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Art of Accounting: A template for next tax season

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Most accountants have just completed their tax season for last year’s returns and are probably not thinking about their next tax season. But they should.  The following is a template for a plan with suggested responses.

Purpose of tax season:

Suggested response: To provide clients with an accurately prepared tax return on a timely basis and where all tax savings techniques are applied along with suggestions made to save taxes going forward.

Your response: ________________________________________________________________________   __________________________________________________________________________________________________________________________________________________________________________

Quality of the work done by the preparer:

Suggested response: All returns submitted by the preparers to the reviewers should be error free.

Your response: ________________________________________________________________________  _____________________________________________________________________________________  _____________________________________________________________________________________

Role of tax return reviewer:

Suggested response: The reviewer should spot check the return to see that it appears to be correct, compare the return with the prior year’s return and look to understand major differences, look for explanations of surprise results, and look for planning opportunities for the current return and for the following year’s return to suggest to the client. 

Your response: ________________________________________________________________________   _____________________________________________________________________________________  _____________________________________________________________________________________

How the reviewer should handle errors found by them on the return:

Suggested response: The reviewer should reassign the tax return to the preparer to make the corrections and should not make any corrections regardless of time pressures. Comment: Part of effective and lasting training is to have preparers fix all errors since they will learn better about their mistakes and will be able to work better in the future to avoid such types of errors. When the reviewer corrects the tax return, the learning would be lost, added time would be spent by the reviewer not only making the correction but in communicating the nature of the error to the preparer at a later time when neither would have that incident fresh in their minds. Also when the preparer knows the errors will be caught and fixed by a reviewer there is a lessening of care in their performance. A side issue is that when the reviewer fixes the error, no one will be reviewing that change reducing the quality control over the tax return.

Your response: ________________________________________________________________________   _____________________________________________________________________________________  _____________________________________________________________________________________

Efforts to reduce tax season workload compression:

Suggested response: Workload compression can be reduced if some of the work that can be done prior to mid-December will be done. This includes all complicated transactions a client engaged in during the year, most of which are known about at this time. This would include sales of real estate, businesses, business interests or inherited assets or collectibles. Other transactions would include stepping up the basis for inherited real estate or determining tax attributes of assets divided in a divorce. Clients with rental or business income could provide their accounting records now to be reviewed to make sure cash accounts or other schedules reconcile or are in balance. There are many other situations and calling a client to check in and find out what went on during the year might uncover work that could be shifted to now rather than the busiest time of the year for you. 

Your response: ________________________________________________________________________   _____________________________________________________________________________________  _____________________________________________________________________________________

Efforts to reduce the workload of reviewers:

Suggested response: Since most firms have many more preparers than reviewers, it would be beneficial to shift work from the reviewers to the preparers. Four suggestions are: 1) to have the preparers compare every item on the return with the previous year’s return and understand any differences and prepare a memo on those reasons; 2) have the preparer look at every bottom line result to determine if it was a surprise or fully expected and prepare a memo explaining their impression of the result and their reason for that impression; 3) have a peer preparer review the return before it is submitted to the reviewer; and 4) have the preparer use the reviewer’s checklist and prepare a memo for everything that the reviewer would specifically be checking. Comment: Some of these procedures will add more work time for the preparer than the time saved by the reviewer, increasing the total time on that return. This is so, but the preparer’s time is more readily available than the reviewer’s time and at substantially lower rates. Also, by having the reviewer’s workload reduced on processes that could be passed down, the reviewer would have more time to concentrate on adding value to the client’s tax return. 

Your response: ________________________________________________________________________   _____________________________________________________________________________________  _____________________________________________________________________________________

The above highlight six areas I consider essential to maintaining a smooth and calm tax season. I’ve provided my opinions, but to make this effective for you, add your opinions and compare them to mine. Then decide whether you are happy with your system or if changes are in order. 

Do not hesitate to contact me at [email protected] with your practice management questions or about engagements you might not be able to perform.

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Accounting

IAASB tweaks standards on working with outside experts

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The International Auditing and Assurance Standards Board is proposing to tailor some of its standards to align with recent additions to the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants when it comes to using the work of an external expert.

The proposed narrow-scope amendments involve minor changes to several IAASB standards:

  • ISA 620, Using the Work of an Auditor’s Expert;
  • ISRE 2400 (Revised), Engagements to Review Historical Financial Statements;
  • ISAE 3000 (Revised), Assurance Engagements Other than Audits or Reviews of Historical Financial Information;
  • ISRS 4400 (Revised), Agreed-upon Procedures Engagements.

The IAASB is asking for comments via a digital response template that can be found on the IAASB website by July 24, 2025.

In December 2023, the IESBA approved an exposure draft for proposed revisions to the IESBA’s Code of Ethics related to using the work of an external expert. The proposals included three new sections to the Code of Ethics, including provisions for professional accountants in public practice; professional accountants in business and sustainability assurance practitioners. The IESBA approved the provisions on using the work of an external expert at its December 2024 meeting, establishing an ethical framework to guide accountants and sustainability assurance practitioners in evaluating whether an external expert has the necessary competence, capabilities and objectivity to use their work, as well as provisions on applying the Ethics Code’s conceptual framework when using the work of an outside expert.  

