When you have to be right. Tax & Accounting. Document Management Strategies: New and Upcoming Trends

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1 When you have to be right Tax & Accounting Document Management Strategies: New and Upcoming Trends

2 2 Document Management Strategies: New and Upcoming Trends Technology continues to evolve rapidly and revolutionize the way tax, accounting and audit firms operate. From improved mobile devices to new security concerns, it s important to understand how developments in tech can affect your firm in the near and long term. In this white paper, we ll focus on how these trends apply to document management systems. We ve seen a number of trends in our profession related to document management everything from SaaS technologies to automation like automatically flowing data into a tax return and we ve also seen an increase in the use of electronic signatures, client portals and knowledge management systems, says Damon Russel, Technical Product Manager of Workflow Solutions for Wolters Kluwer Tax & Accounting. While most of these have remained constant, many have evolved substantially over the past two to three years. In particular, we re seeing three key trends driving technology forward to realize greater efficiencies: mobility, security and workflow. We will delve into the specifics of three strategic areas: Mobile document management what it means for your firm and tips for achieving it. Document security the latest best practices for keeping client documents safe. Document workflow integrations and productivity enhancements you should pursue.

3 Document Management Strategies: New and Upcoming Trends 3 Overview Mobility allows firm leaders to provide staff with greater work-life balance and enable staff to accomplish tasks while traveling or from home. Mobility refers to the ability to work productively anywhere. Productivity on a smartphone or tablet revolves around quick snippets of work that can be completed in just a few minutes, perfect for situations where you may be carpooling to work or riding in a bus, train or airplane and certainly while visiting clients away from the office. Quality mobile apps will provide high-usage value in short increments of time. A smart mobile work plan will reserve more complex tasks for desktop PCs or laptops using cloud-connected software extending the promise of being able to work from anywhere, not just from the main office. With greater mobility comes greater security risk, which we will discuss in part two. It s critical that your firm s backend systems are protected by the latest security protocols and end-to-end encryption. In part three, we will look at how these changes in mobility and security can lead to more efficient workflows and business processes. A number of general, all-purpose document management systems are available today. These may be sufficient for other industries, but accounting firms interested in improving efficiency should look for a document management system built to work as an integral component of optimized tax and audit workflows. Security Cloud Connected Highly Secure On-the-Go Access Quick Snippets of Work or Data Consumption Mobility End-to-End Encryption Supports Latest Security Protocols Limit User Access with Permissions Physical Data Security Integration with Tax and Other Software Productivity Enhancements Digital Workflow Workflow

4 4 Document Management Strategies: New and Upcoming Trends Part 1: Mobile Document Management Mobility and cloud are commonly used interchangeably, but they are not the same thing. Cloud technologies enable and enhance mobile experiences, Russel says. The cloud is the technology behind all mobile experiences. Without the power of the cloud, mobility has a very small range of use. You can certainly have a mobile phone that doesn t connect to the Internet, but most of us would agree that the phone would be very limited in its capabilities if all it could do were make and receive calls or text messages, Russel explains. But once you add the power of the cloud and the Internet, a dumbphone suddenly becomes a smartphone, and the user can have a range of mobile experiences, such as searching for a restaurant or reading a news article or shopping. All of these experiences are made possible in a large part due to cloud technologies. Evolving Mobile Needs The way we use mobile technologies will continue to change. Previously, it was enough for a firm to have on-the-go access to basic client data, such as phone numbers, and physical addresses. Functionality included being able to view files, publish files to a portal or manage basic tasks. Mobile access was needed for a limited number of devices. As mobile devices have become more commonplace, they have also grown, both in power and in physical size. With these hardware advances, users are now looking for upgraded software solutions with advanced mobile features. Today s Mobile Needs Evolving Mobile Needs Mobile access from limited number of mobile devices On-the-go access to basic client data such as phone numbers, and physical addresses View files on mobile phones and tablets Publish files to portals Basic task management Mobile access from any Internet-connected device Instant access to related files or documents Integrated and/or voice-enabled searching SMS-style messaging Skype /AppleTalk voice or video calling Workflow management Client collaboration

