Most accountants have just completed their tax season for last year's returns and are probably not thinking about their next tax season. But they should. The following is a template for a plan with suggested responses.
Purpose of tax season:
Suggested response: To provide clients with an accurately prepared tax return on a timely basis and where all tax savings techniques are applied along with suggestions made to save taxes going forward.
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Quality of the work done by the preparer:
Suggested response: All returns submitted by the preparers to the reviewers should be error free.
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Role of tax return reviewer:
Suggested response: The reviewer should spot check the return to see that it appears to be correct, compare the return with the prior year's return and look to understand major differences, look for explanations of surprise results, and look for planning opportunities for the current return and for the following year's return to suggest to the client.
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How the reviewer should handle errors found by them on the return:
Suggested response: The reviewer should reassign the tax return to the preparer to make the corrections and should not make any corrections regardless of time pressures. Comment: Part of effective and lasting training is to have preparers fix all errors since they will learn better about their mistakes and will be able to work better in the future to avoid such types of errors. When the reviewer corrects the tax return, the learning would be lost, added time would be spent by the reviewer not only making the correction but in communicating the nature of the error to the preparer at a later time when neither would have that incident fresh in their minds. Also when the preparer knows the errors will be caught and fixed by a reviewer there is a lessening of care in their performance. A side issue is that when the reviewer fixes the error, no one will be reviewing that change reducing the quality control over the tax return.
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Efforts to reduce tax season workload compression:
Suggested response: Workload compression can be reduced if some of the work that can be done prior to mid-December will be done. This includes all complicated transactions a client engaged in during the year, most of which are known about at this time. This would include sales of real estate, businesses, business interests or inherited assets or collectibles. Other transactions would include stepping up the basis for inherited real estate or determining tax attributes of assets divided in a divorce. Clients with rental or business income could provide their accounting records now to be reviewed to make sure cash accounts or other schedules reconcile or are in balance. There are many other situations and calling a client to check in and find out what went on during the year might uncover work that could be shifted to now rather than the busiest time of the year for you.
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Efforts to reduce the workload of reviewers:
Suggested response: Since most firms have many more preparers than reviewers, it would be beneficial to shift work from the reviewers to the preparers. Four suggestions are: 1) to have the preparers compare every item on the return with the previous year's return and understand any differences and prepare a memo on those reasons; 2) have the preparer look at every bottom line result to determine if it was a surprise or fully expected and prepare a memo explaining their impression of the result and their reason for that impression; 3) have a peer preparer review the return before it is submitted to the reviewer; and 4) have the preparer use the reviewer's checklist and prepare a memo for everything that the reviewer would specifically be checking. Comment: Some of these procedures will add more work time for the preparer than the time saved by the reviewer, increasing the total time on that return. This is so, but the preparer's time is more readily available than the reviewer's time and at substantially lower rates. Also, by having the reviewer's workload reduced on processes that could be passed down, the reviewer would have more time to concentrate on adding value to the client's tax return.
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The above highlight six areas I consider essential to maintaining a smooth and calm tax season. I've provided my opinions, but to make this effective for you, add your opinions and compare them to mine. Then decide whether you are happy with your system or if changes are in order.
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