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Institute of Chartered Accountants C'P'D Practice Management


When we think of practice management systems, our thoughts turn to the major ... and 3rd party reporting software (such as Crystal, Forests and trees, Brio etc) ... – PowerPoint PPT presentation

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Title: Institute of Chartered Accountants C'P'D Practice Management

Institute of Chartered Accountants
C.P.DPractice Management
  • By J.L Grant
  • M.Sc. F.C.C.A. A.C.I.S

  • When we think of practice management systems, our
    thoughts turn to the major functional areas of
  • Management reporting
  • Performance review
  • Accounts Preparation
  • Taxation
  • Automated Billing
  • Time recording
  • Costing
  • Resource Management and scheduling of resources
  • Client Administration
  • Contact and Marketing
  • Work in Progress Budgeting/Tracking (project
    management) and Compliance

Introduction Continued
  • Apart from the fact that no current practice
    management systems contain this utopian ideal,
    the main problem is that every firm has its own
    way of doing things.
  • In many cases each part of the firm will have its
    own procedures and way of operating

Introduction Continued
For many practices the only way of dealing with
this diversity has been to write software
in-house, this may be affordable for big 5
firms, but it is both impracticable and cost
prohibitive for small and medium sized practices
Introduction Continued
  • Many small practices have created their own
    computerised practice control systems, these tend
    to be
  • Dependent on one or two key individuals
  • Difficult to control
  • Expensive to maintain
  • Not really comprehensive enough
  • They are usually quite ineffective at managing
    the practice
  • Result duplication of effort and gaps in critical

Introduction Continued
  • In response to the above the practice management
    systems providers (in the UK the number of which
    is growing smaller), produce systems which are
    very large, complicated, option and parameter
    driven packages with links to best of breed 3rd
    party software or their own brand software for
    particular functional areas.
  • Even with such complex and flexible systems they
    never seem to quite cope with all the nuances,
    peculiarities and preferences of how accounting
    practitioners operate their business. In many
    cases the full functionality is not understood or
    used to its full potential.

Introduction Continued
  • The result for many small and medium sized
    practitioners is that their systems, working
    practices and procedures usually have to be
    conformed to the systems and procedures dictated
    by the practice management software which
    promised to meet
  • their requirements.

Introduction Continued
  • The responsibility often lies in part with the
    practice, failing to map our its procedural,
    reporting, workflow and functional requirements
    in a clear and comprehensive manner. Rather
    assuming or hoping that the software will
    incorporate these things, others use it, it must
    therefore be OK for our practice needs (after all
    we are just the same as everyone else).

Performance Reporting
Performance Reporting
  • An area of great concern when advising clients
    and adding value to our professional services, is
    one area which many small and medium practices
    fail to define, relying on the practice
    management software to solve this complex and
    difficult area. Our faith in software provider
    is touching if a little naive.

Billing Continued
  • Billing is perhaps one of the most obvious areas
    for automation, experience shows that in a large
    proportion of practices reduce this task to a
    manual task. The use of word processing is common
    and the time honoured method of printing the Work
    in Progress ledger, scribbling and amending this
    (reinventing the missing bits) still lives on. By
    the time bill leaves the practice up to 3-4
    people will have been involved in its production.

Billing Continued
  • Maybe we need to ask some hard question about
    this area, most of our clients seem to cope with
    billing without the same fuss, it may never be a
    simple task but it could be simpler.

Billing Continued
  • Billing systems seem to be poor in areas such as
  • Fixed cost assignments
  • Billing based on Events
  • Percentage billing against WIP
  • Multiple charge-out rates
  • Cost rates and discounted rates.

Time Recording
  • Intimately associated with billing,
    effectiveness, efficiency, performance reporting
    and management. The process is usually
    computerised, most systems offering a great deal
    of flexibility in mode of entry On line, off
    line, manual, batch etc.
  • Very few systems offer the ideal of automatic
    entry as the work is being done.

Time Recording Continued
  • When we contrast accountancy practice management
    systems with legal systems, they seldom show any
    real concern for costing a service, charge-out
    rates yes, but cost of labour and expenses?
  • Determining the cost and profitability of work
    billed is for many practices still hit or miss,
    an informed guess.

Managing and scheduling of resources
  • How many people, at what level, and when, is a
    vital area often ignored by the current crop of
    practice management systems.
  • Why is it that something do obvious, so central
    to what we do is given such a low priority and
    minimal functionality in most of the practice
    management systems?
  • Is project management only for engineers and
    builders? Does the adage, do as I say, not as I
    do apply?

Client Contact and Marketing
  • Although these do exist in most practice
    management systems, they tend to be basic and
    would be less than satisfactory to professional
    marketing managers. This seems at odds with a
    commercial environment, which lays such emphasis
    on the power of marketing. Even the legal
    profession now advertises.
  • Part of the explanation for the above lies in the
    attitude of many accounting professionals who
    fail even at this late stage to realise that the
    most important issues for small to medium sized
    practices are people and management related
    rather than technical ones.

2. Designing functional systems
  • Practice management systems due for a major shake
    up, if not complete change.
  • This is largely because they start with an
    accounting focus and attempt to work towards a
    business focus.
  • They should rather start with workflow and
    business processes, looking at what we are doing,
    how we do it or are going to do it and what if
    anything we need to change.

2. Designing functional systems Continued
  • We provide a series of professional services,
    these have cost and revenue implications, and
    increasingly compliance issues.
  • There is nothing intrinsically difficult about
    these parts, the problems surround the softer
    areas in practice, the management of workflow
    management, client contact, added value services,
    marketing, and management reporting on
    performance etc.

