Engagement & Trial Balance Software — 2005

From the August 2005 Issue

It’s near the end of summer, and you’ve probably been spending a lot of time thinking about your practice model: How can I be more profitable? Serve my clients better? Recapture some personal time? Prepare my firm for future succession? If you’re like most practitioners, the list goes on and on.

Well, if you stop and look at your practice model, the odds are that trial balance (TB) engagements are the primary source of revenue within your firm. Whether the engagement is a compilation, review, audit or a tax return, the trial balance and supporting workpapers (WP) are at the core of the workflow. Therefore, it is a logical conclusion that this component of your practice has the greatest potential for return on investment by, at a minimum, utilizing an electronic trial balance program to manage AJEs, etc., and if you’re forward thinking, actually transforming to an electronic workflow — taking it paperless.

That’s the good news. The bad news is that this is perhaps the most difficult area of an accounting practice to “fully” automate. This is mostly because it means transforming the policies, procedures and culture of a core segment of your practice. The soft side implications are significant and need to be understood. In a fully automated trial balance workflow, we’re not just talking about a “paperless” process. We’re also talking about a “pencil-less” process. That means a significant change in culture, attitudes and elimination of a substantial degree of independence in the process (i.e., doing things your way). It is important that
your firm leadership, in particular, has a clear understanding of this before you undertake the initiative to fully automate your TB engagement processes. The investment in tools, training and personnel can be significant, but the benefits can be substantial as well, with a realistic potential of reducing the “cost of delivery” of these engagements by 20 percent to 30 percent. I doubt there is a business on earth that wouldn’t love to figure out how to drive 30 percent out of their cost of sales. In addition, the work product will be of higher quality and consistency, which will reduce liability exposure that results when different people do the same thing different ways in your firm. It will make your peer review process less painful as well.

Okay, enough pontificating. Let’s take a look under the hood at the TB engagement workflow so that we can provide a framework for you to evaluate alternative solutions. The diagram in the next column illustrates the primary flow of a TB engagement. This will provide the basis for discussion about the features and functions that are important in the software selection process.

Evaluation Categories:

Learning Curve
What we attempt to capture in this rating is the essence of how simple or complex the program is overall in terms of understanding the flow of information through the system, the command and menu structure, screen design and user interface, etc. Please understand that while two packages may have a similar rating in this category, the actual level of learning required may be substantially different, simply due to the fact that one application may have a much broader scope of features and functions than the other.

Import/Export/Integration
This is an important evaluation criterion because it provides a measure of the potential to eliminate time-consuming procedures that make up a large percentage of your trial balance engagement time. This is where firm’s that successfully transform to a true digital TB engagement workflow are experiencing substantial productivity gains that translate into increased engagement profitability.

There are three key aspects of this criterion that we focus on in the evaluation process that follows: