Webinar: How Tax Preparers & Accountants Can Increase Their Profitability Using Lean Six Sigma

How Tax Preparers & Accountants
Increase Profitability Using Lean Six Sigma
Presented by Donny C. Shimamoto, CPA/CITP, CGMA
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FEATURED SPEAKER
Donny C. Shimamoto
CPA, CITP, CGMA
Managing Director
IntrapriseTechKnowlogies
donny@Intraprise.us
(628) 222-3511
Facebook/Instagram/ LinkedIn/Twitter:
@donnyitk
Blog: www.donnyitk.com
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Audience Polls – Demographics
● Organization Type/Size
– Solo Practitioner
– Small Firm (2-10 people)
– Medium Firm (11-40 people)
– Large Firm (41+ people)
– Business & Industry
– Consultant/Vendor
● Role in Organization
– Lead Executive
– Executive Leadership
– Dept Director/Manager
– Dept Staff
– Consultant / Vendor
● Primary Area of Practice
– Admin / Practice Mgmt
– Audit / Assurance
– Consulting (non-Audit/Tax)
– Financial Reporting /
Accounting
– Information Technology
– Tax & Financial Planning
Audience Polls
Choose one from
each set of options
that best matches
how you view your
organization and
your role at work.

● Where LSS helps in Tax Automation & Outsourcing
– 8 Keys to Successful Tax Automation & Outsourcing
● Key #2: Understanding Your Tax Preparation
Processes is Critical
● Key #4: Use a Pilot to Build Your Business Case
● Key #6: Keep a Continual Improvement Mindset
● Key #8: Adopt Value-Billing to Ensure Revenue
Continuity
© 2020 IntrapriseTechKnowlogies LLC

• It’s important to apply Lean Six Sigma techniques when
automating or outsourcing your tax return preparation
processes
• This can help ensure reasonable efficiency gains (Lean) and
minimization of errors on the tax returns (Six Sigma), while
maximizing client value (Lean)
Where LSS helps in
Tax Automation & Outsourcing
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Research: Tax Automation Technology
Efficiency and Profitability of
Tax Compliance Services
• Explore how successful firms
approached using tax automation
technologies
• Strategies for incorporating tax
return outsourcing
• Tips on obtaining buy-in and
adoption by staff
• Ensuring that benefits are realized
by the firm
Available from SurePrep (info@sureprep.com)
or e-mail me (donny@intraprise.us) for a copy

Outsourcing Integral for Success
● Firms with higher adoption rates and longer
history of automation were also outsourcing
● Outsourcing ranges from
– Minimal: review of the accuracy of the numbers
read by the Optical Character Recognition (OCR)
software from the forms that were scanned and
submitted
– Full Prep: a human performs the initial preparation
of the return before it is provided back to the
accounting firm for partner review and sign-off
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8 Keys to Success for Technology
Initiatives
1. Appoint a Tax
Automation Officer
2. Understanding Your
Tax Preparation
Process is Critical
3. Adopt Incrementally
to Ensure Long-term
Success
4. Use a Pilot to Build
Your Business Case
5. Manage Expectations:
Attitude and Transparency
are Important
6. Keep a Continual
Improvement Mindset
7. Provide Training to Reduce
Resistance to Change and
Increase Adoption
8. Adopt Value-Billing to Ensure
Revenue Continuity

• Having a detailed understanding of the tax
preparation process was critical to the firms
that had long-term success
Key #2: Understanding Your Tax
Preparation Processes is Critical

Key #2: Understanding Your Tax Preparation
● Firms with broad adoption (adoption throughout
the tax department) also cited the importance of
understanding their own processes
– First at a very detailed level
– Then figuring out where automation or outsourcing would
impact those processes, and for which returns
● One interviewee commented:
– “[it is] really important to understand what your processes
are before you get to adding [automation or outsourcing].
We didn’t have to re-invent the wheel because we knew
what the basic process was...and everyone knows what
they’re supposed to do at what point.”

● Process documentation generally took the form of
flowcharts or detailed procedural documents
– Include who is responsible for what tasks and when
– Identify the role/person responsible for performing each task
including who it may change to when the process is automated
● Capture the flow of the tasks and their interdependences
– This will help you to identify critical paths in your tax processes
and can eventually allow you to predict whether a return will be
completed before the deadline or need to be put on extension
– Insight into these critical paths is also essential if you are trying
to reduce the overall cycle time for a return (i.e. the elapsed time
from when a client submits all their forms to you, to the
finalization of the return and close out of the engagement)
© 2016, 2019 IntrapriseTechKnowlogies LLC

Audience Poll – Existing Process Documentation
● Do you already have your tax processes
documented?
• Yes, well documented
• Yes, but needs improvement
• No, but I should
• No, not needed