2. Designing functional systems Continued
  • Practice management systems should emulate
    workflow management systems, keeping a record of
    how documents are built, for which client, with
    time recording and achievable tasks etc produced
    as by-products of core activities, rather than as
    separate administrative tasks.
  • Time recording is often viewed as a waste of
    time, which is why people forget, the longer they
    forget, the more Walter Middy like their records

2. Designing functional systems Continued
  • Up to this point most of the practice management
    systems have failed.
  • This has usually been due to functionality, some
    of the best-of-breed solutions coming from
    several vendors have significantly increased the
    problems due to integration issues.

2. Designing functional systems Continued
  • A workable solution will probably consist of a
    modular system, each module in turn representing
    the preferences of the functional area of the
    practice, the best solution for each particular
    task, working together in an environment which
    recognises the need for diversity and harmony in
    the working practices of the accounting firm.
  • All the systems talking to each other.

2. Designing functional systems Continued
It is precisely at this point that our utopian
ideal begins to crumble. Software-to-software
communication is a complex and difficult area,
some help is usually required (therapy can help).
  • Practice management systems must be seen as a
    dynamic process, constantly changing and adapting
    to new requirements and responding to take
    advantage of new business opportunities. We must
    be constantly on the lookout for things we can
    add to assist with various tasks.

2. Designing functional systems Continued
  • It is usually the specific implementation of the
    above concepts that sets good practice management
    systems apart from the poor ones.

3. What is Practice Management?
3.1 - Planning
  • To have good practice management, we must have
    good planning.
  • To have manageable plans there must be measurable
    results, including interim stages.
  • A simple tax return may have a small number of
    stages while a complex audit may have many

3.1 - Planning Continued
  • The measurable results against the stages of a
    project represent opportunities to take
    corrective action,
  • there is therefore a clear correlation between
    the number of stages and number of opportunities
    to apply remedial action. (FDS calls these

3.1 - Planning Continued
  • There is a fundamental difference between project
    management as used by engineers and accountants
    Engineers generally do a relatively small number
    of larger jobs Accountants usually tackle
    thousands of relatively small jobs.

3.1 - Planning Continued
  • The milestone concept of FDS, is a useful one and
    would allow (in theory) the automatic updating of
    all data, prompting for new stages, prompting for
    overruns and delay, missing information and
    billing. Capturing time, cost, WIP transparently
    without conscious effort or manual intervention.
  • (This already happens to some extent with FDS in
    New Zealand) the difficulties seem to centre on
    compatibility of software and identification of
    these trigger events (milestones)

3.1 - Planning Continued
  • Identifying these milestones is a complex and
    demanding process, it is non the less critical if
    we are to fully automate our practice management
    and derive the benefits which otherwise remain as
    merely potential.

3.1 - Planning Continued
  • The concept of a PC (or laptop) at every desk
  • Taken to a new level,
  • Every member of the team has access to all the
  • Confidentiality is critical, it creates a tension
    in the development of comprehensive practice
    management models.
  • The culture and style of most accountancy firms
    is diametrically opposed to this philosophy
  • And this more than anything else leads to failure
    in the type of systems which I am suggesting,
  • It must to be effective and efficient touch every
    aspect of our working practices and empower all
    employees to use it.

3.1 - Planning Continued
  • This detailed planning, leads to
  • accountability, targets, to-do lists with target
    dates, maybe even a resource scheduler.
  • These will probably need to be manipulated to
    allow for acceptable work loads, available hours,
    knock on effects etc, but it should be a good

3.2 - Resource planning and performance review.
  • Provided planning is sufficiently comprehensive,
    the rolling up of these budgets, comparing with
    actual and the review of performance will be
    straightforward. Whether we are looking at
    individual pieces of work, client profitability,
    compliance or reviewing staff should present
    little difficulty.
  • The plan, if properly maintained, can drive all
    the work processes, in every aspect of the firms

3.3 - Management reporting and executive
  • No practice is the same as any other, their needs
    vary greatly in this area.
  • Many small and not so small practitioners have
    only the vaguest inkling of what they require,
    this has often been conditioned by their
    experiences of what other software vendors have
    provided, considering this to be in the words of
    Jack Nicholson as good as it gets.
  • This perception is due principally to two main
    historical factors

3.3 - Management reporting and executive
information Continued
  • 1. Major suppliers to the profession have
    implemented systems using proprietary
    programming and database systems, due mainly to
    productivity gains in software houses and
    efficient software for the profession. The
    downside is the fact that in this arena virtually
    every piece of every module has to be programmed
    from scratch. To save some effort many have
    created general purpose report writing, these
    tools are by nature general rather than specific
    and fail to provide the flexibility which is now
    expected. Developers have been slow to open their
    databases to third-party tools such as ODBC,
    usually this is to protect their investment. The
    claim is that it is to protect end users from
    corruption to data (I have my doubts).

3.3 - Management reporting and executive
information Continued
  • 2. Accountants have only recently started
    embracing marketing techniques such as
    stratifying their client base, measuring the
    proportion of work in areas such as compliance
    v- value added. Historically what was important
    was productivity of staff, this is still
    important, but in todays competitive environment
    progressive firms need to adopt a more strategic
    approach. This drives the need for a practice
    reporting system which accurately and efficiently
    measures the processes and their results. Giving
    facility for corrective action at the earliest
    possible stage.

3.3 - Management reporting and executive
information Continued
  • Practices should not effect fundamental change in
    direction whilst they are effectively flying by
    the seat of their pants hence the need for
    responsive executive information systems to guide
    and inform effective practice management.

3.3 - Management reporting and executive
information Continued
  • Quote, Gerard Mallaghan, Joint Managing partner,
    KPMG Aukland
  • We have a clear vision of how we are going to
    build on success and make the most of the
    exciting opportunities we have identified for the
  • To support that vision we require first rate
    management information, effective working
    practices, profitability and innovative marketing

3.3 - Management reporting and executive
information Continued
  • Quote, David McIntyre, IT Manager, KPMG Aukland
  • We have chosen an infrastructure that meets
    partners need for instant access to information
    today and supports our future plans

4. The starting point for practice management
must be an overview of component elements of a
Practice Management Model?
  • See diagram (a) Practice Management Model

(a) Practice Management Model
Workflow Project Control
Account Prep
Time recording
Management Reporting and Performance Level
Knowledge base common pool of client/practice
Resource Planning Schedule
Linkages to Client accounting packages
Client Admin
Practice Accounts
The model should be based on a number of
5. Principles for a Practice Management Model
  • 1. Modelled on the workflow practices of your
    firm (we must clearly understand these)
  • 2. Data should be captured once, shared through
    the practice, if possible this should be
  • 3. Allow for maximum flexibility of working
    practices in the firm
  • 4. Handle the main functional areas of the
    practice in a straight forward manner
  • 5. Take a holistic view of practice requirements
  • 6. Deal with resource scheduling and planning
  • 7. Address client contact and marketing
  • 8. Assist with attaining profitability,
    efficiency and compliance
  • 9. Modular systems, with options for using best
    of breed from other vendors and connectivity with
    3rd party packages
  • 10. Systems should be networkable, facilitate
    offsite working and be internet enabled
  • 11. Security and client confidentiality are
  • 12. Management reporting should be comprehensive,
    simple to use and flexible
  • 13. User friendly and intuitive

Dealing with these principles one at a time
5. Principles for a Practice Management Model
5.1 - Modelled on the workflow practices of your
  • The practice management system must adapt to and
    facilitate the working practices of the firm.
    This will require the management of the practice
    to understand and document these practices in the
    first place.
  • Some difficulties will often be presented by the
    fact that different departments within the
    practice will have their own procedures and
    practices, often these will be dictated by their
    particular working constraints and reporting
  • For example the taxation department working to SA
    deadlines, multiple taxation areas with their own
    rules and compliance will have quite different
    expectation and requirements from the Audit
    department, working to keep the JMU happy (a
    slight contradiction in terms), complying with
    various audit requirements and compliance issues.

5. Principles for a Practice Management Model
  • No matter how complex and diverse the working
    practices and requirements are, practice
    management systems will simply not work unless
    the workflow practices of the whole practice are
    modelled as one unit.
  • Diagram (b) on functional areas within the firm

Modelled on the Workflow practices of the firm
5. Principles for a Practice Management Model
Tax Dept.
Accounts Prep.
5.2 - Data should be captured once, shared
through the practice, if possible this should be
  • Data should be reviewed as a common resource, it
    should not be viewed as the domain of the
    Taxation department, Audit department, Accounts
    preparation or Management.
  • All data should be maintained centrally, and
    used, updated and referred to and used by
    functional areas as they have need of it.
  • Data should be captured in the most
    straightforward manner and should be added to and
    amended within the functional area most logically
    associated with that function.

5. Principles for a Practice Management Model
  • Care should be taken to clearly identify the most
    efficient time and place for these updates, to
    ensure accuracy and reliability of all data
  • Care should be taken to ensure that data input is
    not duplicated, that data is monitored as it is
    transferred to and from all functional areas,
    this will require flagging information as to its
    status (i.e. working, complete, etc)
  • Diagram of data capture (c)

(C) Data Capture
Taxation Data
Accounts prep. data
Basic client information
Knowledge base common pool of client/practice
Audit Data
Time fees
Staffing cost
5.3 - Allow for maximum flexibility of working
practices in the firm
5. Principles for a Practice Management Model
  • PM Software should allow for some measure of
    flexibility, without compromising the overall
    requirements of the firm. The preferences of
    individual departments and partners in the firm
    should be facilitated.
  • There will often be the need to produce
    individual work-bench, layouts, reports, screen
    layouts to meet preference.
  • There may for some be the need to signoff at lots
    of different stages for others a small number of
    stages in a project or job.
  • Some flexibility is desirable for staff at
    different levels having regard to the type and
    level of work in which they engage.

5. Principles for a Practice Management Model
  • Time recording is a good example of this
    flexibility, allowing for some an automatic time
    capture, if a lot of their work is Network PC
    based, for others it may be batch entry daily,
    remote time entry would be useful for audit staff
    on assignment, maybe through the internet or
    dial-up access.
  • Systems should facilitate onscreen work or
    printout with manual entry, this may be useful
    for audit schedule production.

5.4 - Handle the main functional areas of the
practice in a straightforward manner
5. Principles for a Practice Management Model
  • One of the advantages of the best of breed
    approach is the facility to select the package,
    which provides the closest fit to required
    functionality with an operation that is both
    straightforward and closely aligned to the
    working practices of the firm. Each department
    can select the system, which best suits, its own
  • As we move towards integrated practice management
    systems the straightforwardness of the
    component elements is often diminished and lost
    in the complexity of the integration.

5. Principles for a Practice Management Model
  • For example, because the accounts preparation,
    taxation, budgeting and automatic time recording
    are linked. We cannot commence accounts
    preparation because the client is not yet setup
    with a budget, the type of work we are engaged in
    is new to the firm, the staff member is not
    scheduled for that job and anyway we need the
    clients UTR to complete the taxation linkage.
  • The functionality and the integration of the PM
    system should be carefully considered together
    with the existing practices and procedures, so
    that each individual functional area is simple
    and straightforward within itself and as it is
    integrated to the whole system.
  • The fact that information is missing or
    incomplete should form the basis for some form of
    exception process without over-complicating
    individual processes.

5.5 - Take a holistic view of practice
  • Specialisation within accounting practices is
    necessary if we are to be competitive, able to
    deliver a high quality service and avoid
    negligence claims. The difficulty is that, these
    models of practice give rise to insular and
    narrow perspective, in some extreme cases a lack
    of co-operation, suspicion and even open
  • For PM Systems to work successfully the practice
    needs must be considered as a whole, some
    compromise and a very high level of co-operation
    must be evident to achieve the very real
    potential benefits offered.
  • Individual departments within the firm must see
    very clearly the processes feeding into and out
    of their domain.

5. Principles for a Practice Management Model
  • The accuracy and completeness of data
    requirements flowing from each department must be
    recognised and gives priority, even if that data
    is of no immediate benefit to the originating
  • A good example of this might be the entry of
    information relating to directors, this may be of
    no real benefit at the accounts preparation
    stage, but will certainly be of interest to the
    Audit compliance and taxation departments.
  • Information from the payroll section may seem to
    have little impact on other departments, until we
    consider personal taxation services, which we may
    be carrying out for directors (P11D).
  • Each department should be looking out for the
    needs of other departments, the PM System should
    prompt for and encourage this cross departmental

5.6 - Deal with resource scheduling and planning
  • Our PM Software should simplify the tasks of
    scheduling and planning by integrating at least
    the following

Up to date database of staff resources,
availability (taking into account holidays,
training, sickness), capabilities and levels of
staff to carry out particular work. A List of all
possible tasks and their outcomes for easy
selection and inclusion on any job A List of all
Jobs to be done by the firm, including at least
WIP, Future Jobs and Completed Jobs. Track start
dates, completion dates, budget and performance
on all jobs. Schedule work on jobs and allocate
staff to these projects, this will of course
require some manual intervention, but should at
least present a proposal of the best staff for
5. Principles for a Practice Management Model
  • Project potential bottlenecks and impending
    difficulties for re-scheduling
  • Automatically compare actual performance with
    budget and highlight jobs which seem to be
    running over budget in terms of either time to
    complete or cost.
  • Group reports on resource and scheduling
    information as flexibly as possible so that we
    can review this as it relates to
  • Individual Jobs
  • Individual Staff members
  • All the jobs for one client
  • All the work for one department
  • All the work for one team of staff
  • Allow a much flexibility in reporting on this
    area to meet the needs of different managers and

The aim will be to assist with the process of
allocating staff to jobs or projects, in a manner
that maximises the potential of each resource and
ensures the completion of each job within the
constraints of time and cost.
5.7 - Address client contact and marketing
  • Managing the client relationship is one of
    those areas of practice management about which we
    seem to hear a lot these days.
  • For some it means a 30 minute meeting once a
    year to sign off on accounts, at best a brief
    chat, a brief glance at the key ratios in the
    accounts together with any concerns (usually
    working from a list provide by the staff member
    who did all the work.
  • For others it means a game of golf, lunch or even
    a long walk holding hands.

5. Principles for a Practice Management Model
  • To be really effective, the contact we have
    with our clients must
  • Be affordable and understandable by clients
  • Be good quality advice based on information from
    all aspects of our work for the client
  • Draw on expertise from all specialist areas of
    the practice
  • Be provided from within the existing resource of
    the practice
  • Be perceived by the client as useful and not just
    information to file away
  • Lead to added value services and more fee income
    for the firm
  • PM systems should comprise a mixture of
    automatically generated advice such as
    pre-warning the directors of company cars about
    the impending changes to the calculation of scale
    charges on company cars.

5. Principles for a Practice Management Model
  • General advice, for example compliance issues,
    retirement planning for tax and legislative
    changes which may effect individual clients.
  • Issues raised during our work for the client, tax
    planning, financial statistics, control
    difficulties etc.
  • In order to target our advice the PM Software
    must allow the analysis of clients into
    categories, and the automatic collection of
    advice and comment at various stages in the
    process of the clients affairs through our firm.
  • These additional data entries should then be
    formatted into a sensible report, which may
    encourage the client to see us more in an
    advisory and support role.
  • The categorisation of clients into various groups
    will allow us to engage in a proactive manner
    with them, indicating areas of potential service
    and assistance.
  • Clients perceive value in a process that speaks
    their own language and is seen to improve their
    bottom line

5.8 - Assist with attaining profitability,
efficiency and compliance
  • PM Software should never become an end in itself,
    it is merely a means to an end (or ends). The
    systems we adopt should assist with achieving
    profitability, efficiency and compliance.
  • The systems should enhance profitability by in
    the first instance being affordable and cost
    effective, the systems should minimise waste of
    resource which often arises when data is
    duplicated, incomplete, or inaccurate.
  • Careful control of budget and actual time and
    cost on every job should be automatic, PM systems
    should ensure that all time and cost is
    ultimately accounted for and charged to client
    jobs, either directly or indirectly through
    overhead recovery included in charge-out rates.

