Table Of Content10 Steps
to a
Digital Prac tice
C loud
in the
NEW LEVELS OF CPA FIRM
WORKFLOW EFFICIENCY
2ND EDITION
16670-344
John H. Higgins, CPA/CITP
Bryan L. Smith, CPA/CITP, CISA
10 Steps to a Digital Practice in the Cloud: New Levels of CPA Firm Workflow Efficiency, 2nd Edition.
John H. Higgins and Bryan L. Smith.
© 2015 American Institute of Certified Public Accountants, Inc. Published 2015 by John Wiley & Sons,
Inc.
16670-344_10 Steps_titlepage.indd 1 2/10/15 3:01 PM
Notice to Readers
10 Steps to a Digital Practice in the Cloud:New Levels of CPA Firm Workflow Efficiency,Second
Edition does not represent an official position of the American Institute of Certified Public
Accountants,and it is distributed with the understanding that the author and publisher are
not rendering legal,accounting,or other professional services in the publication.This book
isintendedtobeanoverviewofthetopicsdiscussedwithin,andtheauthorhasmadeevery
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Copyright©2015by
AmericanInstituteofCertifiedPublicAccountants,Inc.
NewYork,NY10036-8775
All rights reserved.For information about the procedure for requesting permission to make
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1234567890SP198765
ISBN:978-1-94165-151-3
Author Biographies
JohnH.Higgins,CPA,CITP
StrategicAdvisor,CPACrossings,LLC
Astheco-founderofCPACrossings,LLC,whichspecializes in helpingaccounting,tax and
financial professionals to leverage technology,John serves as a strategic technology advisor
to CPAs in the planning and deployment of effective technology solutions and workflow
automation.This aids them in the transformation to a digital practice model that features
paperlessprocessesandleveragescloudcomputing.
In2015,JohnestablishedCPACrossings’newCloudAccountingLearningCenter.Thelearn-
ing center is a comprehensive knowledgebase of training,information,and consulting ser-
vicesdesignedtohelpCPAsmakethetransformationtodeliveringclientaccountingservices
through the use of cloud-based accounting systems and other tools.In the new accounting
servicesparadigmforthe21stcentury,JohnisregardedasaforemostauthorityonhowCPAs
canseizetheopportunitytotaketheirfirmsonline.
BryanL.Smith,CPA,CITP,CISA
VirtualCIO,CPACrossings,LLC
Bryanservesasavirtualchiefinformationofficer(CIO)toCPAfirmsandprofessionalorga-
nizations.Hespecializesintheplanninganddeploymentofeffectivetechnologysolutions.As
a cofounder of CPA Crossings,Bryan focuses on helping firm leaders understand the issues
andopportunitiesassociatedwithdeployinginformationtechnologytoimproveproductivity
andenhanceclientservicesandincreaseprofitability.Bryanistheformerregionaldirectorin
chargeofmid-markettechnologyservicesforatop10accountingfirm.Heisalsoanationally
recognized speaker and author on technology issues affecting the CPA profession,with an
emphasisontransformingtoadigitalpracticemodel.
iii
10StepstoaDigitalPractice,2ndEdition
In2015,BryanestablishedCPACrossings’newExceleratorLearningCenter.Thisisacom-
prehensiveknowledgebaseoftraining,informationandconsultingservicesthatisdesignedto
help CPAs become more effective and efficient in Microsoft Excel.The focus of the Excel-
eratorLearningCenterislearningandunderstandingproperExceldesigntechniquessoCPAs
canbuildspreadsheetsthatareaccurateandallowforbetterdataanalysis.
iv
Preface
If you are picking up this book and saying to yourself, "I am too busy to read this with
all of the other things I have going on in my practice," then you are precisely the person
this book is targeted toward.Never before have we experienced the pace of automation of
"informationprocessing"likewhatweareexperiencingtoday.Thatis,atleast,notsinceour
ancestorslearnedhowtoetchsymbolsintostonetabletstocommunicate.
Seriously,asCPAs,weareintheinformationprocessingbusiness,andtheindisputablefactis
thatinformationprocessingisbeingautomatedatanunprecedentedpace.Sothechallengewe
faceishowtoleveragethistransformationtoimprovethequality,efficiency,andprofitability
oftheservicesweofferourclients.Inouropinion,thatistheproperpriorityorderforthese
threeobjectives.Ifyoutakecareofthefirsttwo,thethirdisvirtuallyguaranteed.
Ifyouaredebatingwhethertoinvestthetimetoreadthisbook,askyourselfthefollowing
questions:
1. Doyouwanttoincreasetherelevanceoftheservicesyouprovidetoyourclients?
2. Wouldyouliketofeellikeyouhavemadeadifferenceinthesuccessofyourclientsat
theendofeachday?
3. Are you concerned about keeping your team satisfied and challenged so that they stay
withyouandgrowprofessionallywithyourfirm?
