Electronic Signatures (E-Signatures) became effective in the United States on October 1, 2000 when Congress passed the Electronic Signatures in Global and National Commerce Act ("ESIGN Act").  ESIGN was enacted specifically to ensure that any agreement signed electronically will not be denied legal force, effect, validity, or enforceability solely because an E-Signature was used in its formation.  As a result, online E-signatures, in both personal and commercial transactions, have been granted the same legal status as a written signature – so they are now the legal equivalent of hand written signatures.  

Most accounting firms have clients that have recently purchased a home using E-Signature technology.  That’s because we are seeing a rapid acceleration of E-Signature usage in the real estate, mortgage, healthcare, insurance, communications, recruiting and other industries through broad based E-Signature solutions such as Adobe EchoSign and DocuSign.  These solutions were designed for mass markets and do not meet the needs, demands and workflow requirements of the tax & accounting industry.  However, with the recent release of at least one tax & accounting specific E-Signature solution, they can now be used across a wide range of both client facing and internal firm documents. 

Using E-Signatures in the Tax & Accounting Industry

For firms that are embracing E-Signatures, they typically start by sending annual engagement letters or §7216 consent forms to clients, or annual independence surveys to their staff.  These documents are ideal candidates for E-Signature technology because they are often standardized forms, need annual signatures, can be batch processed with mail merge functionality for a higher efficiency gain and the signers can sign remotely from any PC, laptop, tablet or smart phone.  Firms are reporting that they can process these documents at a fraction of the cost of mailing hard copies. They are receiving E-Signed documents back from their clients and staff in less than seven minutes and the overall workflow process is significantly improved.  

As for other client facing documents, firms are also sending management representation letters, audit representation letters, A/R and A/P confirmations, new client acceptance forms, payroll processing forms, and Forms W-9 and 4506-T for E-Signature.  They are also sending credit card authorization forms to accelerate cash collections.  As for other internal documents, firms are also sending IT policy forms, partnership agreements, internal routing sheets, and a wide variety of human resource related documents including offers of employment, Forms W-4 and I-9, employee handbooks, medical, dental, insurance and 401k forms for E-Signature.     

The IRS and Form 8879

The biggest demand for using E-Signatures in the tax & accounting profession is on Form 8879.  The IRS currently does not accept E-Signatures on Form 8879, even though they are rarely, if ever, submitted to the IRS.  They are simply retained on file by the taxpayer and the ERO for a period or three years.  The instructions in Form 8879 do not specifically address the use of E-Signatures, but there is a single sentence in Publication 1345 that states "This does not alter the requirement that taxpayers must sign Form 8879 and Form 8878 by handwritten signature.” This is actually quite ironic since the entire premise of e-filing tax returns is to reduce paper based tax return filings.  The only step to e-filing a tax return that requires paper is the requirement for the taxpayer to print, sign and send back Form 8879.

On January 23, 2013, the IRS issued Internal Revenue Bulletin 2013-4, Announcement No. 2013-8 seeking recommendations for appropriate E-Signature standards in the tax & accounting profession.  They stated "E-signature standards will promote efficiency, reduce burden and improve identity proofing methods to confirm the identity of the signer”. Unfortunately, we do not know when the IRS will provide formal approval or the specific requirements for using E-Signatures on Form 8879. Many industry thought leaders feel it will be at least two more years before we get the final approval.  

So are firms using E-Signatures on Form 8879 anyways?  Yes, and with tremendous success.  I’m not saying that you should do it, but for the firms that are, they are basing their decision on the following points:   

• The ESIGN Act of 2000 makes E-Signatures legal and valid.
• Effective January 2013, the IRS is allowing E-Signatures on Form 4506-T and §7216 consent.
• At least one large tax vendor is currently in an E-Signature pilot program with the IRS on Form 8879
• The purpose of e-filing tax returns is to reduce paper based processes and create efficiency for the taxpayer, tax preparers and the IRS.  Requiring a handwritten signature from the taxpayer on Form 8879 is the only part of the e-filing process that requires anyone to print a piece of paper. 
• Most tax & accounting firms spend countless hours and thousands of dollars tracking and managing manually signed Form(s) 8879.
• Form 8879 is rarely, if ever, submitted to the IRS.  It is required to be maintained on file by the taxpayer and ERO for 3 years.
• The benefits outweigh the risks.
• IRS solicited industry feedback with Announcement 2013-8.

