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The FLEXIBILITY of PAPER in a
PAPERLESSENVIRONMENT
Integrating traditional paper-based processes with paperless technology
Integrating traditional paper-based processes with paperless technologyoffers practitioners the organizational and review flexibility of paper plus the efficiency of a digital workflow
By David Wyle, CPA, President & CEO, SurePrep
Over the last decade, the accounting profession has undergone a slow and steady evolution to
the paperless office—a transition that began in the area of audit. As audit professionals started
to reap the rewards of more efficient, paperless workpapers, tax practitioners took note and
soon followed suit—putting the tax department at the center of the paperless movement. In
the last few years, the advancement of OCR (Optical Character Recognition) technology and
improved scanning processes have allowed firms to transition to a far more efficient and time-
saving digital tax process.
The evolution to a digital process represents positive change in the profession. However, in
exchange for the convenience of a paperless work environment, firms gave up much of the
flexibility offered by hard copy documents. With traditional paper-based processes, practitioners
used a common medium (paper) and a uniform review tool (the pencil).
Paper files allowed practitioners to organize and cross-reference workpapers, regardless of what
software the workpaper was printed from. For example, an Excel worksheet printed to paper
could be easily cross-referenced to a printed Word document.
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The Flexibility of Paper in a Paperless Environment
Traditional paper binders allowed for flexible
organization, annotation, and cross-referencing.
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The transition to paperless is a move in the right direction, but does not come without its
challenges. Document management systems implemented by “paperless” firms simply can’t
provide adequate workpaper-management functionality because the flexibility of working at
the individual page (or element) level is lost. Consider the two key issues:
1. Document management systems prevent workpapers from being organized at any more
granular a level than the file level.
Document management systems prevent workpapers from being organized at any more granular a level than the file level.
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For example, if an Excel file contains 10 worksheets and a PDF file contains 50 pages,
document management systems display only two files for organizational purposes (one
Excel file and one PDF file) even though those two files may represent 60 workpapers (i.e.
10 Excel worksheets plus 50 PDF pages) that need to be organized independently. We refer
to these 60 workpapers as “elements” of their corresponding Excel or PDF file.
2. Document management systems do not provide common tools to annotate, sign-off and
cross-reference workpapers of different file types.
Using the same “Excel file with 10 worksheets and PDF file with 50 pages” example, there
are no tools that allow practitioners to markup one of the Excel sheets and one of the PDF
pages with a common tick mark. There is also no easy way for a reviewer to sign off on
just one of the 10 Excel sheets or one of the 50 PDF pages. With document management
systems you can only sign-off on the Excel file and/or PDF file in its entirety.
Finally, and maybe most importantly, document management systems do not allow you
to create a hyperlinked cross-reference from a number in one of the Excel worksheets to a
page in the PDF file, and vice versa. This deficiency in all document management systems
either prevents the cross-referencing of digital workpapers or requires them to be printed
to a medium that supports cross-referencing (i.e., either PDF or paper). The downside to
printing workpapers for review is that if the electronic files are modified they then need
to be reprinted and re-cross-referenced—not exactly the preferred process if your goal is
increased efficiency.
So, while the paperless office marks a big move forward for the profession, a key issue remains:
document management systems only allow for organization, sign-off, and annotation at the file
level (Word, Excel, PDF, email). This restriction makes the review process slow and cumbersome,
often requiring that files be printed for easy review. Practitioners need the flexibility of working
with digital workpapers at a more granular level—the element level.
The SurePrep Vision: A totally flexible, firm-wide electronic workpaper system for all
engagement types—not just tax.
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Going paperless is certainly a move in the right direction; however, regaining the organizational
flexibility of paper is a necessity if firms are to continue to improve workflow efficiency. To
achieve this, practitioners require advanced workpaper and workflow automation solutions
that provide both the efficiency of a digital environment plus the flexibility of organizing,
annotating, cross-referencing, and signing-off on workpapers like they used to be able to do in
the paper environment.
This is where SurePrep’s Binder technology, SPbinder™, comes in. Offering the functionality to
cross-reference, sign-off, and annotate at the element level, SPbinder provides the profession
with a powerful application that offers the flexibility of paper in a paperless environment.
The History of the Paperless Evolution
Understanding the history of the paperless movement is critical in visualizing the next
appropriate steps. For firms to accomplish an end-to-end digital workflow—for all engagement
types, not just tax—individual pieces of the process need to be considered.
