CPA TRENDLINES

Welcome....

2010-01-28T13:01:00.002-05:00

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WELCOME TO THE ARCHIVES

2005-04-08T00:01:00.002-04:00

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MOBILE TECH:Get Going or Get Left Behind

2005-04-07T09:13:00.000-04:00

Do you know the right specs for your next notebook, Tablet PC or handheld?

By Rick Telberg
Special for HP

Leading-edge accountants and financial managers are increasing their productivity and their work satisfaction thanks to the new wave of mobile technologies.

From smart phones and handhelds to that old staple, notebooks, mobile devices are freeing accountants to take their work with them -- anywhere in the office, on the road, to off-site meetings, visiting with clients, across the country or around the world. Meanwhile, wireless networking has evolved into a mature and nearly ubiquitous technology that's cutting costs and still adding more productivity.

Accountants not current with wireless and mobile technologies risk lagging behind both their competition and prospective clients. International Data Corp. has estimated that three quarters of American organizations have wireless or mobile systems in place by now.

M-commerce has overtaken E-commerce as business technology's buzz and most significant issue in 2005. More powerful processing chips, longer-lasting batteries, better synchronization, and wireless everywhere are making CPAs and other technology savvy professionals more efficient while on the road meeting with clients than their colleagues are while tethered to PCs in home offices. Thirty-one percent of global workers recently surveyed by a research affiliate of The Economist magazine called mobile technology "critical" to their success and 75 percent said their productivity would increase with greater access to mobile systems.

Productivity within and outside the office is gaining by leaps and bounds, thanks to wireless networking, which uses radio waves rather than wires to send data between devices. For accounting firms, this means adding a temp or new staffer merely requires turning on a computer as opposed to the expense of rewiring walls, adding equipment jacks or reconfiguring desktops.

Wireless configurations range from simple one-room networks that connect desktops with printers, to wide area networks in which traveling salespeople use cellular providers to connect their wireless laptops or handhelds with home office files to access pricing or inventory information.

The most popular wireless protocols are the Wi-Fi or IEEE 802.11 family of standards that operate at frequencies that require users to obtain a license to operate their equipment, and Bluetooth, whose frequency allows unlicensed use.

When shopping for wireless devices, look for ones with built-in support of Wi-Fi, Bluetooth or both. Look, too, for ones known for ruggedness: The road can be rough.

Here's a closer look at some of the key devices for today's mobile accountant.

Notebooks: For traveling accountants, this remains the most essential tool. Recommended specs: 1.8 GHz or higher CPU; 60 GB Hard drive; 512 MB of RAM.

Tablet PCs: Accountants are using the new breed of Tablet PC to take notes in meetings, make presentations and communicate critically important business performance information fast, easily and clearly to management and clients. Recommended specs: 1 GHz or higher CPU; 512 MB or RAM, 40 GB hard drive with integrated graphics.

Handhelds: PDAs have morphed into handhelds that combine address books and calendars with high-resolution screens, integrated cameras, Wi-Fi antennas and built-in cell phones. Recommended specs: 300 MHz CPU; 128 MB RAM; and Palm 5 or Windows Mobile 2003 OS.

VENDOR TRENDER:Clues to the Market in NetSuite Channel Move

2005-03-30T16:52:00.000-05:00

The merely average need not apply.

Adam Ross, the new head of channel sales at NetSuite, is looking for not-your-everyday CPA firm resellers. And that says something about where the CPA market is going.

To be sure, the CPA community remains a core focus for NetSuite and probably always will.

But with NetSuite, which incorporates now a host of integrated applications, resellers will need to be well-versed in everything from debits-and-credits to customer-relationship-management and back again. Many CPA firms sell and service only accounting software, and low-end stuff at that.

If Adam's name rings a bell, it may be because he's been tending the VAR vineyards for about nine years, starting with ACT!, moving on to SalesLogix and arriving at Best before joining NetSuite, which has been funded by Oracle's Larry Ellison.

His views may a harbinger of the future. And certainly worth listening to. There may always be a place in the profession for CPAs who service entry-level software. But as clients grow, they'll need more. CPAs can choose to grow with them, or hand them off to other colleagues in the profession.

BUSY SEASON UPDATE:Entering the Final Stretch

2005-03-30T10:20:00.000-05:00

Most now say conditions are better or the same as last year.

In the current results, it appears that pressures on tax professionals eased slightly in the latest week, with a minority, instead of last week's slight majority, reporting relatively difficult conditions.

How's the busy season going so far?
Better than last year: 21%
About the Same: 35%
Not as Well as Last Year: 44%

Interestingly nevertheless, most practitioners are reporting advances in all key operational and financial measures -- revenues, profits, clients, etc.

As of right now, what kind of tax season are you having this year, compared with last year's? (Percentage answering “significant” or “some” increase.)
Total Revenue: 60%
Net Profit: 58%
Number of Clients: 72%
Number on Extension: 42%
Revenue per Client: 64%
Profit per Client: 54%

So what's going on?
Are tax practitioners working harder and enjoying it less?
If so, what would you do differently next year?

A shocker: Respondents suggest personal and inter-personal issues can be just as troublesome this time of year as technology issues or new rules and regs:

Which of these issues is having a significant impact on the filing
season? (Please check all that apply.)
64%: Clients late or unprepared
52%: Shortage of good staff
26%: Technology problems
25%: Personal or family issues
25%: Partner or office issues
24%: New rules, regs, forms
18%: The general economic situation
13%: Last-minute changes by the government
10%: IRS operations
2%: New competition in my area

Why can't CPAs just get along?

Click here, to report your current conditions or to join the survey panel and get your own "sneak preview."

FIRM ASSOCIATIONS: Facing the Issues

2005-03-23T12:19:00.000-05:00

And bending with the times.

First indications from a canvass of CPA firm association directors shows they are facing the same pressures as state societies and firms themselves.

And they are battling back with a host of ideas and programs. But most of all, they are leveraging their core assets: Strength in numbers.

Here are a few verbatim responses (edited for confidentiality while the project remains a work in progress) received by email. The complete report will contain additional interviews and follow-ups with more association directors.

Association directors and interested firms can contact us directly with questions or comments at rtelberg@telberg.com, or (914) 674-4531.

Or you can leave additional comments by clicking on the “COMMENTS” link at the bottom of this entry.

VERBATIM RESPONSES (edited for confidentiality)

RESPONSE 1

1) WHAT ARE THE MAJOR TRENDS OR ISSUES IMPACTING YOUR MEMBERS AND YOUR ASSOCIATION TODAY?
- Partner succession
- Staffing: retention, utilization, productivity, inter-generational issues
- Technology
- Business development
- Developing efficiencies - improving realization/profitability
- Evaluating/developing new member services and practice niches
- Developing a firm culture based on high moral and ethical standards, where "disciplined people" can thrive and contribute to "great performance". (Jim Collins, "Good to Great")

2) WHAT ARE YOU AND YOUR FIRMS DOING ABOUT IT? OR, WHAT SHOULD THE PROFESSION BE DOING ABOUT IT?
- The total network includes International and Asia Pacific, giving members global resources.
- On-going CPE addresses current issues and trends, combining presentations by high quality speakers and members
- Annual Economic Data Survey for benchmarking
- Leveraging network knowledge
- Development of focus groups, based on member needs
- Encouraging and facilitating greater exchange of information and resources and member collaboration
- An email-based "SOS" program for urgent requests and other information sharing
- Seeking and developing resources and alliances to support member needs
- Participation in IFAC's Forum of Firms initiative

3) HOW'S IT WORKING? DO YOU HAVE ANY EXAMPLES OF THE RESULTS?
- CPE is consistently well evaluated
- The Economic Data Survey report is reviewed in detail at our conference. Part of the review includes a narrative and/or live report of what steps members took to make improvements in their stats
- We recently launched Groove (www.groove.net) collaboration software association-wide with very positive results. For example, the Not-for-Profit focus group has developed a searchable database of audit management letter points which can be easily reviewed and retrieved.
- The knowledge-base program, including Groove, provides resources and opportunities for member-to-member interactions and collaboration. For example, the focus groups participate in periodic conference calls to discuss current issues and exchange information.
- In addition to our global affiliations, we have a strategic alliance with a like-minded association of attorneys, who meet in conjunction with our conferences. This alliance gives member clients multi-disciplinary resources to handle issues such family business succession and/or exit planning.
- Membership in the Forum of Firms positions member firms well to handle international work and prepare them for new international standards as they are developed and implemented.

4) WHY SHOULD A CPA FIRM BELONG TO A FIRM ASSOCIATION? AND WHAT CRITERIA SHOULD THEY USE IN CHOOSING ONE?
- Our members tell us that one of the most important benefits is the opportunity to network and share ideas. Seasoned, long-term partners attend conferences to find fresh ideas and recharge their batteries. Newer partners look to their peers for information, support and informal mentoring. All staff levels and departments benefit from networking with each other. No one has to start with a blank page.
- Most small and mid-size accounting firms don't have the resources to be the "one-stop shop" that clients want. Association membership allows them to exchange information and share resources to provide their clients with the many services they are seeking.
- The on-going CPE allows firms to stay on top of the profession and maximize their productivity and profitability.
- Belonging to an international association gives member firms "local expertise and international presence" and adds to a positive perception by clients.

In choosing an association, firms should:
- match their needs and expectations to the association's list of services and benefits
~ where do they want to fit in terms of firm size?
~ what services are they looking for?
~ what firm goals would they like the association to help them accomplish?
~ what personal development goals would they like the association to help them accomplish?
~ what can they contribute to the association?
- use their list of expectations to interview the association and get specific
- attend an association function to make sure there is compatibility with the members

RESPONSE 2

1) WHAT ARE THE MAJOR TRENDS OR ISSUES IMPACTING YOUR MEMBERS AND YOUR ASSOCIATION TODAY?
The most significant trend affecting our members is the impact of changes to the profession caused by Anderson/Enron/Worldcom/Sarbanes Oxley/PCAOB/Parmalat. These changes have created substantial opportunities for second and even third tier firms. Those firms that have proactively recognized the importance of membership of and active participation in an association like ours are well positioned to take advantage of these opportunities. The challenge that our members are facing is the ability to demonstrate that their membership in an association of CPA firms does in fact represent a viable alternative to the networks available at the Big Four and the other international firms like BDO, Grant Thornton etc.

The biggest challenge faced at the association level is getting the message to CPA firms about the strong value of membership in an association of firms. (Interestingly enough, it is apparent that the message is starting to register given the number of articles that have appeared over the past few months about this specific subject.

2) WHAT ARE YOU AND YOUR FIRMS DOING ABOUT IT? OR, WHAT SHOULD THE PROFESSION BE DOING ABOUT IT?
The proactive firms are definitely getting the message about the abundant opportunities in the marketplace and are taking full advantage of their membership in associations at the local level. As is the case with many opportunities or challenges it takes the profession some time to absorb change and an even longer time to take advantage of change. A strong association, where member firms are active participants, opportunities become far easier to identify and change becomes far easier to accept. This phenomenon can only be attributed to the power of the mutual exchange of ideas generated in a non-competitive environment of member firms that are willing to work together for the good of their fellow member firms as a whole.

The profession seems to be recognizing the value of membership in an association (perhaps as reflected by this proposed article) and by continually reinforcing the benefits, more firms will eventually realize what they are missing.

Separately our association has become a sponsor at various conferences targeted to the profession with a view to raising the profile of associations and the role they can play at the local level. Given the extent to which the profession is unaware of the advantages, we recognized that this would be a three year program and are now in our second year.

3) HOW'S IT WORKING? DO YOU HAVE ANY EXAMPLES OF THE RESULTS?
There have been several significant opportunities that our member firms have secured as a result of the "fallout" described above and the positioning of the respective member firms in taking advantage of the fallout.

These opportunities include:

Joint proposal to a publicly traded German company with operation throughout Europe and in the United States. Participants in the opportunity included a firm located in California and the lead firm in Germany. The biggest hurdle was demonstrating that the members of the association were in a position to offer the same level of sophisticated services rendered by the existing accountant (a Big Four). Through the proposal process, our member firms were able to demonstrate a close working relationship with strong local talent and were ultimately successful.

Another opportunity existed for a strong local firm in the US. A large publicly traded US company (with worldwide operations whose audit and tax services were being provided by Big Four) was concerned about their sky-rocketing audit and tax fees. They were introduced to a member firm with strong local tax talent. They were quite concerned about the services required around the world. Throughout the proposal process and after a review of the offices around the world the work was awarded to our association’s local firm for a minimum of three years.

While these are significant opportunities, they are not the norm. The more realistic opportunity is generally mid-market companies who historically have not recognized that there are viable alternatives to the large national and international firms. These opportunities are far more common and indicate the importance of membership of an association like ours.

4) WHY SHOULD A CPA FIRM BELONG TO A FIRM ASSOCIATION? AND WHAT CRITERIA SHOULD THEY USE IN CHOOSING ONE?
Clients are demanding greater sophistication in all areas of work performed by their CPAs. This sophistication not only impacts work performed at local level but on a national and even international level. In order to meet these demands, CPA firms need to be able to bring solutions that reflect specialization at the local level and also national and international level.

In addition to meeting client needs, demands of running a local firm have grown over the last ten years. Changes in the profession, changes in clients needs, changes in employee issues, changes in standards etc cannot be fully applied to a local firm in a vacuum. Membership in an appropriate association will provide a strong network for discussing practice management issues and for developing best practices scenarios that benefit each of the member firms.

Firms looking to be a member of an association need to make sure that:
1) The members of the association share common goals and objectives (which should be consistent with those of the firm). For example the firms should generally be of similar size, and the philosophy of member firms should be fairly homogenous.

2) The members of the association are subject to some level of peer review by their fellow members.

3) Strong national and international spread of coverage.

4) The association holds regular meetings to encourage networking and the development of strong bonds between member firms.

5) IS THERE ANYTHING WE SHOULD BE ASKING ABOUT TRENDS IN FIRM ASSOCIATIONS THAT ISN'T COVERED HERE?
One interesting trend that has been percolating over the last few years is the role that associations are playing in bringing firms together in more permanent ways. A good example of this change is the formation of one association recently which developed out of close relationships that were built among members of one particular association. An unfortunate side effect of such a development is the impact on some of the firms that did not fit into the profile that the new association was attempting to develop. Some of these firms were forced to look to other alternatives to meet their own needs. (This goes to my earlier point about the importance that members of the association share common goals and objectives.)

It is inevitable -- in an era where mergers are prominent -- that the close relationships that develop between members firms within an association leads to possible mergers over the next few years.

RESPONSE 3

1) WHAT ARE THE MAJOR TRENDS OR ISSUES IMPACTING YOUR MEMBERS AND YOUR ASSOCIATION TODAY?
SOX legislation.

2) WHAT ARE YOU AND YOUR FIRMS DOING ABOUT IT? OR, WHAT SHOULD THE PROFESSION BE DOING ABOUT IT?
We have set up two SOX committees - one in Europe & one in North America. They are being guided by one of our members experienced in the field to obtain the required training to help companies comply with section 404.

3) HOW'S IT WORKING?
It is starting to work. We have one engagement in progress involving 5 different firms in five different countries. and we have two other proposals submitted.

4) WHY SHOULD A CPA FIRM BELONG TO A FIRM ASSOCIATION?
It expands their horizons by exposing them to different business cultures, enables them to retain clients who may think they have to change to one of the big 4, and it gives them an opportunity to exchange problems with peers in a non-competitive environment.

5) IS THERE ANYTHING ELSE WE SHOULD BE ASKING?
Firms should ask of associations:
-- Are they growing, staying steady, or stagnating?
-- Are mergers happening and if so are they working out?
-- What services are they providing to their members?

RESPONSE 4

1) WHAT ARE THE MAJOR TRENDS OR ISSUES IMPACTING YOUR MEMBERS AND YOUR ASSOCIATION TODAY?
* Finding enough staff. There is plenty of work right now, but will we firms be able to find the staff to do it all?
* New wave of consolidation/mergers.
* Leadership/grooming the next generation.

2) WHAT ARE YOU AND YOUR FIRMS DOING ABOUT IT? OR, WHAT SHOULD THE PROFESSION BE DOING ABOUT IT?
* Staffing: Some of our firms are hiring from abroad. Lack of facility with English can be a problem.
* Mergers: Some of our firms have merged or acquired firms to be
able to win larger engagements.
* Leadership: Our Association now has a leadership program for new partners and
for managers.

3) HOW'S IT WORKING? DO YOU HAVE ANY EXAMPLES OF THE RESULTS?
* Staffing: The staffing shortage continues.
* Mergers: Those firms that have upped their size have positioned
themselves well to take advantage of the SOX fallout.
* Leadership: Our program has received rave reviews from the
managing partners and from the attendees.

4) WHY SHOULD A CPA FIRM BELONG TO A FIRM ASSOCIATION? AND WHAT
CRITERIA SHOULD THEY USE IN CHOOSING ONE?
* Each association is unique. Our members join to share best practices and technical expertise, benefit from leadership development and coaching, and have a robust national and international network to help serve their clients. Without a network you are alone; with a network a world of opportunity opens to you.

* For firms considering joining an association, talk to the members. Find out if the member firms share similar issues and concerns of yours. Why do they belong? Will you be able to learn from the group, and will you be able to contribute? Is the network broad, both nationally and internationally? Would you feel comfortable referring a valued client to another member firm?

RESPONSE 5

1) WHAT ARE THE MAJOR TRENDS OR ISSUES IMPACTING YOUR MEMBERS AND YOUR ASSOCIATION TODAY?
Our members are impacted in numerous ways, including:
How to keep up with changes in the profession.
How to keep up with changes in the marketplace.
How to increase profitability.
How to improve quality of practice.

2) WHAT ARE YOU AND YOUR FIRMS DOING ABOUT IT? OR, WHAT SHOULD THE PROFESSION BE DOING ABOUT IT?
As an association we provide members with the latest information through the following initiatives:
Networking and collaborative efforts
Three leadership conferences per year where we provide highly qualified and successful speakers to address current issues in the profession and the marketplace. These conferences provide exceptional networking opportunities as well as informative and substantive leadership training.
A Marketing Program which helps medium size firms effectively address marketing issues in a cost effective manner.
Benchmarking, Technology, and Human Resource surveys which are compiled, shared and discussed in depth with members at Leadership conferences.
A website with an online library, a database of services provided, message boards, and where information can be exchanged.
One-on-one firm counseling.
We provide yearly staff training and sales/advisory training to improve the skill sets of member firm's employees, from associates to partners.
Newsletters
Technical issues sub-groups to address trends in the technical areas of Tax, Accounting & Auditing, and Technology.

3) HOW'S IT WORKING?
We’ve produced valuable relationships and sharing quality work and providing increased profits for our firms. We have also established numerous affiliations and alliances which have either produced revenue or cut costs for our member firms.

4) WHY SHOULD A CPA FIRM BELONG TO A FIRM ASSOCIATION? AND WHAT CRITERIA SHOULD THEY USE IN CHOOSING ONE?
Belonging to an association is only of benefit to a firm if the association is working diligently and successfully to provide benefits to the member firms, such as those listed above.

The criteria for joining an association include those where member firms are matched in their firm size and expertise, where the association can best meets the firm's needs for the future and where the association and its members provide assistance in achieving long-term goals and improving their practice.

RESPONSE 6

1) WHAT ARE THE MAJOR TRENDS OR ISSUES IMPACTING YOUR MEMBERS AND YOUR ASSOCIATION TODAY?
The number one issue our firms are talking about is "Exit strategies for today's owners."

Our conferences have and will continue to focus on two possible solutions: Selling or merging your practice and/or training the next generation of partners (internal sale). The problem the association faces is that many of our firms are being approached about selling or merging their practices. In the last three months two of our members have either been acquired or are in final discussions with other practices about merging.

Although we have been fortunate to retain both members, as the larger regional firms begin to buy market share, our members will be likely targets and we will be forced to either find new firms to replace them or change our model regarding geographical exclusivity or admitting firms who belong to other associations.

3) Regarding results:
It is too early to tell what is going to happen but my informal discussion with many members is that they see selling their practices as the most viable option to their retirements. "They just ain't making partners anymore!"

4) Why belong?
It's like joining a support group...you get to find out that everyone else has similar issues and many times they get to learn from other's experiences. Benchmarking is also a great benefit as is staying ahead of the curve. Our members learned about "outsourcing" four years ago. We are early adopters and early adopters get the worm.

Look for an association that has similar sized, similar thinking firms. The issues of smaller firms are not the same as larger ones although larger firms seem to think that they cannot learn from smaller ones. That is just foolishness. Small firms can get to market faster. Do not join an association to get referral business. Look for a dues structure where everyone is on the same footing. Associations where dues are based on size of the firm are run by those that pay the most!