5 Document Management Strategies: New and Upcoming Trends 5 Mobile App Considerations At Wolters Kluwer, we spend a great deal of time contemplating which features to bring to our mobile apps. We know we must deliver small chunks of functionality that not only work on mobile devices but that also make sense in on-the-go situations where staff members have just a few minutes at a time to work on a task. Mobile apps should lead to gains in efficiency and should not be a duplicate of desktop software, although some mobile functionality might make sense on both desktop and mobile devices. When using mobile devices to access your document management system, there are a number of capabilities that should be part of the software. First and foremost, you must be able to access your data anytime and from anywhere, provided you have an active Internet connection. You will want to get instant answers while on the go, so access to client details or notes, A/R Balances and other data bits is important. Ensuring that your mobile app supports your workflows is also important, though it may not be all that clear in the beginning how mobility fits within your processes. That s OK. Over time, you will figure out which workflows are best suited to mobile devices versus full-fledged PCs. Some things to look for in the mobile app might include the ability to add and recall favorite clients. Assigning file-related tasks to other staff members and importing files uploaded by clients to their portal are good examples of mobile-enabled workflows. Access to client documents is key. The ability to add files, search for files, open files and send files to your clients through or a portal will save time and allow you to provide quick answers anywhere. Over the years, the line between document management and client collaboration has blurred somewhat. This is because, in many cases, it involves file management, regardless if it s in a document management system or in a portal. You may want to look for a solution that supports more fully integrated client collaboration, such as file sharing, e-signatures, secure messaging and even invoice presentment and online bill pay. Offering such features to clients and allowing them to access these services from their mobile devices may prove to be a competitive advantage to your firm. After all, your clients want the same thing from a document management system as you: a smart, easy-touse system that provides a more productive environment for collaborating with your firm. And with mobile-capable systems becoming a regular part of their professional and personal lives whether for , banking or countless other services building your systems to mimic their daily habits will go a long way toward keeping them happy and engaged. Clients will recognize and appreciate that your firm s collaboration solution supports their preferred technology medium, and will appreciate your firm enabling mobile access for their data. In fact, some clients will only do business with firms who offer an available mobile app or mobile-ready website; they consider firms which do not offer mobile access as behind the times.

6 6 Document Management Strategies: New and Upcoming Trends Part 2: Document Management System Security Security is more important than ever. According to the 2015 IBM Cost of Data Breach Study, each lost or stolen record containing sensitive and confidential information costs a business $154 to investigate and contain the breach and alert clients. That number does not include the damage to the business s reputation, the lost trust and the resulting loss of revenue. A firm can be crippled. The risk of compromised data rises as employees connect and access firm and client data from smartphones, tablets and laptops outside of the office. Risk can come from many areas, such as a connection through an open Internet network instead of through a secure VPN; stored on the mobile device; access by adware and spyware to unrelated data (such as a contact list); and lost or stolen devices. The question then becomes how to protect your firm. A firm should utilize multiple layers of security. Let s take a look at the essentials of data security that your firm should plan to address. Layers of Security Protecting your firm and your clients is essential. Focus on three key areas: Datacenter and physical security Permissions and access groups Document and file security You also must use due diligence in securing the software itself, Russel emphasizes. The software should require password-protected access on the front end with the latest 256-bit, Transport Layer Security (TLS) encryption on the back end. Additionally, the system should provide secure file encryption automatically and immediately at upload to the document management system and remain encrypted at rest and behind a firewall. Russel adds: Another important consideration is an automated virus scan before files are stored in the system. This is a function that we have built into CCH Axcess Document and that we recommend in all document management systems. Ensuring physical security of your data can be the most technically complicated and expensive part of securing your data and lays the foundation for security, which is why many firms choose to host their data with a trusted technology partner. Whether you are using a cloud-based provider or hosting on your own, there are several points related to the physical security of your data that your firm and your document management software provider should follow: Protect physical assets from tampering, theft and destruction by using closedcircuit TV cameras, on-site security guards, single entry/no tailgating doors and RFID technology tracking. Implement intrusion detection and monitoring, automatic threat remediation or alerts to team members and security staff. Conduct an external security audit of your firm s processes, standards and security controls to identify weaknesses. Make it routine to scan for malware and viruses when files are added to the system and/or when they are sent outside the system. Use active penetration testing to scan for and identify vulnerabilities. We at Wolters Kluwer subscribe to an independent service for this testing, and have found it a necessary best practice. A report is provided to us after each scan, and any vulnerabilities discovered are addressed. End-to-end encryption of all client/server communication using the latest security protocols must be in place for files in transit, as well as files at rest. Backups, redundant systems and high availability systems should be implemented to

7 Document Management Strategies: New and Upcoming Trends 7 ensure data recovery in case of an emergency or data loss. This is another advantage of using cloud-based software. Disaster mitigation is built into your operations. The next level of security is to ensure files are accessible only to the minimum number of employees. Make sure employees have access only to files they need, and that no files are available to anyone who doesn t need them. This can become complicated, but there are several ways to make it more automated. Best practices regarding permissions and access groups are to: Limit users access based on organization structure. Secure the data for high-net-worth or high profile clients by using Client Access Groups. Use these groups to restrict access to this data to certain staff levels or specific staff within your firm. Secure your staff members data using Staff Access Groups by organizing groups based on which staff can access certain data. Use role-based permissions and grant only the minimum permissions required to complete assigned tasks. The final, most granular level of security is file security. Making sure individual documents and files are safe from accidental as well as intentional tampering is an important first step to protecting your system. Consider the basics of document and file security: Firm documents should be stored separately from client documents. Secure your firm s documents so that only appropriate staff members have access. Secure staff materials, such as employment documents, annual reviews and performance improvement plans, so that only appropriate individuals have access. Use folder-level and file-level security, which provide the most granular levels of security in a document management system. These are useful for highly confidential documents, such as those involving mergers/acquisitions, high-profile clients and internal matters. As emphasized earlier, when sharing files, ensure that there is end-to-end encryption and require a password or code to access shared files. Use security groups to quickly assign basic user permissions.

