Updates and guidance on key IRS practice developments.

• Author: Chambers, Valrie

Practice Management

Small firm lessons from the pandemic

On March 13, 2020, life as everyone knew it in the United States came to a grinding halt as the president declared a national emergency concerning COVID-19. At first there was a great deal of conflicting information regarding whether accounting firms were permitted to remain open, whether remote working was permitted, if a total shutdown was required, what government services were available, and whether sufficient resources would even be available to continue working if it was permitted. The entire country was in a state of confusion, and accounting firms were no less affected than everyone else.

Many large regional and national accounting firms were better equipped to handle the situation due to their previous investments in technology and their movements toward becoming paperless offices. Unfortunately, a significant number of small, local CPA firms or sole proprietor CPAs with one or two employees simply were not ready to jump into the paperless and/or remote-working world.

Initially, the first step for these small firms was to ask the following questions:

Are we permitted to work?: This may seem like an odd question, but it was not completely evident at the beginning. For example, in Pennsylvania, the initial order from Gov. Tom Wolf required accounting firms to cease all operations. It was determined a day later that accounting firms were considered essential and were permitted to open their offices or work remotely. In a survey conducted by Arizent, Accounting Today's parent company, larger accounting firms were far more likely to have closed offices or locations, while only 11% of firms with fewer than 50 staff members reported closing their offices (Hood, "Despite Productivity Drops, Firms Commit to Remote Work in Reopening," Accounting Today (July 7, 2020), available at tinyurl.com/yb2tukfd).

How can we complete our work and keep everyone safe?: With the importance of limiting contact, it became necessary to work remotely. Many small firms had to scramble to set up secure methods for their staff to work from home. Since many of the clients of these small firms are not technologically savvy, working with client-provided paper documents was also necessary. To accommodate the needs of staff to pick up and drop off records and use copiers and scanners at the office, it became critical to limit the number of staff members who could access the office at any one time. Initially, there were so many unknowns that concerns arose regarding the safety of handling client documents. To ensure staff safety, many small offices were closed to the public; dropboxes were used to accept client records; records were received by mail; and once received, records were quarantined for a period in a location with ultraviolet light systems or other disinfecting treatments.

How can we meet the needs of our employees?: Besides the need to access client records and office equipment, employees needed ways to perform their work while, in many cases, educating their children at home and/or caring for other family members. There were also psychological concerns to consider. Staff members had different comfort levels, and employers had to be sensitive. In many cases generational differences determined the importance of various concerns.

How can we meet the needs of our clients?: As mentioned previously, a large portion of the clientele of small firms do not have the ability to scan and upload documents and may not even have a computer, let alone a printer. This presents challenges to any firm, no matter how advanced the technology is at the firm level. The general public was scared. As Congress worked to address economic concerns, accountants worked to keep their clients aware of the various new stimulus, loan, and grant programs arising to address their economic needs. It became very common that the small firm practitioner was not only a tax preparer but also a source of comfort and advice to his or her clients.

How can we make sure client records are safe and secure?: Above all, security of client records is crucial. Detailed documentation of the location of all client files and records was necessary. A master file of the location of all client documents was absolutely necessary. Staff training was also necessary to ensure that all staff handled client documents and files in a safe and secure manner.

Besides dealing with all these issues, accountants also had to learn about Paycheck Protection Program loans, Economic Injury Disaster Loans, stimulus payments, and unemployment benefits to assist their clients. Small firms do not have the benefit of dedicated research and training departments to provide information to staff members. As a result, additional time was necessary to track down information to pass on to clients.

What to carry into the future

After enduring all the questions, stresses, unknowns, and challenges presented by the pandemic, what lessons have small firms learned that can be taken into the future?

Technology is critical to facing the future. Small firms need to be ready for remote-working conditions when necessary, and this means working with a qualified IT professional...