5) What else?
How come firms in the Midwest and West are so underrepresented in associations? Read PAR's CPA Firm Association Directory issue (January 31, 2005) and notice that almost every association is looking for firms west of the Mississippi!

BUSY SEASON UPDATE: Suddenly, Rough Going

2005-03-22T17:06:00.000-05:00

It's been a rough week for tax pros and financial execs grappling with the twin demons of the IRS and SOX.

The percentage of respondents who say operating conditions are running worse than last year has jumped to 51% from 33% in one week.

Of course, the data could be skewed by the mid-March SOX filings. And the season's not over until the fat lady sings. (Now, if ONLY we could remember the tune, we'd have something to look forward to.)

So, How's YOUR busy season? The polls are open all season. Click here to join the sample group and get the regular updates. Less than three weeks left!

How's the busy season going so far?
(as of week of March 21, 2005)
Better than last year: 28% (versus 41% last week)
About the Same : 22% (26% last week)
Not as Well as Last Year: 51% (33% last week)

RANDOM VERBATIMS

I was an audit manager at a big four public accounting. I left in late 2004 due to the black cloud named SOX that was looming on the horizon. I could see our firm was grossly understaffed and would not be able to handle the work coming our way (nor were they making any real changes to address the problem outside of "we'll make it work"). Busy season had always required very long hours, so adding SOX to the workload was unthinkable using the same staff. Personally, I had already given 5 prime years of my life working insane hours and could not bear giving anymore. I recently spoke with my old staff and their comments to me consistently reflect that the effect of SOX on the office is far worse than they could have possibly imagined. ... The staff on SOX engagements are working from 8 am to 9 pm everyday (sometimes until 3 am), including weekends, and are having their meals delivered to them so they don't leave their desks. They speak proudly that they were the last person in the group to have a "breakdown." Even if these staff people had wanted to leave the firm, they have no time to look for another job or are still too new to the firm to have the marketability they hoped to gain from working in public. ... These comments lead me to believe this is truly a horrible busy season for some. In this last article, I noticed quotes are disproportionately from partners, and I would be very interested in hearing from staff from large firms grappling with SOX (at the Microsofts, GEs and Coca Colas of the world). As we all know, most things roll downhill.

Head of tax department left, only 1 employee left (me!). No one's checking my work, there's no one to ask questions of - very stressful.

Had hired helped but did not have the experience they needed. Had been misinformed

Better prepared, fewer changes for my clients

More hours. The work itself is fantastic. There are challenges and comfortable "as-usual" accounts all in the same day, but I wonder why accountants put up with the schedule. There must be options other than 12-hour days, 6-7 days a week. I suppose if I were 22 and single, and work was my main social outlet I might feel differently. As an older staff accountant, I have a different view on the demands of work over home, and yearn for a reasonable alternative.

E-Filing added additional burdens. New tax preparers needed training. Younger CPAs are not as work-oriented as those who are older.

A combination of SOX and restatements are killing me. Eight 80 hour weeks in a row is not my idea of fun.

Full staff. Last year had one out on maternity leave. Absorbed two large clients last year. Not taking new business this year. Much of the work was delayed due to compliance work taking precedence on our clients part - forcing 3 80 hour weeks in a row - many of the big companies have outsourced parts of their accounting - covering all the bases and assuring security of information is becoming a nightmare.

Later nights, longer Saturdays.

More clients are e-filing their returns.

I have reached the point in my career when peers in other industries are referring me business. I am able to make a much greater contribution to my firm's bottom line other than by billable hours alone. My career really feels like it growing. I hope that my reviews and raise reflect that sentiment.

Much more emphasis on audit support, and more pressure around SOX and 404 compliance. Plus, we can do less work for our audit clients, and when we do it is somewhat contentious at times.

More involved audit requires greater dedicated resources.

NEW SURVEY IN THE FIELD:Making Work More Livable

2005-03-21T12:14:00.000-05:00

Can you share some good ideas?

We’re looking for a few good ideas from accountants, or effective programs from employers, that are aimed at alleviating early burn-out. For our latest on the topic, check out "How Happy Are You to Go to Work?"

If you have a good idea or a program to talk about, please join the new survey we just launched, here.

MANAGING:How Happy Are YOU to Go to Work?

2005-03-21T12:11:00.000-05:00

The double whammy of SOX and tax season is taking a toll. How's YOUR busy season going so far?

by Rick Telberg
At Large

Who's excited about going to work in the morning? Of the hundreds of accountants we asked, the yays outnumbered the nays, but not by much, and about half of both groups were a little equivocal.

Like most other people, they had good mornings and bad. But the combination of tax season and Sarbanes-Oxley is a double whammy slamming CPAs these days. So who can blame them?

A total of 56 percent said "yes," they are excited to go to work in the morning. That's not an overwhelming majority. And even then, almost all admitted that "excited" was a little strong for their morning emotion, at least on some days.

Several preferred using the word "enjoy." Others chose instead "love," "like" or "look forward to." One really liked the word "juiced" to explain his feeling in the morning.

Some people just couldn't get enough. Excited? "Even at 76 years of age," said the managing partner of a small firm in Independence, Mo. "Evenings, too," said a consultant in Mountain Lakes, N.J.

Some were apparently keeping track. One felt excitement 85 percent to 90 percent of the time. Another hit just 40 percent.

Others had already had enough. A weary partner said, "After 27 tax seasons, it's getting old."
"Not as much fun as it used to be," said another partner.

Another said, "After putting in one 12-hour day after another, it is difficult to muster the excitement that I once had about going to work every morning."

Those who still feel the excitement of accounting get it from either their daily challenges or the people they work with.

A managing partner in Renton, Wash., said it well: "I am stimulated by working with people, analyzing challenges and communicating solutions to clients."

A partner in Basking Ridge, N.J., had a similarly healthy approach: "I enjoy what I am doing and enjoy helping others, which is the way I look at my work."

Someone in middle management at a regional firm expressed a feeling common to both groups: "I am excited some mornings, but busy season wears you down."

The busy season seems to have accounted for many of the 44 percent of negative responses. What the cheerier CPAs saw as challenges, the gloomier saw as pressure and stress.

"Too much to do during tax season and so few hours," according to a managing partner of a small firm in Atlanta.

Even some of the positives had really bad days. "I generally enjoy work," said a reader in middle management at a mid-sized firm, "but there are some mornings I would rather eat dirt!"
"Sometimes the work is drudgery and the client has no idea of the time it takes to get the job done right."

A more common sentiment: "If it's the same old stuff, no. I do get excited about new challenges, though."
Not one person praised the excitement and challenge of complying with the federal government. In fact, the opposite was true. One manager of a Sarbanes-Oxley 404 project professed excitement "until last week when finger-pointing ensued over the client's SOX project."

Ditto for someone in corporate middle management: "It stopped being fun when we started our 404 compliance activities last year."

But as we all know, SOX wasn't supposed to inspire excitement. It was meant to prevent it.

NOW IT'S YOUR TURN: How's YOUR busy season going so far?

COMMENTS? Send your rants, raves, questions or idle thoughts to Rick Telberg at malto: rtelberg@telberg.com.

TAX SEASON: What's Bigger than Clay Aiken or Paris Hilton?

2005-03-21T09:47:00.000-05:00

Answer: The IRS website.

In the midst of the annual tax season, the IRS says its Web site, www.irs.gov, is averaging more than 1 million hits a day.

"Just to give you a frame of reference," says Mark Everson, IRS chief, "one major search engine reported in a recent week that we were surpassed only by Paris Hilton, Clay Aiken, Pamela Anderson, Britney Spears and a poker game."

VENDOR UPDATE:PayCycle Online Payroll Shifts into Higher Gear

2005-03-18T14:31:00.000-05:00

Adobe executive James Heeger joins co-founder LaCerte as new CEO

PayCycle, whose customer base has doubled to 18,000 in the past year under founder Rene LaCerte (yes, THAT LaCerte family), has hired James Heeger, senior vice president at Adobe Systems, as president and chairman.

Lacerte, current CEO, will become CFO and lead the company's finance and business development efforts. Lacerte, who helped start the online payroll provider in 1999, goes back a long way with Heeger. They worked in Intuit's payroll business together at one time. And Heeger has remained a friend and confidante.

Payroll, mundane as it is, is no small business. It may be a $10 billion a year market. Maybe that's one reason it's in LaCerte's genes. He started in business working payroll for the family operation in Florida.

BUSY SEASON UPDATE:Good, Bad, and BUSY!

2005-03-15T09:34:00.000-05:00

Despite staffing shortages, tax season seems to be running smoothly, with more ups than downs. How are YOU doing?

by Rick Telberg
At Large

For America's accountants, 'tis the season to be busy, and busy they are. But apparently there's "good" busy and "bad" busy.

Far more accountants are good-busy than bad-busy. For instance, in our early straw polls, 33 percent of CPAs say the season so far is running "better than last year." About 49 percent call it "about the same." And 18 percent term it "not as well" as last year's.

Of course, finance managers and executives are suffering their own first-quarter crunch. And this year, their most common complaint is Sarbanes-Oxley 404 and increased auditor scrutiny.

But almost everybody has something to say.

And most of it is something akin to a gripe. If they are busy, they are too busy. If they aren't busy, it's because business is bad.

A sole practitioner seemed to speak for dozens of others: "Better than last year financially, but way behind on deadlines due to increased work."

"Buried," said a managing partner of a small firm.

"Dragging on," said a staff member of a slightly larger firm. A senior partner said, "I feel overwhelmed and crazy with all the pressure." An overstressed staff member confessed: "I'm a zombie already!"

One mid-level firm manager said, "I'm already tired." A managing partner said, "I'm exhausted," and another said, "I'm running out of steam."

The leading cause of busyness: shortage of staff. Dozens of accountants specifically mentioned lack of staff or time devoted to training newbies. A handful said staff additions had alleviated problems.

Said one partner of a small firm, "After years of stable staff, we've experienced some turnover. It's amazing what you take for granted. Maybe that's why we had the turnover."

Having too many clients (and too many slow clients) was a far more common problem than having too few clients.

A partner at a very small firm, complaining of only five hours' sleep, revealed a tempting solution: "I will continue to increase my prices and cut back on clients." A sole proprietor in Redding, Conn., said the season was going well because "I am getting better at saying 'no' to client requests for my time."

Technology was helping some, hurting others. A partner in Tennessee said, "It's going 100 percen better than last year. Our systems seem to be working thus far." But a senior partner in a mid-sized firm said his "firm's efforts to implement 'paperless' procedures are making the busy season difficult."

Not many complained of slow business, but a note from the Rust Belt may reflect a common problem: "In Michigan, it is a very bad business climate, thus it gets depressing watching good clients have to close their doors."

NOW IT'S YOUR TURN: How's YOUR busy season going so far?
COMMENTS? Send your rants, raves, questions or idle thoughts to Rick Telberg here.

BUSY SEASON UPDATE:Signs of Improvement

2005-03-15T08:49:00.000-05:00

Busy season seems to be swinging into practitioners’ favor.

Compared to last week, more tax pros and financial executives are reporting that their busy seasons are running “better than last year.”

So, How’s YOUR busy season? The polls are open all season. Click here to join the sample group and get the regular updates. (Or you may need to cut-and-paste into your browser: http://www.zoomerang.com/survey.zgi?p=WEB2247MD58STC)

How's the busy season going so far?
(Beginning the week of Monday March 14, 2005)
Better than last year: 41% (up from 36% last week)
About the Same: 26% (versus 27% last week)
Not as Well as Last Year: 33% (down from 37% last week)

SAMPLE VERBATIMS:

unable to find trained and competent help

More referrals

I have another year of experience. Not as many new accounting pronouncements for non-public companies this year.

more new clients, more business, farther behind than last year

More work, less qualified staff. All individual taxes are electronically filed.

more work and less people than last year

Management keeps pushing up tax calcs.

Not enjoying the work as much.

efiling

Paperless on all individual returns

New director of taxes, at an owner experience level, coming in with no clients of his own. My workload should be split in two with him, but has stayed the same due to all the work that used to just be left on the table or not fully addressed. Scary that I can load 2,000 chargeables on to his shoulders, and my chargeables don't drop. Now we are both swamped. And this is at the only firm you have ever heard of where firm policy prohibits active marketing. We couldn't handle the results of good marketing. Still, even though we are both swamped, the nature of the stress has eased up a lot with an entire new person sharing my load, so it's much better. And the future should be better still. We are now 4 CPAs including 2 owners, plus an office manager and a write up/payroll person, 1100 separate annual tax filings, plus audits, reviews, writeup & special projects and consulting. About 10,000 annual chargeables..

I have not encountered many efile rejections.

more clients

clients are more unprepared than usual, they are more confused about taxes than ever. more are being hit alt min tax

Slow start on personal returns. Info came in later than usual

It seems we have plenty of work but the cash flow for this time of year isn't very good.

We are controlling work flow better

First, I came into tax season with projects that could not be completed last year due to slow cooperation from the client and/or attorney. Second I have picked up additional business that I have not been able to get to. However, the tax returns are turning around only slightly behind schedule. My top concern is being able to keep up the pace.

STATE SOCIETIES:What's the Real Deal?

2005-03-15T07:49:00.000-05:00

State societies are reacting with energy and innovation to a bevy of weighty challenges.

Here are some early results from a canvass we are currently conducting of the State-of-the-State of State CPA Societies...

Trends affecting societies:
1. Membership declines.
2. CPA firm mergers (bigger firms buy less CPE).
3. CPA brand competition.
4. Increasing costs and prices of live CPE.
6. Increasing demand for online learning.
7. Membership demographic shifting female

Issues/trends affecting members:
1. Finding staff.
2. Technology (Keeping up with it, competing with it, and/or competing against it.)
3. Work-life balance for new generation.
4. Lack of succession planning.
5. Increased regulatory activity.
6. The rise of new non-CPA competitors, from H&R Block to local banks.

VERBATIM RESPONSES

While the study remains a work in progress, we are holding the names of the respondents in confidence. Thus, you'll notice some editing in the verbatim responses. But otherwise, they are published here in their entireties.

RESPONSE #1

QUESTION 1: What are the most important trends or issues impacting your organization in particular, or your members in general?
There is an ongoing effort to liberalize the existing accounting statute, to allow the provision of services and use of accounting titles, by individuals who do not hold the required credential elements - in particular education and examination. The issue has been raised in the legislative arena, without success. At present the issue is now before District US Court.

QUESTION 2: What are you doing about it? What programs, remedies, activities, strategies, solutions, etc. are you undertaking in the face of these challenges or opportunities? Or what should the profession as a whole be doing about it?
We continue to actively represent the accounting profession, in the legislative arena.

RESPONSE #2

QUESTION 1: What are the most important trends or issues impacting your organization in particular, or your members in general?
The younger generation of members are not as interested (or available) for actively serving in Society positions nor attending Society business functions. I think they feel either disconnected from the organization (which may be at their own choosing, or problems with our communication methods), or they simply think "someone" else can handle the matters of the Society. I think the firms place a much higher value on what their employees do to elevate the firm, than what their employees do to nurture and secure the reputation of the accounting profession.

QUESTION 2: What are you doing about it?
We are working on changes in our governing structure from a very complicated one put in place in 2000 to a simpler structure. Also, lessening the number of standing committees. Retaining some standing committees, but moving toward Task Forces which are given specific measurable tasks each year. Also, Committee Chairs are to be invited to serve as chair each year by the incoming Chairman of the organization. Also, efforts are being made to bring together the two primary constituencies of members [in key cities]. Having two metropolitan areas 500 miles apart and quite dissimilar in characteristics complicates efforts toward a truly united statewide organization. Our new governing structure, (Board of Directors), will automatically include a member or members from the boards of those Chapters.

THE MORE PUBLIC SERVICE ANNOUNCEMENTS THAT THE AICPA CAN FUND ON RADIO STATIONS WHICH EMPHASIZE THE QUALITY OF CPAS, AND STATES "THIS MESSAGE IS BROUGHT TO YOU BY THE AICPA AND YOUR STATE CPA SOCIETY"..........THE BETTER. THE MESSAGE CONVEYS NOT JUST THE INFORMATION YOU WANT TO REACH THE PUBLIC, BUT ALSO INDICATES A CERTAIN PRESTIGE FOR A CPA TO BE A MEMBER OF HIS STATE CPA ORGANIZATION.

QUESTION #3: How's it working?
Ask me in a year.

RESPONSE #3

QUESTION 1: What are the most important trends or issues impacting your organization in particular, or your members in general?
Our most recent Board planning session took the pulse of every major segment of our membership (Publicly-traded & privately-held corporate, government and non-profit, large firm to sole practitioner) and came up with a list of almost one hundred major issues. Yet when we looked for the root causes or fundamental drivers, there were only four -
1) Work-Life Balance (which includes staffing shortages, succession planning, student recruitment, etc);
2) Increased Regulations and greater risk (post SARBOX impacts);
3) Training & Development; and
4) Impact of Technology.

Each one of these had major impacts into each and every segment of our membership - from sole practitioners struggling with the changing regulations and standards to public company CFOs & large firms struggling to implement Section 404, they all agreed that the Profession was still navigating the whitewaters of change.

QUESTION 2: What are you doing about it? What programs, remedies, activities, strategies, solutions, etc. are you undertaking in the face of these challenges or opportunities? Or what should the profession as a whole be doing about it?
Mobilizing our members! The power of associations is very simply stated as, strength in numbers. Time after time in our one hundred year history we have examples of how small groups of CPAs have made huge contributions to the CPA Profession and the public at large. Now is the time when we must leverage the collective talents of the CPA Profession to solve some of these BIG problems. We are working on several key initiatives and many educational/informational initiatives - each targeted to help specific segments of our membership.

Our biggest priorities directly address the first three fundamental issues (Work-life; Regulatory; Training & Development) facing our members:

1) Work-Life Balance - several of our largest initiatives directly impact our members' struggle to deal with this issue. The regulatory changes as a result of SARBOX combined with the profession wide staffing shortage have made work-life balance almost impossible. Fortunately, we have been working on this for awhile, planting seeds that are now beginning to bear fruit.

Our student recruitment programs are building the future supply of CPAs to lessen the staffing shortage which impacts all segments of our membership. Our New/Young Professionals Network has worked to create a multi-year Leadership Academy to jumpstart CPAs into their careers and prepare them for leadership in firms and companies.

2) Increased Regulations & Risk - This is an area that proves the power of mobilizing our members. From the moment Enron collapsed, our Accounting Reform Task Force was formed and put out a whitepaper entitled, "The Road to Reform: Protecting the Public Interest, Strengthening the CPA Profession".

This effort has resulted in a comprehensive legislative and regulatory strategy that is based on a philosophy that our best defense against draconian SARBOX reforms in the private company sector is a strong proactive offense. The work of this group of our members has led to defeating a major SOX bill in 2003; participation in a major public hearing by our State Board of Public Accountancy and now three "proactive" bills in our legislature (Mandatory Peer Review, Substantial Equivalency, and Separate Funding for our State Board) that have the support of our regulators.

These bills also include the substantial equivalency provision from the Uniform Accountancy Act that is designed to help our members practice more easily across state borders.

Other important initiatives that help our members in this critical area include our Section 404 Task Force; new education programs in the areas of fraud detection, ethics, internal controls; a partnership with [a major liability insurer] to bring more risk management resources to our firms; and several sessions with the PCAOB to discuss new rules & regulations.

This spring we are planning small firm roundtables to help our small firms understand some of the major changes recently implemented and on the horizon (Ethics Rules 101-2; 101-3; Differential Standards; Tax changes; Succession planning; workload compression, etc.). All of these programs deal with this critical and changing area of the Profession.

The amazing thing I have found is that the diversity of our membership as State CPA Societies gives us a powerful advantage over vertical homogeneous organizations. Gathering CPAs from all segments - practice - government - industry brings a wealth of knowledge and perspective that enables us to solve some of these important problems in a holistic way that benefits all CPAs.

3) Training & Development - We see this as an area where we are making a major impact. Professional Development is a core competency that all State CPA Societies have since the Profession adopted mandatory CPE in the mid-1970s.

CPAs in all areas are struggling to keep up with the In Maryland, we sharpened this competency and expanded it in several key areas - leadership development; leading-edge technical training (fraud, internal controls, ethics, SOX, Section 404); and customized in-house training - where we bring timely, relevant training right into our CPA firms and Corporations.

Our Business Learning Institute has created major programs in leadership and management training to help CPAs acquire the critical hard skills required today. We also provide strategic planning services and competency plans to help firms and companies create custom professional development programs designed to help them accomplish their strategic initiatives.

4) Impact of Technology - We are in the process of several initiatives designed to enable us to provide more focused information to our members. We are involved in the national Shared Services project with the AICPA and a majority of the State CPA Societies. This is a long-term collaborative project to provide us with the technology infrastructure to better support and serve the diverse needs of our members. Without the help of technology, we risk becoming irrelevant as we focus on the fundamental issues of all CPAs without the additional capabilities of delivering information to each member in personalized or customized way. We are working toward the day when all of our members can get the most important and relevant information in the easiest way possible.