5. Principles for a Practice Management Model
  • Systems must encourage efficient use of all
    resources, so that jobs may be completed within
    committed time frames and staff will not find
    themselves in feast or famine situation.
  • Compliance should be automatic, having for each
    client schedules of key dates, legislative
    compliance checklists within audit, taxation and
    accounts preparation applications. Producing
    action list and reminders for both departmental
    staff at various levels in the firm and clients.
  • Efficiency should be encouraged throughout the PM
    System, this will involve speed of data entry and
    extraction, guidance on errors, correction of
    errors, missing information, simple formatting
    and controlled flexibility.

5.9 - Modular systems, with options for using
best of breed from other vendors and connectivity
with 3rd party packages.
  • Modular configuration is beneficial in many
    ways, allowing for the specialised developments
    and changes for different functional areas to be
    incorporated without unnecessarily effecting
    other areas. There should also be scope for some
    choice in the selection of packaged solutions
    from other vendors (this can cause some
    implementation difficulties).
  • A high degree of openness is very desirable and
    standards of open database connectivity must be

5. Principles for a Practice Management Model
  • The PM Software should facilitate the integration
    of there 3rd party systems and preferences within
    the firm.
  • OLE, Dynamic Linking and import/export options
    must be standard within the PM System, allowing
    linkage to industry standard spreadsheet,
    word-processing and database tools.
  • Connectivity with client accounting software is
    increasingly critical, especially since all but
    the smallest clients now operate some form of
    computerised accounting. This connectivity will
    enhance our accounts preparation and audit

5.10 - Systems should be networkable, facilitate
offsite working and be internet enabled
  • The mode of operation for our PM System should
    allow for networked environments (these are the
    norm in most small and growing practices), it
    should also facilitate standalone operations
    using PCs or Laptops.
  • The facility to work offsite, on client premises
    or at home, should be facilitated. This can raise
    some issues regarding updating of information in
    the PM System, especially at the point when the
    offsite date is reintegrated into the main
  • Some form of synchronisation of systems is
    critical if we are to maintain the integrity and
    accuracy of information.
  • PM Systems must be capable of handling multiple
    locations (many firms operate from more than one
    office), the systems must allow for access by
    means of dial-up networking an increasingly
    Internet access and the use of Virtual Private
    Networks (VPNs).

5.11 - Security and client confidentiality are
  • As we open the data pool in our firms too much
    wider groupings and individuals, concerns over
    issues of security and confidentiality come to
    the fore.
  • It must be possible to limit access to data, by
    means of

Passwords Access levels Group / Client settings
Control over edit, deletion of data,
clients Control over key events, for example
finalisation of a years accounts, tax return
etc Control over office administration,
charge-out rates, billing, scheduling etc
Backup and restore facilities for all data should
be an automatic function, which is monitored and
checked on a regular cycle. Virus scanning and
limits to outside access to networks should be
controlled by firewalls and up to date virus
scanning utilities.
5.12 - Management reporting should be
comprehensive, simple to use and flexible
  • Reporting should provide for both the standard
    and the peculiar, reporting should be flexible
    and intuitive and systems should allow the use of
    their own and 3rd party reporting software (such
    as Crystal, Forests and trees, Brio etc)
  • Reporting should be comprehensive, providing
    specific reporting for the particular
    requirements of different functional areas in the
    firm, the reports required by the taxation
    department will be quite different from those
    demanded by the audit department.

5. Principles for a Practice Management Model
  • Management reporting and Executive information
    are in the users domain. The practice should be
    free to define their requirements without
    constraint. Any data maintained by any component
    in the system must be accessible, in a form
    suited to our needs.
  • This flexibility should exist to view and select
    data in any form we choose, of course a great
    deal of effort is required to think through the
    reports we really need, this effort is justified
    in terms of the potential gains resulting.

5.13 - User friendly and intuitive
  • In all aspects of a good PM System, there must be
    attention to the user, screen layouts, data
    entry, errors and missing information, operations
    and functions must all focus on what the user
    needs they must be easy to use, obvious,
  • It must be possible to adapt the PM system to
    meet the needs of individuals and groups within
    the firm, either including or excluding from view
    functions and information as required.
  • Macros wizards and checklists for key tasks,
    context sensitive help facilities and good
    quality examples to illustrate questions should
    be standard throughout.
  • Clear workflow patterns throughout, defining from
    whence and to where data flows, defining the
    logical next step.

So what should we look for in Practice Management
  • The components of a Practice Management System
    will vary, depending on the precise nature of the
    work and expertise of the accounting firm. A
    number of functions will be standard throughout,
    while others will depend on particular
  • We ought to look for a PM System which integrates
    the main functional components of our practice,
    into a cohesive whole and allows for the addition
    of new functional areas as required.

As an absolute minimum we will require
So what should we look for in Practice Management
A Hub or Navigator Accounts preparation Taxation
Time recording Project control and Work in
progress Billing Practice Accounts, payroll,
purchase ledge etc
Other functions may be added, for example
So what should we look for in Practice Management
  • Audit
  • Workflow
  • Management reporting and performance review
  • Costing
  • Resource Budgeting Scheduling, planning
  • Client Administration

We will look briefly at the key elements of each
of these
  • 1. A Hub or Navigator
  • In many respects this is, the PM System, it is
    the centralised repository for firm-wide
    information, and should be the centre around
    which all the functional modules operate.
  • In the case of CSM this central module The
    Accountants Desktop provides the integration
    and linkages necessary to provide an overview of
    the complete data processing, navigation and
    access to all data.
  • While the CSM Accountants desktop not perfect,
    it non the less illustrates the kind of PM Model
    we are talking about.

