Tax Practice Review - the real benefit.

• Author: Pascarella, Stephen E., II

Last year, McGladrey & Pullen implemented an internal program of Tax Practice Review (TPR), patterned after the AICPA's Guidelines for Voluntary Tax Practice Review (VTPR). The firm's program focused on the same three primary areas emphasized by the AICPA guidelines: (1) practice management, (2) administrative review and (3) technical review. The critical distinction, however, was McGladrey's emphasis on continuous improvement, focusing on client service. Ultimately, the true measure of a tax practice review is the benefit to clients.

For the past several years, the controversy in tax peer review has centered on the concept of "voluntary" TPR (see "Point/Counterpoint: Voluntary Tax Practice Review," The Tax Adviser,Jan. 1995, p. 3). This article will not repeat the pros and cons of a voluntary TPR program, but will describe the rewards to be gained from the review process.

The AICPA Tax Division has, for several years, offered a series of checklists designed to assist in the thorough completion of tax compliance projects. It is easy to be misled into thinking that a TPR is simply a documentation program to review checklist compliance. Quality control is obviously an integral part of the program, but increased client satisfaction with the practitioner is the true benefit.

The TPR process involves a review of policies and procedures, and discussions with all levels of personnel of the reviewed firm in the following areas:

* Practice management/quality control: Review of the system used to deliver service, including personnel, supervision and professional development.

* Administration Measurement of the firm's compliance with internal and external professional standards. A tax practice must adhere to its stated policies on practice and procedures and the implementation of those policies.

* Technical review: Review of live client files to ensure that practice management/quality control measures are in fact being applied to actual client engagements. Reviewed issues include client expectations, technical accuracy, fee documentation and client communication.

A friendly, collegial atmosphere in a firm with multiple locations enhances its ability to candidly share TPR results. These results provide the basis for improvement programs for any practice. Be aware, though, that the results of a TPR can be overwhelmingly focused on internal matters. It should be the objective of the "reviewed" tax practice to enhance the comments and suggestions made by...