QUESTION 3: How's it working?
As they say the proof is in the pudding - results are critical in this day of tight resources and the extreme constraints on our members' most important asset - their time. We measure success by results and impact of our volunteers in addition to traditional ROI measures.

In the past few years we have seen enrollment [in state] accounting programs increase by five times the national average - a direct result of our more than 150 volunteers who annually visit over 4,000 high school and college students to talks about an exciting career as a CPA. This program has expanded to include financial literacy initiatives which also increase the image of the CPA. The ROI is huge when you factor the future staffing increase for our firms and corporations as these new accounting majors become productive CPAs.

Leadership Academy - from concept to launch in nine months with input from managing partners from firms all across the state and several CFOs of [state] companies.

Driven by our new/young professionals group, this initiative promises to help provide tangible benefits to CPAs and their employers. Using competency models from the AICPA Business & Industry Committee, the AICPA Assurance Services Committee, and Harvard Business School Publishing, we developed a six-year leadership program designed to create well-rounded professionals from entry in the Profession (Industry, Government, or Practice) to the point in their career that they become a leader. Our program is unique in that it features experiential volunteer activities that are designed to network the CPA in the business community, impact the community in areas like financial literacy or student recruitment, and learn how to influence the Profession of the future (regulatory and legislative involvement).

By integrating these activities into a competency-based curriculum, we believe we can provide more productive professionals that will help solve some of the major issues we face under the work life crisis (succession planning, staffing shortage). This should also build a solid foundation for regulatory and legislative advocacy to address the increasing regulatory risk facing our Profession.

Business Learning Institute and our "in-house" training efforts - Over 150 satisfied clients including Maryland's largest corporations, national CPA firms, local CPA firms, and privately-held companies held over 200 programs training over 4,000 CPAs in leadership, ethics, internal control, fraud detection, management and technical training. This is in addition to our traditional professional development programs available to all of our members. The measurable results are in our growth (this has doubled every year since its inception four years ago), customer satisfaction, and customer retention. Many of these programs and instructors have been included in our leadership academy.

Increased Regulations & Risk - Stopped the [State] Corporate Accountability Act in 2003 which would have imposed many Sarbanes-Oxley provisions on privately-held companies. Expect to pass reasonable reform in the form of mandatory peer review and get an added benefit of easier practice privileges by passing "Substantial Equivalency". Held a private session between our Section 404 Task Force and Chairman Bill McDonough of the PCAOB and created a referral bureau for CPA firms wanting to do 404 work.

These initiatives were driven by over one hundred volunteers over the past three years - from our Accounting Reform Task Force to our CPA Day attendees - these CPAs have demonstrated that a focused effort can produce big results - we have stopped the cascade of SARBOX from hurting [state’s] small businesses and their CPAs. We have also been successful in restoring the public trust in the CPA in Maryland through these same efforts.

Question 4 - what should you be asking?
I think the fundamental question is What can we do to revitalize the involvement of CPAs in their Profession?

Most CPAs in their 40s and 50s were told to join and be active in their Professional Associations (AICPA & State CPA Societies), yet that does not happen in this highly competitive and rapidly changing environment. Active membership from larger firms and companies has been on a decline for years. Young CPAs don't have the time or encouragement from their employers. More and more I hear the CPA as a credential and not a Profession.

I worry that we could go the way of the medical profession as it lost its voice in the marketplace. Doctors began specializing and lost their identity with the fundamental designation of Doctor. They spent more time in their specialty and stopped worrying about the profession of being Doctors. The result was special interest groups like trial lawyers and HMOs began to weigh in on their issues and they lacked the critical mass to fight them.

The CPA Profession is at that same tipping point today. The BAR association is weighing in on tax services and special interest groups are working congress and state legislatures with ideas on how to reform our Profession. As CPAs we all have a stake in our Profession and we are all impacted by the major forces of the marketplace. Only by sticking together as CPAs will we be able to maintain our role as trusted professionals. This is our biggest focus for the upcoming year...

RESPONSE #4

QUESTION 1: What are the most important trends or issues impacting your organization in particular, or your members in general?
The shrinking talent pool for firms; this is the number one issue. Hiring and retention of CPAs in public practice firms is becoming more difficult. There are so many obstacles to entering the practice now: the cost in time and money of the 150 hour requirement; the difficulties with the new CPA exam; the ability of CPAs to be certified without any public practice experience; the flood of work consuming the firms trying to comply with so many new rules and regulations, making firms less anxious to give candidates the time to study and take the exam on four (or many more) different occasions; the rising costs of the Becker course and the rising costs of the exam; the poor pass rate of the exam makes it less attractive to invest the time and money in the entire exercise; etc.

Of course, the shrinking pool will also begin to be reflected in the Society's long-term membership strength. An aging population, coupled with the above challenges will take their toll. Historically, industry members have not been as loyal to the profession -- partly because employers do not necessarily pay for association dues, and partly because members in industry are less likely to need the CPA certification to progress in their careers.

QUESTION 2: What are you doing about it?

We are changing the focus of our strategic plan to incorporate this problem, and will assign our Firm Development Committee to the Executive Committee to begin tackling these issues.

QUESTION 3: How's it working?
Retreat was held this month, we are still in the planning stages.

RESPONSE #5

QUESTION 1: What are the most important trends or issues impacting your organization in particular, or your members in general?
Issues/trends affecting [our state]:
1. Membership decline due to fewer people taking the exam and more Boomers retiring.
2. Increase in mergers and acquisitions of CPA firms could impact our revenue because bigger firms buy less CPE.
3. Expanding list of certifications in marketplace is making the CPA brand fuzzy.
4. A decreasing supply of new instructors and consolidation of CPE vendors may raise fees and limit offerings in CPE.
5. The trend for people to hold 7-12 jobs in their lifetime is creating increased need for career-related services.
6. Increasing demand for online learning.
7. Unknown effect of 150 hour rule taking effect 7-1-06.
8. Greater emphasis on specialization is weakening the CPA brand as the "gold standard" in accounting.
9. Our membership is gradually becoming more and more female. Understanding what this will mean... deserves attention.

Issues/trends affecting... members:
1. Finding staff is the most
urgent issue. It hits smaller firms and businesses hardest.
2. Providing services to clients online -- technology is a challenge for smaller firms.
3. Insistence on work-life balance by new employees -- once again, our members in smaller firms and businesses have the greatest challenge.
4. Lack of good succession planning.
5. Increased "aggressiveness" in the regulatory arena, both at the state and federal levels.
6. The rise of new competitors, such as H&R Block's move into providing comprehensive business services for small businesses. We think banks may start hiring CPAs soon to provide services to businesses.

QUESTION 2: What are you doing about it?
We're making major efforts in our college accounting programs -- visiting the students at least once a year all over the state to promote the CPA exam and the CPA profession. We're hoping to increase the pool of graduates for new hires and increase the number taking the CPA exam.

We're strengthening our relationship with our state Board of Accountancy.

We're adding capability in online education and expanding our offerings. We're offering opportunities to new instructors in a special series of summer CPE programs.

We're evaluating adding an expanded career support center.

We're participating in the Ambassador Program and hope that will facilitate getting the word out to the public and business community about the value of using/hiring CPAs.

The profession as a whole will need to beef up the efforts to help the public and business community understand the value of a CPA versus other certifications. We need to figure out an effective way to reach those hiring in business and industry so that they support their new hires in getting their CPA.

STUDY PREVIEW:Issues and Outlook ‘05

2005-03-14T13:48:00.000-05:00

Of all leading issues, CPAs seem most concerned by "public confidence in profession."

A little while ago we ran a series of reports capturing the ideas of dozens of leading thinkers in the profession.

The articles included:

Bunting Sets Agenda for New Year
Could SOX Really Be CPA-Friendly?
Colleges Share Burden for Profession's Future
Too Much Work, or Not Enough People?
2005 Could Be a Banner Year for the Profession

At the same time, we asked readers to rate the issues raised by the reports.

“Public confidence in the profession” emerged as the single biggest issue, with 92 percent calling it “highly” or “very” important.

In your opinion, how important are these issues to the profession?
(Percentage answering Highly or Very Important)

92% -- Public confidence in the profession.
89% -- Work/Life balance in the profession.
89% -- Information overload of new rules, regs and standards.
82% -- Regulation of the profession.
81% -- The tax system.
80% -- Potential shortage of next generation of CPAs.
78% -- Regulation of business in general.
77% -- New Sarbanes-Oxley workload.
77% -- Current shortage of CPAs.
75% -- Americans' financial awareness and literacy.
74% -- Potential for new disclosures of past accounting misdeeds.
66% -- The Social Security system.
60% -- Upward mobility of women.

Meanwhile, the results of another question suggest that at least two-thirds of CPAs are confident that 2005 will turn out better than 2004. More on that here:

Speaking for yourself (your own business or career), how confident are you that 2005 will be better for you than 2004?
Completely Confident: 25%
Mostly Confident: 39%
Somewhat Confident: 24%
Not Confident: 12%

So, How’s your year going so far? Join the study panel and get an early preview of the results.

INTERACTIVE MARKETING:Is Your Web Site Attracting or Repelling Prospects?

2005-03-14T12:23:00.000-05:00

Avoiding costly mistakes that drive prospects away.

Citing Internet Marketing Report, the latest edition of the AICPA's CPA Marketing Insider, edited by publisher Hank Berkowitz, lists four common mistakes "that could be repelling, rather than attracting prospects to your site."

1. Self-absorbed vanity sites.
2. Splash pages that waste prospects' time.
3. Poor navigation that gets prospects lost.
4. No call to action.

If anything here sounds familiar, AICPA Custom Publishing and Bay Street Group can help make sure your site isn't in the next edition of the best-selling "Websites That Suck." Get a free evaluation now.

SOX UPDATE:Hidden Fraud Risk?

2005-03-13T09:57:00.000-05:00

Too much data? Too little protection?

The complex and copious amounts of data stored on corporate networks after the enactment of the Sarbanes-Oxley Act may be creating greater opportunities for fraud.

Peter Dorrington, head of fraud solutions at the SAS Institute, says companies are storing vast amounts of data but giving little thought to what is being stored. That could make the occasional instances of fraud or anomalous data far more difficult to spot, he said.

"Fraudsters are reliant upon their transaction being a tree hidden a forest," Dorrington said. The vast amounts of data being stored as part of efforts to comply with the Sarbanes-Oxley Act are simply increasing the size and density of that forest, he said.

U.S. Business Relies on Accountants for IT Security

2005-03-11T18:47:00.000-05:00

When you want reliable systems, 'who ya gonna call'? Answer: Accountants

By Rick Telberg
Special for HP
March 2005

For the third consecutive year, information security leads the list of top technology issues identified by an American Institute of Certified Public Accountants' survey of high tech professionals. For accountants wondering about new business areas to focus on after tax season, this is opportunity on a grand scale. IT security skills are a must-have for all accounting practitioners and financial managers.

Don't count yourself out of the picture just because you are not already involved in technology systems implementation. Although the greater technology expertise the better, finance professionals in non-technology specialties owe it to their firms and companies to embrace this work area because IT security breakdowns become over-arching business management issues when they result in down time and loss of critical data.

Now is the time to look for a reliable partner who knows IT security and can help you do what's needed to make your firm and its clients confident amid all of today's security concern. But be advised, there are several different IT security areas that are key for businesses of all sizes, especially small and medium sized ones.

Hardware: Every traveling executive has at times probably harbored a fear of losing their laptop at an airport, but hardware theft is not all that uncommon inside a business's walls by unauthorized visitors or undesirable employees walking away with unsecured laptops, thin clients and small peripherals.

While there are a variety of specialty lock and clamp down cables on the market, it's also wise to keep data backed up on servers so when someone walks away with a computer, they don't also take any irreplaceable intellectual property. Likewise, make sure that firms and clients in the process of buying new laptops, review "drive lock" systems that prevent thieves from getting into hard drives.

Data: Even more vulnerable than the hardware is the data that's the lifeblood of the computers and of businesses themselves. Accountants can step forward as the guardian against unauthorized users tampering with and corrupting companies' data. In addition to multiple layers of computer passwords and the development of data encryption systems, advanced authentication systems based on such things as fingerprint recognition are also gaining in value.

Networks: With dozens of anti-virus and anti-spam solutions on the market, accountants are advised to learn which are most suitable for different business scenarios. And with so much Internet-based access to business networks and the unrelenting presence of hackers, firewalls are another vital security that smart accountants are keeping up with. The added plus of protecting the networks is that it also provides security to businesses' operating system and applications software.

Security Assessments: Regardless of how deeply involved you choose to get with actual implementation of security tools, there's a growing demand that accountants can fill in assessing businesses' IT security vulnerabilities and advising on how to remedy them.

Large public companies are required to assess their IT system, so why not position yourself as an IT security auditor to your clients or employer.

STUDY PREVIEW:How's YOUR Busy Season?

2005-03-09T15:26:00.000-05:00

At first blush: It may be too early to tell.

Based on the first 100 or so responses to the straw poll we launched in “Whistle-Blower Wins Key SOX Ruling,” CPAs are split three ways over how this season compares with last year’s.

The polls will be open all week.
(or cut-and-paste into your browser www.zoomerang.com/recipient/survey.zgi?p=WEB2246JR8KNCY)

So, How's the busy season going so far?
Better than last year: 36%
About the Same: 27%
Not as Well as Last Year: 37%

But who’s doing the best?
Answer: Half of all managing partners, and firms of 50 or fewer people.

If you have a theory on why that might be, we’d love to hear it, at rtelberg@telberg.com.

What's different about this year?
SAMPLE VERBATIM COMMENTS

· More work from larger firms
· Plenty of new business opportunities this year however the challenge is in finding enough qualified staff. Our current staff is dedicated and has a tremendous work ethic however they are getting burned out early in the season this year. The challenge is trying to keep the staff motivated to stick it out while asking them to put in more hours than ever before.
· Implemented new software
· More schedules for 1040's
· 2004's first-year staff now have some experience under their belts. 2. We have a new supervisor on board with extensive 1040 experience. 3. We were lucky enough to snag an intern with strong skills. He's working 30 hrs. per week.
· taxpayers seem more organized and are getting an earlier start than last year.
· 404 sucks.
· Obviously, the focus on SOX and finalizing the certifications for the company.
· Clients are not getting their tax material in as early this year.
· Earlier filings
· A merger right before tax season started has all of us learning to roll with the punches, since we are all trying to figure out who does what, how we as a newly merged group will do things, etc.
· Short handed at work, no replacement of employees leaving prior to tax season
· More SEC audit work.
· client work came in earlier, I was "buried" earlier, and hopefully April won't be quite as crazy. Even though we had major tax bills passed in the fall, they aren't creating hiccups as in past years with changes that were taking effect as tax season progressed. This makes work much more efficient.
· Busier
· SHORT STAFFED
· Do not have enough skilled staff!
· staffing
· I, the CEO, am getting better at my time management, and e-filing is saving us much time.
· Too much work, not enough people
· More organized offset by less experienced individuals.
· More new clients
· same people returning familiar with clients
· IT improvements have backfired.
· New job, better boss.
· more work...
· Different staff members, lack of brokerage house 1099s due to their extensions.
· E filing very helpful
· Tooooooooooooooooo busy (70+ hour weeks)!
· STAFFING
· New software (road to paperless); lack of staff especially on the senior level; state regulatory changes; practice merger.
· I am better prepared this year.
· E-filing
· More knowledge.
· More difficult to find qualified people to do taxes and auditing
· Almost no business! Down 75%
· 50% increase in client load...good for work...bad for workload.
· Sales tax deduction in WA state is a burden
· Things seem to be running more smoothly. Last year I think the biggest additional time drain was for the change in the capital gains in mid-year. This year, without any glitches, my tax practice is running ahead of schedule despite additional business. Pre tax-season planning has paid off. With a week to go my staff and I have just about filed every S corp, C corp and partnership we do, with few extensions.
· More clients
· More work, less productivity
· Review bottlenecks, no interns, staff cuts, and not enough hours in the day.
· I have my own office this year, and can control my hours better. I can also control the type of accounts I want as clients.
· Working longer hours. Our office has increased billable minimums from 55 to 60 hours per week
· Better team moving the work very well. Fired some problem clients.
· I have a larger number of clients and, the repeat clients are far better organized than in previous years
· 2 area preparers are moving out of town so we are getting a lot of their clients. Plus the usual migration of clients from H&R Block.
· VOLUME
· More staffing
· Better coordination of work flow within the office, e-filing capability, tardiness of taxpayers in coming in, later rather than earlier, has allowed us to focus on audits and reviews more thoroughly.
· Information is in slower and new clients with difficult returns taking extra time
· For the first time in 25 years we had not one but two employees leave the firm for industry jobs during tax season.
· Lower level staff cuts, more workload.
· Cut out large corp returns and focusing on individual returns. What a relief!
· Clients are slower than usual. More work--types of work, including divorce planning & litigation, general tax planning.

SOX UPDATE: Whistle-Blower Wins Key Sarbanes-Oxley Ruling

2005-03-05T11:21:00.000-05:00

As mid-March filing deadlines near, financial executives and auditors scramble. And who can forget it's tax time? So how's YOUR busy season going so far?

by Rick Telberg
At Large

With the fast-approaching mid-March deadline for new SEC filings looming, public company executives will soon be personally signing off on their financials, many for the first time. So it comes as a poignant coincidence that one of the Sarbanes-Oxley law's new provisions -- the one about whistle-blowing -- is making headlines just now.

In the first test of the whistle-blowing provisions of the new law, Administrative Law Judge Stephen Purcell has ordered Cardinal Bankshares Inc. to reinstate its former chief financial officer, David Welch, and pay him nearly $65,000 in back pay and damages.

______________________________________
Whistle-Blowers or Not.
This is the Busy Season for CPAs of all stripes
-- from tax prep to auditing and financial reporting.
Tell us: How's it going for YOU so far?
(And be the first to see the answers.)
___________________________________________

You may recall Welch's story. We reported on it about a year ago in "SOX Whistleblower Rules Get First Test " and the supportive response from fellow CPAs was overwhelming, "SOX Whistleblower Gets CPA Support."

In all, workers have filed 144 claims with the Department of Labor since the law took effect in mid-2002, alleging that their employers retaliated against them for calling attention to financial mismanagement. Welch is one of just three workers to win protection so far. Another 16 cases have ended in settlements.

The bank plans to appeal. And Welch is still planning on going back to his old job.

But what's it mean for CPAs and financial executives?

For that, we asked attorney Dan Westman of Shaw Pittman LLP in McLean, Va.

"Sarbanes-Oxley protects both CPAs working inside and outside publicly traded companies," Westman said. "There is a common misconception that Sarbanes-Oxley protects only employees of publicly traded companies. This is not the case. CPA firms or other contractors of publicly traded companies also are legally protected for whistle-blowing."

Will we now be seeing more whistle-blowers come forward? "The data so far suggests so," said Westman. "The fastest-growing category of cases handled by the U.S. Department of Labor is Sarbanes-Oxley whistle-blower cases."

And if you look at the docket, you'll find many smaller companies listed.

Westman notes that few corporate laws have received such wide publicity, adding, "This law is no secret, and employees appear to be well aware of it."

In addition, he noted, unlike 30 years ago when whistle-blowers were often denounced as 'snitches' or worse, in 2002 Time magazine made them Persons of the Year. Remember Cynthia Cooper of WorldCom, Coleen Rowley of the FBI and Sherron Watkins of Enron?

Many employees, do remember them, particularly CPAs. And they may be the true heroes of our age. Maybe Dave Welch is too.

NOW IT'S YOUR TURN: How's YOUR busy season going so far?

COMMENTS? Send your rants, raves, questions or idle thoughts to Rick Telberg here.

ASSOCIATIONS:Canada Accounting Bodies Kill Merger Plan

2005-03-04T16:55:00.000-05:00

Blame lack of interest among members

Talks between leaders of the chartered accountants (CAs), which is the U.S. CPA's closest cousin in Canada, and the certified management accountants (CMAs) have broken off after members gave the idea a big yawn.

"The one thing we found, both parties I think, is that the members really took pride in their designation," David Smith, president and chief executive of the Canadian Institute of Chartered Accountants, told the globe and Mail.

The merger would have led to a single designation ? CA ? and eventually led to the elimination of the CMA title after five years.

"There just wasn't a willingness at this point to automatically transition to the CA designation," said David Fletcher, vice-president of public affairs for the Certified Management Accountants of Canada.

The merger could have created a single group with 105,000 members who would have been able to provide a broad array of services, including audit and assurance, and management and tax.

Canada's accounting profession remains divided into three groups, CAs, CMAs and certified general accountants. By comparison, the AICPA claims 90 per cent of U.S. CPAs.