● Process improvement benefits can come in two primary
forms, tax automation initiatives can be focused on one
or both of these benefits.
● Efficiency gains = complete the return with less direct
staff effort, which generally equates to lower cost to
prepare the return
– In the grander scheme, it may also mean that you’re able to
complete more returns with the same staffing or provide greater
work-life balance during busy season
● Effectiveness gains = improved quality of service
– Complete a return instead of having to extend it
– Allowing professionals to spend more time on either more
complex returns or those with highly technical issues
***
This is where LSS
provides you with a
structured approach
to identifying and
quantifying these
potential benefits
***

● See if you can identify any of the 8 wastes in your
tax return preparation process
● Available at:
goleansixsigma.com/
8-wastes/

• Pilot = a controlled “test drive” to gather lessons learned and
determine how best to incorporate the
automation/outsourcing into your services
Key #4: Use a Pilot to Build Your
Business Case

Key #4: Use a Pilot to Build Your Business Case
● Those participating in the pilot are able to:
– Become familiar with the use of the automation or
service before having to use it on a lot of returns
– Determine what changes will need to be made to
procedures and timing
– Quantify the benefits of the tool
– Quantify the total cost of automating the process
– Determine ROI or payback period
● Results in a business case and recommendation
to the firm’s leadership and/or tax practice
management team
© 2016, 2020 IntrapriseTechKnowlogies LLC

Building a Project Charter
● First step in a LSS project; Part of Define phase of DMAIC
17
● Available from
goleansixsigma.com/
project-charter/

Building a Project Charter
● Project charters are best when kept simple
18
● Available from
goleansixsigma.com/
project-charter/

• Kaizen or “Continuous Improvement” is a core
philosophy of Lean Six Sigma and is a key to
incremental improvement of your tax return
preparation process from year to year
Key #6: Keep a Continual
Improvement Mindset

Key #6: Keep a Continual Improvement Mindset
● Identifying the characteristics of good
candidate returns was a consistent and
strong message from interviewees
– “Trial and error” was mentioned quite frequently
with interviewees citing that they weren’t experts
in the automation technology and that there
wasn’t an easy way to predict what would work
or didn’t work
● To maximize the value derived from tax
automation and outsourcing, continually:
– Improve your tax operations process, and
– Refine the criteria to identify candidate returns

Audience Poll: Continual Improvement Process
● Does your firm have a continual
improvement process in place?
– Yes, formal process
– Yes, informal process
– No, but we need one
– No, not needed

Key #6: Keep a Continual Improvement
Mindset
● Use the GLSS Solution Selection Matrix to rank
and prioritize potential improvements
● Available from
goleansixsigma.com/
solution-selection-
matrix/

• You don’t have to give up timesheets to adopt
value-billing practices. But value-billing is
essential to ensuring revenue continuity with
optimizing the tax return preparation process.
Key #8: Adopt Value-Billing to
Ensure Revenue Continuity

Key #8: Adopt Value-Billing to Ensure Revenue
Continuity
● Value-billing was used by firms to
– Offset lost revenue from reduced time spent on returns
– Lower prices to remain competitive *be careful*
● Firms what weren’t using value-billing yet, were
considering adopting it
● Automation & outsourcing reduced staff workload
– Because most staff are salaried, this doesn’t result in increased
profitability unless your fire them or reduce FTE
– May be ok if goal was to increase staff work-life balance
● Leverage additional staff time to sell more engagements
and generate more revenue

Audience Poll: Value-Billing Adoption
● Are you using value-billing for your tax returns?
– Yes, it is working well
– Yes, but we are having issues
– No, but I’m open to it
– No, not needed

• Use the full 8 Keys as a “checklist” to structure your
automation & outsourcing initiatives.
• We’ve only highlighted a few of the Lean Six Sigma (LSS)
tools that help guide your approach to automation &
outsourcing and ensure that you realize both efficiency
and effectiveness gains.
Apply the 8 Keys to Success + LSS
to Ensure Success and Improve
Profitability

Special Offer for GLSS Webinar Attendees
● As a special benefit for GoLeanSixSigma.com
webinar attendees, we’re providing our research
report, Keys to Success for Tax Automation &
Outsourcing, for free.
● Click here to obtain the report:
https://www.intraprise.us/product-page/keys-to-
success-for-tax-automation-outsourcing
– Use promo code GLSSWebinar to get it for free.
– The promo code is only valid until 9/18/2020, so act
quickly before you forget.
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● Managing Partners, Tax Practice Leaders, and IT
Directors should:
– Discuss the firm’s strategy on tax automation and
outsourcing—and how it relates to revenue
– Identify what returns are good candidate returns and start
talking with the vendors
– Train key staff on Lean Six Sigma so that they can help identify
and reduce the 8 Wastes and drive continuous improvement
● Using the 8 keys is a way to help ensure that your firm:
– Manages the risks of tax automation and outsourcing
– Maximizes the benefits of your investment in tax preparation
technologies and services

Donny C. Shimamoto, CPA, CITP, CGMA
Email = donny@intraprise.us
Voice = (866) 737-9991 x7200
Twitter/Instagram = @donnyitk
Blog = www.donnyitk.com
Thank you for your attention and
participation!

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