Top Considerations When Choosing an E-Signature Solution

Every industry vertical has its own set of document types and workflow requirements surrounding the E-Signature process.  Your firm should look for a solution that is tax & accounting specific.  For example, your staff should be able to quickly send documents for E-Signature while classifying each document with accounting specific workflow and reporting data such as Document Type, Engagement Type, Tax Year and Partner.  Your solution should provide firm wide reports that are accessible by all members of your firm and provide for centralized management of the E-Signature process.  For example, firm administrators and partners should have complete visibility over every document sent for E-Signature within their firm.  They should be able to quickly sort, filter and search to send reminders, view documents and download final signed documents of other users.

Accounting firms often need to mail merge and batch process documents requiring signatures.  Examples include annual engagement letters and §7216 consent for clients, and annual independence surveys for staff.  Your solution should provide the tools necessary to mail merge and batch process hundreds of documents for E-Signature with the click of a button.  To effectively accomplish this, your solution should provide for text tags in documents to automate the signature placement process.  Otherwise, your staff will need to manually drag and drop the signature location into each document.

Finally, be careful of monthly subscription fees.  Most providers have "reasonable use clauses” which restrict the number of documents that can be sent monthly per licensed user.  Accounting firms tend to have seasonal demands and can quickly surpass the reasonable use clauses, resulting in higher monthly fees.  To obtain the full benefits of your E-Signature solution, you should license all members of your firm so they have access to the real time reporting, tracking and management features.  As a result, we recommend solutions that allow free licenses to all members of your firm, and then bill based on the actual number of documents sent for E-Signature.

Steve Dusablon is the President and CEO of cPaperless, LLC, a software company that develops paperless solutions for tax and accounting firms.  cPaperless partnered with Adobe EchoSign to develop CPA SafeSign, the first to market E-Signature solution, designed specifically for the tax and accounting industry.  To learn how CPA SafeSign can help your firm leverage E-Signature technology, please send inquiries to sales@cpaperless.com, call (800) 716-2558 Ext. 100 or attend a Free CPE Webcast on E-Signatures.  

Workload shifts and moves many different directions throughout a year. How do you handle those ups and downs that could be the differentiator between establishing yourself to go to the next level and drowning in your own to-dos? It you can start to envision the balance between you and your work, it may allow you to avoid the dreaded burnout and find the peace of mind that you have been searching for. 

Develop a Plan to Prioritize

What do your methods look like for prioritizing your assignments? How do you differentiate between the "needs to get done asap tasks” and the "does not need to be done until the end of the year tasks?” No matter what your process is, it is vital that you start breaking down your items in a more realistic and specific way to get moving through your workload.When prioritizing your items for a specific day, try to determine the single item that needs to be the number one priority for that day. At the end of the day this one item is an essential task. It needs to be complete or for some long-term projects at least started. This should help you in determining the things you know you will need to focus on and get done first. Remember, although all items might seem important, it is necessary to realize what level of importance they fall into. Are they important to just you and your goals? Are they important to the goals of someone else you work with? Are they important to building revenue? Are they based off a deadline? Try to really think about the difference and where they should fall in your priority list for that day. With a little planning and prioritization on a daily and weekly basis all items will get done, but in a more efficient and effective way.

Know When to Say No

We can all sometimes be a ‘yes man.’ We want to be able to do everything and take on any responsibility that is thrown at us. In the past most of us have said yes to everything when it came to our careers. We said yes to this project and this favor and the end result was of course our growing workload. We went about our days and eventually the workload would get under control and you always made it out fine. Fast forward to when you said yes again only to make the heavy workload reappear.  I have (slowly) learned that sometimes being a "no man” can help benefit your career verse hurt it.

Take the project that you were just offered. Does the project help you and your career grow in value? Did someone ask you to do that project because of the value you would give it? Or did they ask you because they know you would say yes and do it anyway? By saying no sometimes, it can increase the overall value of those things we do say yes to. Think about that project and determine what type of focus you can and want to give it. Does it move you or give you passion? Does it make you happy to work on it? Can you give it the attention it deserves? 

Knowing what the benefits are of saying no in certain situations and knowing the right way to say it, no does have the possibility of working you towards a successful career.

Utilize Others Unique Abilities

Your co-workers can be a fundamental part of helping you balance a full workload. By using their unique abilities you can come into contact with a whole other set of experiences, expertise and knowledge that can be applied to your projects and tasks. Not being afraid to reach out to them is the key. For some of your to-dos, having that extra hand or resource could be the difference between you getting the job done and coming up short on that assignment. When you can recognize the need for help when you are extremely busy, you can see that the expertise of other people within your firm can help you move through and get out from underneath many of your daunting tasks.  