STAFF SHORTAGE? 3 tips on recruiting

2005-03-04T16:54:00.000-05:00

Rule No. 1 for fisherman: Fish where the fish are.

That may be easier said than done.

But if you'?re looking for new staffers in this tight labor market for accountants, here are some clues from some of our latest research:

These are the people most eager to change jobs today:

1. CPAs in business or industry (33% are "likely" to "certain" to consider changing jobs, versus 25% of those in public practice).

2. Look for them in companies of 100 or more employees.

3. And target middle managers. They're the most eager to bail out right now.

For more information on our staffing research, contact rtelberg@telberg.com

STUDY PREVIEW: Your Success Secrets

2005-03-04T09:37:00.000-05:00

In "CAREERS & MANAGEMENT: How Does YOUR Raise Rate?" we asked, What does it REALLY take to succeed?

You answered. Here are the flash top-line results.

As you examine the returns, please don't hesitate to let us know if you have any additional thoughts or questions. Email: rtelberg@telberg.com

What's it REALLY take to succeed as a CPA or financial executive in today's business world? (Please check all that apply.)
A sense of humor : 46%
Working for the right organization : 61%
An organization that's having a good year: 12%
Getting a good boss: 44%
Having great clients : 24%
Knowing the right people : 46%
Having the right skills and training : 78%
Integrity : 72%
Reliability: 70%
Getting along with people : 70%
Really understanding what the numbers mean : 57%
Contributing to the success of the organization : 68%
General economic conditions in my industry : 21%
General economic conditions of the nation at large : 11%
Overcoming discrimination and prejudice : 9%
Delivering new clients, revenue or profit to the company : 38%

DEMOGRAPHICS

In what type of business do you work?
Public accounting: 39%
Business or Industry: 50%
Government: 2%
Not-for-profit: 5%
Education: 1%
Other: 3%

How many people work in your office or location?
1 to 10: 15%
11 to 50: 26%
51 to 100: 15%
101 to 500: 26%
More than 500: 18%

Which best describes your position?
Chief executive/Managing Partner: 6%
Senior Executive/Partner: 20%
Middle Management: 47%
Staff: 21%
Other: 6%

Copyright 2005 Rick Telberg/Bay Street Group LLC. All Rights Reserved.

STUDY PREVIEW: How Balanced is YOUR Life?

2005-03-01T10:39:00.000-05:00

Not very, suggests our latest study.

A surprising -- and troubling -- number of accountants and financial executives across the profession are clearly not satisfied with the balance between their work and their lives right now.

What do you think? Email me at: rtelberg@telberg.com.

Are you excited about going to work every morning?
Yes: 56%
No: 44%

Are you sure you know what your boss or clients expect of you?
Yes: 68%
No: 32%

Do you feel your life is properly balanced between family, work and community?
Yes: 46%
No: 54%

Do you know what business you're REALLY in?
Yes: 85%
No: 15%

Does work keep you awake at night?
Yes: 38%
No:62%

For additional information about the study, please contact rtelberg@telberg.com.

Copyright 2005 Rick Telberg/Bay Street Group LLC. All Rights Reserved.

STUDY PREVIEW: Identifying Key Staff Issues

2005-02-27T11:47:00.000-05:00

Good management starts with accepting responsibility and giving credit where credit is due, according to the top-line results of our latest study.

In as competitive a job market as today's -- where accountants and financial managers are in a seller's market -- companies and firms should take heed. As they say, your assets walk out the door every night. Here are some clues to what keeps them coming back tomorrow.

How well is your organization handling these staff issues?
(Great, OK or Not at All?)

1. Making sure employees know they're important. Staff knows they play a vital role in the company's success. Staff knows company couldn't achieve its goals without them doing what they do every day.
Great: 23%
OK: 52%
Not at All: 25%

2. Management encourages loyalty through appreciation. Your employer shows gratitude, gives credit for extra effort sounds like a little thing, but demonstrating appreciation for discretionary effort motivates people to continue performing at high levels.
Great: 20%
OK: 47%
Not at All: 32%

3. Provides you with the support and resources they need to achieve their goals. Management asks, "Do you have what you need to get the job done? What else can we do to make your job better?"
Great: 26%
OK: 47%
Not at All: 28%

4. Company makes people feel rewarded in a way that goes beyond compensation and benefits. Top performers look forward to being given challenging, significant assignments.
Great: 21%
OK: 50%
Not at All: 29%

5. Management understands the crucial importance of giving credit and accepting blame. If a company achieves its objectives, it's because its employees performed well. If the goal is missed, it's often because the leader didn't align employees with the objectives, didn't equip them properly, or didn't provide the resources necessary for them to get the job done.
Great: 17%
OK: 52%
Not at All: 32%

6. Top staff helps employees achieve a sense of accomplishment. They communicate the importance of what workers have achieved so they know they're making a difference.
Great: 18%
OK: 52%
Not at All: 30%

CAREERS & MANAGEMENT:How Does YOUR Raise Rate?

2005-02-25T13:18:00.000-05:00

Most say: Expect about the same as last year. But what does it take to earn more?

by Rick Telberg
At Large

Accountants are only slightly optimistic about an improvement in income this year, and most say it's their organization's performance, not their personal performance, that will primarily determine any change in income.

Sixty-three percent of our respondents said they expect raises at their organization to be about the same as last year. Eighteen percent expect more; 19 percent expect less.

With cautious optimism, most see raises exceeding inflation by a bit.

The biggest single group - 37 percent of all respondents - expects raises to average a modest three percent. Another 12 percent expect raises of one to two percent. And five percent expect no raises at all at their company.

But on the upside, about 31 percent are looking at raises of five or six percent and another 16 percent are forecasting seven percent or more.

Half the respondents expect their own raises to be about the same as everyone else's. An optimistic 37 percent think they'll get more than their colleagues, but 13 percent think they'll get less.

Responses to an open-ended question about key factors that might affect one's income showed that the health of CPAs own organizations was perceived by far as the most prominent. Over half the respondents mentioned it. Several summarized it in two words: "Company performance." And just as many said, "Company profits."

A senior partner at a small accounting firm reflected a common concern with internal and external factors: "Condition of the agricultural economy, costs of upgrading to a paperless office."

Personal performance ran a distant second behind economic factors. Half as many mentioned it, though most also referred to business performance. Words like "billable hours," "chargeability" and "collectability" came up a lot.

A staff member in a medium-sized company expressed a common combination of factors: "Accounting group's overall contribution to the company's bottom line and my own individual value."

Sarbanes-Oxley and new technology came up often. "Billable hours, technical knowledge, understanding of integrated audit methodology, SOX 404 experience," said one staff member of a large CPA firm.

Competition came up, too. In some cases, it was salary competing with the cost of technology. In other cases, it was the organization's competition for qualified staff, which meant less money available for raises.

Quite a few times the big bad boss was mentioned or implied, rarely without a note of cynicism. A rather well-paid CFO in a small, privately owned company, said the factor affecting his income was "Amount of my raise, which I have always had to ask for in order to get."

Other factors mentioned included "politics," "mood," "greed," "face time" and "glass ceiling."

But apparently the bosses have their own problems. One staff member at a small firm saw his income dictated by the "ability of the firm to absorb increases in health insurance premiums," adding, "Generally, premium increases have resulted in reduced salary increases."

Health insurance was the most commonly cited cost factor, but there was broad concern for generally meeting budgets.

Raises may indeed reflect performance, but that means economic performance as well as personal.

NOW IT'S YOUR TURN: What does it take to REALLY succeed as a CPA or financial executive?

COMMENTS? Send your rants, raves, questions or idle thoughts to Rick Telberg here.

BOOMERS, X-ERS AND Y'S:CPA Generation Gap Is Real

2005-02-24T06:37:00.000-05:00

" 'Old school' partners think you should be at the office all the time because that's how they made it."

by Rick Telberg
for Career Insider

It's well established that there are distinctly different personal preferences and work habits among the four generations in the workplace.

For instance, as we reported in "What Your Workforce Really Wants," the generations fall into a few basic categories: the so-called Mature generation, born before 1946; Baby Boomers, born between 1946 and 1964; Generation X, born between 1965 and 1980; and Generation Y, born after 1980.

Indeed, a study by the Society for Human Resource Management found that 58 percent of human resource professionals have observed conflict among employees as a result of "generational" differences in their organizations.

We wondered: Could such a generation gap exist within the CPA profession, and if so, how does it affect the delivery of services? To find out how CPAs feel about an issue that is simmering or perhaps already boiling over in many work environments, we surveyed our readers.

With the 51 percent responding from public accounting and 40 percent from business or industry, we found an overwhelming "Yes!"

" 'Old school' partners think you should be at the office all the time because that's how they made it," said one Gen-X-er (25 to 40 years old), a male staffer at a local CPA firm.

In fact, 86 percent of the CPAs say they believe there is a generation gap in the profession.

"I work part-time in a CPA firm but I'm not the standard. As I think of the people at my office and other friends and peers, I agree that there is a generation gap," said Diana M. Torres Cancel, a senior staffer at a larger local CPA firm in Trujillo Alto, PR.

Among the 14 percent who reported they did not believe there was a gap, well over half were from business or industry. Hardly anyone from public accounting reported seeing no gap.

"As a Boomer," said a female middle manager in a medium-sized business, "I definitely feel there is a different expectation of jobs/careers by younger generations. Younger CPAs expect to change jobs numerous times (seem to me to be 'trying out' different jobs/lines). I'm considered a dinosaur or fixed asset because I found my niche as an internal auditor and have been given opportunities for growth as my company as grown. (I've been with the same employer for 24 years and still like it)."

Interestingly, the percentage of chief executives and managing partners who say they see no evidence of a gap slightly exceeds the overall percentage. Approximately the same number of Baby Boomers as Generation X-ers reported seeing no gap: 48 percent are Generation X-ers, 47 percent are Boomers, 13 percent fall in the Mature category, and just 1 percent come from Generation Y. The survey was gender neutral, with 53 percent of the responses from women.

CPAs from all generations differed on the level of value that each generation brings to the workplace. While several Boomer CPAs surveyed complained that Generation X and Y-ers put a lower priority on work and ethics than do the older generations, other Boomers marvel at the advanced technology skills and greater willingness to look for new opportunity that the younger generations bring to the job.

Some of the Gen X-ers surveyed acknowledged that they may not focus on work as intensely as their elders but, perhaps as their backlash to being raised by work-obsessed parents, the Gen X-ers also noted they can instead pay more attention to their families. One noted that his generation was raised to be "more choosy," which can boil down to being positive for work because it makes them better able to choose what's right for them and for their employers.

While it would be foolish to even ponder if there is a "Greatest Generation" among CPAs, understanding the differences among the generations is a first step to bridging any gaps.

NOW IT'S YOUR TURN: What is (or should) your company be doing to bridge the CPA generation gap?

COMMENTS: Rants, raves, idle thoughts, or questions on research, contact Rick Telberg.

CAREER ADVISER:Accounting among Top 10 Jobs in Turnover.

2005-02-23T08:29:00.000-05:00

Accounting is No. 6 on the Top 10. Here's why...

CPAs are in high demand and feeling confident about changing jobs, especially if they have SarBox or 404 skills.

What do they want? Simple: Higher salaries and better work arrangements elsewhere.

Of course, some accounting firms have high turnover by design through internship programs for entry-level investment bankers and management consultants, Bill Coleman, senior vice president of compensation at Salary.com tells Marketwatch.

"They like young, smart people," he said. "They work them to death and in exchange you get the credential of working there for two years."

But some consultants further into their careers find the expectations difficult to manage long-term and head for the door, says John Challenger, chief executive of outplacement firm Challenger, Gray & Christmas. "There's a lot of burnout in consulting when you have to travel five days a week."

Here's the full list of the top 10 highest turnover jobs:
1. Fast-food workers
2. Low-level retail jobs
3. Meter readers
4. Nurses
5. Child-care workers
6. Accountants, consultants and auditors
7. Telemarketing and customer-service representatives
8. Movie-theater employees
9. Hotel and restaurant workers
10. Sales people

Well, at least movie-theater employees get free popcorn.

SMALL BUSINESS:Washington Tinkering Could Hurt Some

2005-02-21T19:41:00.000-05:00

And you thought the Small Business Administration was supposed to be fighting for the little guy.

But with half it's budget slashed in the last four years, the SBA is under pressure to streamline.

So one way to scale the job to the resources seems to be to simply say there are fewer small small business in the U.S. than we thought.

A year ago, the SBA proposed changing from revenue-based standards to measuring firms from 50 to 1,500 employees. About half of the 4,500 comments the agency received on the proposal were opposed to it, and the effort was abandoned.

But it's back. And some small business lobbyists are up in arms. Under last year's proposal, 34,100 new small businesses would have lost their small-business designation.

"Instead of bidding against 50 companies, I may be bidding against 300 companies. It's always harder when you have to compete with large companies," Annetta Vickers, owner of TAB Co. Inc. told the St. Louis Post-Dispatch.

It may be up to Congress to stop it from happening.

To Comment, E-mail: restructure.sizestandards@sba.gov
Include "RIN 3245-AF22" in the subject line of the message.

TAX SEASON PRO BONO:Wipfli CPAs Give Free Tax Services to Returning Soldiers

2005-02-21T19:32:00.000-05:00

Gail Jackson, a senior marketing coordinator with Wipfli in Wausau, Wisc., said the firm decided a few weeks ago to help the soldiers out of gratitude for their service. And help they will.

Jackson said the firm has uncovered a number of tax breaks for soldiers. "When all these tax breaks are available, you really want to make sure these things are taken care of," she said.

The first to take advantage of the offer, Sgt. 1st Class Luke Leslie, lived in Iraq -- a tax-free zone -- for 10 months in 2004, so he does not expect to get much, if any, money back in the form of a tax return. But while he was away, his wife returned to school and worked a part-time job, so he hopes there are tax breaks for returning adult students.

COMMENT: Three cheers for Wipfli. But it seems to some of us that this country owes more to Iraq vets than a free tax return. Don't you think?

SELF-ASSESSMENT:Are You Asking the Right Questions?

2005-02-19T09:30:00.000-05:00

If you don't ask the right questions, you can't get the right answers.

by Rick Telberg
At Large

Questions are the lifeblood of consultative selling. By asking the right ones, savvy CPAs can discern operational and finance problems that their clients or their employers in business and industry are not aware of themselves and can step forward with solutions before the problems cause damage.

But what if CPAs asked themselves the same kinds of questions? Would they find that their businesses and finances are better or worse off than they suspect?

In a rare CPA self-assessment, we asked our readers to answer a list of client questions compiled in a program designed specifically for accountants by consultative selling authority Paul Dunn. Paul is well known for Results Accountant Systems and now providing services to CPAs with Shannon Vincent through a firm called The ReNew Group. We launched the study from the recent column "What You Don't Know Could Hurt You."

Our sample for the study includes more than half from small businesses with ten or fewer people; 32 percent from organizations of 11 to 50 or 51 to 100, with the remainder from larger organizations. Chief executives and managing or senior partners accounted for 74 percent of the responses.

The sad fact of the study: CPAs could definitely use some consulting services.

Surprisingly, only 28 percent of CPAs surveyed are very confident about the quality of the management information from their systems. About 51 percent reported being somewhat satisfied.

Among the more than 20 new consultative questions that the respondents devised for what CPAs should ask of themselves and their clients, here are some examples: "How happy is your staff with their jobs?" and "How happy are you with your staff?" Also, "How often do you talk with your clients?" and "In striving to create value for stakeholders, have you seriously considered obligations to create or preserve nonmonetary value to society?"

As might be expected, 73 percent are very confident about the completeness of their personal tax returns, and 74 percent said that they prepare and review their own financial statements somewhat or very frequently.

Financial planners take note: Only 16 percent of the CPAs surveyed are very confident about their own retirement planning, and just 18 percent give the highest grade to their personal investment plans.

On the management advisory services side, just 14 percent of the CPAs surveyed have carried out a financial modeling exercise with "what if" scenarios for their companies very recently. Some 23 percent have not done one at all. And 24 percent don't know or don't have an opinion on the topic.

And yet, CPAs are confident about what they do. Are they fooling themselves?

Asked to describe their confidence in their ability to clearly explain in 30 seconds or less what they do, 77 percent said "very" or "somewhat." About 76 percent are happy with how well their businesses have lived up to their expectations.

Questions are not only the lifeblood of consultative selling, but they are vital to successful business in general and to rewarding relationships.

CPAs are learning all they can about posing questions in a consultative manner to their clients and employers. But are they asking themselves the right questions often enough?

Of course, At Large readers had some questions they'd add to the short list we provided. Some of them may make you stop and think.

--- "Are you excited about going to work every morning?"-- a managing partner at a small CPA firm.
--- "Do you know what your clients expect of you?" -- a senior partner at a local firm.
--- "Do you run your business or does your business run you?" -- Robert D. Blumberg, managing partner, local firm, Cary, Ill.
--- How balanced is your life between family, work, and community?" -- C. Richard Sarle, chief executive of a large not-for-profit in Belle Mead, N.J.
--- "What business are you in?" -- managing partner of a local CPA firm.
--- "What wakes you up at 3 a.m.?" -- senior partner at a large CPA firm.

ECONOMIC PULSE:Small Business Optimism Growing for 2005

2005-02-18T10:17:00.000-05:00

Small business owners are doing something unusual this year -- smiling.

Intuit, the accounting software maker, says a new survey shows 57 percent of small business are optimistic about the overall business outlook for the 2005.

With this optimism comes a focus on growth, says Intuit. The survey found that 34 percent of small business owners are focused on actively growing their businesses this year. And about 69 percent say they would encourage others to start small businesses at this time.

When asked about how they would invest to achieve growth:
--- 39 percent reported purchasing new software and equipment,
--- 27 percent said marketing programs, and
--- 11 percent cited adding new employees.

Thirty-one percent cited the economy as the top issue facing small businesses this year -- down from the 36 percent that reported concern in 2004.

Source: www.intuit.com

ECONOMIC PULSE:How Bad Was '04, Really?

2005-02-16T10:21:00.000-05:00

Wages Fell, Job Growth Lagged, and Unemployment Spells Remained Long

The labor market may have showed some signs of improvement in 2004. For instance: Job growth that occurred in every month of the year -- first time since 2000. And the unemployment rate fell about 6% in 2003 to about 5.5%.

On the other hand, several other indicators and comparisons depict a labor market that remains distinctly weak, according to the washington-based Economic Policy Institute.

The EPI Report:

Among nearly all groups of workers, wages fell, relative to inflation.

Inflation-adjusted wages grew throughout the recession of 2001 and the jobless recovery that followed. However, by 2003, the persistently weak job market began to take its toll on wage growth, and last year the hourly wages of most workers either remained flat or dropped relative to inflation.

This period also represented a return to growing wage inequality, as wages grew faster among workers at the top of the wage spectrum than among other workers.

For example, among men, the hourly earnings of the worker right in the middle of the wage spectrum was essentially the same in 2004 as in 2000 (down 0.2 percent), while hourly earnings rose 7.7 percent for the worker at the 95th percentile (five percent of workers have wages higher than this worker, 95 percent have wages lower than this worker).

Further, from 2003 to 2004, the only education group that experienced wage gains was the group where workers had been to graduate school. All other groups — workers with less than a high school education, with a high school education, with some college, or with a college degree — experienced either flat or falling wages.

Over the course of 2004, job growth fell 1.4 million short of the amount that would be typical for a recovery. Since the end of World War II, at this stage of the recovery job growth has typically occurred at a pace that would generate about 300,000 jobs a month.

This is the same benchmark that was used when, in early 2004, the Bush Administration forecast that 3.6 million jobs would be created from December 2003 to December 2004.The 2.2 million jobs created in 2004 thus fell 1.4 million — or nearly 40 percent — short of the level typically experienced at this stage of a recovery.

This shortfall indicates that the drop in the unemployment rate thus did not reflect robust job growth. Instead, it reflected an unusually slow pace of labor force growth. In 2004, the labor force grew more slowly than it had in 13 years.

Due to the relatively modest amount of job creation, long-term unemployment levels remained exceptionally high, with the number of unemployed individuals exhausting their regular state, unemployment benefits and not receiving additional aid hitting a record level of 3.5 million. Though long-term unemployment began to trend down somewhat in 2004 its level continued to be high.

There were more than twice as many long-term unemployed — unemployed individuals who have been seeking a job for at least a half a year — in December 2004 as in March 2001, when the downturn began. The long-term unemployed have been more than one in five of the unemployed for 27 straight months, an unprecedented development in the post-WWII period.Also, in 2004, some 3.5 million individuals used up all their regular unemployment benefits before they found a new job, and did not qualify for additional federal aid.

For some period of time, they thus went without either a paycheck or an unemployment check. This level of unmet need was larger than during any other year on record, with data going back to 1973. It suggests that the temporary federal unemployment benefits program — which provided aid to workers who have exhausted their regular, state benefits — was ended too soon (the program quit providing aid to new exhaustees as of the end of December 2003).

