| Firms Just Don’t Get It. Windows Workpaper Applications by Tom C. Davis, CPA |
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I started
consulting with firms on workpaper applications in 1983. Back
then, we called this type of application “trial balance software”.
In all these years, there has been very little change in the way most
firms use these tools. Many practitioners pay little attention to
the nuts-and-bolts use of workpaper applications. They seem not to
realize that the real key to the successful use of technology in their
practices requires changes to the basic work processes. It is not
enough to do things the old way, but faster. New approaches are
needed to get the maximum benefit from accounting firm technology. Workpaper
software basically improves engagement efficiency by making the
recurring task of grouping client account balance information faster and
more reliable. This is very basic stuff: you take a client’s
chart of account, adjust it, group it, and prepare financial statements
and tax returns. During the process, information is changed and
regrouped as new information becomes available and as the work goes
through the review process. Then, the process starts all over
again in subsequent periods. This type of
software has been around for years. What are firms doing wrong?
First of all, few firms are using workpaper applications to get final
quality financial statements. In most cases, information is
grouped in the workpaper tool and then re-keyed into a word processor or
a spreadsheet to produce the financial statements. The reasons for
this method include a lack of understanding about the cost of this
process, poor knowledge about financial statement preparation features
of workpaper applications, and over estimating of the value financial
statement formatting available in the word processor and spreadsheet
applications. Many firms
do not export workpaper information to their tax application. Here
again, client information is re-keyed into another system rather than
transferring it from the workpaper tool. Given the ease of
performing this exporting, it is amazing firms do not take advantage of
this capability. I typically find this is worth on an average, at
least a couple of hundred dollars on every engagement. Another area
of weakness in firms is the lack of importing information electronically
from the client. The workpaper vendors have made exceptional
progress in simplifying the process to import information produced in
the client’s general ledger package into the workpaper application.
This process can be extremely valuable for large clients’
charts-of-accounts. Finally,
there is very little thought given to standardizing the use of these
tools within a practice. In many instances, different staff will
use the applications in different manners. There are significant
benefits to be gained from standardizing workpaper application use.
Standardization simplifies the process, reduces training time required
to become proficient in using the tools, and promotes uniformity in the
financial statements, tax returns, and workpapers. The work is
done more efficiently when performed in a standard fashion. This review
features applications from the AICPA, CLR, CCH, and CaseWare.
CPA’s have the best choice of workpaper applications ever. There
is very little chance you will make a mistake picking any of these
applications (unless you do not plan to change your work processes).
All the applications do a good job covering the basics. In making a choice of applications don’t just consider the workpaper application’s features. Look at the other software offered by the vendor. You will find more and more integration of vendor applications into accounting firm software suites. Currently, many of the suites offer only the most rudimentary exchange of information (client name and address). However, given more time, these suites will become more tightly linked, and their importance to firm productivity will increase.
ACE
Audit Plus RIA/CLR
continues to be the most innovative CPA Software company. They
have expanded their accounting firm software suite with enhancements to
their ACE line of products. The Thomson Corporation recently
acquired CLR. This acquisition puts CLR in the same group of
companies as RIA, Creative Solutions, and Practitioners Publishing
Company. The potential interaction between all the applications
produced by this group makes for some very interesting possibilities for
firms using their products. ACE
Audit Plus is a 32-bit application, that is a significant upgrade from
its 16-bit version. The new version allows for the ‘splitting’
of the engagement among multiple staff. Portions of the work can
be assigned by lead code. Staff can then “check out’ their
items from the main client, perform the assigned work and then merge the
data back into the shared client’s file. This
version is both more flexible and user-friendly. The user accesses
ACE Audit Plus features by selecting either Windows menu bar items or by
clicking on tool-bar icons. A spreadsheet style grid is used to
enter information. The system supports conventional Windows copy
and paste capabilities to speed up information input. Screens can
be modified to limit displayed information. ACE
Audit Plus has interim reporting capabilities that support annual,
semi-annual, quarterly, and monthly reporting. Additionally, the
system supports multiple accounting methods including cash basis books,
accrual basis reports, and cash basis tax returns. It can handle
59 character account numbers in flexible formats that make the setting
up of divisional client information more efficient. Account
balance information is maintained for eight years (if account balance
information is maintained on a quarterly basis, the system will still
maintain eight years of information, broken into 32 quarters).
