The intranet - a firm's private road on the information superhighway.

• Author: Black, Robert L.

In the last issue, an article about the Internet(1) (or "the Net") briefly covered the rapidly evolving technology and business applications of intranets. An "intranet" is an internal network that uses Internet-based technology to provide access to a variety of firm information, most of which would otherwise require (among other things) multiple software licenses, substantial data conversion time and different user interfaces. Because this type of efficient information system is generally limited (in a tax practice) to use only by professionals and staff, it is called an intranet.(2)

One application of an intranet might be the establishment of a keyword-searchable tax database of firm newsletters, research memoranda and opinion letters. Some intranets may even permit limited access by clients, but outsiders are generally prevented from unauthorized access by "firewalls"(3) (For a definition of these and other terms used in this article, see the Glossary on page 569).

Installing an intranet enables a firm to harness the Internet for an internal information system by combining the firms local area network (LAN), including existing firm information, with a user-friendly Net browser that features hypertext markup language(4) (HTML) formatted pages and hyperlinked home pages. Internet browsers provide easy access to many forms of firm information contained in a consistent graphical user interface format on an intranet. Moreover, intranet client/server applications can operate cross-platform if a mix of operating systems (e.g.,windows, Mac OS, Unix) needs to be incorporated into the system.

Centralized electronic files provide for efficient retrieval, permit multiple users and promote quality control. Development of an intranet may be a major step forward for any tax practice in promoting an electronic, paperless office in which the electronic version is the main file record. The benefits of an intranet installation are examined in Exhibit 1 on page 563.

This article addresses (1) the relevance and potential uses of intranets in a tax practice; (2) characteristics of firms suitable for intranet applications; (3) the technological underpinnings for equipping a firm with an intranet; and (4) future intranet applications and technology. The focus is on the types of applications and firms that can benefit most from establishing an intranet, not on the applicable technology and "how to" of an installation. Even practitioners who do not intend to install an intranet should be familiar with its operation and use, because clients are likely to already have an intranet or plans to build one.

Tax Practice Applications

Intranets are well-suited to replace (or archive) many paper-based information delivery systems within a firm, resulting in lower costs, easier accessibility and greater efficiency. For example an intranet might contain standard tools tax professionals use in making calculations or preparing returns, such as a tax calendar, local tax rates, amortization, interest and penalty macros (or shareware) and rules of thumb on, for example, capital gains, alternative minimum tax and depreciation.

An intranet can also provide access to employee manuals and other human resource (HR) materials that change constantly and are expensive to reproduce and deliver; such information needs to be updated frequently at additional expense. An intranet significantly reduces these costs: a single electronic copy of the employee manual can be posted on a server that employees can access via keyword, peruse online, and copy to a local printer if needed. The single electronic copy can be updated frequently, rather than physically delivering the revised information to each employee or having to file manually. In addition, an HR "home page" promotes consistent treatment of employees, provides up-to-date information and supports adherence to legal requirements.

A CPA firm could use an intranet to advise employees of its professional policies and procedures, professional ethics, employee addresses, telephone and electronic (e)-mail directory, and other basic documents that require constant updating and thus can benefit from the readily available, up-to-date format.

Beyond the convenient distribution of basic internal documents to employees, an intranet can improve communication and coordination among employees. Professional services and meetings (e.g., engagement planning and staff meetings) can be scheduled through engagement management software and calendars on an intranet, thus providing input from all parties and communicating current status to the individuals involved.

Similarly, when formal meetings are not necessary, an internal discussion group can be facilitated through an intranet. For example, suppose several professionals have been assigned to a client with a variety of service needs. Each professional within the group can access a private electronic bulletin board dedicated to the client on the firm's intranet. Group members can post their questions, answers, completed documents, schedules, ideas, suggestions and other relevant information to the bulletin board.

An intranet can also facilitate internal discussion groups for tax professionals who share a particular area of expertise. As new information on a topic emerges (e.g., legislative developments, regulatory changes, court decisions), interested parties within the firm may access the intranet for posting or retrieval. While such discussion groups are already available on the Net (e.g., via usenet and other conferencing applications), there may be some obvious advantages to limiting the discussion to firm members via an intranet.

When firm professionals co-author a common document (e.g., a tax newsletter), the intranet can be used to make the original version accessible to each co-author. When additions or editing changes are made, all parties can be informed simultaneously, consequently; the collaborative efforts of the work group can be pooled in the most efficient manner.

Another potential feature of an intranet is a keyword-searchable electronic filing system. Basic administrative documents (e.g., phone directory and employee benefits), confidential client information (e.g., tax returns, client billings, research memoranda, opinion letters and correspondence) and public information (e.g., speeches, articles, and IRS forms, instructions and publications) can all be searched and retrieved from specific intranet libraries. Passwords and other security methods can be used at any level to protect certain libraries from unauthorized access.

Finally, an intranet can be used to make certain information within a firm available to clients, colleagues and associates. Clients might be permitted to access particular intranet libraries (through the firm's Internet connection) to review, for example, archived tax newsletters or their most recent billings. Other items accessible to clients on an intranet could include (1) a glossary of tax terms, (2) frequently asked questions (FAQs) and their responses; (3) certain accounting tools (e.g., spreadsheet templates for bank reconciliation, macros), (4) special-interest articles and speeches, (5) an internal professional and staff e-mail directory hot-linked to their mail boxes, so that a client can e-mail them; and (6) a section of useful shareware that clients could download directly from the intranet or hyperlink from another Net site.

The above discussion only hints at the intranet applications available to (or specifically designed for) clients.(5) Obviously, access by clients (or anyone outside the firm) must be carefully controlled. This requires, among other things, password-protection and firewalls, plus a discussion with counsel regarding disclosures and disclaimers. Most importantly, however, client use of a firm's intranet is a value-added service at relatively low cost that can act as a powerful marketing and communication tool; it also promotes efficiency in interactions with clients, who increasingly expect technological sophistication from their CPAs.

Real-World Usage

As an example of why a firm might create an intranet, consider thee following example. A long-standing CPA firm has begun to notice some consistent and disturbing trends. It has focused most of its efforts on servicing a particular client niche that is now experiencing numerous consolidations, closures and sales, resulting in a gradual reduction of the firms client base. In addition, clients are requesting guidance on the use of their own internal...