Due Date Monitoring – The Basics
Many years ago, I worked for a small local firm that prepared several hundred 1040’s during the tax season. During the 1980’s we did not have the benefit of due date monitoring software. Spreadsheet software was just coming into its own with Lotus 123© having most of the market share. Our firm managed deadlines on a thirteen column manual spreadsheet. We started from scratch each tax season.
Extensions along with any outstanding taxes were sent certified mail, return receipt requested to ensure that no issues arose with regard to timely submission. Our firm updated the task status on the manual spreadsheet once the extension was mailed.
When Details are Overlooked
It was always a concern that important clients from previous years would not be carried over to the manual spreadsheet for the next year. In one particular year, one of the partner’s important clients missed the extension deadline because of an oversight of the kind just described. As you no doubt are aware, penalties for late filing are stiff and in cases like these become the responsibility of the preparer. Occasionally, the CPA can plead for mercy and the IRS abates the penalty. Nevertheless, client awareness of the situation may generate a loss of confidence.
Several days after the deadline on my way to lunch, I observed the responsible person take the late extension and walk it to the mailbox outside our office building. The individual dropped the extension in the mud, stepped on the letter, picked it up and twisted it several times until the address was barely visible. Next, the partner picked the letter off the ground and dropped it in the mailbox. Several weeks later, the extension came back approved!
Implementation of Task Tracking Software
Before considering unscrupulous and extreme steps such as these, consider implementation of a reliable due date monitoring system. This system should have the ability to rollover deadlines from one year to the next for active clients. Also, a basic report should ensure that active clients have an in-process or completed task in the system.
To minimize implementation time, similar client types should be setup as a group through a simple cloning procedure. Every task in the task tracking software should have a start and due date, as well as extension and completion dates. At a minimum, tasks assignments include both a preparer and reviewer. Due dates should auto-calculate based on the characteristics established for the master task. In unusual circumstances, you should be able to override calculated due dates. An example of this would be the situation where several years 1040’s are prepared well after the original due date, but in accordance with an agreed deadline with the IRS.
Other Features to Consider
Tasks should store notes about the status and progress of the work. A good practice would include review of pertinent notes when preparing to change client fees. Notes should also be reviewed when extenuating or difficult circumstances require advance planning before preparation of the next year’s work.
The frequency of tasks should be flexible. Many tasks fall due on weekly, monthly, semi-monthly, quarterly or specific dates, such as response to an IRS notice. Robust permission features prevent active tasks from deletion, or reassignment to inactive staff. The ability to break down tasks into several simple stages is very helpful. The following example from Mango software displays a due date report for 1040’s that are incomplete and waiting for extensions.
Due Date Monitoring – Extension Report
Status Level Report
A variation of the previous report displays due date items with a grey bar depicting progress towards task completion. Users can make quick assessments of the status level of the tasks within the filtered group. The date completed for a particular status is also displayed.
The following example displays the split-form deadline management screen filtered for 1040 tasks. A button option allows users to optionally record notes for each task.
Deadline Management Screen
Effective due date systems should generate reports of tasks assigned to staff or client groups for user defined date ranges.
A Note About Workflow Planning and Management
Firms with more complex requirements that involve staff utilization should consider workflow planning and management software that integrates with your due date system. Effective workflow management may involve separating a main task into one or more specific sub-tasks. Sub-task characteristics include a staff assignment, time requirement, start and due date. Dependent or hierarchical sub-tasks ensure that step two proceeds only after completion of step one. On the other hand, concurrent sub-tasks do not depend on the completion of a previous step and are useful for audits.
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