McGladrey Reminds Audit Staff to Stay Billable This Busy Season

McGladrey isn’t just clinging to the billable hour, they’re trying to put a ring on it.

McGladrey isn't just clinging to the billable hour, they're trying to put a ring on it.

Concerned Managing Partner Joe Mazza sent out an email this week reminding his soon-to-be-up-to-their-tickmarks-in-workpapers assurance team that busy season is soon upon us and it's important to be mindful of professional responsibility. No, not responsibility to clients. Responsibility to TIMESHEETS.

To the LA Office Assurance Team:

As we close out the calendar year and approach our busiest time of the fiscal year, I wanted to share a few reminders on our collective professional responsibilities to the practice and each other.  Please see the attached communication on chargeability, daily time entry and busy season expectations and, also, an option for everyone to plan a weekend off during busy season.  I am also asking the office career advisors to review and discuss the communication with their advisees as well as respond to any questions they may have.  Adhering to these professional responsibilities will position us for a successful busy season as a team. Thank you for all of your contributions to making our office and the West Region of McGladrey successful.

In exchange for their compliance, the assurance team can take one, pre-approved weekend off during busy season as long as it doesn't force the rest of the team to do rails of meth to keep up in their absence.

There's a three-pronged strategy here: stay chargeable, do your timesheets, and expect not to see daylight for awhile.

First up: Chargeability

Meeting chargeability goals is imperative to our collective success in the practice of public accounting for many reasons. By meeting or exceeding our charge hour goals we ensure the following:

  • We maximize our productivity levels related to generating revenues for the firm. (The primary source of revenue to the firm is billable charge hours.)
  • We can accomplish our objective of providing a high level of client service at profitability levels that will allow us to reward our employees with compensation that is aligned with market conditions and level of performance.
  • Our professionals are getting the experience they need for career development and success within the profession.
  • We are able to adequately assess our resource needs or constraints. For example, if there are professionals not recording all of their chargeable time while working on client engagements, it creates the appearance that we have adequate capacity to grow with the current resources that we have. Therefore, our line of business leaders may make improper decisions related to our practice if the data they are using to manage the business is not accurate.

How exactly are the chargeablity goals of the firm aligned with "a high level of client service"? It seems that the output of Mickey G's employees, that is, producing the best end result for their clients would be a high level of client service. Combined with charge goals, isn't chasing timesheets the sort of thing that might lead to substandard work due to time constraints? How about just providing a high level of client service, period, end sentence.

Next: Daily Time Entry

We have noticed an issue with time keeping practices among certain of our professionals, particularly daily time entry. Not recording time daily can have several adverse consequences on our business such as:

  • Our revenues are misstated at any given point in time when partners and firm finance personnel are analyzing the revenue generated by our engagements. This also adversely impacts the profitability of our operations as we generate revenues primarily from selling our partners’ and employees’ time.
  • We can’t bill timely (i.e. to ensure a successful practice we must stay on top of our billing arrangements with our clients and ensure we are billing often and receiving collections timely). In addition, if time is not entered on a daily basis, we may final bill certain folders or negotiate change orders on incomplete data which has resulted in lost revenues and profitability for the firm. (Charge time posted after a final billing most often needs to be written off.)
  • We realize lower profitability levels which have a direct correlation on partner and employee compensation

In response to this concern, the West Region will be monitoring those few habitual offenders who do not input their time daily. These individuals will have to be held accountable for these practices in the form of lower performance ratings which will ultimately impact employee compensation. (We will also ensure that career advisors, when meeting with their advisees, discuss the importance of daily time entry and will be responsible for communicating with any of their advisees who have been identified as habitual offenders.)

Can I get a show of hands for those people who love being micromanaged to death in 60 minute increments? I read this to mean you can absolutely suck at your job but as long as you're getting your time billed properly, expect fabulous performance ratings.

The third point is not worth breaking out on its own, as it's basically just a reminder that you will be tethered to your desk for the foreseeable future so don't you dare plan vacation or any kind of life activities for that matter.

Back to the first two points. Seriously, how important is this? Is McGladrey even aware that other metrics exist for measurement of the firm's activities and operations? Yeah, I know, that's rhetorical.

McGladrey says in the above section on chargeability that meeting or exceeding charge goals ensures "our professionals are getting the experience they need for career development and success within the profession." Wow, so that's how you measure how well someone understands ticking and tying? Sure, that guy Tom is a jackass and no one likes being on a client with him but damnit, he billed 100 hours on this therefore he must be good at his job!

The war on billable hours is nothing new, and yet nothing changes. As our own Greg Kyte once said, tracking your billable time is "at best a suboptimal business model." That's putting it kindly if you ask me.

We read this reminder to say "don't eat hours because then you're screwing up our math" but why the hell measure client service and profitability using hours at all? Oh right, because that's all they know.

Here's a really easy solution that would save everyone so much time and base "client service" on actual client service: ditch the timesheets! I know, I know, never going to happen.

The full Communication on Professional Responsibilities (a.k.a. Billing Directive) is included for your reading pleasure below. Be sure to charge the proper code for time spent reading it.

Communication on Professional Responsibilities by jda_23

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