Institute of Chartered Accountants C'P'D Practice Management

1
Institute of Chartered Accountants
C.P.DPractice Management

• By J.L Grant
• M.Sc. F.C.C.A. A.C.I.S

20/09/00
2
Introduction

• 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

3
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

4
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
5
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
  information.

6
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.

7
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.

8
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).

9
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.

10
Billing
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.

11
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.

12
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.

13
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.

14
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.

15
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?

16
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.

17
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.

18
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.

19
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
  become.

20
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.

21
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.

22
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.

23
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.

24
3. What is Practice Management?
25
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
  stages.

26
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
  milestones)

27
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.

28
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)

29
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.

30
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
  detailed
• 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.

31
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
  start.

32
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
  endeavour.

33
3.3 - Management reporting and executive
information

• 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

34
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).

35
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.

36
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.

37
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
  future.
• To support that vision we require first rate
  management information, effective working
  practices, profitability and innovative marketing

38
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

39
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

40
(a) Practice Management Model
Workflow Project Control
Account Prep
Time recording
Taxation
Management Reporting and Performance Level
Knowledge base common pool of client/practice
data
Resource Planning Schedule
Audit
Linkages to Client accounting packages
Client Admin
Compliance
Practice Accounts
Marketing
Cashing
Billing
The model should be based on a number of
principals
41
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
  automatic.
• 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
  critical
• 12. Management reporting should be comprehensive,
  simple to use and flexible
• 13. User friendly and intuitive

42
Dealing with these principles one at a time
5. Principles for a Practice Management Model
43
5.1 - Modelled on the workflow practices of your
firm

• 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
  environments.
• 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.

44
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

45
Modelled on the Workflow practices of the firm
5. Principles for a Practice Management Model
WE DO IT OUR WAY O.K.
Tax Dept.
Accounts Prep.
Audit.
46
5.2 - Data should be captured once, shared
through the practice, if possible this should be
automatic.

• 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.

47
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
  stored.
• 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)

48
(C) Data Capture
Taxation Data
Permanent
Working
Accounts prep. data
Basic client information
Knowledge base common pool of client/practice
data
Permanent
Audit Data
Time fees
Working
Scheduling
Staffing cost
49
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.

50
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.

51
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
  needs.
• 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.

52
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.

53
5.5 - Take a holistic view of practice
requirements

• 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
  opposition.
• 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.

54
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
  department.
• 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
  co-operation.

55
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
consideration.
56
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
  staff.

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.
57
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.

58
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.

59
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

60
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.

61
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.

62
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
  adopted.

63
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
  functions.

64
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
  system.
• 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).

65
5.11 - Security and client confidentiality are
critical

• 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.
66
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.

67
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.

68
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,
  intuitive.
• 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.

69
So what should we look for in Practice Management
Software?

• 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
  specialisms.
• 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.

70
As an absolute minimum we will require
So what should we look for in Practice Management
Software?
A Hub or Navigator Accounts preparation Taxation
Time recording Project control and Work in
progress Billing Practice Accounts, payroll,
purchase ledge etc
71
Other functions may be added, for example
So what should we look for in Practice Management
Software?

• Audit
• Workflow
• Management reporting and performance review
• Costing
• Resource Budgeting Scheduling, planning
• Client Administration

72
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.

73
So what should we look for in Practice Management
Software?

• 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
  confidentiality.
• 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.

74
Accounts preparation

• 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 types from simple
  non-regulated to complex regulated entities.
  Default charts of account should come as standard
  allow modification as required t meet particular
  needs.
• 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.

75
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
  departments
• Full integration with the central data and other
  modules within the PM System should be
  transparent and simple

76
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
set.
77
Taxation

• 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

78
Taxation

• 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

79
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
  firm
• Reporting which focuses on profitability,
  productivity and utilisation, exception reporting
  for missing time sheets and unaccounted time.

80
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

81
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

82
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.

83
Billing

• 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

84
Billing

• 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.

85
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.

86
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
  client.
• 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

87
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
  analysis.
• 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.

88
Audit

• 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
  scheduling.
• 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.

89
Audit

• On-screen completion of audit programs and
  checklists, either within the firm or off site.
  To do list of questions outstanding, un-cleared
  notes
• On-screen working paper creation and filing
• Audit notes and outstanding task checklists for
  each job, to facilitate working and review
  practices
• 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.

90
Audit

• 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.

91
Workflow

• 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.

92
Workflow

• 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

93
Workflow

• 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
  requests

94
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
  software.
• Report generation wizards, to guide users through
  the steps of generating simple and complex
  reports.
• Facilitate the generation of enquiries, drill
  down, cross tabulations etc
• Flexible output to spreadsheet, databases, word
  processors
• 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.

95
Costing

• 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.

96
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
  allow
•  
• 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.

97
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
  changes.
• 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
  independence.
• 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

98
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.
•  

99
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
  billing.
•  
• 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.

100
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
  affordable.
•  
• 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.

101
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.

102
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.

103
In Conclusion

• In conclusion, my opinion is that the future