Many reports can be produced using various combinations of these years
and periods. ACE
Audit Plus has transaction information capabilities that allows for the
entry of information at the transaction level and the production of
various journal and general ledger reports. The user can directly
import information from ACE Write-up and ACE Business Ties. Client
information obtained in an ASCII or spreadsheet format can also be
easily imported. Financial
statements are produced in ACE Audit Plus by either using 10 default
financial statement formats or using ACE Audit’s “Financial
Statement Wizard”. You can also set up “master clients” with
predefined financial statements and ratios, and then copy these masters
to other clients. Once the initial financial statement has been
created using a default format or the wizard, you can use built-in word
processor features for customizing the statements to meet your specific
needs. This financial statement information can also be OLE
(Object Linking and Embedding) to a Windows word processor. As
information is changed in ACE Audit Plus, the OLE linked financial
statements are automatically updated in the word processor. Another
new ACE Audit Plus feature is its custom workpaper capability. By
selecting from eight user-defined workpaper templates, you can use a
“Workpaper Wizard’ to create workpapers. The workpapers can be
linked to financial statement information. They also feature tick
mark capabilities. ACE Audit Plus allows for more than one
workpaper to be opened at the same time. In
the tax preparation area, ACE Audit information can be exported to tax
services such as GoSystem, Profx, A-Plus Tax, Lacerte, UltraTax, and
others. Journal entries can also be imported back into ACE Audit
from GoSystem. As in other systems, ACE Audit Plus uses the
assignment of accounts to tax lines and tax journal entries, in order to
group and adjust trial balance information for tax return purposes.
But with ACE Audit, you only need to set the information up once.
ACE Audit Plus automatically generates tax journal entries upon annual
roll over of information. The system features many reports that
can be used to review tax information prior to transferring information
to your tax package. ACE
Audit includes consolidation and divisional capability as part of its
basic package. The system can consolidate up to 75 subsidiaries in
a single consolidation. The consolidated entity can then be
included in other consolidations. The separate ACE Fund package is
used on not-for-profit engagements. The ACE Fund module speeds the
setup of multiple funds that use the same chart-of-accounts. ACE
Fund has the same basic reports and system conventions as ACE Audit and
can be used to prepare 990 tax returns. ACE
Audit features an extensive number of reports and system features that
are used for analysis, review, and diagnostic purposes. The
separate Graphically!! package by Jasca Corp. can be used to incorporate
graphical information into financial statements and workpapers. In July 1998 a new add on module
called Electronic Engagement will be available. Pricing begins at
$195 and a site license for ACE Audit Plus and ACE Client Plus or Lotus
Notes is required. Using an audit program “tree” design, Electronic Engagement integrates audit workpapers, financial statements, and other evidentiary information from the trial balance. Standard audit program templates are available for ACE Client Plus users or Lotus Notes. Combined with ACE Audit Plus, this module will provide for the elimination of all printed documentation as desired. Features are extensive and include off-site review by remote personnel, multiple preparers sharing a single audit clients, and flexible computer environments.
Accountant’s
Trial Balance - Version 2.01 for Windows ATB for DOS and ATB for Windows
combined are probably the most widely used trial balance applications.
Intuit (now the owners of the Lacerte tax package) developed ATB for
Windows, a 16-bit application, for the AICPA to offer an easy transition
for firms moving from ATB for DOS. The focus of ATB for Windows is
to improve engagement efficiency by eliminating the re-keying of
information into other applications. ATB advertises that
information can be taken from the client, to the trial balance, to the
financial statements, and to a tax package, without re-entering a single
keystroke of data. New features in ATB for Windows Version 2.01
include a new design using the logic and intuition of accountants and
enhanced productivity power for maximum performance and productivity
gains. Ease
of use is not a concern with ATB for Windows. In addition to the
standard Windows menus, tool bars and basic look and feel, ATB for
Windows makes extensive use of “wizards” to aid users in the setup
process. ATB uses a file folder layout similar to Excel and Lotus
for accessing system information such as general ledger accounts,
transaction journals, journal entries, and financial statements. ATB
for Windows allows you the same flexibility of account number format, as
does ATB 4.0. The classification of the information on the trial
balance is determined by specifying the beginning account number of the
income statement. ATB for Windows account numbers can be 20
characters (alphanumeric) in length. ATB for Windows maintains
account information for up to 10 years. ATB imports client information using ASCII, comma-separated, and dBase file formats. Additionally, ATB for Windows includes a direct link from QuickBooks. An unlimited number of transaction journals can be used to summarize detailed client transaction information. ATB for Windows supports seven types of journal entries: general journal, adjusting, reclassifying, Federal tax, state tax, other, and potential journal entries. It uses grouping schedules to provide summarized client account information for workpaper purposes. An unlimited number of companies can be consolidated into a single “consolidated” company in ATB. ATB
for Windows offers extensive financial statement formatting
capabilities. A “wizard” prompts the user for information
about the statement type, basis of information, and column format.
