In the final episode of his five-part series on the top priorities for CPA firm management, Ira Rosenbloom of Optimum Strategies covers the foremost efficiency concerns, including standardization, engagement selectivity, and automation. Make sure to check out the rest of the series with episodes on personnel, succession planning, client-service systems, and performance metrics.

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By: Bill Hayes, Pennsylvania CPA Journal Managing Editor

Podcast Transcript

Welcome to the fifth and final podcast in our series with Ira Rosenbloom on the top management priorities for CPA firms, we've discussed metric categories, client service system must-haves, succession planning, and personnel. All four of those podcasts can be found at www.picpa.org/conversations. This month, we wrap this series with a focus on efficiencies. What do CPA firms need to know to ensure that their businesses are running as efficiently as possible? Let's find out.

We'll start out by revealing the top five that we're going to be going over on this list. The top five priorities in CPA firm efficiency are listed as standardization, production control, automation, engagement selectivity, and administrative delegation. Let's start with standardization. What's the concern there?

[Rosenbloom] It's really going to be very difficult to be efficient if every partner and every manager wants to have their work done differently. So that we don't have our opportunity to rally around, number one, the best way to do it. Number two, to have a level of consistency so that we can train people and that we can move things out in a way that is easy to review because the papers or the product has been prepared in a consistent manner. Therefore, the time going into every stage or every important stage would be controlled, ideally minimized, because the client base, especially now in the COVID time period, is going to be mindful of every dollar that they're spending. To the extent that the accounting firm is inefficient, there will be a difficult time in passing on any part of time that is not going to be well appreciated. So standardization goes a long way in terms of keeping our time charges practical and fair and allowing for growth.

The other part of standardization is that we will diminish the frustration that people in the organization feel. If they're frustrated, it takes away from their happiness in the job, which interferes with their productivity and their efficiency. So, standardization is vitally important and it's not just in the area of the work product that goes out to the client. It's also in the administrative and operational support areas. The more consistent we are, the better and happier people are, the more they're going to be motivated and thinking about how they can do a better job as opposed to being buried in confusion and frustration.

Now, production control, what is it, and how is it going to make operations more efficient?

[Rosenbloom] Well, this is very, very critical toward, I would say, internal satisfaction and external satisfaction. It's all about creating an expectation and then managing that expectation. So, as projects are assigned, it's really important that we have a budget for the amount of time and that we set up some components within the engagement that will trigger some type of communication between the people producing and the people reviewing so that we know that the work is meeting a timeline. We also know that we are picking our priorities so that there is little, if any, opportunity to veer from what has been planned. There's always going to be something that comes up, but the more that we can control the work process and establish upfront the time period that it should take to do it, then the more clarity there's going to be and the more likely it is that we will be able to see the work product turned around within that cycle.

So that we're keeping people focused, we're keeping them productive, and we're moving our priorities in a fashion that is going to make sense. Now, in a larger firm, it's not something that is unique to having one partner operate in that fashion. It's going to be across the board. So, in a larger firm, there would be probably a scheduling function that would work along with the in charges, the partners and the managers, to get a sense of the priority, to be sure that we have budgets for all these projects and to understand how far along the jobs will go before there's some notification that the budget can't be complied with.

So controlling production is really important to being sure that our resources are being put to good use. That adds to the concept of, is the work spread evenly? Do we have people who are busier than others? Now at a point in time in the calendar, if it's a firm that has specific departments, if it has a tax department and accounting department, and then a test department, then there are seasonal time periods with which one department would be busier than another, but within the department itself, you want to keep those scales very closely balanced so that people are very, very comfortable with the fact that it's an even, fair workflow component.

Again, attitude is a key function in keeping people efficient and having people be motivated and having people think about what is the best way to do something. As part of that production control and establishing that budget and moving things along, it's really important to get the input from the people who are going to be completing that task, or who are assigned to that task, to understand whether or not this is attainable and to understand whether there's going to be some type of interference or conflict.

I was just reading an article today about the sort of continued onset of artificial intelligence and machine learning. So that falls into the area of automation. What should CPA firm priorities be in the area of automation at this point?

[Rosenbloom] This is an evolving area and certain CPA firms are much more embracing and enthusiastic about automation or ready to move more quickly in and around automation. Compliance, tax preparation, some of the functions that go within an audit are very much suited for an automation process or an automated process. Firms would be wise to walk before they run, do enough investigation in and around where they think the pitfalls may come, and then take themselves steadily and prudently through an automation procedure.