AUDITS:1 in 4 Companies Switch

2005-02-15T10:39:00.000-05:00

2,514 changes reported over the past two years

That's about one-fourth of all U.S. publicly traded companies.

More than 1,600 companies changed their outside accounting firm in 2004, up 78 percent from 2003, reported proxy research firm Glass Lewis & Co.

Smaller businesses were more likely to changes auditors. According to the study, 85 percent of the companies that did so rang up $100 million or less in revenues last year.

The most common reasons that companies switched auditors:
-- Audit firms discontinuing public-client work because of extra regulatory demands;
-- Corporate mergers; and
-- Lower fees at the new firm.

Only 19 companies last year, versus 27 a year earlier, switched auditors because of disagreements over accounting matters.

The increased changes are "inconsistent with the arguments put forth in the past by the accounting firms, that changing auditors reduced audit quality," a Glass Lewis analyst said.

The biggest beneficiaries are the second-tier audit firms, which got a net gain of 117 clients last year.

The Big Four netted a loss of 400, 200 from Ernst alone.

BDO Seidman picked up the most new clients, 109.

And 61 companies changed auditors at least twice last year; most had less than $25 million in revenue. The report explained it as "opinion shopping."

TECH TRENDS:You Can Run, But You Can't Hide

2005-02-12T06:07:00.000-05:00

Financial managers and CPAs are uniquely equipped to take the lead in tech trends. They don't at their own peril.

by Rick Telberg
At Large

The evolution of the Internet is making technology an even larger factor in the CPA profession in 2005. So much so that firms that do not respond to the newest Web trends risk losing business.

Financial managers, practitioners, vendors, academics and consultants responding to our survey (launched with an interview with AICPA Chair Bob Bunting) about the New Year show that advanced Internet technologies are driving the following trends:

More direct communications between vendors and suppliers, companies and customers, and practitioners and clients.
The weeding out of fraud in financial reporting.
Improved marketing to the point that the technology itself generates new business.

"As clients become more and more comfortable with Web-based banking, brokerage (and other services), they will naturally begin to expect similar services from their accountants," said Greg LaFollette, executive editor of CPA Technology Advisor magazine and president of the consulting firm Accounting Technology Resource Network.

"Internet savvy and connectivity will be the rainmakers of the 2000s," LaFollette noted.

He particularly advised practitioners to become familiar with instant messenger (IM) technology, which enables parties to correspond real-time in e-mail, so e-mail dialogue is more like a telephone conversation than a letter. It accelerates communication from hours or days to minutes or seconds.

Bruce Clark, chief executive of New Clients Inc., a Mullica Hill, N.J.-based provider of marketing services, says that some smart firms are already utilizing Internet-based media such as interactive Web sites, e-mail marketing, electronic newsletters, "e-advertorials" and Web-based seminars, while others are learning about cross-marketing and bundling techniques.

Barry J. Friedman, chief executive of BizActions, a Potomac, Md.-based developer and manager of newsletters for professional services firms, foresees a re-emergence of push technology that enables information to download directly to someone's desktop and bypass e-mail. For CPAs, this could be used to distribute newsletters and financial reports.

Technology market analysts Aberdeen Group support Friedman's expectation, noting that the clogging of e-mail systems will add demand for push technology in more industries than just accounting.

Dana R. Hermanson, accounting professor at Kennesaw State University in Kennesaw, Ga., is hopeful that accounting fraud will be significantly contained as the Internet allows software developers to create systems that provide for real-time financial reporting. He noted that he is advising the developer of a "continuous monitoring software" designed specifically to detect fraud and other misstatements in financial reports.

When it comes to fraud prevention and technology, there is much to keep up with. A Google search for auditing software turns up 47,000 links, and a search for fraud prevention turns up almost 1 million.

While vendors are developing new and more sophisticated systems every day, accounting and finance professionals must also be ready to cope with some vendors' plans to simplify their existing software products in 2005.

"Our expectation is that the year ahead will be about simplifying the lives of accountants and their clients," said Richard Walker, director of accountant and advisor relations for QuickBooks developer Inuit Inc. "Technology has over the past few years created some of the exact problems that it was trying to solve -- to help users be more productive by performing complex tasks quickly and easily."

CPAs, anxious to cash in on an expected boom in business, are waiting and trying to keep up-to-date with the ongoing technology advancements. Said Charles Larson, CPA, of St. Joseph, Mo., "This is a year that I am focusing on re-looking at options in technology to see if there is any way to further upgrade or re-think my approach to any activity. I will be looking especially close at communications as an opportunity."

SELLING & RAINMAKING: What Is a 'Buying Mood'?

2005-02-11T12:12:00.000-05:00

Creating the right atmosphere can have a profound effect on clients and prospects.

Think about it: When you go into a retail store, what are you expecting? Welcome signs? Clean floors? Upbeat music? Special deals? Happy, knowledgeable employees? The right selection of merchandise, that's also easy to find?

In professional services or business-to-business sales, clients and prospects have expectations too.

How many of these items are you providing?

Client service people with a "yes" attitude.
The right words to use in a professional greeting.
Refraining from “selling.” Instead, solve problems.
Employees who tell the truth, even if it costs a sale.
Clean rest rooms.
Welcome sign with the visitor’s name on it.
Tour the office and introduce them to the people they’ll be dealing with after they sign on.
Superior food and drink.

CPA/TECH ADVISER:New Entrant in Backup Derby

2005-02-10T13:00:00.000-05:00

Sonasoft Announces Point-Click Recovery Solution for Small Business

Sonasoft Corp. of San Jose, Calif., is bidding for CFOs' and CPAs' attention in the market for backup and disaster recovery.

They've released the so-called conceive Point-Click Recovery Solution for Small Business. The new offering is "an affordable and easy to use solution specifically designed for addressing the pain points of small businesses."

SCARY FACT: National Archives & Records Administration reports that 93% of the companies that lost their data center for 10 days or more filed for bankruptcy within a year.

The Sonasoft service covers Exchange, SQL and Windows File Systems. Customers can buy the SonaSafe Small Business Suite that provides a total backup and recovery solution for anything to do with Microsoft, i.e. databases, emails, files, applications etc.

If you're looking for a network backup solution, consider:
1. Total cost of ownership, including installation, training, and maintenance
2. Ease of use and start-up time
3. A company's history in the market

It's too early to tell whether Sonasoft is the right choice for most CPA firms or finance departments. But for details and pricing, contact www.sonasoft.com.

And... Let me know what you think.

CPA/TECH ADVISER:Securing Financial Data with eVaulting

2005-02-10T09:23:00.000-05:00

Offsite electronic storage should be accountants' first choice in backup systems.

by Rick Telberg
for HP

With most businesses now extremely or entirely dependent on their computer-based information systems, electronic data vaulting systems have become as important to operational futures as banks are to their financial fortunes.

Vaulting service providers operate from their business and individual customers' own bandwidths to back up their server-based and computer-based data and e-mail or upload files to secure vault centers, where systems and personnel dedicated to data security monitor, mirror and constantly back up the files to disc.

Users can access their data anytime including, most importantly, when their local IT systems are unavailable due to technical malfunctions or emergencies. Data is transferred from user to vault via highly secure private online networks that enable files to be transferred, stored and backed up just minutes after they are created.

By contrast, companies that back up only periodically or at the end of the day risk losing any data lost due to a system breakdown or break-in between back-ups. In addition to insulating data from problems the businesses' may incur on-site, vaulting also eliminates the expenses for additional hardware, software, tape media and manpower required for on-site backup and the annoying downtime that onsite backup can create.

For businesses with multiple locations, vaulting provides uniform and more secure back-up of data from multiple department servers, desktop computers and laptops. Web-based vaulting has been around since the early 1990s but began attracting more attention after the Sept. 11 terrorist attacks in which the parent companies of many of the World Trade Center-located business operations destroyed also lost those operations data, which was stored on nearby servers.

Demand increased in 2002 with passage of the Sarbanes-Oxley Act accounting reform law that makes public company CEOs and CFOs personally responsible for the integrity of their companies' financial data. Fueling future vaulting demand are the exponential growth of financial records, with some businesses seeing their volume of data grow 40 percent or more a year, and no end in sight to the natural catastrophes and manmade computer viruses, works and hacking attacks threatening electronic data everywhere.

At the same time, businesses remain naïve about how to safeguard their data.

Noting that 53 percent of organizations either don't have a backup strategy at all, or leave it up to individual users to back up to a network drive, IDC says corporations are "in a very vulnerable position, without protection for the majority of their data."

With many vaulting services now available and more in the pipeline, businesses should choose wisely.

For starters, look for a provider with a good reputation for service and high-quality products and is financially strong enough to remain in business for years to come. Your data is only as secure as the vault where it's stored.

Along the same lines, businesses should look for a vaulting company that can advise them on their overall IT security strategies The level of security in the connection between the customer and provider's vault, as well as the physical security of the vault itself are also paramount.

Systems with advanced data encryption and digital signature policies for data transfer and ones whose vault centers are protected from natural disasters and power outages are preferred.

MARKETING:The True Value of a Client

2005-02-10T08:27:00.000-05:00

Practicing Customer Loyalty in Professional Services

Once you've landed a client, what's it take to keep them?

"In today’s hyper-competitive environment, loyalty is critically important to most businesses and is an important key to increased profitability and long term survival," according to a new report from Martiz Inc. a consumer-marketing researcher. " Companies that do not actively measure and manage loyalty do so at their own peril."

But what sustains customer loyalty?

Translated for the professional services sector, the answers are:
>> Client care standards and procedures
>> Product and service enhancements
>> Targeted (one-to-one) communications and dialogue marketing efforts
>> Flawless internal operations
>> Regular advertising, promotion
>> Employee training programs, and
>> Incentives.

So How about incentives?
What are the top incentives? In the consumer sector they are:
Merchandise........................18%
Gift Certificates...................45%
Experiential Rewards...........9%
Travel...................................18%
Other.......................................9%

Professional services, of course, are another breed of cat. Loyalty programs begin with great service and one-to-one contact, and stretch through adding real business value and innovation, such as educational services or market news and intelligence.

So don’t be fooled by all the iPOD (as cool as the gadget is) give-aways.

BOTTOM LINE: True professionals want value, relationships and results. Strrategically structured communications is just one element for success.

CAREER ADVISER:Rate Your Raise

2005-02-09T09:38:00.000-05:00

Here are the early results from the Rate Your Raise study we launched in January, "CPAs Primed to Find a New Job."

Compared to last year, will the average raises at your organization be More, Less or About the Same?
More .................... 18%
Less .................... 19%
About the Same .................... 63%

How much will the average raise be at your organization this year?
0% .................... 5%
1% .................... 2%
2% .................... 10%
3% .................... 37%
4% .................... 20%
5% .................... 11%
6% .................... 4%
7% .................... 2%
8% .................... 3%
9% .................... 1%
10% or more .................... 6%

Personally, are you expecting your own raise to be More, Less or About the Same as the average raise at your organization?
More .................... 37%
Less .................... 13%
About the Same .................... 49%

What is your current annualized total compensation category?
Up to $30,000 .................... 0%
$30,001 to $40,000 .................... 4%
$40,001 to $50,000 .................... 7%
$50,001 to $60,000 .................... 12%
$60,001 to $70,000 .................... 14%
$70,001 to $80,000 .................... 14%
$80,001 to $90,000 .................... 13%
$90,001 to $100,000 .................... 10%
$100,001 to $125,000 .................... 13%
$125,001 to $150,000 .................... 6%
$150,001 to $200,000 .................... 4%
$200,001 and Over .................... 3%

DEMOGRAPHICS

In what type of business do you work?
Public accounting .................... 36%
Business or Industry .................... 52%
Government .................... 3%
Not-for-profit .................... 7%
Education .................... 1%
Other .................... 2%

How many people work in your office or location?
1 to 10 .................... 14%
11 to 50 .................... 29%
51 to 100 .................... 13%
101 to 500 .................... 23%
More than 500 .................... 21%

Which best describes your position?
Chief Executive/Managing Partner .................... 3%
Senior Executive/Partner .................... 16%
Middle Management .................... 53%
Staff .................... 21%
Other .................... 7%

In your opinion, what will be the key factors affecting your income this year? (Please explain.)
(Sampling of Verbatim Responses)

· Increased competitive pressure have decreased Company's Financial Results
1) Whether or not my boss lets me have a promotion. 2) State of the business as a whole. 3) My performance.
· 404 transition, staffing movements
· A new job in another organization. There is little to no mobility in my current organization. The environment is getting worse every year for our business.
· a poorly designed incentive plan and no concern for market value related to the position I hold
· A well orchestrated tax season and the effective implementation of new policies & procedures. Additionally, the utilization of my new CVA certification will have a major impact on my compensation.
· Ability of department and company to meet budgets.
· Ability of organization to meet budget
· ability of the firm to abosrb increase in health insurance premiums, generally premium increases have resulted in reduced salary increases
· Ability to hire and retain qualified staff so that we can continue to grow.
· Ability to retain clients and bill what our services are worth.
· ability, communication, hard working, smart
· Accomplishments in the area of special projects (BSA and Sarbanes-Oxley)
· Accounting group's overall contribution to the companies bottom line and my own individual value added.
· achievement of goals, education level
· Utility, fuel & food costs
· utilization and bonus
· We all get std cost of living raise which has been 3% last several years. 2005 we got 4%.
· We are a performance based organization with income affected by number and quality of audits with emphasis on dollar savings and value added to our stakeholders.
· whether or not I find a new job.
· Whether or not I leave this job for another
· Whether or not I stay with the same company.
· Whether or not the company makes money.
· whether our company is sold or not.
· whether our company meets its performance targets which trigger bonus compensation
· Whether the Company achieves significant profitability
· Whether we increase staff & I see a promotion out of it.

SUCCESSION PLANNING:Exit Plan? What Exit Plan?

2005-02-07T10:37:00.000-05:00

Plenty want to retire. Few plan for it.

In its survey of 364 CEOs of fast growing, privately-held companies called the "Trendsetter Barometer," PricewaterhouseCoopers found that 65% of the respondents said they planned to leave their company within 10 years.

But few are actually planning for it.

When asked about their exit plan, a majority of the respondents (51%) thought they would leave via a sale to another company. A measly 3% minority said they were counting on an IPO payoff.

But a huge 43% of the respondents said they had done little or no succession planning.

"Like many of us, these CEOs have a sense of their desired future, but they are overloaded with managing for today and are short of time fro developing comprehensive plans for tomorrow," said Mike Kennedy, leader of PricewaterhouseCooper's Personal Financial Services practice.

"Unfortunately, unless a key event occurs such as the company being sold, important corporate/shareholder documents like the buy/sell agreement are often not reviewed on a periodic basis," he adds.

How many CPAs are helping clients develop a plan? How many have one of their own? Answer to both questions: Not enough.

SELLING & RAINMAKING:Hire First Borns

2005-02-07T09:52:00.000-05:00

Here’s an exercise you might find interesting: Ask your top-performing producers if they are first-born children.

Chances are, according to Thomas Connellan, author of "Bringing Out the Best in Others!" (Bard Press, 2003), most of them will say "yes."

First-borns make up about 35% of the general population, but in study after study they make up a vastly higher percentage of high achievers.

Of the first 23 astronauts, for example, 21 were firstborns, and more than half of U.S. presidents have been firstborns.

So does that mean you can blame their mothers?

NO LAUGHING MATTER:City Worker Slapped for Adding Jokes to Tax Forms

2005-02-07T09:41:00.000-05:00

Taxes are no laughing matter... Certainly not in Middletown, Ohio.

The city's tax superintendent apparently sent out annual tax forms with such lines as, "If we can tax it, we will."

And, "Free advice: if you don't have a profit in a five-year period, you might want to consider another line of work."

Revised forms were sent out immediately at a cost to taxpayers of about $5,500. And the official has reportedly been suspended without pay for a week.

FROM LONDON: U.K., Europe Face Twin Issues of SOX and IFRS

2005-02-04T08:31:00.000-05:00

As if trying to conform to Sarbanes-Oxley as a foreign company isn't hard enough, the European Union accounting and finance community is also grappling with new financial reporting standards of its own.

by Rick Telberg
At Large

LONDON-- If the United Kingdom and the United States are cousins separated merely by the same language, as is sometimes suggested, then the familial relationship may extend as well to Sarbanes-Oxley rules and regulations.

Sir Howard Davies, a former chairman of the U.K.'s Financial Services Authority and now head of the London School of Economics, says more than a few of the 113 U.K.-based companies with a dual listing on a U.S. stock exchange are considering pulling out of the U.S. bourse.

BP, the British petroleum company, for instance, is spending up to $125 million to comply with SOX. In another example, Wolseley, a heating and plumbing supplier with annual sales of about $17 billion, is spending about $10 million, with 20 full-time staffers at work and KPMG as adviser.

An estimate by the Association of Chartered Certified Accountants, one of three professional institutes covering the accounting profession in the U.K., put the total cost to U.K. companies at $350 million.

Some of the companies are household names in the U.S.: Barclays, British Airways, Bank of Scotland, GlaxoSmithKline and British Telecom.

By the way, the same week we were in London, KPMG reported 6 percent revenue gains for the year, 9 percent raises for partners and a 23 percent revenue jump in the unit handling SOX and Section 404 issues. The rest of the Big Four are probably doing as well or better, according to our U.K. sources.

U.S. Securities and Exchange Chairman William H. Donaldson has offered some relief, telling Davies and others gathered at a symposium at the London School of Economics, "We do have some thoughts on how we can lessen the restrictions." For starters, he said, the SEC is considering pushing back the deadline for foreign issuers from July to as late as December to give them some breathing room. Davies said Donaldson's "statement is to be welcomed." And certainly, the New York exchanges have a lot at stake in the outcome.

U.K. financial managers and accountants are almost as concerned, meanwhile, by the report that maybe 600 U.S. companies face shareholder litigation and higher capital costs after admitting "material weaknesses" in their Section 404 reviews.

THE GLOBAL VIEW FROM LONDON

But relations with the U.S. under Sarbanes-Oxley is just one of the many factors reshaping the global auditing, accounting and financial reporting scene these days.

The European Union, for example, is pushing through a series of measures to standardize and make more transparent financial reports from all businesses in the trading sphere.

Starting this year, E.U.-listed companies must start issuing financial reports under the new International Financial Reporting Standards. The rules hit banks, especially France-based banks, hard. But Vodaphone, because of changes in goodwill rules, could come out ahead. U.S. companies have until 2007 to get into line.

It's a fact of life that the SEC chairman was clearly aware of when, at the London School of Economics, he said, "Many companies outside the U.S., especially in Europe, face additional challenges in the near term that go above and beyond those faced by U.S. companies as European companies adopt International Financial Reporting Standards for the first time in 2005."

From London, it becomes almost painfully clear the global importance of clear, consistent accounting standards. Luckily, on both sides of the Atlantic, and in many other places and tongues, the worldwide accounting profession and financial community are pushing hard to advance the one universal language of business: accounting.

CPAs Still Learning Lessons from Grade School: The Hard Way

2005-02-04T08:03:00.000-05:00

Stuart Hartley, of FocusROI, is incensed. Here's the note he's circulating to friends and colleagues:

A CPA firm under fire for its audit of a Long Island, N.Y. school district is reportedly shutting its doors. This came right after the scandal-plagued school district filed a $12 million lawsuit against the firm and the release of a scathing report by New York State Comptroller Alan Hevesi in which he blasted the accounting firm for failing to identify a multi-million-dollar fraud, not meeting professional standards, and violating auditor independence standards in its audit.

Specifically, a press release from his office indicated:

The CPA firm did not meet nine mandatory professional standards for conducting audits.
When a whistleblower first exposed the fraud in 2002, the CPA firm investigated and found only $223,136 in inappropriate payments. Using the same methodology, State auditors found $1.6 million in questionable payments.
In its testing of school district spending, the CPA firm didn't look at cancelled checks and a cursory review would have revealed instances where the actual payee on the check was different from the payee listed in the firm's workpapers.
The firm's workpapers, supposedly created in 2002 and 2003, allegedly contained payment information that was put in the district's records by district officials in 2004 to cover up fraud.
The CPA partners sold financial and other software to the district creating a conflict of interest and violating professional standards requiring auditors to be independent.

Hevesi opined the work of the firm was "so appallingly inadequate that it would shock anyone associated with the auditing profession and certainly the taxpayers who depend on the firm to safeguard their money. Our auditors found fraud so pervasive that it would have taken significant effort not to uncover it. Even a rudimentary review of disbursements and cancelled checks would have revealed many instances of wrongdoing," He concluded that he was "extremely troubled by our findings, and I urge the State Board for Public Accountancy and the Nassau County District Attorney's Office to pursue this matter aggressively."