The transition to the paperless tax workflow began with an emphasis on scanning tax source
documents. In the minds of many practitioners, “paperless” simply meant eliminating paper
storage (not workflow). As such, firms scanned documents on the back end, which offered
electronic storage but did not provide the ability to work on-screen from the start of the process.
The next major trend in the paperless tax movement was defined by improving the scanning
process—switching from back-end to front-end scanning. By scanning client source documents
at the beginning of the tax return preparation process, practitioners positioned their firms for
the efficiency gains that come from working with electronic files throughout the entire job.
Scanned source documents could be run through scan-and-organize and scan-and-populate
applications to be automatically organized and bookmarked into a single PDF file. Data could
then be imported into tax software to auto-populate fields in the tax return.
One practitioner offers his experience with adopting a front-end scanning procedure…
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From the Practitioner
Darren Root, CPA.CITP, Managing Partner, Root & Associates LLC
Darren Root’s firm began the move to a paperless office several years ago, well
ahead of the profession as a whole. Experiencing his fair share of obstacles, Root
admitted that while the transition was peppered with trial and error, the end
result was well worth it. Root described how he listened to fellow practitioners
who had already transitioned their firms to paperless, and how he implemented
process improvements to take full advantage of a digital work environment.
“Like many other firms, at first, we thought that paperless meant simply
eliminating paper. We quickly realized that if we were going to take advantage
of the workflow technology that was out there, we would have to re-evaluate our
process first. And that’s what we did.”
Root described how critical it is to have processes that support the technology.
“We started by scanning on the back end, but all this got us was electronic file
storage. To enjoy an end-to-end digital process, we knew we needed to start
scanning on the front end. We took it a step further than just bringing scanning
to the front, however. We created a standard procedure for scanning documents,
which called for administrative staff to scan in workpapers as they came in. This
freed our preparers to concentrate on higher billable work. With the change, we
were supporting both a paperless process from the beginning and assigning
work appropriately. It made all the difference to have the right process in place.”
Root went on to explain the importance of aligning the right technology with the
firm’s workflow process.
“Once we had the process down, we could then effectively evaluate which
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solution best fit our needs. Our previous scan-and-organize application was fairly
cumbersome to use. The system made it difficult to organize PDFs; it was also
hard to merge subsequent files. In the end, we had to deal with multiple partially
organized PDFs and separate Excel files. Lack of control over file organization
was a huge problem and worked against our improved tax workflow process. In
the end, we identified a powerful binder solution that solved all our issues and
put control of file structure back in our hands.”
Applying the new front-end scanning approach, firms started to experience greater efficiency
gains via an automated, digital process. The downside, however, was realized when working
with bookmarked PDF files. The inability to work seamlessly with other file types negatively
affected workflow, hindering the practitioner’s from:
• Cross-referencing and annotating individual pages (elements) within larger workpaper files
(e.g., cross-referencing one sheet in an Excel file to one page in a PDF file).
• Combining multiple file types (Excel, Word, PDF, and emails) into a single electronic
workpaper binder.
With the paperless movement well on its way, the tax and accounting profession quickly ran
into a significant limitation of working with digital files—the inability to properly organize,
annotate, cross-reference, and sign-off on workpapers at the page or element level.
The New Era of Digital Workflow
To make a full transition to paperless, accounting professionals require a remedy for the issue
of inflexibility. What’s needed is the electronic equivalent of the traditional paper process. This
was easier said than done…until the release of SurePrep’s SPbinder.
Implementing a digital process that offers the flexibility of paper requires technology that
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allows working with files at the element level. Only within the last couple of years has this
caliber of technology been available. With SPbinder, firms now have the ability to assemble
binders from a variety of file types. Firms are no longer limited to working with disconnected
file types—which most often required them to print documents for adequate cross-referencing
and review. Even better, this advanced solution supports flexible electronic workflow beyond
tax—enabling firms to enhance processes across all engagement types for unprecedented
efficiency gains.
The flexibility of paper in a paperless environment becomes a reality with SPbinder.
SurePrep’s digital binder technology puts the “flex” back into the restrictive paperless
environment. It’s the best of both the paper and paperless worlds. Firms benefit from a fully
digital workflow without losing the flexibility to organize, annotate, cross-reference, and sign-
off at the element level. In fact, many forward thinking firms have already adopted this kind
of technology and are enjoying the productivity gains that come
with it.
