Efficiency and Quality -- Using Lean Six Sigma in CPA Firms

Source: Journal of Accountancy

In an accounting firm, Lean Six Sigma focuses on adding client value by eliminating non-value-added steps and inefficiencies in client service processes.

Skilled facilitators (certified trained experts in applying Lean Six Sigma concepts) lead teams through a thorough analysis of the "current state" of the firm's processes. Waste and inefficiencies are identified, and lean techniques (tools focused on process effectiveness and understanding client value) are applied.

Here is an example, from the experience of the firm Rea & Associates.

When looking at our business tax process, several areas of inefficiency were identified:

Overproduction. Jobs were ineffectively prioritized. Excessive time and resources were used during the heart of busy season to work on clients that file extensions every year. Instead of focusing on what needed to be done at that moment -- effectively take care of the client from an extension and estimated payment standpoint -- more work was being done on the return.

Waiting. Wait times, a symptom of bottlenecks, were found at several steps, including first review. A "learning curve" was identified -- the longer something stayed in the review queue, the more time the preparer needed to become reacquainted with the client and the thought process that took place during the previous touch.

Not utilizing people's talents. Partners did too many administrative activities, did too much project management, and spent too much time in the minutiae. They weren't staying at a high level and focusing on ways to better serve clients.

Transporting. Too many paper folders were being transferred throughout offices, resulting in time delays. Individuals weren't optimally located to work with their primary teams.

Inventory. Excess work in process occurred. This led to a lot of started and partially completed work but fewer finished products getting out the door to clients.

Motion. Hard copies and electronic copies of documents were not being filed properly. This led to time wasted searching for certain pieces of information or communication.

Excess processing. Time was spent outside the scope of the engagement on things such as cleaning up bookkeeping and fixing mistakes. People didn't realize the scope of an engagement and performed more work than the client engaged the firm to do -- and was willing to pay for.

For the complete article, click here and read "Get Results: Improve Your Accounting Form Processes Using Lean Six Sigma."

From Journal of Accountancy, American Institute of Certified Public Accountants, January 2010, p. 1, http://www.journalofaccountancy.com/Issues/2010/Jan/.