get it
Maintain a balance of
followers. Many staff members will want to
be leaders in the belief it will help their
careers; spread the perks and the
www.aicpa.org and type
electronic engagements and
competencies into the search
field for an extensive collection of
AICPA articles and resources.
www.cpa2biz.com and type
for best practices
information. The site lists many
articles and courses on doing
business electronically and gives
information about WebTrust and
SysTrust consulting services.
See Dan Simms’s new
chapter, “Digital Environments,”
in the MAP Handbook and
Management of an
Accounting Practice Handbook
, vols. 1, 2 and 3, AICPA.
of an Accounting Practice
Simms foresees more technology
changes at HA&W: “Someday we won’t produce
hard-copy documents for clients at all,” and they’ll
get work products via Internet e-mail or an extranet.
In the future, embedded XBRL document tagging likely
will enable CPAs to discern trends, such as
industry-wide swings in profitability, without
rekeying data. Despite this brave new electronic
world, paper isn’t quite obsolete, Simms says. Some
HA&W CPAs still use lined notepads for client
meetings. “It’s quieter—and no one suspects you of
checking your e-mail,” says Lowthers.
|Paperless to a
Firms don’t all
have the same resources or needs. These two
small practices offer examples of how to use
digital technology at a lower level of
Levey, CPA, CFE, CMA |
1500 NW Bethany Blvd., Ste. 265
Beaverton, OR 97006
Jerry Levey and daughter Melissa
are the complete staff of a two-person CPA firm.
The practice files clients’ tax returns
electronically and 90% of the time doesn’t need
to print a copy for the IRS or state. The firm
decided to go “paperless” about a year ago, but
it still prints a client copy of the tax return.
Under the firm’s old system, it printed two
copies of a client’s tax return: one for the
client and one for its files.
method is this: It prepares the tax return and
prints a copy for the client. It scans that
copy into the firm’s copier/scanner/printer to
create an Adobe Acrobat PDF file. In the
computer, the Leveys rename the file by client
name and year and store it on the hard drive.
They can locate files quickly by alphabetical
search, which saves them time. Clients who
need a copy of their return can get one as an
attachment via e-mail. Their PDF file access
lets them attach notes, delete blank pages or
amend pages as needed.
For security in
case something happens to the firm’s documents
or computers, the Leveys keep backup files in
a cyberspace storage facility called Document
Mall. Every few days they upload client files
to this Internet facility.
At a cost
of about $8,000 for computer programs,
storage-facility fees and a new
copier/scanner/printer, the firm says going
paperless was a substantial investment. The
Leveys chose the SAVIN 2522 because it lets
them scan directly to Document Mall (at the
time, no other printers had that capability).
The system is easy to use and has cut down on
paperwork and time. For less money a firm
won’t get Internet file storage, and it will
need to save files (which can become quite
large) to its own network or a separate drive.
|The system is easy to upgrade if the
firm grows, the Leveys say. A bigger firm might
want a faster copier/scanner/printer along with
more storage and a more sophisticated
file-search program. That could cost more than
$20,000 installed. The most expensive component
of a changeover is time, the Leveys say. They
chose not to scan their legacy files, but firms
that want to drastically reduce paper will have
to. For about $200, depending on the quality of
the scanner, a very small firm can use the
Leveys’ strategies to go paperless. |
Robert E. Schroeder, CPA, PA
One Florida Park Drive South, Ste. 211
Palm Coast, FL 32137-3801
Schroeder is the managing stakeholder of a
three-person firm consisting of one CPA, one
professional (not certified) and a
receptionist. Three years ago Schroeder
noticed he was using more office space for
storing files than for desks for people, so he
decided to reduce paper. He purchased three
PaperPort scanners at $200 each and instructed
his staff in how to use them to scan files.
The firm used a peer-to-peer Windows network
with an Iomega Peerless 20 Gb backup for
off-site storage. The file structure was by
client and year. A file more than 30 pages
long in one year was subdivided by subject
After tax season 2000, the
receptionist scanned old files, beginning with
individual tax files. The firm reviewed the
scanned files for image clarity and
completeness and then destroyed paper
documents. Since its inception, scanning has
reduced the firm’s space needs by one-third,
cut copy costs and sped up client service.
Schroeder no longer puts a client on hold
while staff search for paper files. Files can
be copied to laptops if the professionals need
to take them out to a client office. If a
client needs a copy of a document, the firm