So what should we look for in Practice Management
  • These tools seem to offer some of the
    functionality we require, they are however a long
    way from offering the ideal, they do not score
    very highly when it comes to workflow,
    flexibility, marketing and productivity. They are
    becoming stronger in the areas of integration,
    capturing data only once, security and
  • There is still a lot of development needed to
    achieve a comprehensive PM solution,
  • Sage have indicated their intention to do this,
    and their acquisitions of Hartley, CSM and seem
    to indicate serious intent in this direction.

Accounts preparation
  • A standard requirement of every practice, large
    and small, it is essential that this functional
    area have at least the following minimum
  • Easy creation of client data-sets (should be
    possible here or in any functional area),
    providing for all client types from simple
    non-regulated to complex regulated entities.
    Default charts of account should come as standard
    allow modification as required t meet particular
  • Posting should allow for flexible data entry
    organised into logical groupings by type, cheque,
    cash, journal, Accruals, prepayments, VAT
    Extraction, PL, SL etc. Allowing Summary and
    detailed entry.

Accounts preparation
  • Efficiency of data entry, including auto
    repeating, search and find, automatic balancing,
    amendment facilities.
  • Working paper generation
  • Bank Reconciliation
  • Standard and customisable report pages, organised
    into logical sets for management and final
    accounts reporting. There must be a facility to
    receive regular updates to legislative and
    reporting requirements. Full cross referencing
    and page numbering should be automatic and
    require minimal manual intervention.
  • Facility to adopt house style suited to the
    preferences of the firm and individual
  • Full integration with the central data and other
    modules within the PM System should be
    transparent and simple

Accounts preparation
  • Report and Output options should include OLE,
    Import and Export with spreadsheets, word
    processors, 3rd party client accounting software
    with mapping facilities for coding
  • Exception reporting for missing information,
    compliance matters and items requiring decision
    or clarification.
  • There should be no limit on the number of
    transactions in any area.
  • Year End procedures should be controlled and
    facilities should exist for reversal if required.
  • Audit trail should be clear transparent

There are many other functions and facilities
available, but the above is at least the minimum
  • This is also a standard requirement of every
    practice, large and small, it is essential that
    this functional area have at least the following
    minimum functions
  • Easy creation of client data-sets (should be
    possible here or in any functional area),
    providing for all client taxation requirements
  • Integration with Accounts preparation, including
    checking that accounts are actually complete
  • Are all returns, schedules and pages acceptable
    to the Inland Revenue as facsimile copies
  • The system should include Personal tax and all
    related schedules, supplementary pages such as
    Lloyds, Foreign income and Capital gains
  • Business, partnership, trust, non-domiciled tax
    including non-trading pages for partnership,
    overlap relief, retirement, change of partnership
  • Does the system deal effectively with loss
    utilisation?, roll forward year on year
  • Company tax returns and computations which are
    clear and understandable

  • P11D production
  • ELS and administration with Inland Revenue,
    including receipts
  • Proper validation of tax returns and schedules
  • What if and planning functions and tax planning
  • Facility to adopt house style suited to the
    preferences this department
  • Full integration with the central data and other
    modules within the PM System should be
    transparent and simple
  • Report and Output options should include OLE,
    Import and Export with spreadsheets, word
    processors, 3rd software
  • Exception reporting for missing information,
    compliance matters and items requiring decision
    or clarification. This is particularly critical
    in regards to filing and submission dates

Time recording
  • This is also a standard requirement of every
    practice, large and small, it is essential that
    this functional area have at least the following
    minimum functions
  • Easy creation of data sets for each staff member,
    including cost, multiple charge-out rate and
    skill sets
  • Flexible, simple, speedy input facilities
    including batch, online (as work is conducted in
    other functional areas), remote.
  • Activity codes and sub-codes to standardise
    activity across the firm, while allowing a set of
    activities to be defined for each area in the
  • Reporting which focuses on profitability,
    productivity and utilisation, exception reporting
    for missing time sheets and unaccounted time.

Time recording
  • Dealing with holidays, training, sick, as well as
    comprehensive analysis of work types.
  • Close and transparent integration with work
    scheduling, budgeting, work in progress reporting
    and monitoring.
  • Narrative and description options for all time
    recorded and facilities for review of activity.
  • Facilities to enter time in hours/minutes,
    decimal, units reflecting the preferences and
    work practices of different groups in the firm
  • Time adjustment facilities with reason codes,
    carefully controlled by password

Project control, Work in progress tracking
  • Work in progress is one of those central
    operational areas within the practice, tying
    together all functional areas and forming the
    basis for the billing systems, productivity, work
    flow, control and many other areas.
  •  The system should contain at lease the following
    facilities and characteristics
  • Easy creation of client data-sets (should be
    possible here or in any functional area), this
    should include detailed budgets together with
    stages and out-turns for each
  • A model set-up facility, to simplify job
    creation, simple wizards and step by step guides.
  • Facility to base current job set-up on last years
    actual performance

Project control, Work in progress tracking
  • Automatic input from all operational and
    functional modules, allocating all use of
    resource to particular jobs. This process should
    be simple and not time consuming.
  • A reporting structure which allows the monitoring
    of work and stages within each job, prompting
    when jobs seem to be running over budget for time
    and cost
  • To do lists and suggestions for corrective action
    as part of the review process
  • Very clear links to billing and profit reporting
    within the PM System
  • Clear links to resource scheduling and
    operational areas of the PM System
  • Manual intervention should be facilitated, but
    should not be required in all cases.

