New Era Working Papers: Flexible and Integrated

By Margaret George, Business Fitness

The new era is happening now; indeed, we are the new era. Digital disruption is nothing new, but what does this really mean? The impact of technology is forcing change in the way businesses interact with their customers. Opportunity, along with some risk, is everywhere. As a business executive you can choose to adapt to the constant change, enabling you to do more with less, or eventually face decline.

Some of the main causes of this change are mobile technology trends, the possibilities of more and more integration, the connected world, and big data being used to personalise information. While this article does not delve into the depths of digital disruption, it is an important consideration in understanding the changes being made to workpapers.

Firms have been using workpapers for many years in an attempt to enable:

• Standardisation;
• Quality control;
• Accuracy of calculations; and
• Avoiding staff reinventing what someone else has already done.

However, many of these spreadsheets that are developed in-house contain errors. It is reported that close to 90% of spreadsheets contain errors.

“Spreadsheets, even after careful development, contain errors in 1% or more of all formula cells,” writes Ray Panko, a professor of IT management at the University of Hawaii and an authority on poor spreadsheet practices. “In large spreadsheets with thousands of formulas, there will be dozens of undetected errors.”

The answer to avoiding errors in spreadsheets comes from careful quality control and testing of formulas, which is not often done by individual firms creating their own spreadsheets. This is why it is more cost-effective to outsource the creation of these documents to an external specialist provider so that the spreadsheet creation and updating goes through the full quality control process.

While the focus will always be on quality, clients are looking for a new model – and while still having a comprehensive range of workpapers, the new way of working requires greater levels of flexibility and automation.

The new era workpapers needed:

• To be based on Excel as the accountants are all familiar with this software, which gives a great deal of scope in customisation;
• An ability to add additional worksheets of the same type, e.g. more than one bank or rental property;
• An advanced way to manage sign-off of individual worksheets;
• Flexibility over which worksheets are used on each assignment;
• A smaller footprint for the finished workbook (particularly as cloud data storage becomes more prevalent);
• The ability to add a file from another workbook (e.g. permanent file);
• Personalisation of the initial file (e.g. adding sheets that are mandatory for every assignment);
• A function to allow firms to add their own worksheets to a file – this is particularly true in the job management area, where firms often have their own way of working;
• To summarise data between sheets, such as a rental property summary (no matter how many sheets have been used), tax and other reconciliations;
• A comprehensive range of worksheets covering every accounting and tax situation that may arise;
• Hyperlinking source documents;
• A worksheet status for each individual sheet;
• An option to roll information and balances from year to year; and
• Being able to store the finished workpaper wherever and on whichever device is required: on-site server, hosted server, cloud storage.

Of course, modern firms need to manage the entire workpaper process electronically, from preparation to finalisation.

Using Excel as the base for these workpapers is important as this offers accountants a tool that they know and love but also gives the flexibility of adding formulas and slightly changing the worksheet depending on the situation, such as adding rows, columns and notes.

The benefits of these new era workpapers include:

• The standard of work is improved as less experienced accountants have a guidance on preparation of workpapers for an individual assignment;
• Error messaging and links to additional resources (a great tool for the accountant preparing the assignment);
• Risks are reduced through working with documents that have been through a proven quality control system;
• The accountant preparing the workpapers can identify the progress on each part of the client’s assignment, including where they are waiting on information from the client;
• Overall visibility of the assignment is accessible to those involved with the job;
• Reduced review time as the accountant has been guided through a systematic process for working on the assignment;
• Customisation is easily achieved with a proven tool allowing for flexibility;
• No missing pieces of the puzzle – all items are catered for;
• No rekeying of data as worksheets link to pick up appropriate figures from other sheets – this avoids costly data entry errors; and
• A reduction in data entry through rolling information and balances from the prior year – a huge time saving with the knowledge that you are using the latest templates for the current year, populated with opening balances and list information from the prior year.

The Connected Workpapers

With a growing requirement to link with many different software packages (clients of accounting firms use a variety of accounting software – they are not just limited to one brand), connection becomes an important piece of the efficiency conundrum. Connection cannot be just limited to one particular type of software – workpapers need to cater for all different types of software, ranging from the myriad of client software to software used specifically within the practice. However, there is a definite trend away from using practice-specific software, with all the work being done in the client’s software.

The ability to share the same source accounting file with the client has definitely produced many efficiency gains for accountants. Keeping the efficiency momentum going, not having to transfer data to another system to produce standard reporting will be an important step in furthering this efficiency.

A seamless flow from accounting software through to workpapers, production of journals, final reports, paperless review by the client and electronic signing of accounts and tax returns will provide the end-to-end solution that accountants are looking for.