A CPA Firm’s Lean Journey, Part Three: Results

This is the third article in a three-part series that shares our Firm’s story of continuous improvement using Lean Six Sigma (LSS). In this article we highlight the preliminary results of our efforts and discuss our recent LSS projects.

Partners and managers who drive the efforts of an organization or a group have a responsibility to know the effectiveness, or lack thereof, of their processes and be able to discern how, when, and where to institute change. If you want to measure the performance of your staff and your organization, you must provide them with the tools to succeed. To improve your organization you can start by improving your processes. But, how do you gauge the effectiveness of your current processes and know what needs to be improved upon and how?

Office processes are difficult to measure, especially when compared to a typical manufacturing process. In manufacturing, the process is very visible. You can watch raw materials convert to finish goods. You can observe the number of defects or the time it takes for pieces to move through the facility. In an office setting, the processes
are more ambiguous. However, it is not impossible to measure office processes, you just need to begin with the
end in mind. Start by asking these critical questions:

• What are we trying to improve?
• How will we know when we improved it?
• What does our client value?
• What do our staff value?

These were questions we asked our team, our staff and even our clients when we began our improvement process discussions. In order to improve our processes we needed to know how to define value.

When we initiated this process, we defined what was valuable for our organization within our audit process, and ultimately concluded that we should improve the timeliness for delivery of financial statements after completion of fieldwork, decrease staff overtime hours, increase staff satisfaction and ultimately realization. As mentioned in our first article, the goal of a business is to make money!

The results are in! In our first year, our staff overtime hours decreased approximately 1,000 hours. Admittedly not all of that was due to our new Lean processes. Our staff survey’s show significant improvement in key areas of satisfaction by up to 10 points moving from the mid 80’s to the mid 90’s. One key area of improvement involved communication and expectations. Because we defined our processes, staff now understands what is expected of them based on which phase of the audit they are currently in. We also virtually eliminated personal preferences by managers and partners. Public accounting is a technically challenging career yet firms make it more difficult by each partner having a preference on work paper documentation.

A difficult area for us to measure was the timeliness for delivery of financial statements. We are utilizing workflows to track but this process, but this is certainly an area of continuous improvement for us. Anecdotal evidence suggests we have experienced significant improvement in this area with many financial statements delivered within two weeks after fieldwork versus a range of three to six weeks in the past.

Our realization improved in the first year by approximately 1%. It doesn’t sound like much, but our accounting and auditing department accounts for nearly 50% of our firm revenues and therefore 1% to the bottom line is significant. In our second year, we implemented new quality control materials and because of the significant investment, we expected a 2-4% realization decline. However, through our second quarter, we had actually improved another 2% over the previous year. I attribute this to our enhanced understanding and continuous improvement of our current processes.

Of course there have been other benefits, but this highlights some of our improvements. We’ve recently improved our business tax and personal tax return
preparation processes. We started with our business tax preparation and experienced substantial improvements in decreased quality control corrections and realization among others. As we move towards the first quarter of 2015, we will be implementing our personal tax return lean process and have high expectations.

We will never be done. Things change, technology changes, rules and regulations change, people change. LSS has become part of our culture because we recognize that organizations who don’t continue to improve will ultimately fall behind.

All content provided in this article is for informational purposes only. Matters discussed in this article are subject to change. For up-to-date information on this subject please contact a James Moore professional. James Moore will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.

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