also: eight kinds of staff you don’t want.
by ed mendlowitz
how to review tax returns: the field-tested update
reviewers have to face accountability. they are judged several ways, but i feel the best way is not with a metric but by how the quality of the preparers improve during tax season and how the workload is managed.
more: tax reviewers can advance, with a push | what makes an excellent tax return reviewer | 10 errors that ‘smart’ scanners make | tax: the procedural checklists your firm needs | the best way to review a tax return | why you can’t skip checklists
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yes, the reviewers are responsible for the preparers’ quality. the reviewers are expected to find errors and show the preparer what they are, how to fix it and to not have them reoccur. and this should be done quickly by not letting prepared returns hang around unchecked for a while. the quicker the turnaround time, the easier and better the training and better all-around job by everyone.
one of my key elements is for the preparer to make every correction – even the easy changes that a reviewer can make in a “second.” the preparers will learn by their mistakes, realize that their mistakes will have a bothersome cost to themselves by having to make arrangements to fix them, will become “owners” of their errors and i believe will reinforce the importance of quality with the first touch – not the second or third time around.
the reviewers will have a mounting workload as tax season progresses because there are more preparers than reviewers. workload management is an important part of the reviewers’ job. when the workload becomes unmanageable, the reviewer should seek assistance from the partner in charge on prioritizing the review work and also with added help.
if the procedures are sound with the preparer doing the right type of job, the reviewer’s work should be easier and will have less ticking and tying and more issues-oriented consideration. this is the time when training and good systems really pay off. however, the time to get these in place is before tax season begins, not in the heat of the moment, although it is never too late to institute sound procedures.
we are accountants and measuring things is important or comfortable for us. here are some metrics that can be assessed after tax season to evaluate the overall performance of the preparers and reviewers:
form to measure tax return quality and performance
| reviewer’s name__________ | total for reviewer | specific preparer | specific preparer | specific preparer |
| # returns reviewed | ||||
| # returns with errors | ||||
| # returns with errors a 2nd time | ||||
| # returns with errors a 3rd time | ||||
| # returns that were approved by reviewer that had errors discovered by partner or client or someone else | ||||
| time spent reviewing returns of each preparer | ||||
| average review time per return | ||||
| percent of review time based on total time sent by preparers |
| # issues uncovered or recommended | this could be the most important | ||||
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eight more ways to evaluate staff and tax season are by:
- staff who make repeated errors
- staff who don’t listen to instructions
- staff who don’t follow procedures or omit required standardized workpapers or lead sheets
- staff who continuously miss deadlines
- staff who always seem to work under pressure
- staff whom clients complain about who do not return calls or are not responsive to their questions
- staff who can’t seem to finish anything
- staff who do not keep the partner or manager informed of their progress and questions and concerns of clients
i believe it is the responsibility of the reviewer to note these things and discuss with a partner. quality is paramount and must be given a super-high priority. i really think a zero-tolerance attitude toward mistakes needs to be instituted. (i know – i keep repeating this!)
reviewers need to look at quality from a very selfish standpoint. the better the quality in the work assigned to them, the less work they will do, the lower the backlog, the lower the tedium for them, the more issues they will develop and the more enjoyment and satisfaction they will get from their jobs. also, the more money the firm will make.
time it takes to review a return: my rule of thumb based upon my experience and observations is that it takes a reviewer about 40 percent of the time it took to prepare the return. without ticking and tying or using a peer preparer as a pre-reviewer, this drops to 10 percent for the reviewer. the savings of 30 percent shifts to the peer preparer who is reviewing the input. this seems like a good tradeoff.
movement that disagrees with me: there is a “movement” (that i will not name) that says the work must always be pushed forward and never backward. this is a complete contradiction of what i am suggesting about having the preparer make all corrections, and which i have been doing for many many years with absolute success. (i suggest that the evangelists of this “movement” never prepared a tax return during tax season for an accounting firm, although while i have spoken to some of these people, i never ascertained this.)
the movement dictates that the reviewer should make all corrections, because giving it to the preparer to fix is a backward motion and defeats the prupose and efficiency and effectiveness of their system, which is to push work forward. they claim no value is added to the customer by having added or unnecessary touches and handling. i know some adherents of this movement who made a minor change – they want their reveiwers to make all “small” changes and to send the return back to the preparer if major changes are necessary. they define small by changes that will take the reviewer less than 15 minutes to do.
this needs some discussion by me because i totally disagree with this. keep in mind that the end goal is to improve the work of the reviewers and have them perform at their best level, which in the long run will make tax season better for everyone in the firm and will also result in less costs and added profits.
- my contention is that the preparer will never learn to avoid those errors or that carelessness, if they do not actually fix it themselves.
- the goal is to elevate the quality of the preparers, have them become more careful and deliberate in their work, and for the firm to end up with effectively functioning staff. not having preparers become responsible for their own errors defeats this goal and relegates the practice to permanently having poor performing staff. i have found that preparers fixing their own errors is the best way to train in this regard. we should all be in this business for the long haul, and error reduction is an investment in the solidity of your practice for every moment afterward.
- the reviewer’s time is what we are trying to conserve because it is the most valuable of the tax preparation process. even if you are just concerned with this tax season only, you will still be better off because you are utilizing your resources at a maximum efficiency. you are using procedures that keep the reviewers away from work someone else could do and maximizing the time they spend doing what only they could do. even if total time is added to the preparation, it will be at the lowest levels while reducing time at the highest levels. keep your eye on the big picture – which is the future of your practice.
- question: if the reviewer corrects the errors, who will review those corrections? it is quite possible that the reviewer will make some errors while making the corrections – probably not many, but there would be some.
- when a reviewer makes the corrections instead of the preparer, this is an instance of upward delegation. that makes no sense to me.
- let’s do some simple math. assume the reviewers will fix all errors that would take less than 15 minutes. if the reviewer reviews five returns a day in a 10-hour day and spends 12 minutes a return to fix errors, that means the reviewer is spending 60 minutes a day as a result of the upward delegation. the reviewer loses the production of 10 percent of their review time.
here is a worksheet to fill in your own numbers:
production for a reviewer during tax season
you my example
time per return 2 hours
# returns needed to reviewed 200
# hours during tax season 400 (40 days)
time to respond to upward delegation by fixing errors
you my example
time per return to fix errors 12 minutes
# returns needed to be reviewed 200
# hours during tax season 2400 minutes (40 hours )