What strikes me as so interesting is the tone and references in the release. Here we are two and one-half years after Sarbanes-Oxley and the focus is back on the auditor. The terminology being used refers to conflict of interest and failure to maintain independence. We also see claims of other revenue than for auditing services. In this case, it concerns software.

The Actual Testimony of Hevesi:

In March the public became aware of the alleged theft of $223,000 of Roslyn School District funds that had been discovered, and then covered up, 18 months earlier. Over the next three months, spurred by an investigation by Nassau County District Attorney Denis Dillon, the public became aware that the fraud at Roslyn was much more extensive and involved more people than had previously been thought. So far, three officials have been indicted and charged with stealing or misusing more than $2.3 million.

Subsequently, allegations arose concerning theft by officials at the William Floyd School District, where two officials have been arrested and charged with nearly $1.5 million in theft of public funds. In the Three Villages School District, the former Superintendent is alleged to have charged more than $40,000 in personal expenses on a district credit card. In addition, there have been a continuing series of public disclosures alleging questionable behavior by board members and school officials at the Hempstead School District.

These allegations have created a crisis of confidence throughout Long Island. The clearest evidence has come in voting on school budgets on Long Island. In 2004, well over one-third of school budgets were rejected by voters, an all time high.

Given this public turmoil and erosion of confidence, it is imperative that State leaders and elected officials take immediate steps to restore the public’s confidence and ensure that the resources we have dedicated to our children’s education are used exactly for that purpose. I would like to describe just some of my Office has done in response.

The best defense against fraud is strong internal controls in every school district. My Office has worked with a coalition of various education organizations to develop policy solutions to improve the internal control structures in school districts and increase the effectiveness of some of the oversight mechanisms. The Schools Financial Accountability Coalition is comprised of representatives from my Office, the New York State School Boards Association, the New York State Society for Certified Public Accountants, the New York State Council of School Superintendents and the New York State Association of School Business Officials. We also worked with representatives from the State Education Department in developing our plan, and their assistance has been invaluable.

In addition, I have redirected resources within my Office and initiated audits of 21 school districts on Long Island, including in-depth audits of operations in five districts and audits of administrative expenses such as credit card usage, meals and travel in 16 other districts.

To-date we have issued three final audit reports from this effort. Two of those were reviews of the Baldwin and Plainedge school districts. I am happy to report that in both districts we found no wrongdoing, although we did recommend some administrative improvements in each.

On January 6, we completed our review of the external audit process at Roslyn during the period the alleged thefts were occurring. The fact that each school district is required by the State Education Department to undergo an annual audit is intended to give the public some assurance that taxpayer funds are spent appropriately. In fact, it was the presence of this annual audit requirement that led Comptroller Edward Regan more than 20 years ago to suspend the State Comptroller’s routine audit efforts in schools. Comptroller Regan made this point clear in a May 10, 1984 letter to then Assembly Speaker Stanley Fink, when he wrote that the State Comptroller was not doing regular school districts audits, because of “the fact that State Education Law requires school districts to be audited annually by certified public accountants.” This rollback of the OSC audit coverage was necessitated by budget cuts that resulted in substantial reductions in the number of Comptroller auditors. In fact, the number of the local government auditors was reduced by half during the 1980s and early 1990s.

Our report on the Roslyn outside auditor, Miller, Lilly and Pearce, was designed to determine why this outside check on the school district failed to operate effectively. The results of our review were remarkable. We found a complete failure of oversight.

The CPA firm knew, as early as 2002, that a fraud had occurred, but in its audits it never looked for more fraud. The CPA firm looked at what were clearly fraudulent transactions in the sample that it tested, but did not identify them as fraudulent. The CPA firm’s workpapers contain evidence of significant internal control weaknesses, but it never followed up to see what might have resulted from those weaknesses or pointed out that they could cause problems. District officials had to post millions of dollars of accounting adjustments at the end of each year to cover up massive theft, but the CPA firm failed to identify any unusual activity in its annual audit reports. In fact, in both the years we examined, the CPA firm gave the District a clean, unqualified opinion on its financial statements.

We found numerous deficiencies in this audit. Nine of 22 required professional standards for such an audit were violated. Violating any one of those standards can lead to professional sanctions. For example, an auditing firm is required to be independent of the school district it is auditing. We found obvious conflict of interests, clearly prohibited by professional standards. The CPA firm had designed and developed computerized accounting software and sold it to the District. The CPA firm also provided ongoing support and periodic upgrades and maintenance for this software. Thus, when the firm was auditing the accounting system, they were auditing their own work. In addition, the firm was involved in selling to the District student tracking software. They therefore had a financial relationship with the District outside the audit, a direct conflict of interest.

When testing transactions, the CPA firm did not review cancelled checks. Such a review is basic and elementary. In fact, the name on some checks was different than the vendor name for those checks shown in the District’s records. Because they didn’t review the checks, they missed this obvious fraud.

In another case, we found that the vendors listed on the CPA’s workpapers for certain payments were not the vendors listed in the District’s records at the time the audit was done. They were phony names put into the District records to cover up the fraud. And they were put into the records after the CPA’s audits were completed. In other words, the CPA had fraudulent information in its workpapers supposedly completed in 2002 and 2003 that was not put in the District’s records until 2004.

We asked the CPA firm to explain this discrepancy. The CPA told us that he was given the vendor names by the former Assistant Superintendent. This is an extraordinary admission for two reasons. First, the auditor is admitting that he simply accepted the verbal representation of a member of the organization he was auditing without verifying these assertions by checking them against the written records. That would be bad enough. But consider, the Assistant Superintendent is the person the auditor found to have stolen $223,000. She had resigned before the second audit reviewed by us was done. So she was not around to provide the fraudulent information during this second audit. The fact that the workpapers presented to us, and ostensibly produced in the summer of 2002 and 2003, contain phony vendor names that do not appear in the District computer records until February 2004, when someone changed the vendor names in an attempt to cover up the theft, is more than troubling.

In 2002, a whistleblower went to the CPA firm with evidence that a theft had occurred in the District. As a result, the District asked the firm to identify the amount taken. The CPA firm calculated that $223,000 had been stolen from the District by the Assistant Superintendent. The firm then helped District officials keep this fact secret from the public and other interested agencies, such as the State Education Department, the District Attorney, and my Office. Even though it was aware of this theft, the CPA firm made no effort in its audit for the 2002-03 fiscal year to actively look for fraud or other questionable activity, as required by national audit standards. It is of course now obvious that had the CPA firm done its job and looked for additional fraud, it would certainly have found plenty. In addition, when we replicated the work that the CPA claimed he did in calculating the $223,000 theft in the fall of 2002, we identified $1.6 million in questionable transactions, not $223,000. How this could have occurred, what actually happened, how more than $1.3 million in additional questionable transactions could have been ignored, is a job for the Nassau County District Attorney to determine.

Hartley sums it up: "In short, one of the fundamental safeguards we have all come to depend on, the outside independent audit, failed."

So You Think You're Smart?That Won't Buy You Lunch in This Business

2005-02-04T07:31:00.000-05:00

In a survey of 316 LPL Financial Services representatives, "intelligence" came in 9th in a list of 10 traits for success in financial planning:

1. A service mentality = 31.6%
2. Strong ethics = 28.8%
3. Determination = 21.8%
4. Wisdom = 5.1%
5. Empathy = 4.7%
6. Patience = 3.2%
7. Candor = 1.9%
8. Friendliness = 1.6%
9. Intelligence = 0.9%
10. Luck = 0.3%

Source: Career Adviser/financial-planning.com

NOTES FROM LONDON...

2005-02-01T08:45:00.000-05:00

The Some-Things-Are-Universal Department: A corporate treasury manager who stole almost $20 million over five years to fund his Internet gambling addiction was convicted and sentenced to five years in jail. Colleagues described him as "quiet, unassuming and polite." The theft was discovered when he handed in his notice, but couldn't explain discrepancies to his replacement. His modus operandi, by the way, was to log on to the system as various company executives and withdraw small amounts at a time. ...

Government Accountants at Work: U.K. taxpayers are losing about $2 billion a year to waste, fraud and abuse in the nation's sprawling work and pensions system. Of course, this is only the 16th year the auditors have issued such a finding. ...

Where Else but the U.K.? Accounting is taken seriously over here. The prestigious Times of London lists in a special four-page section every candidate who passed the test to join the Institute of Chartered Accountants in England and Wales, the AICPA's closest cousin in the U.K. ...

Death and Taxes: An inheritance tax imposed in 1986 to target the "Brideshead Revisited" set is now sweeping up about a third of all homeowners, whose property values have risen rapidly in recent years. Their heirs could owe 40 percent at settlement.

2005 Could Be a Banner Year for the Profession

2005-01-31T08:01:00.000-05:00

Barring more global calamities or professional scandals, forecasters paint a rosy scenario.

by Rick Telberg
At Large

With the national accounting scandals comfortably in the past and hopes for an economic recovery in the future, 2005 could be a great business year for CPAs and their firms, say executives from across the accounting profession.

Tax, attest and financial planning services stand out as the areas most likely to enjoy the boom. This is one of the key issues raised in the series of reports that began Jan. 3 with the views of AICPA Chair Bob Bunting, in "Bunting Sets Agenda for New Year."

"2005 should shape up as another banner year for the CPA profession as the image is back to pre-Enron highs and demand for CPA services continues to grow;" Maryland Association of CPAs chief executive Thomas Hood said. He expects to see corporations increase their hiring of CPAs for their financial reporting expertise, and lessen their recruitment of MBAs and "finance gurus."

Among the vendors expecting big things in 2005, Mark Schlageter, chief operations officer of Thomson Tax and Accounting in New York, predicted that the time is ripe for accountants to "restate and reinforce the profession's value proposition as trusted advisor."

A boom in tax planning work is being predicted thanks to tax reform legislation and hopes for additional reform.

"People do not like change; this in turn leads to increased opportunity for accountants," said Bruce Clark chief executive of New Clients Inc., a Mullica Hill, N.J.-based provider of marketing services.

The Baby Boom generation's advancement toward retirement age will help fill CPAs' financial planning plates. David Reedy of Richmond, Va.-based financial planning services organization, Genworth Financial predicts that "an ever increasing number of CPAs" will be adding financial planning services in 2005 and those with established services will see an uptick in clients seeking to build cash reserves or to distribute funds already accumulated.

Practitioners themselves are bullish, such as Thomas Marino, managing partner of New York-based regional giant J.H. Cohn, who predicted that 2005 will be "a very good to great year" economically, and Jerry Esselstein, an Ohio CPA and past president of that state's CPA society, who said that demand for services will be high.

However, there's also a good deal of caution as you might expect from our sample of experienced CPAs.

St. Joseph, Mo.-based CPA and practice-management guru Charles Larson is hopeful about a banner 2005, but added that global politics and terrorism threaten to spoil the party.

"Everyone needs to have done some contingency thinking and be prepared for the unexpected," he said.

"While accountants got some bad initial press because of all the audit failures, in the end it was the accountants who were the winners," added Steve Albrecht, associate dean at Brigham Young University's Marriott School of Management.

Albrecht noted that CPA firms of all sizes will be performing more services related to audits and, because corporations have become more hands-on in attest services, "accountants now deal directly with audit committees and CFOs instead of controllers, and audit fees have been increased."

Russell Flagg, president of New York-based conference organizer Flagg Management thought "cautious optimism" best described the mood of the profession. "We should pray that Iraq, Iran and North Korea will not provide any surprises in 2005."

Too Much Work, or Not Enough People?

2005-01-24T07:56:00.000-05:00

Or both? The CPA community struggles with a new surge in demand for services, talent... and bodies.

by Rick Telberg
At Large

At the same time they're boasting about the prospects of a big boom for tax and accounting work in 2005, CPAs and other parties keenly interested in the accounting profession are worrying about whether firms will have enough qualified people to handle all the additional business.

Practitioners, business school professors and vendors who serve the profession told us they are concerned about the lack of resources to meet the pending boom. They're also nervous about the dearth of leaders who appear ready to take over firms in the wake of anticipated massive retirements of partners from the Baby Boom generation. This is one of the key issues raised in the series of reports that began January 3 with the views of AICPA Chair Bob Bunting, in "Bunting Sets Agenda for New Year."

Every CPA we surveyed predicted a business boom in 2005, and Thomas Marino, managing partner of J.H. Cohn in New York, added, "The challenge, because of all the extra work, is managing the limited number of staff that exists today."

Firms with limited staff and expanding workloads are increasingly being forced to rid themselves of clients who "don't match their ideal client profile," said Jean Marie Caragher, president of Capstone Marketing in Marietta, Ga.

The talent shortage spells good news for vendors of technology systems. "There continues to be a high demand for staff accountants, but there has been a decline in accounting graduates," said Richard Walker, director of accountant and advisor relations for QuickBooks developer Intuit Inc.

"Great demand for accountants' services with fewer staff accountants will require better tools for the experienced accountants and their clients," Walker said.

Academics are sounding the biggest alarm about the profession's lack of fresh blood. "The challenge is finding enough qualified people to do all of the audit work now," added Dana R. Hermanson, accounting professor at Kennesaw State University in Georgia. "We need to attract people to the profession."

Dale L. Flesher, Arthur Andersen Alumni Professor of Accountancy at the University of Mississippi, predicted, "It will be a great year for students to find jobs in accounting. All firms - large and small - are adding more people than usual; every prospective candidate is getting multiple offers."

Redwood, Calif.-based Camico, one of the accounting profession's professional liability insurers, is worried about whether there will be skilled people at the helm of firms as current partners from the Baby Boom generation -- aged 45 to 60 -- start retiring in large numbers.

"As many CPA firm partners in this generation are interested in retiring in the near term, the problem is that there is a demographic trough between [Boomer-age partners] and the next generation," said John Dodsworth, president of. "It is very likely that in just a few years, the CPAs interested in retiring will outnumber the CPAs capable of, or interested in, succeeding them."

Joel Sinkin and Terrence Putney, principals at mergers and acquisitions consulting firm Blacklake Transition Solutions, added, "As the Baby Boomers age and the crunch for talent tightens, the trend toward needing to plan for succession is clearly a rising issue."

CAREER ADVISER:CPAs Primed to Find a New Job

2005-01-21T11:56:00.000-05:00

CPA employers had better watch out. Our new study found that four in five accountants or financial managers could be considering a job change in 2005.

by Rick Telberg
for Career Insider

The last time we asked the question, only about half of the respondents said they'd be considering a job change in 2004.

So 2005 could be a year of major staff upheavals in many firms and companies.

"I have a broad base of business experience, a history of making sound decisions and an overdose of tenacity," says one middle manager at a small business. "I will search to find that organization which recognizes and rewards the value of those attributes."

The signs are good that it's a seller's market for job hunters. On the other hand, think of the impact on your firm or accounting department if most of your staff takes a hike and never comes back.

"I have been working with start-up companies for many years, and have considered a job change to a more stable environment with concrete benefits -- other than the questionable value of stock options," says Donna Maynard of Sanford, Fla.

So Maynard, like many others, has updated her resume, references and cover letters, has activated e-mail agents on a major job board and is tapping into her own personal network. She figures she could be ensconced in a new controllership position relatively soon.

Would they find greener pastures? Seventeen percent thought the job market would be "excellent," and another 68 percent described it as "good." That opinion accounts for all but 15 percent of survey respondents. Significantly, not one respondent saw the market as "poor."

What are job seekers looking for?

Asked which criteria are most important in a job, a surprising 81 percent specified the integrity and ethics of management as "essential," and another 17 percent called it "important." The next most popular requirement is job description, with 58 percent terming it "essential" and 40 percent calling it "important." That was followed by geographic location, with 87 percent calling it essential or important.

Salary pulled a 97 percent importance rating. Company stability followed with 96 percent. Benefits ranked slightly lower, with a 94 percent importance rating.

"I'm looking for a 'great boss' - one who mentors and grooms talent for leadership positions," states one junior manager in a large health system. "I'm also looking for a corporate culture that truly lives 'work-life balance' and applies the same value to single, childless employees as to married parents. But it's tough to assess during the search process since you really don't know a company's true colors until after you sign the dotted line."

In all, CPAs ranked these 10 job-satisfaction criteria as "essential":

81% Integrity/ethics of the management
58% Job duties
57% Company stability/strength
56% Opportunity for advancement
55% Geographic location
48% Salary offer
47% A good benefits package
42% Continuing education and training
35% Co-workers
24% Chance for equity/partnership

Job seekers weren't waiting for the jobs to come to them. Forty-six percent said they'd follow up on leads. Thirty-six percent would be taking business cards to holiday parties. Sixty-seven percent planned to conduct a self-assessment and check their skill sets. Sixty-eight percent said they'd work to foresee opportunities, demands and crises.

Still, despite these aggressive intentions, the greatest number - 68 percent - put their priority on balancing work and life.

"Having flexibility is vital," says a middle manager at a large public accounting firm.

What does it all boil down to? Accountants know the job market is in their favor, and they're willing to work to move ahead. But they want an honest employer who respects a variety of professional needs.

Colleges Share Burden for Profession's Future

2005-01-17T13:47:00.000-05:00

Integrity and ethics must become a part of every course in every curriculum.

by Rick Telberg
At Large

Accounting academia is shouldering some of the responsibility for the audit scandals of a few years ago and in 2005 will be doing more to safeguard against future financial reporting fraud, according to our ongoing study of practicing CPAs, educators and other accounting professionals.

"As academics, we have to continue asking ourselves how we contributed to the attitudes that caused the profession's problems," said Gary L. Sundem, an accounting professor at the University of Washington in Seattle. "What caused a few of our accounting graduates to become villains -- the perpetrators of the scandals -- while others were heroes -- those who identified wrongdoing and brought them to light?"

Professor Sundem's remarks are part of broad survey opinion among visionaries and leaders in the profession as part of our 2005 Outlook Study. We began reporting January 3rd on the results of the study with the views of AICPA Chair Bob Bunting, in "Bunting Sets Agenda for New Year."

"I don't think it was because most accounting programs ignored ethics; it was more because we were not effective in conveying its importance," Sundem said.

How will academic leaders respond to the key trends in 2005? "I don't think more ethics classes are the answer, though they may be helpful," Sundem replied,. "Rather, we need to make integrity an important part of everything in our accounting programs, from faculty role models to discussing the ethical implications that underlie most of what accountants do."

Dana R. Hermanson, accounting professor at Kennesaw State University in Kennesaw, Ga., said that in his classroom he is stressing ethics, fraud prevention, corporate governance and the pressures that auditors and accountants face on the job.

"It is critical that students understand the role of auditors in the economy and that they do not lose sight of this role once they are in practice," Hermanson said. He also has increased his personal research focus on issues related to fraud, internal reporting controls and corporate governance. "I want to learn more about what works and what doesn't work and carry the message of sound governance and control to the practice community," Hermanson explained.

Because of an increased interest in corporate fraud brought on by the Sarbanes-Oxley Act, University of Mississippi's Dale A. Flesher said that he and his fellow business educators are being encouraged to implement new courses in fraud and to incorporate more fraud and ethics training in existing courses. They are also encouraging younger students to major in accounting.

Steve Albrecht, the associate dean of Marriott School of Business at Brigham Young University, noted that because of the scandals and the Sarbanes-Oxley Act, accounting firms' audit-related services work has been increasing rapidly. In response, he is encouraging his students to become "more proactive in the profession."

The professors seem enthusiastic about the accounting profession's business prospects in 2005, but are wary of the potential for more auditing scandals.

"As long as we don't have another big accounting fraud in the U.S., I see 2005 as a very good year," Hermanson said. "The profession can further rebuild its credibility, and investors and others hopefully will appreciate the new internal control audits" required by Sarbanes-Oxley.

Sundem added, "We can't afford major setbacks. Unfortunately, audits are not perfect and never will be, so there is always the chance of what some may call audit failures."

New years resolution #1: secure that data!

2005-01-14T13:50:00.000-05:00

Are you one of the many accountants whose systems are vulnerable to catastrophic outages?

By Rick Telberg
Special for HP
HP/CPA Tech Advisor
News and Trends Exclusively for CPAs from HP

Losing computer system data can be financially devastating, and small and medium sized businesses are vulnerable to the point that their very existence is at stake.

The events that can damage computers and rob businesses of their data are expanding faster than technology itself. Here are just a few: fires, explosions, computer viruses, hackers, disgruntled employees, sprinkler alarm malfunctions, vandalism or theft, tornadoes, earthquakes, blizzards and forced evacuations, such as what occurred during the Anthrax mail scare shortly after the Sept. 11 terrorist attacks.

SMBs unprepared for such threats can suffer dearly. The American Red Cross estimates that at least 40 percent of SMBs never reopen after disasters such as floods and tornadoes, and in many cases its because they failed to protect customer information, financials and other key data that had been in their computer systems.