You can then edit the financial statements, link account information to
lines, and define statement totals. There are controls for fonts,
colors, bolding, automatic adjustment of line height, single and double
underlining. A new print preview feature lets you preview the
formatted financial statements prior to printing. Supporting
schedules to financial statement lines can be automatically created and
are either bound to the parent financial statement line (meaning changes
to supporting line information are automatically reflected in the
supporting schedule) or created in a free-form manner. Cash flow
statements are created using a Wizard that prompts the user for various
statement information. A cash flow workpaper is used to explain
the sources and application of cash. The user can export trial balance information, including groups, accounts, balances and lead schedules to spreadsheet programs in an ASCII, Comma Delimited or dBase format. Filtering criteria can be used to narrow, or widen, the data to be exported. Tax information can be exported from ATB for Windows to supported tax packages such as Arthur Andersen A-Plus Tax, AMI Tax Machine, CCH Computax, CLR/Fast Tax, CPA Software, Lacerete, Tax Relief, Tax Wise, and Turbo Tax ProSeries. Information can be exported in text file, spreadsheet, and database formats for creating workpapers with other applications. ATB has a built-in word processor for preparing reports and engagement documents.
AuditVision 32 CCH’s
32-bit AuditVision workpaper application was originally developed for
Grant Thornton as a replacement for the Prentice Hall DOS FAST!
Application. Since CCH’s acquisition of AuditVision in 1996, it
has been tightly integrated into the ProSystem tax application. AuditVision makes extensive use of the spreadsheet metaphor in its presentation of data. Selecting a particular AuditVision feature brings you to a “spreadsheet” style grid where information can be entered and edited. Multiple screens are open simultaneously making it easy to switch to different features and screens. This
grid approach has some significant advantages for working with system
information. The grids can be tailored to contain exactly the
information that you need. For example, when you are entering or
editing account information, you can choose any of 24 columns of
information for display. This feature greatly improves the setup
and review process by presenting just the information needed. You
can also limit information by applying various filters to the data to
best match the particular data setup or review task being performed. The
information in any of the grids can be copied and pasted into other
applications or can be linked to other Windows applications using
AuditVision’s DDE (Dynamic Data Exchange) capabilities. The
information linked to these other applications will automatically change
when the AuditVision data changes. This allows the creation of
complex, dynamic workpapers using the capabilities of popular
spreadsheet and word processing applications. This
system has the most flexible account numbering scheme of any of the
packages reviewed. AuditVision supports general ledger account
numbers of up to 40 characters in length. The account structure
can be divided into segments to define departments, profit centers, or
any other logical division needed. This is very useful for
not-for-profit, divisional, and governmental engagements. This
segmented account structure can be used to filter information in
AuditVision’s grids. AuditVision uses a “wizard” to automatically generate balance sheets, income statements, statement of cash flows, and supporting schedules. These automatic financial statements can be built from lead schedules or account information. You also have the capability to produce financial statements built from scratch. AuditVision takes advantage of Windows fonts and other formatting capabilities. Financial statement information can be exported to Microsoft Word and to various Windows spreadsheet applications f more powerful formatting is required. AuditVision’s
cash flow capabilities feature a reconciliation approach for explaining
the changes in financial statement items. When cash flow changes
are analyzed, they can be linked to AuditVision account, lead schedule
and other information so that the information is automatically updated
when balances are adjusted or upon subsequent period roll forward. AuditVision
can easily share data with other applications. Data can be
imported from other workpaper applications, as well as from applications
that can present information in an ASCII format. AuditVision can
establish Dynamic Data Exchange (DDE) links with other applications such
as spreadsheets and word processors so they can use AuditVision
information. These DDE links can be “refreshed” to transfer
changed information automatically to the applications. Information
can also be copied and pasted from AuditVision using the Windows
clipboard capabilities. Tax information can be exported to CLR
Fast-Tax and Tax Advantage products and CCH’s Profx systems. The
system features consolidation and combination features for handling
multi-subsidiary and departmental engagements. The system also
handles not-for-profit engagements with a capability for creating funds
and fund types and adding this information to general ledger accounts.
