Electronic file rooms & workpaper software.

In the previous two columns, we looked at steps an accounting firm might take when moving to a paperless work environment and how to estimate the benefits of making that move. This month, we look at a couple of basic tools that many firms already use: the electronic file room and workpaper applications.

Electronic File Room

Let's start with a simple "paperless" solution: an electronic file room based on the Microsoft (MS) Windows Explorer folder capability. This is an inexpensive solution providing efficient organization and fast access to information.

One of the most beneficial aspects of using computer technology in business is creating electronic documents that can be edited and reused with minimal effort. While many firms become adept at building documents, they often are unable to locate the information when they need it. Your firm should develop an electronic information system organized in the same logical way as paper files.

This electronic file room should have a separate directory for client information on the server drive. Within this directory, file client directories use the client's name (alpha letter) and number. Within the client directory, set up subdirectories for projects or types of work, such as audit, financial statements and memos. Maintain files for applications containing their own client data structure in their application-specific directories.

One significant disadvantage of the electronic file room is how it relies on users placing documents in the correct location. Since this "system" does not control the placement and enforce the firm's standards, it requires more training and review to achieve consistently accurate results.

Workpaper Applications

Workpaper applications software is the successor to the trial balance (TB) applications used in most firms. These applications combine TB features with capabilities for organizing workpaper files, controlling access to workpapers and standardizing work processes.

The main products in this category are Caseware Working Paper software from CaseWare International; ProSystemfx Engagement by CCH; Engagement Solution, a joint effort of Creative Solutions and PPC--both Thomson companies; and the McGladrey Paperless Audit System from RSM McGladrey.

These applications offer significant improvements over their TB predecessors. First, their TB features are much more powerful and flexible in financial statement preparation. Workpaper applications can produce a final-quality financial statement in almost any format needed.

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The workpaper container features of these tools make it possible to standardize the organization of different types of engagements. All of these tools have template features to create a workpaper organization scheme for different types of services. The templates promote uniform organization translating into improved preparer and reviewer efficiency and reduced training time.

The access control features of a workpaper application make it easier for multiple team members to collaborate on the same engagement. Assign workpapers to the responsible staff in a manner allowing access to some but preventing inaccurate editing of documents by others. These tools also have features to "synchronize" workpapers from the field back to the office, further improving document protection and security.

When implementing a new workpaper application, it is important to plan the tool's use before training firm members. These applications create a uniform workpaper environment and have a great deal of flexible features, making it possible to fit the tool to the firm. A firm's standard approach covers the setup, use and review process in significant detail.

This is the third column on the "high-level" issues that accounting firms face in making the decision to move to a paperless information environment. Next month's final column will look at document management applications.

Tom Davis is owner of Tom C. Davis, CPA, LLC, and president of Knowledge Concepts, Inc. in Valdosta, Ga. Contact him at tdavis@tcdcpa.com or 229-247-9801.