Take Time to Breathe

Sometimes the simplest balance tip to take a break from a stressful assignment or work load is to just breathe. Take five minutes and focus on something else that won’t elevate where you are already at. Take a moment and walk around your office and enjoy the break of a bit of exercise and fresh air. It is important to realize that another part of balance is also including in some of those "life things” that can calm you down and bring you back to the center. 

The 2013 tax season is behind us, but that certainly does not mean that we can take a break.  It is time to refocus on other important things in our firm, and one of those is talent.  Specifically, the human resources trends that every business should be spending time on.  The trends below represent the HR issues that should be on your radar as you move forward in 2013.

Health Care Costs:  It comes as no surprise that health care costs are not going down in the years ahead.  If you are choosing the passive road and simply waiting and seeing what your health care vendor tells you the new rates will be, don't be surprised when you have a panic attack after seeing your new premiums.  Start now and proactively talk to your health care provider about the steps your firm can take to hold costs down or change your plan to reduce prices.  Some firms are finding that developing "health programs" in their firm and then turning in the ongoing results to their health care providers is a positive step.  The results of their proactive program being tied to lower usage is equating to lower increases in overall premiums.  

Shortage of Skilled Professionals:  This challenge does not come as a huge shock to anyone in our profession.  We have amazing talent in our firms, but we just want more of them.  At the core of the problem is that there are simply less people in the current Gen X and Y age groups than there are in the retiring baby boomer generation.  Pair that fact with the lower number of individuals that are choosing to stay in the public accounting arena and we just have less people to work with today.  This challenge must be met with a stronger emphasis on moving top talent into higher level work faster and more time spent mentoring, teaching and motivating the best of the best.  

Retiring Baby Boomers:  Given the fact that we know we will have less people to replace those that are leaving, retiring Partners might be a bit discouraged about their ability to leave the firm when they had planned to.  We simply must start thinking in a new way about mandatory retirement ages, ways to attract younger team members to buy into the ownership track, the amount of time we spend in knowledge transfer and the expectations we have of our new leadership team.  All of these old rules and mindsets must change as we move to the next generation of leadership and management in our firms. 

Decline in Employees' Retirement Savings:  The recession hurt our country and our profession and one area that is not recovering as fast as we had hoped it would is employee retirement savings contributions.  While some firm leaders would say "that is their problem, we give them the opportunity and it is up to them to take advantage of it", I contend that as leaders we need to insure that we are educating and encouraging our team in the management and necessity of their future retirement planning.  This is a great area to collaborate with an outside vendor to work with your firm.  Asking an outside financial planning professional to meet with team members can be extremely valuable to the firm and the individual.   

Threat of Another Recession:  When you are clobbered once it is hard to trust that everything will be ok in the future.  The experts agree that we are recovering slowly.  The experts do not agree as to the likelihood of another recession.  The challenge is to not let your firm leaders get into a position of being scared.   Scared says that you are in the position of retreat or standing still.  You must continue to push forward, improve and strengthen your firm.  Be courageous!  

Greater Demand for Life and Work Balance:  The conversation around life and work balance was once thought to be a passing fad.  Today we know that this is not just a "next gen" issue.  This is an "about everyone" issue.  Everyone is searching for more balance including a career that they are passionate about as well as a personal life that is fulfilling.  Firms have to continue their quest to develop accountability at work which includes setting professional goals that will help each individual accomplish the life they want, but will almost never look the same as the next person that walks through the door.  That is where the challenge comes.  We must have a system in place that allows for flexibility that will connect the needs of the firm with the goals of the individual.  

As I stated earlier, now is the time to act as leaders and be courageous.  Use the trends above to develop strategies that will enable your firm to navigate the talent trends of 2013 and end the year in a positive way.  

by Jim Boomer, Boomer Consulting, Inc. & Drew West, Deltek

Imagine arriving tired and weary, late at night in a strange city. You hail a taxi for what you hope is a quick ride to your hotel.  But with no knowledge of the area, you have no idea how long the ride will take or what the final fare will be. Isn’t it unsettling to watch the meter tick up and up, while you just hope you have enough cash when you finally reach your destination?

While CPA firms may see little in common between themselves and taxi drivers, hourly billing basically takes our clients for a faithful ride in the backseat.  Just like you in that unfamiliar taxi, clients have little idea about the path we take to deliver the end product, or how long it will take.  Wouldn’t an agreed upon price up-front make both sides more comfortable entering into a transaction – whether it’s a cab ride across town or business advisory services?