AuditVision has up to 32 pre-defined industry specific financial ratios,
and allows an unlimited number of user-defined ratios for analytical
review of information. CCH has just included transaction journals that can be used to summarize client-detailed information such as check disbursements and receipts. A release scheduled for later this year will feature interim financial reporting, multi-user features, and OLE linking capabilities.
CaseWare
for Windows, Version 2.1 CaseWare
has the largest installed base of the applications reviewed in this
article with more than 75,000 users (primarily in Canada and Europe) of
its DOS and Windows workpaper software. Its Windows version is a
32-bit application. CaseWare
is the first workpaper application to offer a “workpaper container”
for controlling engagement documents. This concept is one that
will become a requirement for workpaper applications in the future.
Basically, the CaseWare Document Manager is a document management
system. CaseWare documents (standard and custom) are listed in
this index. Selecting a workpaper from the Document Manager
displays the document for review or editing. Documents created in
other Windows applications can be OLE linked into the Document Manager. CaseWare
capabilities can be separated between trial balance functions and
workpaper features. CaseWare’s trial balance function allows for
the account number structure of up to 40 characters. The system
handles departmental and consolidated information. Information can
be entered by month, quarter, year or by random periods. CaseWare
has seven types of journal entries: adjusting, reclassifying,
eliminating, prior period, statement of cash flow, unrecorded /
proposed, and tax (Federal, city, and state). Account
and detailed transaction information can be imported from 20 accounting
packages, as well as from ASCII files. Tax information can be
exported to an impressive list of tax packages including A-plus Tax,
CCH’s Pro System FX, CLR Fast Tax, DigiTax, Lacerte, and Turbo Tax.
Information can be converted from the ACE, ATB, FAST!, FAST/CPA, and
WISPR trial balance software. In
addition to trial balance and journal type workpapers, CaseWare prepares
ratio analysis and variance workpapers. The system will compute 37
standard ratios and allows the user to add custom ratios. Variance
analysis can be performed using threshold amounts for dollar amount and
percentage change. CaseWare’s “groups” feature allows you to
relate account information to three different groups. Groups can
then be used to prepare workpapers and financial statements. Another
unique feature of CaseWare is its write-up journal capability. In
addition to using seven journals for summarizing detailed client
transactions, CaseWare has bank account reconciliation capability and
after-the-fact payroll features. CaseWare
uses “templates” to speed information setup. These templates
include checklists, letters, forms and reviewer documentation as well as
industry specific chart-of-accounts and financial statements.
Standard workpapers can be customized from the CaseWare workpapers, or
they can be produced from engagement programs in the Harcourt Brace
& Company’s Miller Comprehensive Compilation and Review Guide. The
CaseView module is used to produce custom workpapers. CaseView has
spreadsheet and word processing features that link information such as
accounts, lead schedule amounts, financial ratios, and other CaseWare
elements to prepare customized reports, audit forms, and workpapers.
Draft financial statements are produced from lead schedule or account
information. And the final quality financial statements are then
produced using the CaseView modules. CaseWare offers the most extensive set of engagement management, planning, and reviewer tools of any application in this review. In addition to standard workpapers for checklists and engagement documents, CaseWare has extensive annotation capabilities for adding almost an unlimited number of symbols and notations to the system information. This application makes it very easy to migrate paper workpapers to electronic documents.
Summary Firms need to do a better job using
the features available in Windows workpaper applications. We all
continue to use these tools in the same manner as we used 14 column
pads. Concentrate on getting final
quality financial statements out of the workpaper tool in an automated,
standardized manner. The most significant impediment to doing this
is that no application will automatically produce the financial
statements in exactly the same manner that you have produced them in the
word processor. Make an effort to understand that just because the
workpaper tool-produced financial statements look different from what
you get from the word processor does not mean they are inferior or
wrong. They just look different. A change in format will produce a
significant reduction in the time it takes to produce the statements. Take every
opportunity to link import information into the workpaper tool and to
export (link) information to other applications such as tax packages,
spreadsheets, and word processors. Never re-key information when
you can transfer it electronically. The results are much more
accurate and less costly. When making your Windows workpaper choice, consider other things besides just the features of the application. All the applications will do a good job. Software suites, links to tax applications, and other considerations will have an impact on your firm’s efficiency.
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