Question

Should CPA firms continue to use time sheets for their employees? Why, or why not?

Answer 1

The motive of using time sheets is to bill the customer on the basis of number of hours worked. This approach gives more focus on number of hours worked rather than quality of hours worked. Instead, price to the customer should be based on the value which is created using the work done for the customer. Thus, CPA firms SHOULD NOT maintain time sheets for their employees.

When time sheets are used, the approach to price the customer becomes cost-based pricing which will not let you unleash the value which can be created using value pricing. Under value pricing, price is determined on the basis of scope of work and the technicalities involved. The cost then becomes a secondary matter.