Fixed Fees | A Balancing Act. Yet many firms long attached to hourly billing feel uneasy about the risks of fixed-fee pricing.  Even firms sold on the merits of switching still face internal resistance, fueled by the mindset of sticking to "how it’s always been done.”  Yet with timely access to the right information, firms can confidently turn to fixed-fee pricing to reduce risk on both sides of the relationship, increase trust and gain a competitive advantage. 

Any firm considering fixed-fee pricing must consider both the advantages and the risks:

Project Management Required

Breaking free of hourly billing means confidence in your engagements– confidence driven by accurate status of projects, appropriate guidance for your people, and knowledge about what works. For this kind of project management, your practice management system should deliver visibility into information, control over people and their work, and insight into the results. 

Practice management systems with the following attributes provide the information you need to price, staff, manage and deliver successful fixed-fee engagements.  

Visibility.  Visibility is all about the past, present and future.  To scope accurately, you want easy access into past work and results, so ensure all the firm’s critical data is easily accessible– from either a single environment or a tightly integrated system. Present status is key– you want to know immediately when engagements are off schedule or budget, so look to dashboards and alerts to provide margin, utilization, or realization KPIs to partners and all involved staff.  Looking to the future, effective resource planning means knowing who’s currently available, and their future capacity. Connect constantly-updated staff availability to the sales pipeline of fixed-fee engagements, so you can effectively plan resources.

Control.  Control is about guiding engagements to the profits you expect.  Don’t take on costly inefficiency; make sure your invoicing and billing has the flexibility needed for fixed-fee pricing– such as automatic invoicing triggered by progress milestones. Of course doing this means progress has to be accurate, so once again look to your practice management system to enforce prompt collection of the hours spent on each project.  Finally, control how people are treated. Ensure your practice-management system fairly measures each resource’s true contribution, and accurately calculates realization or utilization targets– so staff working on early phases aren’t penalized if revenue is realized at the end of the engagement.

Insight.  Insight is going beyond the simply visibility of facts and status, to having true knowledge.  Practice management systems that combine information together are good at providing knowledge, because people then have a path to connect outcomes back to the decisions behind them.  Put in a much better place for deep analysis of past activity, the single set of historical data in a good practice management system helps consistently determine appropriate scope-of-work, accurately estimate costs, and even evaluate the historical effectiveness of involved staff.  As insight gets increasingly deeper, fixed-fee engagements become easier to accurately scope, and increasingly less risky to deliver.

Making the Leap | Some Recommendations

You’ve weighed the benefits and challenges and you’re ready to make the leap.  What are some initial steps to take as you head out on your journey?

1. Gain Buy-In. Ensure the entire team is on board– you’re impacting culture, and that’s no small undertaking.  Before diving in, conduct strategic planning sessions to gain consensus and set a roadmap for implementing fixed-fee pricing that includes initiatives, responsible parties and due dates. 
2. Evaluate Readiness. Assess your ability to access the information you need to effectively manage projects.  Ready your practice management capabilities to support the firm’s fixed-fee approach.
3. Switch Your Pitch.  Focus engagement letters on value creation.  Move important risk-mitigation language to an addendum to the main agreement.
4. Select Early Adopters.  Look among your top clients for those using multiple services– and with entrepreneurial spirit. Pricing is an art not a science– so be ready to adjust to their feedback.  You’ll also gain confidence and skill as you get more engagements under your belt.
5. Package and Price. Bundle your services and price these packages for monthly billing. Give your clients pricing options based on ranges– like small, medium and large bundles.  This can increase margins and monthly cash flow.
6. Target Clients. Define your target client in terms of ideal monthly fee and your acceptable minimum monthly fee.  Beyond fees, consider other criteria like:
• Are they willing to take our advice – are they coachable?
• Will they refer us to other clients that meet our defined criteria?
• Will the client increase our capabilities?
• Respect – do we respect the client and do they respect our team?
• Does the client appreciate our services and promptly pay bills?

Your Move?

Instead of sitting lost and worrisome in the back of a taxi in an unfamiliar city, you now have a roadmap to take on fixed-fee pricing.  Will you maintain the status quo and march in step with the rest of the profession?  Or will you break out into the fixed-fee pricing model proven by innovative firms to deepen client relationships, increase revenues and improve profitability? 

