Project Management for Accountants

Effectively plan engagements to achieve success.

Project management is a client-focused process that significantly increases the probability of providing the desired results to the client. It can help an accounting firm plan its resources more effectively and ensure that work is delivered to clients in a timely manner. The project management methodology enables an accounting firm to manage its engagements prospectively, not retrospectively, such as through time sheets. When properly implemented, project management can provide your firm with a competitive differentiation by defining the success of your firm the same way your clients do—through results. This article explains the important tools and objectives underlying project management.



Most accounting engagements clearly qualify as projects. According to the Project Management Institute (PMI), a project is “a temporary endeavor undertaken to create a unique product, service, or result.” Further refining two words in this definition provides tremendous insight into project management. Those words are temporary and unique.


To understand a project as temporary is to understand that it must have a clearly defined end. For CPAs, this would mean a set of client-specific deliverables, such as a tax return, a compilation or review, a cash flow projection or an audit.


The unique aspect requires an understanding that, while you may have participated in similar projects, each one is truly different. There are no “plain vanilla” tax returns or “standard” audits. Each one has a slightly different set of goals and objectives and, more importantly, they clearly involve different constraints and client personalities. Nowhere in the definition of a project is there a provision for the number of hours spent on the job. It cannot be said that, if a project (engagement) is believed to require less than X hours, it is not a project.



What needs to be clearly defined under the PMI definition of a project is the “sum of the products, services and results” you want to achieve. This is the scope. A scope does not take the place of an engagement letter. For a project, the scope can go well beyond a standard engagement letter. A properly written scope document has some essential elements. They are:


Scope statement. The scope statement defines in one sentence what the project will accomplish. An example scope statement would read: To provide (end-product) on or before (due date) and at a price of (dollar amount). This statement addresses three specific subelements: scope, due date and price. Although this statement appears at the beginning of the scope document, it is easier to write after the rest of the document is completed and an overall idea of what is to be provided emerges.


Objectives. Objectives answer the question, “What does success look like?” They are high-level statements that explain exactly what the project’s desired results are, such as to produce a tax return for a client. Since they are generally actions, they should begin with verbs, for example: produce, create, develop; followed by specific, measurable, attainable, relevant and time-sensitive (SMART) items to be accomplished. An objective should be, for lack of a better term, objective; this means it is or is not accomplished by the aforementioned due date. Something that would happen as a longer-term result of the engagement, for example, an increased number of inventory turns, should not be listed as an objective.


Constraints. Constraints are applicable restrictions that affect the performance of the project or the scheduling of activities, or “risks in waiting.” They are limitations that could prevent work from being accomplished. It is important to identify the constraints as a starting point for a later conversation about risks. Common constraints are found in the following areas: technical, financial, operational, geographic, time, resource, legal, political and ethical. Constraints are known facts. An example of a constraint might be the poor quality of data available from systems.


Project structure. Each project must have an overall organization. In short, your project structure is the organization chart for the project. Most projects require you to assign at least three roles: (1) an executive sponsor, (2) a project manager and (3) a team member or leader.


Roles definition. Once you have outlined the project structure, it is important to define each role within the project. Each role must have specific responsibilities. These can and will change from project to project.


Team definition. This is the list of people and the roles they are playing on the project. Once you define the structure and roles, you need to assign people to the roles. In large projects this is called resource planning.


Assumptions. Assumptions are beliefs about the relationship that serve as the starting point for project definition. Be sure to evaluate each assumption in terms of it being true, real and certain. Another way of looking at assumptions is that they answer the question, “What should we not leave unsaid?” An example of an assumption would be: To attain success, the relationship between scope, due date and price must be maintained. A change to any one of these three interrelated variables will affect the other two (see sidebar “The Triangle of Truth,” below). This means that, if the client wants to add or change something, the scope of the project will require an adjustment to either the due date or the price of the project.


Deliverables. Deliverables are the tangible results—the products or services of the project. Whereas the objectives are verbs, as stated earlier, deliverables are nouns. They are usually things you can physically touch. There are two types of deliverables: intermediary deliverables, which are to be used in subsequent tasks on the project; and final deliverables, which are turned over to the customer at the end of the project. Examples of intermediary deliverables include: the project plan, a training schedule and training manuals. Final deliverables will change depending on the project, but this is a critical section that expounds on the scope statement’s end-product. For example: What specific audited financial statements will be provided?


Project change control. This section simply says that the scope document can be changed (amended) and defines the process for doing so.


Future project list. In addition to the obvious of being a list of possible future projects and major tasks that will be deferred until after this project is complete, the future projects list is important in that it allows us to define what is excluded from this project.


Approval. The scope should be signed and dated by the project manager and the client’s executive sponsor.


If any of these elements are lacking, the project has a much higher risk of failure.



The Triangle of Truth

The most basic principle of project management is known technically as the triple constraint (also dubbed the “Triangle of Truth” by consultant Dave Franz).


