Did we convince you to embrace the management side of running a CPA firm in “The Life Cycle of a Tax Return”?
Ok, fine. Maybe you don’t jump out of bed in the morning and say to yourself, “I can’t wait for our engagement planning meeting today!” You’ll always be more excited performing the technical work for clients than combing through engagement realization reports. However, you’ve learned that the most profitable CPA firms have the best handle on the management side of running a business. And for CPA firms, high-performance management means policies and procedures are in place to ensure efficient and profitable engagements.
In our last article, "The Life Cycle of a Tax Return", we considered how tax engagements can be completed in an efficient and timely manner with the assistance of automated software. This article touches upon project management best practices for those CPA firms that conduct financial statement audits. We’ll look at the same two areas we examined with tax returns: using automated software to automatically assign projects and analyzing budgets.
- Automatically Assign Projects
When you open an envelope and find the engagement letter you've been eagerly anticipating, you feel great to officially begin your client's financial statement audit!
Now it's time to wade through the planning process. Depending on how your firm structures an audit engagement, you can have six (give or take one or two) different phases to keep track of:
2.) Understanding the Client (including internal controls)
3.) Risk Assessment
4.) Performing Test of Controls
5.) Gathering Audit Evidence
6.) Issuing the Audit Report
If you're lucky, you have a small engagement and only need two or three members in your staff. But even with a small engagement, having two or more staff members mean potential scheduling and implementation obstacles. For example, some staff members might end up getting work done quicker than others and just sit around waiting for something else to be assigned. Or, the client can be quick to supply requested documents one day, then become non-responsive for a request the following day.
To help with this unpredictable schedule, automated software can organize tasks in a queue. When an associate finishes a task, they log into the software and assign themselves the next overall task waiting to be completed. BillQuick has many such features that do exactly that. Its Allocation feature allows you to assign tasks to employees based on their workload and get notified when the tasks are completed. That way, instead of taking phone calls from your staff wondering what they should work on next, managers and partners can attend to more important matters, such as taking the audit client out to lunch. Further, Project Control in BillQuick lets you assign only specific employees to specific engagements, thus preventing any confusion or error.
- Analyzing Budgets
Nowadays, there are more and more auditing standards that firms need to attend to, specifically when dealing with in-depth inquiries surrounding internal controls and the presence of risk. It has become vital for firms to accurately forecast budgets and set appropriate fees for audit engagements.
Thanks in part to these new standards, the average cost of an audit has increased between 4% and 6% each year for the past several years. It has made many companies (for-profit and non-profit) to take a second look at the necessity of conducting a full-fledged audit. Therefore, many audit engagements have been downgraded to reviews, compilations or even agreed-upon-procedures.
What can CPA firms do to save their audit engagements? The best place to start is becoming as efficient as possible when conducting audit engagements. Know how long it takes to complete each phase of your engagement. Automated software makes it easy to create reports in as much detail as the manager or partner desires. Not only does BillQuick help in tracking your time and expenses accurately on any engagement, it provides managers many useful and powerful reports for tracking the status, costs and profitability of engagements and their phases.
For those engagements that are over budget, find out why. Do you have a micro-managing client who is making it difficult to collect evidence? Does your staff need more training on how to conduct tests of internal controls? If your engagement is coming in under budget, can you do any better? Are there one or two phases that are over-budget while the audit as a whole is under-budget? Can you motivate your staff to go from good to great? BillQuick has numerous budget comparison reports besides having a full-fledged Budgeting feature that shows the actual costs and hours against the budgeted ones in real-time.
Take a hard look at your budget and see if there's any room for improvement.
Bottom line: More Value for Your Client, More Value for Your Firm
The better understanding you have of scheduling logistics and realized budgets of your tax and audit engagements, the better decisions you can make when quoting fees. After all, isn't having satisfied clients who understand the value you provide one of the primary objectives of CPA firms? Of course it is!
With the assistance of automated software, such as BillQuick, specifically for the accounting industry, you can make compliance engagements more profitable for your firm. If you would like to learn more about BillQuick or schedule a walk-through demonstration today, please call us at (866) 945-1595 or email us at firstname.lastname@example.org.