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Accounting

Tariffs will hit low-income Americans harder than richest, report says

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President Donald Trump’s tariffs would effectively cause a tax increase for low-income families that is more than three times higher than what wealthier Americans would pay, according to an analysis from the Institute on Taxation and Economic Policy.

The report from the progressive think tank outlined the outcomes for Americans of all backgrounds if the tariffs currently in effect remain in place next year. Those making $28,600 or less would have to spend 6.2% more of their income due to higher prices, while the richest Americans with income of at least $914,900 are expected to spend 1.7% more. Middle-income families making between $55,100 and $94,100 would pay 5% more of their earnings. 

Trump has imposed the steepest U.S. duties in more than a century, including a 145% tariff on many products from China, a 25% rate on most imports from Canada and Mexico, duties on some sectors such as steel and aluminum and a baseline 10% tariff on the rest of the country’s trading partners. He suspended higher, customized tariffs on most countries for 90 days.

Economists have warned that costs from tariff increases would ultimately be passed on to U.S. consumers. And while prices will rise for everyone, lower-income families are expected to lose a larger portion of their budgets because they tend to spend more of their earnings on goods, including food and other necessities, compared to wealthier individuals.

Food prices could rise by 2.6% in the short run due to tariffs, according to an estimate from the Yale Budget Lab. Among all goods impacted, consumers are expected to face the steepest price hikes for clothing at 64%, the report showed. 

The Yale Budget Lab projected that the tariffs would result in a loss of $4,700 a year on average for American households.

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Accounting

At Schellman, AI reshapes a firm’s staffing needs

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Artificial intelligence is just getting started in the accounting world, but it is already helping firms like technology specialist Schellman do more things with fewer people, allowing the firm to scale back hiring and reduce headcount in certain areas through natural attrition. 

Schellman CEO Avani Desai said there have definitely been some shifts in headcount at the Top 100 Firm, though she stressed it was nothing dramatic, as it mostly reflects natural attrition combined with being more selective with hiring. She said the firm has already made an internal decision to not reduce headcount in force, as that just indicates they didn’t hire properly the first time. 

“It hasn’t been about reducing roles but evolving how we do work, so there wasn’t one specific date where we ‘started’ the reduction. It’s been more case by case. We’ve held back on refilling certain roles when we saw opportunities to streamline, especially with the use of new technologies like AI,” she said. 

One area where the firm has found such opportunities has been in the testing of certain cybersecurity controls, particularly within the SOC framework. The firm examined all the controls it tests on the service side and asked which ones require human judgment or deep expertise. The answer was a lot of them. But for the ones that don’t, AI algorithms have been able to significantly lighten the load. 

“[If] we don’t refill a role, it’s because the need actually has changed, or the process has improved so significantly [that] the workload is lighter or shared across the smarter system. So that’s what’s happening,” said Desai. 

Outside of client services like SOC control testing and reporting, the firm has found efficiencies in administrative functions as well as certain internal operational processes. On the latter point, Desai noted that Schellman’s engineers, including the chief information officer, have been using AI to help develop code, which means they’re not relying as much on outside expertise on the internal service delivery side of things. There are still people in the development process, but their roles are changing: They’re writing less code, and doing more reviewing of code before it gets pushed into production, saving time and creating efficiencies. 

“The best way for me to say this is, to us, this has been intentional. We paused hiring in a few areas where we saw overlaps, where technology was really working,” said Desai.

However, even in an age awash with AI, Schellman acknowledges there are certain jobs that need a human, at least for now. For example, the firm does assessments for the FedRAMP program, which is needed for cloud service providers to contract with certain government agencies. These assessments, even in the most stable of times, can be long and complex engagements, to say nothing of the less predictable nature of the current government. As such, it does not make as much sense to reduce human staff in this area. 

“The way it is right now for us to do FedRAMP engagements, it’s a very manual process. There’s a lot of back and forth between us and a third party, the government, and we don’t see a lot of overall application or technology help… We’re in the federal space and you can imagine, [with] what’s going on right now, there’s a big changing market condition for clients and their pricing pressure,” said Desai. 

As Schellman reduces staff levels in some places, it is increasing them in others. Desai said the firm is actively hiring in certain areas. In particular, it’s adding staff in technical cybersecurity (e.g., penetration testers), the aforementioned FedRAMP engagements, AI assessment (in line with recently becoming an ISO 42001 certification body) and in some client-facing roles like marketing and sales. 

“So, to me, this isn’t about doing more with less … It’s about doing more of the right things with the right people,” said Desai. 

While these moves have resulted in savings, she said that was never really the point, so whatever the firm has saved from staffing efficiencies it has reinvested in its tech stack to build its service line further. When asked for an example, she said the firm would like to focus more on penetration testing by building a SaaS tool for it. While Schellman has a proof of concept developed, she noted it would take a lot of money and time to deploy a full solution — both of which the firm now has more of because of its efficiency moves. 

“What is the ‘why’ behind these decisions? The ‘why’ for us isn’t what I think you traditionally see, which is ‘We need to get profitability high. We need to have less people do more things.’ That’s not what it is like,” said Desai. “I want to be able to focus on quality. And the only way I think I can focus on quality is if my people are not focusing on things that don’t matter … I feel like I’m in a much better place because the smart people that I’ve hired are working on the riskiest and most complicated things.”

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