4. Do you find yourself at a point in your life where you wish you had more choices on
how to spend your time,for example,doing recreational activities or watching your
familygrow,orjustspendingmoretimerelaxingingeneral?
We do not want to oversell the expectations of what this book has to offer,but if you
answered yes to any of the previous questions,then this book will be worth the investment
ofyourtimeandmoney.
Our primary goal is to provide accounting and tax practitioners,primarily those of you
with practices that range in size from sole practitioners to mid-size firms,with an easy-to-
followroadmapforleveragingtheunprecedentedarrayofinformationtechnologysolutions
thatcanpoweryourpractice.
As you read this book,we want you to understand that "going paperless" is not the ob-
jective."Going digital" is.These are actually two different ways to describe a path to the
samegoal.Sowhystatethedistinction?Theconceptof"goingpaperless"impliesgivingup
something we like to work with—paper.We will be the first to admit that some days,we
would prefer reading a paper copy of the Wall Street Journal while eating breakfast.We own
iPads,and we use them as a reading device in many situations;but there are times when a
paper newspaper is preferred.Call us old fashioned.The real value in going paperless is in
getting the data and information we need to process into a digital format so that you can
strivetoautomatethatprocessingasmuchaspossible.Notwithstandingourcommentsabout
preferring to read a paper newspaper,we often get frustrated when we find ourselves pro-
cessingpaperdocuments.Thatmeansweareprobablydoingsomethingthatcouldbefurther
automatedandmissingtheopportunitytoreducemanualefforts.Wealsowanttobeableto
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10StepstoaDigitalPractice,2ndEdition
accessitviaallthedifferentInternet-enableddevicesthatweuse:laptops,iPads,smartphones,
andwhateverelsecomesnext.Thankgoodnessforthe"cloud"thatletsusaccessthisinfor-
mationatanytime,fromvirtuallyanywhere!Throughoutthebook,wewillbetalkingmore
about going digital and less about going paperless.However,at the end of the day,they are
oneinthesame.
Before we get started,there is one important point you should keep in the back of your
mind as you read this book.There is no end to the efforts you can make to automate your
practice.Thekeyistomakesureyouarespendingyourtimeandmoneyontheappropriate
initiativesattheappropriatetimes.Thebestwaytomakethishappenistodevelopaplan.It
doesnotneedtobeanoverlycomplicatedanddetailedplanbut,rather,aplanthathighlights
yourgoalsandobjectivesforthenext12,24,and36months.Donotspendalotoftimeon
the36-monthplan.Thefocusshouldbeonthenext12months.Wewilloutlineaprocessfor
developingthisplaninchapter13,"DevelopingandImplementingYourTechnologyPlan."
vi
Contents
Chapter 1:The Nature of the TraditionalOn-PremiseModel ......21
Digital Practice Model and ManagedServiceModel ............22
the Benefits to You and Your DataCenterHostingModel
Firm ................................1 akaIaaS(Infrastructureasa
TheDigitalPracticeValue Service).........................24
Proposition.......................2 SaaSModel .......................25
KeyChallengesforToday’s SecurityintheCloud...............26
CPAFirmandTechnology’s
Role.............................3 Chapter 4:Broadband..............29
Staffing ........................3 BroadbandDefined.................30
Regulation.....................4 MeasuringBandwidth ..............30
FirmSuccession ................4 BroadbandRequirements ...........31
Technology.....................5 DataCommunication
KeyTrendsinCPATechnology.......5 Service.....................31
CloudComputing(aka Modem.......................31
SaaS)........................6 Router .......................32
MobileComputing .............6 WirelessAccessPoint...........32
ClientPortals...................7 Firewall.......................32
ExtendedWorkflows............7 WiredVersusWireless ..............32
BenefitsoftheDigitalPractice WiredServiceOptions .............33
Model ...........................8 DSL(DigitalSubscriber
QualityofClientService ........8 Line).......................33
StrongerClient Tier1–5(T1,T2,T3,T4,
Relationships ................8 andT5) ....................33
DoMoreWithLessEffort.......9 Cable.........................33
EnhancetheOverall FiberOptic ...................34
ValueofYourFirm ...........9 WirelessServiceOptions............34
Wi-Fi(WirelessFidelity)........34
Chapter 2:The 10 Steps to a Cellular(3G,4G) ..............34
Digital Practice ....................11 WiMAX(Worldwide
StrategicViewofITModel.........12 Interoperabilityfor
Infrastructure..................12 MicrowaveAccess)...........35
SoftwareApplications ..........13 Satellite.......................35
BusinessProcesses..............13 HowtoDetermineWhatYou
StaffandClients ...............13 Need...........................35
The10Steps ......................15 TheNumberofUsers
WorkinginYourOffice .....35
Chapter 3:Infrastructure ...........19 NumberandTypeof
InfrastructureDefined ..............20 CloudApplications ..........36
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10StepstoaDigitalPractice,2ndEdition
SizeandTypeofData Smartphones ......................59
Transmitted ................36 PickingYourPlatformand