Just because your offices are not in an area prone to tornadoes or heavy rain, don't think your data is secure. The threat of a direct technological attack is greater than ever.

A whopping 53 percent of computer security executives surveyed in 2004 by the Federal Bureau of Investigation and the Computer Security Institute reported that there was at least one unauthorized use of their organizations' information systems in the past year and close to 60 percent reported virus attacks. A more recent study by a digital security firm found that during the third quarter of 2004, the number of technology security events jumped 150 percent over the same period in 2003 fueled by "more sophisticated hackers writing better code."

Large well-capitalized corporations are investing millions of dollars to fend off hackers and the viruses, worms and other "malware" technologies popping up almost everyday. Still, in some cases, technology break-ins just cannot be effectively countered as 12 percent of the companies in the FBI-CSI study experienced more than ten computer security incidents.

While SMBs are not the victims of direct attacks as often as larger companies, there are at least three frightening reasons for them to be concerned: First off, smaller businesses are often the end part of larger attacks, including Internet worms or credit card theft scams. Secondly is the simple fact that as larger, highly capitalized companies invest in tighter technology safeguards, attackers will increasingly look at the less expensive systems that are easier to break into.

And all companies are subject to data loss caused from within their organizations by disgruntled employees breaking into systems to intentionally wreak damage or by happy campers making honest mistakes. Gartner Group once estimated that employees are responsible for more than 70 of the unauthorized access to businesses' information systems. For SMBs relying on the traditional method of having employees backup their PCs or duplicate computer data to tape once a day, the only way to eliminate all risk is to have them do that backup 24 x 7.

Unfortunately, even insurance is not an answer because while it covers the loss of physical assets, it often excludes the even greater asset of the computer data that represents an SMB's pooled knowledge and often it's future. It's up to SMB managers to make sure that data is kept safely.

Could SOX Really Be CPA-Friendly?

2005-01-10T13:43:00.000-05:00

As CPAs shoulder new requirements, workloads shift through the profession.

by Rick Telberg
At Large

Considered by some a slap across the accounting profession's face when it was enacted in 2002, the Sarbanes-Oxley accounting reform law may have become a business ally for accounting firms of all sizes and finance professionals of all types.

In addition to heightening the public's appreciation of audit services, the law's multitude of new financial reporting requirements has created new work for the larger firms that typically handle public-company reporting, and they have passed some of the work to their smaller brethren. Last week, we began reporting on the results of the study with the views of AICPA Chair Bob Bunting, in "Bunting Sets Agenda for New Year." [See some reader responses below.]

"The Sarbanes-Oxley Act should have been called the Full Employment Act for CPAs," said Thomas Marino, managing partner of New York-based JH Cohn, one of the profession's 10 largest firms. He notes that because they are unable to handle all the new reporting requirements for all of their clients, the national firms are culling clients, which are then picked up by regionals like his, who, in turn, are culling clients being picked up by smaller firms.

Joel Sinkin and Terrence Putney, principals with Blacklake Transition Solutions, a M&A consultancy for accounting firms, say the SOX phenomenon has created a supply/demand imbalance at larger firms that is indeed trickling work down to smaller firms. Local and regional firms able to muster the necessary resources will be positioned for more growth in the near term, they add.

Dana R. Hermanson, accounting professor at Kennesaw State University in Georgia, noted that the law's additional reporting rules, particularly its section 404 requirement that companies audit and sign off on the integrity of their financial reporting systems, will ultimately improve the accounting process and rein in the potential for Enron-like accounting scandals.

Joseph Eckelkamp, president of Eckelkamp and Associates, a St. Louis-based regional CPA firm, said he's been handling a lot of new audit clients as "the big guys move away from my marketplace, increase their prices and focus on SOX services I don't provide." He noted that a big part of his new work is internal audit assignments referred by external auditors whom SOX precludes from serving as both an internal and external auditor for the same company.

Likewise, Gary L. Sundem, Julius A. Roller professor at the University of Washington Business School in Seattle, called the law "the Accountant's Employment Act of 2002," and notes that the profession is scrambling to carry out all the new work it has created.

But Sundem warns, "There remains much to do to recreate confidence in the accounting profession. We are moving in the right direction, and I only hope it is fast enough to avoid future scandals."

That warning is not lost on practitioners. Jake L. Netterville, chairman of Baton Rouge, La.-based regional firm, Postlethwaite & Netterville, said, "We must remember that Sarbanes-Oxley was passed with great haste and is imperfect at best. The profession should continue its quest to improve on it."

Marino added, "I think the big uncertainty that exists is what will happen when we have the first accounting failure on a company that has received a clean opinion on their 404 work?"

That's a thought to make one shudder anew. All CPAs have a stake in seeing that it doesn't happen.

READER REACTION TO "BUNTING SETS AGENDA FOR NEW YEAR"

He's right on track.
-- Neil Galanti, CPA
Dunwoody, GA

I agree with the AICPA agenda; however, as finance director for a city of 20,000 I am finding it very difficult to explain why we should be reporting under GASB. The response I get is, "There is no law that says we have to, so we don't want to." I understand the purpose of GASB and I am trying to comply. The only problem I have with the statements is the Statement of Activities. I find it to be very confusing and not very informative.
-- Dale Walker

I agree with Mr. Bunting that small business regulation should be appropriate to the environment that this segment of business and industry is operating within. If we apply the level of regulation now required of publicly held companies, small business will be overwhelmed and become ineffective. This will have a negative effect on the part of business that keeps this country competitive.
-- Ed Henderson
Montgomery, Texas

Bunting Sets Agenda for New Year

2005-01-03T13:32:00.000-05:00

AICPA chief scans horizon for perils, opportunities.

Rick Telberg
At Large

Welcome to 2005! It's a year that may bring unparalleled opportunities for the CPA profession...or unprecedented peril. Or both?

In this edition of At Large, we wanted to talk to the person who is perhaps the premier leader of the profession.

It's only fitting, then, that we start with Bob Bunting, chair of the AICPA, and long the driving force and senior partner at Moss Adams, which he built from a local firm in the northwestern United States into an international presence.

To Bunting, the top long-term trend facing the profession is "the demographic dynamic" between the aging boomer generation - those roughly 40 to 60 years old -- and new entrants from university accounting programs.

"The good news," he says, "is the growing upward mobility of women in the profession, which more than doubles our access to great talent."

He knows all too well, however, that the continuing challenge is for public accounting and industry employers to get the work/life balance dilemma sorted out so the profession keeps more of the talent it initially attracts.

The most immediate challenge, nevertheless, is "to get regulators to address the fundamental difference between the public interest need for regulatory and reporting controls of private business and other smaller organizations compared to public companies," according to the chairman.

While many regulators acknowledge the powerful contribution of private enterprise to the nation's social and economic health, they sometimes seem resistant to, in Bunting's words, "addressing the unique needs and issues of this segment when it comes to how they should be regulated."

Too often, Bunting says, "this leads to 'one-size-fits-all' thinking regarding every new regulatory initiative."

Bunting wants to ensure that those who wish to regulate the private and small enterprise segments of the U.S. economy "give appropriate representation to those segments in the deliberative process."

Despite the issues and challenges, Bunting is very optimistic about the profession in both the near and longer term.

"We are making progress in attracting top talent into accounting programs," he notes. "Events of the past three years have reinforced the critical role that CPAs play in the economy in our two principal disciplines, financial reporting and tax services. The demand for CPA services and, therefore, CPAs, has grown and should continue to do so over the next few years. And, the profession has heard and is answering the wake-up call that led to Sarbanes-Oxley. Our members in public practice, industry, government and academia have an enhanced sense of their importance in the economy and society and they are acting on this understanding."

The largest risk to the profession, he avers, is that the public will misinterpret reports of restatements, disclosures or allegations of past misdeeds, as indications that recent regulatory changes have not been productive. In fact, enterprises of all kinds are struggling to cope with the new regulations.

"We need to allow these changes to filter through American business before we can truly assess their impact," he says. "A new round of laws and rule-making would not be helpful or appropriate at this point."

As a member of AICPA leadership, Bunting is a part of a broad-based outreach and communications program. In partnership with state CPA associations, and other interested parties, the AICPA is reaching out to regulators, state and federal legislatures, public interest groups and others.

"Our goal is to have regular, clear and respectful communications with those who have influential opinions about how we carry out our public interest responsibilities," he says. "While surprises are always a possibility, they are less likely if we have frequent and open communications with the groups who have the potential to spring surprises."

The profession has a big stake in seeing Bunting's efforts come to fruition.

Mergers & Acquisitions: Trend Watch 2005

2004-12-29T10:04:00.000-05:00

2005 Could Be a Boom Year

Early returns suggest most CPAs expect a pickup in mergers and acquisitions activity. That usually augurs increased demand for CPA services -- and most CPAs seem to agree.

For some background: What the New M&A Boom Means to You

Here are the preliminary results...

1. How convinced are you that mergers and acquisitions among small-sized and mid-market COMPANIES will increase in 2005?
Completely Confident: 30%
Mostly Confident: 48%
Somewhat Confident: 18%
Not Confident: 4%

2. How convinced are you that mergers and acquisitions among small-sized and mid-market CPA FIRMS will increase in 2005?
Completely Confident: 6%
Mostly Confident: 48%
Somewhat Confident: 35%
Not Confident: 11%

3. How do you think this trend could affect you PERSONALLY?
It'll be TOTALLY GREAT for me: 15%
It'll be MOSTLY GREAT: 47%
It'll have NO EFFECT on me: 35%
It could HURT SOMEWHAT: 2%
It could hurt me A LOT: 2%

4. In your opinion, what else should we know about the issue of mergers and acquisitions? Please add your comments here...
1) Expect to see the acquisition of US companies by foreign companies to increase, since the devalued dollar makes cross-border acquisitions much less expensive.
2) There just doesn?t seem to be any firms for sale in my area. Every month the buyers far outnumber the sellers and most buyers' ads go unanswered.
3) Advisors need to plan on being licensed to represent sellers, as this is becoming the norm.
4) How to finance the transactions effectively
5) I would think the "aging of the baby boomers" is having an impact as well as the Big getting rid of business.
6) Discount and premiums for smaller privately held companies. How to apply for investment value, fair market value. Also 50/50 and one shareholder is buying the other out not under a dissenting shareholder action.
7) We all have to quit sometime.
8) I believe in the long-run it both helps and hurts. It helps because as companies combine, it creates opportunities for new start-ups; it hurts because of a tendency to lessen competition.
9) Tell clients to prepare in advance!!!!!! A Client with a good plan will make out much better than one who wakes up and decides to sell right away.
10) real value to consumers--- check out UAL and Delta rumors

DEMOGRAPHICS

In what type of business do you work?
Public accounting: 60%
Business or Industry 16%
Government: 2%
Not-for-profit: 0%
Education: 2%
Other: 20%

How many people work in your office or location?
1 to 10: 45%
11 to 50: 25%
51 to 100: 13%
101 to 500: 13%
More than 500: 4%

Which best describes your position?
Chief Executive/Managing Partner: 35%
Senior Executive/Partner: 33%
Middle Management: 13%
Staff: 9%
Other: 11%

CPAs Break Along Political Fault Lines on Tax Issues

2004-12-27T09:40:00.000-05:00

The “Master of the (Tax) Universe” survey asked CPAs how they would set federal tax policy if they had the power to do so.

The respondents were almost equally divided on four options:
1) whether to leave recent personal tax cuts in place or restore the top two pre-2001 rates to expand and relieve the middle class;
2) whether to preserve the current Social Security system or allow personal retirement accounts;
3) whether to strengthen the existing pension system or create new retirement and savings plans; and
4) how to reform health care and its affordability.

CPAs showed stronger preferences in issues relating to taxation aimed at economic impact. Two-thirds want the global playing field leveled through reduced rates for companies that operate overseas. Sixty-five percent would rather see fiscal discipline than lower taxes and unfunded pro-growth spending.

An open-ended question drew a wide variety of tax solutions, some detailed and comprehensive.

The most common were (in order):
a) replace income tax with VAT or sales tax,
b) simplify the tax code,
c) eliminate the Alternative Minimum Tax, and
d) adopt a flat tax.

Opinions ranged from liberal (tax the rich; fund health care, oust President Bush, etc.) to conservative (reduce government power, eliminate corporate tax, privatize Social Security, balance the budget, etc.).

More: Something for Everyone in New Corporate Tax Bill

Andersen Refugee:'Thank You, Mr. Sarbanes and Mr. Oxley'

2004-12-23T13:59:00.000-05:00

How's this for irony?

Three auditors who lost their jobs when Arthur Andersen folded are cleaning up because of the mistakes that led to Andersen's downfall.

They're auditing local San Jose, Calif., businesses that are racing to meet Sarbanes-Oxley regulations devised to prevent another fraud like Enron, according to the Mercury News.

But there's more: The founders named their firm Blueback, the nickname for the blue forms that Andersen's auditors used to detail their clients' accounting flaws. And co-founder Kim Le's last name is pronounced "Lay."' (As in Ken "Lay.")

The 32-year-old Le says she loved the eight years she put in at Andersen. But the firm collapsed while she was on maternity leave with her first child. By the time she was pregnant with her second, she knew she wanted to go back to work. So she teamed with two other Anderson refugees to start Blueback.

Blueback is now handling a number of accounting chores for Intuit, Neoforma, Plumtree Software and Good Technology.

Joked Le: ``I've got to write Senators Sarbanes and Oxley and thank them.''

CPAs to Santa:Give us Peace and Digital Stuff

2004-12-20T09:42:00.000-05:00

The study of professionals in accounting and finance found PDAs edging out world peace at the top of the average Yuletide wish list.

The survey, admittedly, was unclear, however, whether “PDA” stood for Personal Digital Assistant or Personal Display of Affection, but in either case it appeared on 45 percent of the professionals’ plans for lap-time with Santa.

That was one percentage point ahead of requests for peace on earth.

The only more popular choice was “a better memory of my own,” at 53 percent.

Apparently all but 14 percent already had an adequate desktop computer.

But 36 percent wouldn’t mind an ultra light laptop.

Almost as many wanted “wi-fi everywhere”, and a quarter of those polled wanted a GPS device to tell them where they were and which way to go, presumably while wandering around with their new ultra light wi-fied laptops.

Only nine percent needed a new business card scanner. Only twelve percent, apparently, had maxed out their hard drives, and 15 percent could use more computer memory.

Smart phones were near the top of the list, but one smart aleck said he’d prefer a dumb phone with a good signal to a smart phone with no signal. Whether either phone will reach Santa’s workshop — we sincerely hope neither will — remains unknown.

Departing from multiple-choice suggestions, over three dozen respondents indulged in more creative Christmas cravings.

One still wanted a ’67 Shelby GT500, another a Ferrari, another a T-bird, another a plane. Two wanted health, one sanity, one time.

A Blackberry, a cell phone, a watch, a TV, golf clubs, lots of digital cameras, a lifestyle pill for everything.

Money. Music. Many happy returns after April 15.

Nobody mentioned love. Not even sex. Or maybe that was included under PDA.

TAX SEASON '05:Is the IRS Ready? Are You?

2004-12-19T09:45:00.000-05:00

Following a new Government Accountability Office report that found the Internal Revenue Service deficient in several key operating areas, accounting and finance professionals responded to a survey that questioned the IRS's ability to do its job this year.

Only nine percent were "fully confident" that the IRS could handle this year's tax season effectively, but 69 percent were mostly or somewhat confident.

A troublesome 22 percent were pointedly "not confident."

The respondents were more confident in themselves. Eighty-one percent considered themselves "on schedule" or ready to roll for the upcoming tax season, though 14 percent were just beginning to think about it.

Five percent didn't even want to think about it.

Most saw money coming. Just over three-quarters foresaw their revenue and profits rising somewhat or significantly.

Nobody saw revenue decreasing significantly. Almost a quarter expect no change in their number of clients, and only 7 percent expected a decrease.

What will have the greatest impact on the filing season? For 68 percent, it will be clients late or unprepared. Just over half expected problems with new rules and regulations, last minute changes by the government, and technology problems.

Few said they were concerned with local competition, but 18 percent were worried that the national economy would affect their business. Just over a quarter were worried about having enough staff. Just as many feared screw-ups at the IRS.

Of 14 respondents who offered expanded comment, six complained about some aspect of the IRS: its operations, its software, its failure to deliver on promises.

Another three complained about the challenge of regulation and legislation. One worried about competition from the cheap and unskilled.

One worried about uncooperative clients. One foresaw a satisfying journey to exhaustion.
And one believed the tax season would be "uneventful."

What the New M&A Boom Means to You

2004-12-17T15:16:00.000-05:00

A perfect storm of low rates, consolidating markets and cash-rich buyers could spark a deal-making frenzy. Are you ready?

by Rick Telberg

At Large

Hold on to your hats. American business may be on the brink of a new rush of mergers and acquisitions.

CPAs in the mergers and acquisitions space are telling me they have been seeing an upsurge in M&A momentum during 2004. And they expect the trend to gain more steam in 2005.

This could be a boon for properly positioned CPA firms of all sizes.

ARE YOU READY FOR THE M&A BOOM?
Sound Off Here.

(Get a FREE preview of the study.)

For CPAs in business and industry it may be both a blessing and a curse. The ramp-up to a deal can give a financial manager a chance to shine. In the aftermath, however, finance departments are often second only to marketing departments to face the axe. Don't worry too much though: the Sarbanes-Oxley earthquake is expected to keep the financial job market humming for at least another year.

But why the M&A resurgence now? And what does it mean?

After the lull following the burst bubble and broken hearts of the 1990s, cash-flush corporations are on the prowl, and post-bubble survivors are looking for offers, according to Michael Jacobs, president of Atlanta-based Jacobs Capital, writing in Catalyst magazine.

"There is no precedent for this amount of cash" available for deals, according to S&P equity analyst Howard Silverblatt, quoted in Forbes magazine.

The message to owners of small- and medium-sized businesses is: get ready, get set, get sold.

It's a sellers' market, but not for long.
T
he same dynamics are playing out in the CPA firm marketplace. Larger firms are gobbling up smaller firms. If you're looking to cash out, this is a great time to sell. But that's another story, or two: See "It's a Great Time to Sell!," "Buy or Sell? Firms Ponder Profits, Perils," "6 Things You Must Do Today to Thrive Tomorrow," and "What's Your Business Worth?"

In fact, middle-market transactions have almost doubled in the past year. The main drivers are increased cash flows and improved revenues in corporations that trimmed down during the recession and are already taking advantage of the recovery.

Another big driver is the low cost of capital. Though interest rates have nudged up, they're still down. And it will be a long, long time before they get this low again. Companies in search of companies have every reason to borrow now, acquire now, and pay later as the acquired companies start sucking up the cash of a recovering economy.

It's no surprise that last year 75 percent of merger deals were cash transactions. After all, why give up shares just as they're finally starting to be worth something?

Meanwhile, private equity funds have entered the market. After half a decade of poor performance, they're hungry for companies they can flip for quick profit. They're looking for companies that have survived by trimming back to maximum efficiency.

At the same time, there are more sellers than ever before. Many were waiting for the advantageous moment. Many are owned by aging baby boomers who are starting to think about retirement. And just in time, the capital gains tax is about as low as it'll ever get.

It's a sellers' market, but it won't be for long.

The deals will go to those who are ready. So get ready. Get set. Go deal.

NOW IT'S YOUR TURN: : What could a new M&A boom mean for you? Sound off here.

COMMENTS? Send your rants, raves, questions or idle thoughts to Rick Telberg here.

Finance Leads Rosy Job Outlook for '05

2004-12-16T15:31:00.000-05:00

Six in Ten U.S. Workers Expect Salary Increase in 2005

Most U.S. workers -- especially finance professionals -- are looking to 2005 optimistically, with 61 percent expecting higher salaries, according to a national Hudson Highland survey

This includes 18 percent who expect to earn significantly more. Also, the percentage who believe their job prospects and employment situations will improve next year (44 percent) outweighs the percentage of those who do not (33 percent), according to the company, which was started by a coterie of Arthur Andersen refugees.

Workers also anticipate improved employment prospects in 2005, with 42 percent indicating they are somewhat to very likely to look for a new job in the coming year. Only 22 percent rule out looking for another job next year. To enhance employment opportunities, one in four workers (25 percent) believes that developing new skills will play the most vital role, followed closely by 23 percent of workers who feel a higher educational degree would be most helpful.

"Looking ahead to next year, workers are more positive overall than at the same juncture last year, though optimism has cooled since a summer peak," said Jeff Anderson, senior vice president, Hudson Global Resources, North America. "Still, fewer are worried about losing their jobs and hiring has rebounded. As a result, we expect workers will be more willing to take risks; gone is the 'better safe than sorry' mentality that was keeping them in their current jobs."

2004 Hudson Employment Index Year-In-Review

In fact, the Hudson Accounting & Finance Employment Index posted the most positive annual average sector Index at 114.4. compare that to the Manufacturing Index, which posted the lowest 2004 average at 99.