All projects consist of three interrelated variables: scope, resource (some say price or cost) and time. These variables are like the sum of the angles of a triangle. In a triangle the sum of the three angles is 180 degrees. For a project this would mean that Angle A (Scope) + Angle B (Resource/Price/Cost) + Angle C (Time) = 180. If the sum is not 180, the figure is not a triangle. In addition, if you change the value of one of the angles, one of the other two angles, or both, must change to compensate or else the figure is open or broken.


Many professionals are quite lax about scope development. They prefer to concentrate on the second two elements, cost and time. In some cases, this is a reaction to a customer or prospect demanding answers to the cost and time questions first. The problem is that a professional who provides these answers before understanding the full scope is the equivalent of a doctor writing a prescription before performing a diagnosis.


When we draw a circle inside the triangle, the size of the circle represents the quality of the work performed. The largest circle that can be drawn inside a triangle is possible only when the triangle is equilateral, that is, each side is the same length and each angle is 60 degrees.


For a professional knowledge firm (PKF), quality is defined exclusively by the customer, not the professional. Quality requires conformance to a customer’s requirement and does not refer to the CPA’s work.


I receive at least one e-mail a week asking for assistance with scope creep on a project. My first response is always to ask for a copy of the scope document. In almost all cases, I am sent a proposal with a range of hours.


My first response is to explain the good news: They do not have scope creep. Then I deliver the bad news: They are over budget. Since the scope was never properly defined, they cannot have scope creep. Occasionally, I do get a well-defined scope document, and there is true scope creep. This happens when the CPA allows more scope to be added to the project without rebalancing the angles of the triangle.




Once the scope has been defined and agreed upon with the client, the project manager then breaks down the objectives and deliverables into a series of tasks known as issues. Please note that issue in project management is a neutral term. It does not have a negative connotation normally ascribed to issues. Issues can be problems, but, more often than not, issues are the specific steps that are necessary to accomplish the project’s objectives and deliverables. In short, issues are the results plus the problems, not just the problems. Grouped together in one document, issues are known, quite simply, as an issues list.



A properly constructed issues list includes the following elements:


  • ID#. Each issue should be numbered for easy identification. For most small projects, ordinal numbers (1, 2, 3, …) suffice. For more complex projects, issues can be grouped using a work-breakdown structure format. For example, 12.1, 12.2 and 12.3 would be three related issues.
  • Issue description. A concise, one-sentence description of the issue is necessary.
  • Priority. Every issue should be assessed a priority of some kind. I recommend using A, B, C or D. This allows the project (engagement) manager to scan for and address top priorities first.
  • Responsible party. This is the person responsible for ensuring the issue is completed on time. This is not necessarily the person who will perform the work, although it can be.
  • Resource. This is the person who will actually perform the work. Note that this can be someone who works for the client as well as the accounting firm. If the client fails to complete its issues, it will be clear who is responsible for the delay.
  • Effort estimate. This is the estimated effort in hours needed to resolve the issue.
  • Original estimated completion date. This is the date by which the issue needs to be completed. Both the project manager and resource person who is taking on this task must agree on this date at the beginning of the project, and all issues listed must have a date assigned upon their inclusion on the list. It is not an official issue until it is on the list with an agreed-upon original estimated completion date.
  • Revised estimated completion date. Occasionally, issues are not completed by their original estimated completion date. This element allows the project (engagement) manager to revise the date while preserving the original date. As we will see later, this is critical to tracking the estimated completion of this project.
  • Actual completion date. This is the date the issue is actually completed.
  • Status. For small projects, I recommend a brief description to signify the status, such as Open (on the list, not started); In process (on the list, started); Completed or Deferred (by mutual agreement of the project (engagement) manager and client this issue can be left uncompleted, yet the project as a whole can be considered done). For larger projects, an estimated percentage of completion should be considered with deferred being an acceptable value.
  • On or before index. This logical value (that is, yes/no or checked/unchecked) indicates if the issue was completed on or before the original estimated completion date. It will be used for calculating the project’s probability of on-time completion percentage.
  • Comment/result. This field is for notes about the issue as well as any proposed or actual solutions.



Once you have the complete issues documented, you can manage the project (engagement) from the issues list, not the time sheet.


As the discrete tasks are completed by the person listed as the resource for the issue, the project manager should be notified so that the issue can be marked as complete. The resource should indicate if the issue took significantly less or more time than the effort estimate. If a significant deviation occurs, a conversation should take place to capture any innovation or knowledge that occurred or deliver any coaching on resolving this type of issue in the future. If there is no significant deviation from the effort estimate, the issue is marked and dated as completed.


Tracking the issues this way allows the project manager to calculate two important metrics: percent of completed issues and percent completed on or before (Percent OOB) the original estimated completion date.


