Lessons Learned: The Checklist Manifesto - How to Get Things Right

For more than two decades, our singular focus has been to partner with CPA firms to identify and implement digital tools and processes so those firms can more effectively serve clients.  Busy seasons provide a respite where we “sharpen the saw” with advanced technical training, profession/peer topic exploration, reviewing new applications, and re-visiting existing solutions. This past busy season we were introduced to Atwul Gawandi’s book “The Checklist Manifesto” which piqued our interest as so much of the accounting profession has traditionally relied upon checklists.  While tax checklists and audit programs long ago were manual documents, most are now automated within applications creating an environment where we don’t even realize we are following a checklist. Unfortunately, we are seeing that most firms are not taking the time to revisit and update the critical items on their “checklists” even though their production processes and applications have evolved.  Below, we identify some thoughts to ponder as you think about your current processes and where checklists can make a difference.

Checklists Improve Performance: Regardless of industry, utilizing “good” checklists to make sure you get critical items right creates a higher level of discipline and improves baseline performance.  This is particularly true during times of stress, where mistakes become more prevalent as assumptions that all steps were already taken can be made. Teams that purposefully use a checklist actually promote better collaboration and communication.

ASK: What items on existing tax or audit checklists are still necessary and what critical items are being missed and should be added taking into account our new tools?

“Good” Checklists: Good checklists reduce ambiguity, are precise, and practical to apply to a given situation. They focus on what is necessary to catch critical errors and reduce risks.  They establish baseline performance, which in effect promotes discipline and efficiency when the items are appropriate and followed completely. Yes, even in the height of busy season busy-ness! According to the book good checklists consist of 5-9 steps documenting mission critical items the firm needs to get right, particularly during periods of stress and exhaustion.  If more than this range of steps, it is better to eliminate less critical steps and to break the checklists into phases with pause between (such as between scanning, preparation, review and delivery). Good checklists also provide for opportunities to not only plan collaboration but to “pause” to improve the process.

ASK: Have our scanning quality control, tax preparation, tax review checklists been updated for the appropriate level of client and are any items being overlooked that are consistently resulting in errors?

Power of Pause: When working on complex projects with multiple phases the book discusses the importance of pausing between phases and making sure that any concerns are brought up and corrected before moving onto the next phase of the engagement.  For instance, reviewing a completion of audit fieldwork checklist might bring up tax or security issues that others should be made aware of and would provide an opportunity to collaborate when all the knowledge is fresh in everyone’s mind.

ASK: Where in our processes should we pause to convene for a few moments to make sure we have all our bases covered and any concerns addressed?

Group Collaboration: Whether at the start of an extremely busy tax week, new consulting engagement, or audit project planning, it is important to pull together the entire team members to ensure they all understand their role in the team engagement and walk through the project checklist and describe responsibilities.  This is particularly important in audit planning at the initial meeting with the client and at both the start and completion of fieldwork where communication between all members is often lacking because of scheduled availability. Using virtual collaboration tools (Skype, Teams, Zoom) allows for scheduling such meetings when most they are most beneficial to the team. Collaboration on unexpected scenarios allows for consensus of expertise which is also a training opportunity. 

ASK: What tools and training are necessary to improve collaboration between firm members and how can they be utilized in planning and “pauses?”

Workflow/Projects ARE the Checklist: Firms traditionally had manual checklists to track everything from due dates, to project assignments, to month end close procedures.  With their automation many firms standardized the checklist to the application’s capabilities which may not apply to all situations.  For instance, tax workflows often follow the same path for a very complex, a very simple, or a core pooled return.

ASK: Are the steps required for processing tax returns appropriate to the level and risk presented by the return?

Era of Super Specialization:  Knowledge has become unmanageable! The book explores how the rapid expansion of knowledge and technical tools creates an environment where practitioners must become “super-specialized” in order to remain relevant to their clients as it is becoming near impossible to know and recall everything. Examples of specialization in medicine, engineering, aviation can be applied to the accounting profession where firms are becoming increasingly focused on financial knowledge specialization. Think about the movement of firms into industry niches and transitioning to more of a consultative role as traditional compliance work becomes more automated.

ASK: What components of industry knowledge and training need to be standardized to develop our people to serve that segment?

Transition to Consultative Role: We are hearing about this ad nauseum which will require that each firm become increasingly specialized and apply new skillsets to targeted industries and services.  Firms will need to educate personnel on facilitation skills, marketing/communication skills, and utilizing technology such a collaboration and data visualization (Microsoft PowerBI, Tableau, Qlik). Checklists create standardized processes which can then be taught and used to hold personnel accountable to learning that expertise.

ASK: What skills will all our consultants need as a baseline to be successful in consulting with our clients?

Firm processes will evolve with the technological advancements being created within and outside our profession, but it is critical not to lose sight of getting the key things right as we transform our practices digitally.  Utilizing checklists whether integrated into an application, embedded in a process, verified on a spreadsheet, or checked off on a Word document will ensure the important things are done right.

Roman H. Kepczyk, CPA.CITP is the Director of Firm Technology Strategy for Right Networks and works exclusively with CPA firms to implement today’s leading best practices and technologies incorporating Lean Six Sigma methodologies to optimize firm production workflows. Roman is also the author of “Quantum of Paperless: A Partner’s Guide to Accounting Firm Optimization” which is available at Amazon.com.