The movement of work within the office, which is in many, many, many CPA firms, we're talking about highly paperless environments, is a reflection or a component of automation. The more we can have the clients engage in that automation process with the firm, the more efficient that's going to be. An example of that, which is certainly popular today, would be portals where clients send the information, receive the information. As a result, we don't have to interfere with somebody's high-level performance to take care of something that is more of a basic or clerical need. A common example is a client needs a copy of their tax return because they're applying for a loan or they're trying to figure out some financial planning. Well, they could call the office, the office has to find it, and make a copy of it. But if it's sitting in the client's portal, they can do it. There's no need to take away from somebody's focus to handle something that's important, but not technically at a high level.

So we want our people working at their highest and best use and automation will drive that entire process. The good news about automation is that it's moving quickly and it's going to be practical for CPA firms to get a good seat on that bus as it moves forward.

Being a bit of a business novice, when I think of this, I'm always thinking that firms should be looking to get as many clients as possible. But obviously that's not something that's always going to be the case. How can being a little more selective of the engagements a firm chooses to get involved in be helpful for them?

[Rosenbloom] At the end of the day, if we do what we do best, we'll be more efficient, we'll be more profitable, and we'll have a better bottom line and a better business. This process of doing what we do best starts with the way with which we select and accept our clients. Certainly, we would not want any accounting firm to take a client on that they've viewed to have some moral or ethical challenges. So, let's take that completely off the table. But there are particular industries that certain firms are more adept at handling. There are certain types of work that firms are more adept at handling so that accounting firms know, whether they have automation, whether they don't have automation, have to have criteria in and around, what's going to be the model client, what is it that they should be capable of achieving with that client?

It's the efficiency and it's also the value-added component. For too long, accounting firms have been strictly oriented toward the hourly charge and whether they had a base hourly charge and an escalated hourly charge for premium work, more often than not, they just had one rate, but it didn't reflect the value of the work that's going to be done. Well, if you've got a selection process that indicates that, when we take in clients, it's got to include clients that would appreciate and need X amount of value-added services, that's something that would continue to build the profitability of the firm as well as the firm's expertise. Once you get the selectivity going, it builds on itself and the firm can then do what is in its best interest. That being said, as part of the selectivity component, there are many firms that will make a decision to invest in an area because they want to become really talented in that area.

In the beginning, they're going to be accustomed to or accepting of some poor performance with the expectation that with five more accounts of a similar task, they will have better performance and that's perfectly fine. So long as the ownership is aligned around the fact that there's a willingness and a commitment to make those kinds of investments and if the investments turn out to be wrong to alter your program. You've got to have your selection process be a reflection of the vision, and the commitment that the ownership group, which is certainly going to be a reflection of the talent and the purpose of the form.

So we've done five podcasts now, five priorities per podcast. If my math is correct, we're talking about 25 priorities here, and this would be the 25th and final one we're going to do in this series. We're talking about administrative delegation. What is administrative delegation, and how can it help streamline operations for a firm?

[Rosenbloom] So, there have been administrative assistants in CPA firms for many, many years. A frustration that is common is that the administrative assistants can do more than they've been asked to do. The ownership group will communicate that they would like to see more being done. As we move forward in a world where we're working more likely on a remote basis and we'll continue to do that, how you can put your administrative people to maximum use and diminish the role of the partners, the managers, and the seniors in the process of administering the practice is going to free up those people, meaning the partners, the managers, and the seniors, to be more available to their clients who need their attention now more than ever before, given the complexities and the difficulties which are at hand in our economy at this point. You've got to have administrative people that take things off of the plate.

Scheduling, follow-up, completion of files are components of delegation to an administrative person that are extremely appropriate, but unfortunately not always utilized. Having administrative people who are more familiar with the software options that are available to move the client management process into a more expedient format would be a delegation that's really important. Adding more responsibility to the technology people who typically fall within that administrative or operational umbrella will free up the technical providers, the service and client service providers, to be that adviser that is so critically important.

What needs to take place in all CPA firms is a focus on how can technology become more of a factor. Reaching out not just to technology providers because you may have your network service, then your computer is taken care of quite effectively, but to talk to people who were at the cutting edge of where technology is going and where automation is going, to touch base with professors in universities and thought leaders as to where and how this type of shift in work approach, which is component of delegation, can be meaningful. That's the accounting firm of the future. More and more technologically based, more and more reliant on people who can be nimble and multiskilled within that operating skill set to free up our accounting group to take things to an even higher level, to become that much more of an adviser and leader in the financial life of their clients.