Percent of completed issues is the number of completed issues divided by the total number of issues. For example, a project that has 50 issues with 40 of them marked as completed would yield a completion percentage of 80%. This is a concurrent indicator and is not perfect, but it is significantly more accurate than the most-used metric of hours billed divided by hours budgeted. If you have budgeted 100 hours for a project and you have billed 80, you have yielded 80% completion by hours. How accurate is that? The project could, in fact, be completed. Worse, and far more often, it is not even close to being completed. Measuring the completeness of your projects by hours billed is akin to listening for the smoke detector to determine your cookies are done. The alarm only goes off when it is too late.


Percent OOB is calculated by taking the number of completed issues and dividing by the number that were completed on or before the original estimated completion date. This is a predictive indicator that allows the project manager to assess the likelihood of the total project’s actually being completed by the due date. Using the example above, if of the 40 completed issues only 10 have been completed on or before the original estimated completion date, the likelihood of completing the entire project on time would be 25%. It is important to note that this indicator is of value even early on in the project. If in the same 50-issue project only 10 items have passed their original estimated completion date, but only two of those 10 were completed on or before the original date, then the project manager is alerted quite early on that the project is going sideways and can perhaps take corrective action.



When you use project management techniques to manage your firm’s engagements, you are no longer bound by budgeted hours only. Project management is a client-focused process that significantly increases the probability of providing the desired results to the client. Using predictive indicators such as the OOB measurement, project management becomes based on real-time assessments, allowing your firm to provide clients with more accurate expectations for engagement completion.



Effort vs. Duration

In project management there is a difference between effort and duration. Duration is the number of days or weeks that a project task will take to complete. It is the window of time in which the result must be achieved.


Effort is the actual amount of work, usually expressed in resource hours. A task can have duration of eight hours; however, the effort may be only 15 minutes. Alternatively, a task with duration of eight hours could require 24 hours of effort. Project management is more concerned about duration than effort, although both are important; and, certainly, a customer only cares about duration.



Success Without Time Sheets

Many professional firms across all sectors, from CPA and IT to legal firms and advertising agencies, do not bill by the hour or keep time sheets. When asked what these firms do instead, the answer is that they have replaced old methodologies with new ones that are more reliable for a professional knowledge organization such as an accounting firm. Examples of the methodologies that are replacing time sheets and the billable hour are: fixed price agreements and change orders (see “Pricing on Purpose,” JofA, June 09, page 62), and project management.





 Project management is a results-focused concept based on planning and achieving firm objectives.


 Project management can replace time sheets. Firms that use project management do not need to track time on an hourly basis.


 For a project to be successful, the scope must be accurately defined. Scope is the sum of the products, services and results. Some elements of a well-defined project scope include: a scope statement, list of objectives, constraints, project structure, definition of project roles, and deliverables.


 In project management, the term “issues” means the specific steps needed to accomplish the objectives and deliverables of a project. To track and measure each issue, construct a detailed issues list to identify, describe and prioritize the tasks. An issues list will also include information about who is responsible for each issue, and projected due dates.


 Successful project (engagement) management is based on a complete issues list, not a time sheet. Using metrics from the issues list, a project manager can assess the likelihood of the total project actually being completed by the due date.


Ed Kless ( is the senior director of Partner Development and Strategy for Sage North America and a senior fellow at the VeraSage Institute. He lives in Allen, Texas.


To comment on this article or to suggest another article, contact Loanna Overcash, senior editor, at or 919- 402-4462.





JofA articles


Use to find past articles. In the search box, click “Open Advanced Search” and then search by title.



AICPA Practitioners Symposium, June 7–9, Las Vegas


For more information or to register, go to or call the Institute at 888-777-7077.


Private Companies Practice Section

The Private Companies Practice Section (PCPS) is a voluntary firm membership section for CPAs that provides member firms with targeted practice management tools and resources, as well as a strong, collective voice within the CPA profession. Visit the PCPS Firm Practice Center at





“Highlights from Issues List Management Session,” July 9, 2009,


Web site

Project Management Institute, including A Guide to the Project Management Body of Knowledge (PMBOK Guide),



  • The Answer to How Is Yes , by Peter Block, Berrett-Koehler Publishers, San Francisco, 2001
  • Measure What Matters to Customers: Using Key Predictive Indicators , by Ronald J. Baker, John Wiley & Sons, Hoboken, N.J., 2006



Year-end tax planning and what’s new for 2016

Practitioners need to consider several tax planning opportunities to review with their clients before the end of the year. This report offers strategies for individuals and businesses, as well as recent federal tax law changes affecting this year’s tax returns.


News quiz: Retirement planning, tax practice, and fraud risk

Recent reports focused on a survey that gauges the worries about retirement among CPA financial planners’ clients, a suit that affects tax practitioners, and a guide that offers advice on fraud risk. See how much you know with this short quiz.


Bolster your data defenses

As you weather the dog days of summer, it’s a good time to make sure your cybersecurity structure can stand up to the heat of external and internal threats. Here are six steps to help shore up your systems.