8 8 Document Management Strategies: New and Upcoming Trends Part 3: Document Management Workflows and Integrations For a tax, accounting and/or audit firm, the term workflow can take on several meanings. In its most basic form, a workflow is simply the steps required to complete a specific task; it doesn t necessarily mean the workflow is efficient. Vital for Small Firms Small firms, too, should look to a document management system to become as efficient as possible, provide the best customer service, allow staff to work from anywhere and secure critical data. What you re looking for when assessing current workflows are key integration points or scenarios that allow you to be more efficient or to service your clients more quickly. A document management system should be able to help you do that, says Russel. A good document management system provides many features designed to support, simplify or improve various file-related workflows within the office. Version control, status reporting and retention management are good examples. Obviously ease of use is very important. You can have the best features in the world, but if no one can figure out how to use them, where is the benefit? Russel asks. Another key consideration in a document management system is that it should integrate with a variety of other systems commonly used by accountants, including: Tax preparation software Audit/Engagement software CRM Time and billing Client portals Project management Microsoft Office, Adobe Acrobat Document management systems are a vital part of planning for the future with small firms, just as much as for larger firms, Russel says. Processes from 1040 tax work to billing clients to assurance processes all come together in a document management system no matter the size of your firm. A good system will fit the needs of a small firm in the marketplace and help the firm compete with larger competitors. The efficiency gains should help the firm keep prices competitive while protecting the bottom line. Optimizing Workflow There are several common document management system workflows to consider when implementing software. To maximize your firm s efficiency, do not plan to turn a paper-process workflow into a digital workflow. Sometimes starting with a digital workflow that models a paper workflow can be a good steppingstone for a firm, since it helps staff members retain comfort with the workflow process, says Russel. But such a strategy should be looked at as a short-term solution. The next step, in order for your firm to maximize efficiency and eliminate unnecessary steps, is to optimize the digital workflow. It s an important part of your firm s ability to keep current in the marketplace.

9 Document Management Strategies: New and Upcoming Trends 9 Below are common optimized digital workflows: 1040 Workflows Files are stored in a document management system before staff begins working on the 1040 return. Files could come from a client portal, , paper or prior-year documents. Files should be secured and encrypted. Files are accessed/reviewed on an asneeded basis when completing or reviewing the tax return. Final tax return copies are stored in the document management system and published to a client portal. Billing/Invoicing Workflows Invoices from a practice management application can be stored in a document management system. Copies of checks could be stored in the document management system. Audit Workflows Finalized, prior-year audits can be saved to the document management system and recalled at the start of the next audit project. Files could come from a client portal, , paper, etc., and be stored in the document management system temporarily and later transferred to the engagement binder. Related files could be opened from the document management system and reviewed. Client Collaboration Workflows Just as it s important to look to a document management system to improve internal workflows, the system should also help improve client service, as well as secure clients data. Firms should look for integrated portal solutions that do the following: Provide mobile access for clients and staff Ensure security with end-to-end encryption Support your workflow needs related to clients Other considerations in addition to the above are that the collaboration tool should allow immediate access to the portal after logging in, as well as the ability to search and filter contents, Russel says. Heading into the Future To fully embrace technologies and mitigate security risks, it s necessary to understand trends in the industry. Best practices are evolving to address today s issues facing firms: The current musts Mobile access is nice to have but not necessarily required. Firms manage and own the security of their data themselves. Paper workflows are digitally duplicated to reduce the staff learning curve, even if inefficient. The evolving musts Mobile access is a requirement and should support quick tasks. Firms look to cloud providers with expertise in data security. Digitally authentic workflows replace inefficient paper workflows.

10 10 Document Management Strategies: New and Upcoming Trends Criteria for a Future-Ready Document Management System The document management system you choose substantially affects how your firm operates. The digital workflow starts and ends with a true document management system, says Russel. The system will automate your firm s capture, storage and dissemination of all electronic documents and files, as well as firm communications. The system should be capable of organizing and tracking all documents from the native versions through to the completed audit or tax work, in addition to storing them. The system should allow access through the cloud to documents by staff members working from anywhere. When choosing a document management system, be sure to: 1. Look for one that offers mobile access to your clients data and provides functionality that supports your firm s document management and security policies. 2. Look for products that provide mobility via smartphones, tablets and other devices. 3. Understand that integration across software helps improve workflow. When comparing multiple products, create an integration matrix with your existing products plotted against the document management system you re evaluating to see which will provide the greatest level of integration. 4. Look for a document management system that allows clients to use portals as long-term storage for their files.

11 Contact information: Wolters Kluwer 2700 Lake Cook Road Riverwoods, IL United States Please visit CCHGroup.com/Document for more information. 4/ CCH Incorporated and its affiliates. All rights reserved. When you have to be right