ERNST & YOUNG:

PROCESSING PERSONAL
TAX RETURNS
POINT OF VIEW
This case examines the process by which Ernst and
Young processes personal tax returns. The firm service level
high and the business is not believe to be very profitable.
During the past years the firm adopted new computer
software and total quality management. The firm is
considering a number of options, the focus is on an audit
manager who is wondering how to survive the upcoming
tax season. This case would like to illustrate the process
analysis in a service enterprise. It could be used to discuss
applications of TQM, service design and lay-out planning.
 PROBLEM ANALYSIS
Problem Symptoms Causes
 Delay of processing tax returns  Clients incomplete information
1. Poor service system on
 Delay of filing  Clogs of files

Personal Tax Returns  Rework  Incorrect data

 Time consuming  Staffs are unexperienced (staff

 Communication Gap accountants)

 Unorganized of materials needed

(office supplies and records)

 Office Structure

 No established standard operating

procedure of the service system

PROBLEM STATEMENT

 What should the Ernst and Young do in order to finish and submit the
Proccess Tax Return without delay?
 What should the Ernst and Young do to minimize the processing time of PTR
and processing cost while quality on time submission of PTR and maximizing
profits?
 Should the Ernst and Young adopt the Total Quality Management?
 AREAS FOR CONSIDERATION
STRENGTH: WEAKNESSES:

• Innovative Culture • High Debt Burden

• Size Advantages • Work Inefficiencies
• Economies of Scale • High Start Turnover
• Customer Loyalty • Cost Structure
• Brand Name • Location
• Unsatisfied employees

OPPORTUNITIES: THREATS:

• Online Market • Bad Economy

• Innovation • Volatile Revenue
• Emerging Markets • New tax regulation which is more
difficult than usual
 ALTERNATIVE COURSE OF ACTION
Implement the Total Quality
Management
a. Mckinsey 7s model
b. Lay-out Planning
c. Adoption Technology
Using the DOS base program
ADVANTAGES
• Monitor the flow in the
organization
• Improve the performance of a
company
• Determine how best to
implement a proposed
strategy
• increase in PTR completed
• reduction of time consumed per
activity
• minimization of motions
• reduced effort, stress and strain
• improve productivity
• maximization of space
• Strengthen and improve quality of
the existing services


Will run on a much smaller system
Very lightweight and it allows direct
access to most hardware
 It does not have the overhead of a
multi tasking operating system
DISADVANTAGES
• May miss some fine gained
areas in which gaps in
strategy conception or
execution can arise.
• It is rather difficult to assess the
degree of fit with accuracy
successfully.
• But the evidence also
suggests that some
employees resist or even
subvert TQM, finding it
ideological or faddish
• increase in PTR completed
• reduction of time consumed per
activity
• minimization of motions
• reduced effort, stress and strain
• improve productivity
• maximization of space
• Employees unfamiliar with the new
system.
• Incurred higher initial cost and
maintenance.
• Very few “new” programs
available
• Offered no multitasking and no
memory protection
 RECOMMENDATION

 Continue the implementation of TQM. There should be a separate

groups of employees in audit and tax. Because of this the E&Y can
better serve the financial services industry by developing more
experts with more experience.
 Ernst and Young should also consider the strategic structure or
layout of the company office that follow the flow the service
process design; and should adopt the technology that would give
advantage to the company against its competitor at the same
time, quality, time framed service with high rate of clients
satisfaction.
 IMPLEMENATION PLAN
Activities Person/department Time frame
In charge

Implement the Mckinsey’s 7s Early January if every

Manager
model year

Office layout planning and Top management May to July

implementation
Adoption of new technology Top management and
( computer software system) Employees July to date
a. Continues Trainings of
employees
b. Immediate actions on
whatever clients feedbacks
Strategic planning two (2) Top management and Every October of the
months before end of the employees Year
year.