  • Billing should be tailored to the needs of the
    accounting firm, and should take account of
    particular practices and needs within the various
    areas of the firm.
  • Billing should cater for multiple rates for
    billing, based on the level of staff, nature of
    the work and what has been agreed with the client
  • Facilities for fixed-cost assignments, success
    fees, interim bills should be included

  • Event based billing should suggest bills based on
    the occurrence of particular events, for example,
    signing off on a set of accounts, ELSing a SA
    Return, completion of a job.
  • Billing should integrate with SL functions within
    the administration software of the practice
  • Clear and simple links should be evident with
    WIP, profitability monitoring and productivity
    monitoring for staff.
  • Formats and structure of invoices should reflect
    the preferences of each area of the business.

Practice Accounts, payroll, purchase ledge etc
  • The firms own accounts are an area where
    confidentiality if perhaps more critical that any
    other single area in the practice. For this
    reason many practices keep this area completely
    stand-alone and outside of the PM System, this is
    I believe a mistake and leads to inefficiency in
    the operations of the firm.

Practice Accounts, payroll, purchase ledge etc
  • The practices own accounts should include the
    following features
  • Accounts receivable, which interfaces directly
    with the Billing and time recording functions.
    Providing full debtor control and monitoring,
    reminders to both senior staff and clients of
    overdue amounts, flagging these for action on to
    do lists and ensuring that all billable time and
    disbursements are charged to the appropriate
  • Accounts payable, should incorporate POP, for use
    when appropriate. Schedules of suggested
    payments, cheque or BACS facilities with
    remittances. Links to staff expense recording and
    WIP in order that all legitimate expenses may be
    charged to clients or appropriate centre, to
    monitor the true cost and profitability of doing
    work for clients. In some cases links to
    automatic telephone systems will allocate costs
    to particular areas of the business to monitor
    departmental profitability

Practice Accounts, payroll, purchase ledge etc
  • General ledgers, should be departmentalised and
    facilitate profitability reporting against,
    budgets, last year, etc. This ledger should of
    course be fully integrated with the other
    accounts based ledgers.
  • Bank entry and reconciliation
  • Fixed Asset Register
  • Payroll, linking directly to time recording and
    reducing the necessity for re-entry of data.
    Encompassing all the features normally associated
    with payroll, including returns, P11Ds and
  • In all the accounting ledgers it should be
    possible to allow restricted access and in most
    cases no access to particular staff and partners
    in the firm.
  • Management reporting should be flexible and
    reflect the need to manage and generate profit
    within the various areas of the firm.

  • An important area and one which some level of
    automation will greatly enhance productivity,
    performance and compliance. Catering for the
    complete audit cycle.
  • Planning, risk analysis and budgeting, automating
    and guiding these tasks, linking to resource
  • Customisation of audit programs to the practices
    of the firm and the characteristics of the
    client, while providing as a starting point full
    programs for all common regulated entities.
    Allowing for links to PM System accounts
    preparation or clients own accounts preparation
    software (with account mapping)
  • Customisation of accounts disclosure checklists,
    while providing generic list for all common
    regulated entities. The facility to enter
    specific comments relating to particular clients
    is useful.

  • On-screen completion of audit programs and
    checklists, either within the firm or off site.
    To do list of questions outstanding, un-cleared
  • On-screen working paper creation and filing
  • Audit notes and outstanding task checklists for
    each job, to facilitate working and review
  • Audit journals and lead schedules
  • On-screen review and sign-off
  • Maintenance of permanent file information
  • Links to central data, regarding all matters
    pertinent to the audit client, information such
    as Directors P11D and remuneration information,
    other services for letter of engagement,
    corporation tax etc.

  • While we are a long way from the paperless off
    and even further from the paperless audit, the
    ability to generate audit programs,
    documentation, working papers, review and sign
    off all on screen is probably as close as we are
    ever going to get.

  • Whichever PM solution we adopt, it should be
    moving in the direction of work flow
    management, that is ever set of tasks and
    procedures should be seen as a series of
    activities, leading to some result which can be
    measured. Each activity should be seen in the
    context of a job or collection of activities with
    some form of logical sequencing.
  • The PM Solution must actively encourage this
    approach, working with the and responding to the
    current practices of the firm to achieve a
    cohesiveness and productivity which to this point
    has been little more than a pipe dream.

  • Some of the significant features of a good work
    flow system are
  • Definition of Activities, these will be coded and
    reflect the working practices of the accounting
    firm, for each of these Milestones or out-turns
    or deliverables will be defined. These will be a
    mixture of generic activities and specific
    activities for particular jobs for clients
  • Activities will be sufficiently detailed to allow
    corrective action at various critical stages in
    the process of a complete job for a client
  • Each Activity will have preceding and succeeding
    activities and will form a workflow, this
    workflow will dictate the allocation of resource
    and the scheduling of the same

  • The workflow in various specialist areas of the
    accounting firm, will be different, they will
    however form a part of the whole workflow
    associated with a body of work for a client.
  • There should be automatic updating of status
    information on Jobs and WIP for all activities
    defined for any client.
  • The systems should automatically generate
    suggestions on the key activities and workflow
    patterns for any job based on, last years
    experience, typical models for that type of work,
    and allow for modification to specific needs or

Management reporting and performance review
  • This should be based around the model of an
    Executive Information System (EIS), giving the
    managers of the practice at least the following
  • Access to all data elements in all modules of the
    PM system
  • Simple and easy to use report generating
    software, allowing the user to access the data
    using ODBC, OLE, Dynamic links to 3rd part
  • Report generation wizards, to guide users through
    the steps of generating simple and complex
  • Facilitate the generation of enquiries, drill
    down, cross tabulations etc
  • Flexible output to spreadsheet, databases, word
  • Saving of sets of reports to be used on a regular
    basis within the accounting firm
  • Automatic generation of reports and emailing to
    key management and staff (distribution lists) at
    regular intervals. This is particularly useful
    since useful exception reports, to do lists often
    fail to be used to their maximum advantage
    because no-one quire gets around to running and
    distributing them.

