A Paperless Story

Taketa Iwata Hara & Associates LLC is a small firm of about 20 professionals and paraprofessionals offering tax, bookkeeping, attest, payroll and consulting services in Hilo, Hawaii.  Three or four years ago, our partner group decided that becoming a paperless office should be one of the firm’s strategic objectives. 

Being paperless was attractive for several reasons; the primary one is the ease and speed of tracking client files.  We felt working in a paperless environment would allow us to respond faster to client queries; be more thorough in following our retention policies; and reduce our use of paper, thereby decreasing the related storage costs.  As it turned out, the real benefits were far greater—but more on that later.

First steps

Our first step was to form a task force.  We decided it would be comprised of our technology partner, firm administrator and both of our tax and bookkeeping managers.  This group approached the project by first looking at the available technology to help migrate to a paperless office. 

After spending about a year researching several document management systems, we decided that the best choice for our needs would be CCH’s ProSystemfx Document (“Document”).  It meets our needs and budget, and integrates well with other CCH Products we use.

Although the entire office was moving to Document for file storage, we decided early in the process to focus our efforts for full paperless conversion on our tax compliance group.  Tax compliance has relatively standard documents and is a fairly automated process to begin with, so it made sense to begin phasing out paper in our tax department before rolling the procedures out to other business lines.  With Document as our new on screen file room, questions regarding storage and management of our files were answered.  Now we needed to determine how we would actually work with the files.

Adobe to the rescue

While there were a variety of new software packages emerging at the time to aid in the preparation of electronic workpapers, we decided to keep things simple and as close as possible to our paper process, just without the paper.  The controlling reason behind this decision was an attempt to refrain from overwhelming our staff. 

We knew that the adjustment to Document was going to be a major one, so we decided to limit our introduction of new software.  We had already made the decision that we wanted to be working in a paperless environment, not just storing files electronically, so scanning in on the front-end was important to us.  We needed something that would allow us to comment and notate on client source documents. 

For us, the obvious choice was to do all of our work in Adobe Acrobat (“Adobe”).  We purchased the Standard version for all of our users and determined that beginning January 1, 2005, our tax department would be paper free.

Looking closer at processes

The subsequent step was hammering out all the little details.  First we needed to make sure that we had the appropriate people and hardware in place.  We decided to hire an additional administrative person to help with the initial scanning.  Besides the new server required by Document, we also purchased three scanners for the office; a Fujitsu fi-4530C duplex, a Fujitsu fi-4120C duplex, color scanner and an Epson flatbed scanner.  

Next, the task force went back to work drafting procedures for preparing workpapers within Adobe.  We analyzed our old paper process and then tried to see how we could convert our previously handwritten notes, tickmarks and referencing into Adobe textboxes, custom stamps and page numbering. 

For example, in our paper process, as the preparer input a figure into our tax return software (CCH ProSystemfx Tax) they would write a red checkmark next to each number on the client’s source document.  In the paperless environment, preparers now outline the figure with a red box using Adobe’s rectangle tool. 

It took some time, but we developed a very workable process.  For each challenge that arose we came up with alternative means. 

10 key calculator tapes

One early problem we encountered was 10-key calculator tapes.  Consider a client who provides 25 cancelled checks in support of $675 in charitable contributions.  In a paper file we would have simply used a 10-key to add up the figures and then would attach the calculator tape to the charitable contribution page of the organizer.  We wouldn’t expend the time and energy in photocopying all 25 checks. 

Our initial thought was to scan in the tapes, but the scans were often unreadable due to poor print quality.  We stumbled upon a freeware calculator program (MoffSoft) that solved the problem.  Now our users can add up the figures using the onscreen calculator and then copy and paste the calculation into a text box in Adobe.  

We knew we were recently on the right track when we saw an early version of CCH’s ProSystemfx Scan which included an Adobe Plug-In with numbers and tickmarks just like the ones we had created, not to mention a new calculator tape function.

Exceeding expectations

The benefits of converting to a paperless work environment exceeded our expectations.  We have experienced an increase in productivity and a vast improvement in our ability to respond to clients’ needs. 

Surprisingly, one of the biggest advantages of going paperless is in the area of employee retention.  Being paperless allowed us to offer remote working conditions, which gives us the ability to keep two individuals with the firm who might otherwise have left.  We now have a remote tax preparer 2,500 miles away in Alaska and a tax manager 5,000 miles away in South Carolina.  Remote work arrangements enable our current users to work from home on the weekends.  It is also an effective recruiting tool.  

In summary, here are some of the key factors that made our implementation successful:

• Full support by the entire firm – This can’t be stressed strongly enough.  It is absolutely critical that everyone, especially those in owner or management positions, express a willingness to give the new procedures a try.
• Understand that there will be increased administrative time spent in the initial phase of the rollout.  Making decisions about (and documenting) our policies and procedures took a great deal of time, but it made the initial conversion more straightforward, provided an excellent resource for training new staff and provided a template for other lines of business that we later converted to fully paperless.
• We made our existing client network directory read only with the roll-out of Document.  This forced people to use the new document management system.
• It’s important to train immediately prior to implementation.  Things went well for us partly because we switched over to Document the Monday following training when everything was still fresh in our minds.  We then followed up with paperless tax preparation in Adobe just before tax season began.

So even if paperless workpapers doesn’t seem to make sense, working in a paperless environment certainly does.

About the authors

Janet W. Hara, CPA, meets the needs of her clients by drawing on her knowledge and experience in the areas of technology and business consulting, business coaching, audits, reviews and tax planning and preparation for individuals and small businesses. Janet is also a graduate with a Bachelor of Arts from Stanford and holds a Master of Business Administration from the University of Hawaii.

Janet is a member of Hawaii Society of Certified Public Accountants, the American Institute of Certified Public Accountants and sits on the board of several local community associations.

Misty O'Brien is a Tax Manager serving the compliance and consulting needs of individual and small business clients.  Prior to joining Taketa, Iwata, Hara & Associates, LLC in 2003, Misty spent 12 years with a Big 4 accounting firm.  She graduated with honors from Chaminade University of Honolulu and received her Masters of Science in Taxation from Golden Gate University.  Misty is a member of the Hawaii Society of Certified Public Accountants and recent past treasurer for the Big Island chapter of the Hawaii Association of Public Accountants.