Ahhh. Documentation. Everyone knows that when next year comes around, there's nothing better than a well-documented prior year file. Or, what about something that happened ten years ago, and it's thoroughly recorded in the permanent file? Most accountants dream of such a scenario. Too bad reality is often the exact opposite. Take that tax file from last year. You're looking for how a number was computed and what does the workpaper say? "Per John." And, who's John? A relevant authority to back-up the facts or law? Not hardly. He was the staff accountant you let go after last busy season because he just wasn't "getting it." Documentation like that can be downright scary.

But, just because it's valued doesn't mean that every file demonstrates best practices in that area. Documentation is a challenge and, frankly, not everyone is always up to the task. But, luckily, getting proficient at documenting is like a lot of other things, it happens with practice. And, with paying attention to details. Once you become skilled at it, the art of great documentation can become second nature and just part of excellent client service. Because rest assured, you'll do a better job in the long run if you value appropriate documentation.


The First Step

Documentation is part of a well-rounded accounting risk management plan and can start even before a project begins. Often, the launch of a job starts with a phone call. Let's say your client is contemplating a significant transaction, and so he gives you a call. That call turns into a 90-minute discussion about the details surrounding the deal. What an excellent start to the project to chronicle the phone call, including all the details. Memorializing the conversation is the start of the project plan. In fact, it's often an outstanding idea to outline a plan right there on the phone with your client. You can end the call and then schedule the project planning meeting with your staff. And, that planning meeting can be easier and more productive. You've already formulated at least a draft action plan and documented it. No need to rely strictly on memory because you've recorded the facts and details.


The planning process

The planning process is where documentation can really pay off. Slow down and take the time to think through how the project will flow. Make sure the planned steps get to the proper objective in the most direct manner. If steps aren't clear, break them down further until they are. Take the time to create a detailed plan for completion. It will make the project more productive and enjoyable for the whole team.


Workpaper Preparation

Once planning has been completed, workpaper preparation is generally next. Here is the place where a lot of accountants do a much better job. Nice workpapers show just how the computations were completed. You know what could be even better, though? Usually, the information that's not computations. Especially if the transaction is complicated, mapping out the flow of how it happened or will happen really helps. Then, adding in details by explaining them with words. Yes, words. Workpapers are great with numbers, but they can be stupendous with written details.

Here's another example. Say you've just acquired a new client. The company does construction and uses the percentage-of-completion method for its accounting. Take the time to document the construction process and show the funds flow in the workpapers. It can not only help to demonstrate that the computations are correct but can also be used as a learning tool. Having good workpapers that provide essential details about how calculations are completed can help others in the firm learn new skills. Think about new staff who are just learning that the facts aren't all listed on a page in a textbook and that there isn't a template for every type of workpaper. Teaching good workpaper creation skills will help them to understand the importance of proper documentation. It can help with learning and obtaining understanding earlier in an accounting career. Think "light bulb moment."


Effective Communication

Another critical element to appropriate documentation is that it facilitates effective communication with your clients. Make it a practice to document touchpoints with your clients during a project. It not only helps your file, it also helps to build and maintain improved client relations. Customers appreciate being kept up-to-date about the status of a project, and it's easy if it's part of your action plan. Plus, knowing some of the minute details that might not be readily gleaned from the source documents and are better understood by the client makes completion of a project more manageable. Sometimes, a gigantic reason for the extreme challenge of a project comes from an incomplete understanding of the facts. Once the whole story is known, the project flows much more efficiently. So, talk to your clients more often. Communicate and document the conversations. You might find that projects go more smoothly. Besides, there's no doubt the resulting relationship building with your client will be nothing but positive.


Review The Project

Once a project is complete, and out the door, a practical next step is to review the project with the team. Discuss what worked and what didn't work. Make sure the file documentation is complete. Also, note similar work for which you learned a new technique on this project. Make sure to note future application to that other work. Help staff to understand the critical takeaways from the project. Every project is an opportunity for new learning. It's also a chance to improve client service. Documentation is key here, though. Informative and well-constructed workpapers plus detailed memos and notes show the results and provide examples of excellent documentation.


Conform to Professional Standards

Finally, documentation should conform to firm policy and any applicable professional standards. It shows an understanding of those policies and standards. It also demonstrates a commitment to upholding those policies and standards, which is a pillar of professionalism. Professional standards, especially, help to instill respect for the education, knowledge, and experience of the individuals and firms involved. Make sure that your files show the commitment to whatever professional standards that you and your firm have promised follow. Great documentation. Commit to it, and you'll never be disappointed you did. It's truly a key element to an effective accounting risk management plan.