UploadVersusDownload Device..........................60
Speed ......................36 Android™.........................61
ThickClientVersusThin AppleiOS.........................61
Client......................37 Windows .........................62
PhoneSystem .................37
WheretoGetYourBroadband ......38 Chapter 6:Scanning Solutions......63
TelephoneCompany...........38 CentralizedVersusDistributed
Cable.........................38 Scanning........................64
Cellular.......................38 AlternativeScanningDevices........65
Regional......................39 ScannerFeatures ...................68
Recommendations .................39 AdvancedDocument
ContactVendors...............39 ProcessingSoftwareforTax
MainCommunications Preparation......................69
Network....................40 WorkflowIntegration...............70
Back-upCommunications FrontEndScanning............71
Network....................40 Mid-PointScanning............71
TwoAlternativeApproaches.........40 BackEndScanning ............72
BroadbandtoGo...................41
Hotspots ..........................42 Chapter 7:Document and
File Management Systems..........73
Chapter 5:The CPA Metadata101......................74
Technology Toolkit.................43 Capture...........................75
DesktopComputerVersus Process............................77
Laptop..........................44 Store..............................77
RecommendedDesktopand Disseminate .......................78
LaptopConfiguration ............45 TheBigPicture....................79
MultipleMonitors .................47 DMSImplementationBest
SelectingMonitorsand Practices ........................79
Accessories......................48
TouchScreenMonitors.............49 Chapter 8:Trial Balance
Windows® 7.......................50 Working Paper Software............81
Windows® 8.......................52 FeaturesReview ...................83
Microsoft® Office .................52 TrialBalance ..................83
MicrosoftOfficeFromthe JournalEntries.................83
Cloud ..........................53 FinancialStatements............83
GoogleApps™ ....................54 WorkingPaperBinder..........84
Adobe® Acrobat® .................54 EngagementManagement ......84
WebConferencingSystem ..........55 ReviewNotes.................84
SmartphonesandTablets ...........58 TaxSoftwareBridge............84
viii
Contents
AccountingSoftware MuchImprovedServiceWith
Bridge......................85 theCloudAccounting
SolutionsOverview ................85 Model.........................107
TheOpportunity .................108
Chapter 9:Client TheEconomicModel.............109
Portals—Gateway to the
Future..............................87 Chapter 12:Security and
Security...........................89 Disaster Recovery.................111
TaskAutomation...................89 DataSecurityStrategies............112
ExtendedWorkflows ...............89 DataEncryption .............112
InnovativeServices.................90 PasswordPolicy...............115
DevelopingYourPortal CloudComputing ...........116
Strategy.........................90 SecureDataTransmission .....117
Stage1:Documentand AntivirusSoftware ...........118
FileExchange...............91 Firewalls ....................119
Stage2:Workflow MobileComputing
Integration..................92 Security ..................119
Stage3:Aggregationand DataBackup .................120
SingleSign-on ..............93 DisasterRecovery
Stage4:ThirdParty Protection .....................120
CloudApplications ..........93
PortalDeploymentChecklist........94 Chapter 13:Developing and
Implementing Your
Chapter 10:Workflow Technology Plan ..................123
Software............................99 WhatDoIDoNow? .............124
ProcessMapping..................101 HowDoIApproachthe
SchedulingandTask Process?........................124
Assignment ....................101 Strategy .....................124
DynamicRules...................102 Education....................127
DocumentandFileBinder.........102 Analysis......................127
ReviewNoteTracking ............102 Execution....................129
ElectronicForms,Checklists, Assessment...................129
andRoutingSheets.............102
E-mailAlerts .....................102 Chapter 14:Case Studies ..........131
ManagementReports .............103 ClarkNuberP.S.:Leveraging
ConfirmationSoftwareto
Chapter 11:Cloud-Based StreamlinetheAuditProcess.....132
Client Accounting System.........105 Juravel&Company,LLC:
ItIsTimeforaChange............106 ClientPortals...................133
InefficienciesWiththe Krueger&Associates,P.A.:
TraditionalClient LeveragingaCloud-Based
AccountingModel..............107 ClientAccountingSolution
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10StepstoaDigitalPractice,2ndEdition
andOtherPortal Appendix C:Resource
Applications....................135 Center ............................149
Schlabig&AssociatesLtd.:
OutsourcingIT Appendix D:AICPA SOC
InfrastructuretoaData References and
CenterHostingService..........136 Resources.........................159
Appendix A:Sample Tax Appendix E:Reporting on
Services Process Review...........139 Controls at a Cloud
Computing Service
Appendix B:Glossary .............145 Organization......................165
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