  • All aspects of the accounting firm should be the
    subjects of costing as the basis for monitoring
    performance and profitability of staff,
    activities and clients. In a PM System this
    becomes a reality since all aspects of the
    resource allocation and utilisation are
    integrated and compared.
  • Costing needs to be facilitated in the following
    aspects of the practice
  • Staff costs, taking account of training, sickness
    and holiday, these costs should be automatically
    monitored against the current payroll and absence
    records for each staff member
  • Overheads should be recovered against client work
    on a reasonable basis (often the assumption is
    that this is just included in the charge-out,
    this may be misleading), these overheads need to
    be constantly updated and reviewed by reference
    to the practice overheads, this process should
    also be automatic.
  • All activities in the workflow of the firm
    against individual jobs must have realistic cost
    allocations, these should be monitored against
    actual activity to ensure maximum productivity
    and profitability.

Resource Budgeting Scheduling, planning
  • Probably based on some form of due date
    monitoring, the facility to schedule in a job for
    a client, identify the components or activities
    and allow the system to schedule and make
    recommendations regarding resource implications
    is the logical next step for small and medium
    practices. The cost of these facilities is
    reducing to an affordable level.
  • As an absolute minimum these systems should
  • Store information about the resources of the
    firm, this will mainly be comprised of staff,
    their levels of competence and activities in
    which they can engage.
  • Availability of resource, taking account of
    holidays, training, up to date information on
    sickness and current commitments, expected
    completions etc.

Resource Budgeting Scheduling, planning
  • Monitor the current performance of Work in
    Progress and re-schedule future work as required,
    squaring the circle by automatically informing
    senior staff, staff and clients of these likely
  • Update activity and project start and completion
    information as timesheet information is entered.
  • Provide advance notice to staff of their work
    schedule and commitments, allowing facility to
    modify these (within reason) to deal with real
    world events.
  • Determine the best or preferred staff to carry
    our assignments, taking into account previous
    experience on particular jobs and issues such as
  • Produce reports which give overview and detailed
    information for management in particular areas
    and departments to help them cope with
    bottlenecks and resource difficulties which will
    occur from time to time

Client Administration
  • Client administration should be viewed as a
    central task, taking into account the fact that
    different departments in the firm may well be
    communicating with and administering particular
    areas of the clients affairs.
  • Our PM Solution must co-ordinate these diverse
    activities so that each area of the accounting
    firm is appraised of the current state of play in
    other areas.
  • For example if the tax department is currently
    engaged in resolving a section 12a review for a
    client, it would probably not be a good time to
    schedule the IT section to install a new
    accounting system for them.

Client Administration
  • It would be unwise to engage on this years
    accounts preparation while the Accounts
    Receivable section are experiencing difficulty
    getting payment for the year before lasts
  • The systems must at least flag the fact that
    various other matters are presently ongoing with
    the client and appraise the staff of the fact
    that they should make further enquiry or in
    extreme situation exclude such clients from the
    planning process until they are sorted.

Brief review of the current crop of Practice
Management Systems
  • The landscape of PM solutions has been changing
    rapidly, I believe this is due to the
    difficulties experienced by many software houses
    in maintaining a comprehensive suite of practice
    related software which if completely up to date,
    fully compliant, easy to use, integrated and
  • There are plenty of accounts preparation,
    taxation, time and fee billing solutions around,
    the problem seems to be combining these into
    comprehensive solutions. As a result many
    practices will use best of breed for each
    functional area and tolerate the duplication of
    data entry as one of those facts of life we all
    have to learn to live with.
  • Unfortunately in the past 12 months the status
    quo has been somewhat upset by Sage, purchasing
    Hartley, CSM and recently Apex, they have
    effectively signalled their intention to become a
    major player in the PM Solutions market.

Brief review of the current crop of Practice
Management Systems
  • Sage Accountants Suite as they choose to call it
    is at the moment only the Apex software with a
    new badge sage, no changes have yet been made
    to its functionality.
  • The fact that sage now owns the Hartley, and the
    CSM Auditman etc range of products suggests that
    the other players in this very specialised market
    place need to watch out.
  • Sage is the biggest provider of accounting
    software in the world, sage is a close as you can
    get to a household name in this area. It has the
    capability of developing the apex suite to
    incorporate the best elements and features of the
    Hartley and CMS products. It will probably add
    some additional functionality, especially in
    areas of Audit automation from its own Audit 2000
    package, Forecasting, Hartley Consultant.

Brief review of the current crop of Practice
Management Systems
  • The acquisition provides a sustainable base in
    the accounting profession and an incentive to
    Sage to develop a fully integrated Practice
    Management Solution at an affordable price (at
    least affordable for the present)
  • We should not discount the other major players in
    this area Solution 6, Iris (UK), CMS
    (Omniledger), and for practice management on it
    own, FDS Advance, Goldmine, Maximiser (UK)
  • These software houses are long established, their
    major difficulty will be competing with a
    financial giant like Sage, with the tremendous
    resources and brand status to develop their
    already strong position and product range.

In Conclusion
  • In conclusion, my opinion is that the future