Growth typically requires both entrepreneurial and managerial skills.  The majority of CPAs are more skilled in the management area than entrepreneurship.  With both skills firms can reduce risk and grow through innovation and learning.  The end result is a new kind of collaborative accounting where technology plays an important role – the accelerator.  How well do you know your clients and prospects?  Do you use the data to market and differentiate your firm?  Marketing trumps facts when it comes to sales.  Great companies and firms are using data mining and business intelligence to increase their market share.  You are the trusted business advisor with relationships and have access to important and accurate data.  Are you leveraging these relationships and market intelligence for the benefit of your clients and to your firm’s advantage?  Or are you simply too busy charging hours to notice the less commoditized opportunities?

There are five significant traps that firm’s often fall into when trying to enter a new or expanded niche with new innovation.  The traps and how to avoid them are as follows:

1.  Lack of Focused Leadership

Firm leaders are often distracted with existing responsibilities and try to develop the new services on a part-time basis.  If the niche is a priority, and part of the firm’s strategic plan, then adequate resources including firm leadership should be allocated accordingly. 

2. The Allure of a Plan versus a Business Model and Platform

Conventional wisdom typically includes a business plan and projections.  Too often these are little more than a spreadsheet estimating hourly rates and the number of hours utilized.  More important is a business model and platform focusing on client dangers, opportunities and strengths.  The pricing strategy should be value based rather than hourly and the business model should be collaborative.  In order to be collaborative, the platform will be typically cloud or Software as a Service based rather than traditional client server architecture.

3. Lack of Knowledge

Firms too often lack knowledge or ignore important data regarding client needs other than from an accounting and tax perspective.  While tax and accounting are important, they are only part of the client’s requirements.  The CPA is the most trusted business advisor and must think like a quarterback rather than a defensive lineman or safety.  There are many higher value added opportunities beyond the transactional services that firms can offer.  This requires a process of communication to identify and package services beyond tax and accounting.  Some professionals are comfortable with change while others resist.  Is your firm missing viable opportunities because you haven’t named, packaged and priced services to meet client needs?  These opportunities may also require different skills and delivery personnel.

4. "Just do it" Attitude

The day of the rugged individualist is over and today’s client services require a team approach to meet the expanding requirements.  Broader scope often requires additional internal or sourced resources.  Lisa Gansky, the author of "The Mesh", coined the term "mesh” and it is appropriate for the accounting market where leasing rather than owning is appropriate for firms and their clients.  The rugged individual approach typically results in less than optimal results for the client in the areas of strategic planning, budgeting, cash flow, human resources, technology and talent development.  Properly naming, packaging and pricing these services can result in extreme client savings and satisfaction while increasing firm revenue and margins.

5. Traditional Accounting Firm Management Methods

Most firms have focused on independence rather than advocacy.  Both values are important depending upon the type of service being offered.  Continual commoditization in the audit and tax compliance areas is forcing firms to look at margins and rethink service offerings.  The charge hour mentality also challenges good business thinking.  With the right business model and platform, firms can increase both revenues and margins.  Unique processes and a hosted platform make the services scalable and address client requirements.  The most profitable firms focus on selling consulting services, even to assurance service clients.  There are of course some limitations based upon independence requirements.

The Current Environment and Opportunities 
The tools and climate are right to change industries, professions and the world.  Technology can be disruptive.  The trusted business advisor status requires collaboration, creates value, requires scope and pricing in advance, and typically is based upon a fixed monthly fee with change order clauses to protect the client and the firm.  The Value Creation Agreement improves cash flow and addresses workload compression, if properly managed.  You must think more like a lean startup than a traditional CPA firm.  The service life-cycle has multiple phases and you should start with the vision of your market, experiment and learn as you progress.  Most successful firms admit they got their start from a client that requested the additional services in a particular niche.  They learned, adjusted, packaged, priced and grew the service.  To remain competitive they focus on innovation.

Required Resources 
In practice we see four primary resources that dictate success: 

1. A champion with passion 
2. Existing clients who need the services
3. A unique ability team to service the clients
4. A technology platform that supports collaboration

Due to the limited space of this article we will only focus on the characteristics of the champion who reduces risk and develops a profitable service.  The characteristics are as follows:

• Level 5 leader with a purpose and vision beyond personal gain
• Team builder who is a multiplier leader
• Access to internal and external resources
• Politically connected
• Proven track record
• Passionate

Words of Wisdom 
Those with passion do, while those without passion try.  Charles Kettering’s law on committees:  If you want to grow an idea, keep it away from committees.  Success requires leadership and a unique ability team.