Another practitioner offers her firm’s experience…
From the Practitioner
Lori, Manager, Local CPA Firm
This local CPA firm started the transition to paperless back in 2005—with
full force—explained manager, Lori. Decision makers picked a date and
mandated paperless from that day forward. From the start, firm leaders had the
forethought to start with scanning on the front end and to assign this task to
administrative staff. The firm also adopted tax document automation technology
to support a paperless workflow. Today, they’ve gone a huge step further, having
implemented SurePrep’s digital binder technology that supports a standardize
tax process firm wide.
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“We are concentrated on the tax process specifically. Front-end scanning put us
on the path to a true paperless tax workflow, but we also knew we needed to
be able to implement a uniform indexing procedure for workpapers…Before we
identified SPbinder, we had to manually create a section in order to add a single
page from a workpaper. This was the only way we could “customize” how we
indexed workpapers for clients. Because of this, we couldn’t truly standardize
the process. It was also time consuming. The biggest issue, however, was that
cross referencing was impossible…We now are able to adhere to a standard
process because the solution makes it easy to index workpapers at the individual
page level. The flexibility of accessing individual pages also supports easy cross
referencing—on any page in any workpaper. Without SPbinder, there is no way
we could have taken our tax process completely digital.”
Advanced digital binder technology opens up a world of opportunity for firms committed to
going paperless. SPbinder offers the ability to:
• Automate and Standardize Binder Setup—firms can customize how they index client
files, creating a structure that works best for their needs.
• Clone Binders—once a file structure is standardized, firms can simply copy an existing
binder to support a new engagement and follow the same index format.
• Index Multiple File Formats at the Element Level—including Excel, Word, PDF, and
Outlook emails. Each sheet in an Excel file and each page in a PDF file become separate
elements. This makes easy work of organizing and cross-referencing, and streamlines the
review process.
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• Cross Reference as Easily On Screen as On Paper—advanced functionality allows
practitioners to quickly access individual pages and cross reference items even between
different file types (e.g., PDF and Excel), supporting a completely on-screen review process.
Each Excel sheet is a
separate element that can
be bookmarked, annotated
and cross-referenced
independently.
Dynamic cross-referencing between
electronic workpapers of different file
types (e.g. PDF and Excel).
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• Use a Common Set of Digital Review Tools (replacing paper and pencils)—including
tools for annotation (stamps, notes, and tick marks), review (roles based sign-offs and the
ability to preserve notes and create conversation threads), and cross-referencing (create
cross-reference hyperlinks on any page) that work on multiple file types (Excel, Word, PDF,
and email).
Today, practitioners finally have all the pieces required to adopt highly efficient paperless
workflow processes. Combining practices from a traditional paper-based approach (e.g.,
standardized workpaper indexing, cross-referencing, etc.) with front-end scanning, document
automation applications, and revolutionary SPbinder digital binder technology completes the
recipe for a true end-to-end paperless process—for tax and any other engagement types.
Final Words
Tax and accounting professionals firmly live in the paperless era. The time has come to eliminate
paper and standardize processes within a digital environment. The value of going paperless
is clear—standardization improves the efficiency and quality of workpaper preparation and
review, while the elimination of paper saves time, money, and allows professionals to work
entirely on screen. However, while the convenience of an electronic workflow is clear, losing
the ability to work seamlessly across all file types had many professionals rethinking their
paperless efforts.
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Today, the best of both worlds is available—the flexibility of paper and the efficiency of an
electronic process. Digital binder technology found in advanced applications like SPbinder
supports an end-to-end paperless workflow, while also allowing practitioners to work with files
at the individual page or element level. Firms can standardize processes, develop a unique
workpaper indexing structure, and cross-reference pages across as many workpapers as needed
(even if the workpapers are from different file types).
While the paperless evolution continues, the organizational flexibility of paper in a completely
paperless environment is a significant marker. Moving forward, firms can benefit from the cost
and time savings that a digital work environment offers, while leveraging the value of the time-
honored paper-based approach.
About the Author
David Wyle, CPA, leads the SurePrep team as president and CEO. Prior to SurePrep, he founded
ePace! Software and was a CPA with the accounting firm of Coopers & Lybrand. Over the years,
David has emerged as a leading voice in the tax and accounting profession, specifically in the
areas of the paperless office. He has been a featured speaker at numerous trade events and
nationally publicized educational webcasts. David has also been featured as a content expert
in leading trade publications, including CPA Practice Advisor and Accounting Today, and has
been named multiple times to Accounting Today’s Top 100 Most Influential People list and the
CPA Practice Advisors Top 40 Under 40.