Details at http://www.hudson-index.com/hudson/yearend.asp.

CAREER COACH:20 Tips for Career Success in 2005

2004-12-16T05:54:00.000-05:00

Don't let the holidays distract you from your career goals. It's a great time to shine. What are your goals for 2005?

by Rick Telberg
Career Insider

Just because you may be gearing up for the twin busy seasons of tax-preparation and year-end closes, you shouldn't necessarily put your career plans on hold.

CAREER Q&A
What Are YOUR Career Goals and New Year's Resolutions?
Sound-Off Here
(And get an exclusive Survey Preview as a Thank You for participating.)

Don't be fooled by the distractions of the holiday season. Top recruiters say it's a great time to make inroads on your job search or to establish footholds in your career climb.

This is the time of year when new networking opportunities abound and hiring managers are sizing up people and plans for the New Year.

Here are a few tips:

Don't let the holidays be an excuse to put off your search.
Take advantage of the fact that decision-makers may be more accessible.
Hiring managers are less likely to be traveling, so you're more likely to find them in their offices.
Holidays make great opportunities for networking. If you've worked hard on your job search and have built momentum, then the holidays are not the time to take a vacation.
Make sure you have plenty of business cards on hand to pass out to people you meet at holiday parties and networking events.
Reconnect with your network by sending out holiday greetings and extending good wishes.
Consider volunteering for a charitable cause. Non-profit organizations are always looking for extra help during the holiday season. What better way to give back to your community and make new contacts at the same time?
Follow up on job leads and referrals given by friends and acquaintances.
Busy season brings out the best (and the worst) in people. This is your opportunity to attract top-level attention for your achievements.
Take the initiative to make sure your work gets noticed.
The holidays may also be a time for self-reflection. Conduct a self-assessment and before you look for ways to promote yourself, take an honest look at your professional abilities.
Check your skill set and plan your professional education needs.
Get active in your professional and industry associations.
Share your knowledge by writing an article for a local trade publication. Pass along a few tax tips, or what you know about how Sarbanes-Oxley works.
Support the success of others by giving your colleagues and employees the tools and guidance they need to excel in their positions. Then celebrate your achievements together.
Don't skip the office holiday party. Do more than just make an appearance. Take the time to talk with people from throughout the company -- not just the co-workers you already know well.

In sum, the most successful CPAs seem to agree that lifelong learning and adaptation are the real keys to success.

They often mentioned four broad categories:

Bridging education, technology, regulations and competence
Learning to network, present, demonstrate value and prove integrity
Balancing work with life
Foreseeing opportunities, demands and crises.

And that rounds it out to a neat 20 top job tips for 2005. Have a Healthy and Prosperous New Year!

CAREER Q&A: What Are Your New Year's Goals and Resolutions?

TALKBACK: Send rants, raves, ideas, suggestions and requests for more information to Rick Telberg here.

Is the IRS Ready for Tax Season?

2004-12-10T17:27:00.000-05:00

IRS modernization: One step forward, one step back.

by Rick Telberg
At Large

The Internal Revenue Service's efforts to update its systems need to be ramped up a notch or two if the agency is to remain compliant with federal law, according to a new report from the Government Accountability Office (formerly the General Accounting Office).

The GAO conducted a financial audit of the tax agency's fiscal 2004 statements. It noted that the IRS, while making significant strides in modernizing its internal processes, is deficient in several key operating areas - areas that could leave the agency prone to further inefficiencies and possibly compromise taxpayer data.

IS THE IRS READY?

Cast your opinion here.

(Get a FREE preview of the study.)

The IRS was commended for meeting its reporting deadline in a very timely manner while simultaneously implementing its new Integrated Financial System, a process that the agency says will eliminate many of the weaknesses spelled out in the GAO report. Despite such praise, the GAO stated that this speedy reporting was gained via "extensive compensating procedures."

Among the IRS's chief vulnerabilities or "material weaknesses" spelled out in the GAO document are:

Weaknesses in controls over the financial reporting process, resulting in the IRS (a) not being able to prepare reliable financial statements without extensive compensating procedures and (b) not having current and reliable ongoing information to support management decision making and to prepare cost-based performance measures;
Weaknesses in controls over unpaid tax assessments, resulting in the IRS being unable to properly manage unpaid assessments and leading to increased taxpayer burden;
Weaknesses in controls over the identification and collection of tax revenues due the federal government and over the issuance of tax refunds, resulting in lost revenue to the federal government and potentially billions of dollars in improper payments;
Weaknesses in information security controls, resulting in increased risk of unauthorized individuals being allowed to access, alter, or abuse proprietary IRS programs and electronic data and taxpayer information.

In addition, the GAO found what it called "reportable conditions" that cause deficiencies in certain procedures. For example, the auditors found a lack of controls over hard-copy tax receipts and taxpayer data, something that can potentially result in the tampering or loss of this vital information. The GAO also said there were deficiencies in controls over property and equipment, which prevent the agency from maintaining reliable and timely information on plant and equipment throughout the year.

Furthermore, the report concludes that the IRS's problems run even deeper.

As agency resources for enforcement have declined, its workload in this area has actually increased. This resulted in declining trends in the agency's enforcement statistics. The IRS needs to have current information on compliance from all tax groups.

According to the report: "IRS continues to lack accurate, useful, and timely financial information and sound controls with which to make fully informed decisions and to ensure ongoing accountability, which is the end goal of the CFO Act."

The agency is actually relying on data that is largely from the late 1980s. If it wishes to properly enforce the tax laws, current data is required. The GAO does acknowledge that the IRS has begun the process of gathering more recent statistical information on certain tax cohorts.

Any effort by this agency to overhaul itself is a mammoth task when one considers the massive amount of information with which it deals. It is only when the IRS fully addresses these problems that it will truly obtain the level of efficiency required of it.

And to its credit, the IRS is trying.

The tax agency anticipates that the new Integrated Financial System will be fully operational in January 2005, despite the GAO's doubts. (The release of IFS was delayed several times.)

Already, the IRS has expanded its e-filing system, making it available to corporations. It has also begun processing individual tax returns on its new Customer Account Data Engine. The new data engine will replace the agency's antiquated master file system, a time-consuming process involving magnetic tape files. However, GAO cautions that any malfunction in these systems can negatively affect the integrity of the IRS's financial records.

NOW IT'S YOUR TURN: Is the IRS ready? Are you? Cast your opinion here.

COMMENTS? Send your rants, raves, questions or idle thoughts to Rick Telberg here.

What Are You Doing for YOUR Staff This Holiday Season?

2004-12-08T15:28:00.000-05:00

Don't miss out on the fun. Small business owners are getting this party started!

Some 95% of small business owners are planning some type of holiday celebration for their employees this year, according to a poll released this week by Battalia Winston International. That's an increase of 12% since December of 2001.

Since 9/11, financial worries have inhibited business owners and have been driving them to cut back on activities perceived as an unnecessary spending of funds, according to the study, reported by small-business researchers at Warrilow & Co. "The partying spirit is returning, even though many companies are holding back on costlier outlays, such as year-end bonuses and salary increases," Warrilow says.

By throwing a holiday party, business owners could also be killing two birds with one stone. For much of 2004, business owners told us that they were concerned about employee retention and their ability to attract skilled labor. They are rewarding their employees for their hard work but also increasing staff retention efforts by making their staff feel valued and appreciated.

Hi-Tech Tops Must-Have Wish Lists

2004-12-06T08:18:00.000-05:00

CPAs just can't live without their PDAs, smart phones and laptops these days.

by Rick Telberg
At Large

Gadgets and gizmos -- not just gimcracks and gewgaws -- are high on the wish lists of CPAs this holiday gift-giving (and -getting) season.

Newfangled tech devices to ease mobility and ensure constant contact seem to be all the rage. To many, they are true work-savers; to some, they are lifesavers.

PDAs, smart phones and ultra-portable PCs top the lists of many professionals this year.

But which hot, new gadget can you not live without these days?

Let's check in with a few trendsetting members of the profession...

CPA HOLIDAY WISH LIST

What do YOU want for Christmas?

(Santa wants to know.)

Susan Bradley, Tamiyasu, Smith, Horn and Braun CPAs: "My Acer Tablet PC... I love it. Lightweight and portable and just the right size for what I need."

Michael W. Harnish, Plante Moran: "Absolutely my Apple Airport Express (works with Windows and Mac). Creates a 10 user wireless network (B and G bands) from a single Ethernet connection as well as allows wireless sharing of a USB printer. Also allows wireless streaming of music to powered speakers. A must for users on the go or small workgroups. Can be secured."

Michelle Class, Barnes, Dennig & Co. CPAs: "I have two, one a professional item and the other personal. (1) My wireless network at home. Since my husband and I both work from home a few days per week, it's wonderful that he can take his laptop and work from the dining room, while I have the desktop computer in the office. And (2) My X-BOX! Yes, it's not only for children. I'm 33 years old and enjoy playing the games in my spare time, especially HALO-2."

Greg Lockhart, Lockhart Industries: "When I travel, I love the new (coat-pocket-sized) GPS systems that can give turn-by-turn driving instructions (as well as where the nearest hotels and restaurants are)."

Paul Dunn, ReNew Group: "Skype, the best thing that ever happened to calling. It's a VoiP [voice-over-Internet-phone service] app. There are now something like 23 million people using it. We use it all the time for three-way conference calls (amazing quality) between the U.S., Australia and France. Music is such a part of my life that I have two iPods; my laptop and Wireless connectivity are a lifeline and anything that lets me use the power of the Web is top on my list."

Randy Johnston, K2 Enterprises: "Treo 600 and the portable Apple Airport. I can't imagine being a mobile worker in technology and not owning these tools."

Anne Stanton, accounting technology consultant: "I recently invested in the Corex Cardscan v700 and I use it all the time. Now I can electronically save the image of any business card and easily transfer data into my contact database and Outlook. Additionally, it fits in the palm of my hand and easily into my briefcase so it goes with me to events."

Allan Boress, marketing consultant and author of Mastering the Art of Marketing Professional Services: A Step-by-Step Best Practices Guide. "I would stop anyone who dared touch my new HP IPAQ 6145, which combines a PC and the accompanying Microsoft programs with wireless e-mail and Web site access - all attached to my belt! I was able to watch the whole election unfold by staying online with the Drudge Report. It is also a mobile phone!"

Chaim Yudkowsky, chief financial officer and business consultant: "My Dell Axim and Blackberry phone. I still like Pocket PC for many things!"

Eva Rosenberg, author of the upcoming "Small Business Taxes Made Easy:" "What do I want? A mallet. I would like to use it to smash my computers! OK, what can't I live without? My all-in-one printer - an HP 9100 color copier, printer, scanner, fax. While I haven't used the fax feature yet, the color printer, copier and scanner have helped me replace pre-printed stationery completely. I can quickly create colorful reports and print out short e-books that look sharp. Also, my Sony Read/Write CD/DVD drive. Wow. I can create CDs of my books, audio workshops and materials for my clients, regardless of file size. And of course I love the feature in most tax programs these days allowing us to create PDF files of the tax returns. We can send those off to the clients for review...or even as the final product. This has saved me about 25 percent of my paper and printing costs. (E-file has saved me about 50% on my paper and printing costs.)"

Ron Seigneur, Seigneur Gustafson Knight CPAs: "I just moved to a Treo 600 to replace my old cell phone and my Palm Pilot. Not quite a "Crackberry," but I just cannot stand those who have to check e-mail every five minutes.

Sandi Smith, CPA web advisor: "I love my new version of Camtasia Studio (by TechSmith). This software package allows me to produce customized multimedia video on the fly. I use it for training mostly, but later plan to use it for presentations and Web video. It takes five minutes to learn. It captures screen contents, my keystrokes, and my voice so I can produce a quickie training video. I can go into an accounting package, demonstrate what I want to teach, post the file to my Web site, and send an e-mail with the link to my client. Voila, instant customized training movies! Very cool!"

Geni Whitehouse, Best Software: "I have two gadgets that I am using almost daily - one is a USB hard drive pen (I have been using these as giveaways at trade shows). And the other is my digital camera - especially due to my move from Atlanta to Southern California, and selling furniture, etc. Craigslist.com has been a great tool as well."

Of course, technology isn't everything. As marketing guru Bruce Marcus reminded me, "The hottest gadget I couldn't live without is my brain, which sometimes works."

TRENDS, FORECASTS 2005

2004-12-03T09:33:00.000-05:00

We're putting together a list of the
"TOP TRENDS AND FORECASTS FROM THE TOP PEOPLE IN THE PROFESSION."

If you're reading this, you're probably one of the "top" people.

We want to know:

1. WHAT ARE THE TOP TRENDS, ISSUES, CHALLENGES OR OPPORTUNITIES FACING THE PROFESSION?
(They may be anything you are personally aware of or passionate about -- Economic, Tax, Managerial, Political, Competitive, Global, Regulatory, Technological, Sociological, and/or etc.)

2. WHAT ARE YOUR EXPECTATIONS FOR 2005?
(What kind of year will it be for the profession? Good or Bad? What kind of surprises may erupt? What's the best that could happen? The worst?)

3. WHAT ARE YOU DOING ABOUT IT?
(Considering the Trends and Forecasts, what are you doing about it? What should the profession do?)

Participants will get a special summary of the responses, which some may find useful for their own strategic thinking for 2005.

If you'd rather talk than email, please feel free to call Rick Telberg at (914) 837-6458.

Responses are already rolling in. Check out the COMMENTS link below to see the latest. [I apologize in advance to the contributors for any typos. We're working fast and on-the-fly on this project.]

Thanks!

WORK/LIFE BALANCE:Stress Relievers for Telecommuters

2004-11-23T11:40:00.000-05:00

In 2003, 71 percent of U.S. employees worked more than 40 hours per week, and 57 percent considered themselves overworked, according to a survey by career site Monster. The good news? Home-office workers can incorporate stress relievers that may not fly in the corporate office.

Here are five techniques that telecommuters can try at home:

1. At home you aren't subject to fire-hazard laws, so light aromatherapy candles.

2. Play light, relaxing music in the background, but lower the volume during business calls.

3. Take a 15-minute power nap to keep you refreshed, or reward yourself with a quick break. For instance, for every two hours of work, allow yourself 10 minutes to get a snack, get fresh air, or to stretch.

4. Arrange for a massage therapist to visit you in your home. Onsite masseuses are often paid by short blocks of time, so arrange the visit for as quick or as long as you need.

5. Take advantage of your flexible schedule. Work a half day when you are too stressed to concentrate. Make up the other half on a day when your office coworkers don't go in, like on a Saturday morning or on a holiday.

Source: www.salesandmarketing.com

FASB Gets Input from Sounding Board

2004-11-20T10:54:00.000-05:00

The standard-setters' advisory panel unveils annual wish-list agenda. What do YOU think the FASB should be doing?

by Rick Telberg
At Large

Pssst! Wanna peek into the future of accounting standards-setting?

Here's a clue: The little known Financial Accounting Standards Advisory Council, an adjunct to the powerful and well-known Financial Accounting Standards Board (FASB, or the Board), based in Norwalk, Conn., has completed a member survey of the top issues. The results could suggest FASB's focus in years to come.

Some old problems still need urgent attention, according to FASAC. "For the third consecutive year," the report states, "revenue recognition topped the list of issues that Council members believe should be the Board's priority."

And the FASAC members are not necessarily as enamored of international harmonization as you'd think from reading the global business press. "FASAC members generally would not automatically assign a higher priority to projects that provide international convergence opportunities," the report said. "Nor do they believe that the Board should always add a project to its agenda because the International Accounting Standards Board does."

In sum, the report said, "Most FASAC members support the Board's efforts to create a codification of U.S. GAAP. Some encouraged the Board, however, to not let the work on the codification affect the progress on other important projects."

To be sure, the AICPA's own Al Anderson said, "None of the Board's current projects should be removed from the agenda. Several current projects are scheduled to be completed in the near term, and new projects can be added to the agenda as that occurs."

Another interesting insight can be gleaned by comparing FASAC's responses to the survey with FASB's:

FASAC Members (out of 28 respondents) vs. FASB Members (out of 7 respondents)
--Revenue Recognition: 21 vs. 5
--Financial Performance Reporting by Business Enterprises: 16 vs. 4
--Fair Value Measurement/Fair Value: 15 vs. 2
--Codification and Simplification: 12 vs. 1
--International Convergence/Short-Term Convergence: 11 vs. 2

Beyond the standards issues themselves, however, FASAC members made several interesting references to impending economic changes necessitating changes in accounting standards.

One respondent pointed out that the burgeoning federal budget deficit will lead to higher interest rates and inflation. Inflationary conditions will stress the definitions of fair value and also leave investors unable to accurately evaluate performance figures. The trade imbalance and "accommodative monetary policy" will aggravate inflationary tendencies, according to John F. Richards, managing partner of Crabtree Ventures.

At the same time, cost pressures brought on pension funding (by inflation crossed with poor market performance) are likely to cause companies to use accounting to juggle numbers and shade the truth. Guidelines may have to be tightened. Cost pressures are also giving birth to new pension plan designs to which current standards may not clearly or reliably apply.

The expectation of future economic change makes it all the more difficult to apply the Board's proposed standard on fair value measurement. Small changes in discount rates can have major effects on value over the long term. In a world subject to disruptive political and economic events, anything from terrorist attacks to commodity shortages can have major effects over the short term.

Said Hal Rogero, representing the Institute of Management Accountants: "Some fair value measures are based upon estimates so far into the future that reliability is a real issue." This is all the more true in an inconstant environment.

The imminence and inevitability of economic change make it all the more important that FASB continue its effort to produce standards that rely more on principles and the spirit of the standard than on detailed guidelines and the letter of the law. Principles accommodate change far better than bright-line rules do.

The FASAC survey didn't say it, but one might reasonably conclude that any attempt to deal with economic change by heaping more rules on old rules could not only confound preparers and auditors but confuse investors. One result: the kind of volatility normally associated with an unsure environment.

FOR THE FULL FASAC REPORT: Click here, http://www.fasb.org/fasac/resultspg2004.shtml

What Your Workforce Really Wants

2004-11-18T09:09:00.000-05:00

If today's CPAs mirror others of their generation, then they want less work time and more family time.

by Rick Telberg
Career Feature

Who'd ever have thought that the turn-on-and-drop-out generation of the '60s and '70s would turn into a force of workaholics with a penchant for office time over family time? This is just one of several important trends that may mean long-term challenges for accounting firms.

A survey conducted by the Families and Work Institute has found that 22 percent of Boomers are "work-centric," compared to 12 to 13 percent of other generations. Meanwhile, 52 percent of Gen-X are family-centric, compared to 41 percent of Boomers.

The study holds clues to recruiting, retaining and grooming CPA talent in the 21st century. The lessons should be studied and understood by hiring managers at CPA firms and in business and industry alike. But the data could also help rank-and-file CPAs understand and grapple with the workaday conflicts they face in balancing the career and personal life.

The study also parallels recent research that suggests fewer people are lusting after becoming partner in a firm, or chief executive of a Fortune 1000 company.

One can imagine why the children of these hardworking Boomers are showing a marked shift toward more time at home.

The survey found that Gen-X fathers (those 23 to 37 years old) are spending 50 percent more time with their children than Boomers did in their younger days. Likewise, Gen-X, especially the women, are more likely to turn down career opportunities if the added responsibilities mean less time for family.

An increasing number of men, too, are less attracted to the high-earning positions in their companies. The "bad-mood meters" of their bosses hint of managers' dissatisfaction with job and life.

Of those who want jobs with less responsibility, 44 percent are at least somewhat likely to look for work elsewhere.

Does this mean trouble for American productivity?

Not necessarily.

Family-centric and dual-centric workers, the survey found, exhibit better mental health and satisfaction with their lives and jobs. And the more they like their jobs, the longer they're willing to work each week. In fact, the younger generations spend about as much time at work as their older peers.

These trends may mean trouble for accounting firms.

Just as it suffers a dearth of qualified professionals, those who are qualified may be less inclined to strive for success. They'll put in the hours, but their minds will be on their families. They don't want to get ahead; they want to get home. Many may want opportunities to move down in the company rather than up. Time-off may mean more than time-and-a-half.

That's something for management Boomers to think about while they're working late, when it's quiet because everyone else has gone home.

Comments? Click on the messaging box below.

What You Don't Know Could Hurt You

2004-11-13T11:04:00.000-05:00

CPAs need to start asking the tough questions. Here are my top 10.

by Rick Telberg
At Large

If you think you know what your client or company wants from you, you are probably wrong.

Why? Because most CPAs simply don't ask. It's probably the single biggest mistake most CPAs make in their practices and in their careers.

Evidence of the gap is all around. For instance, ask CPAs what the next big thing is going to be in technology, and you'll find CPAs in public practice and CPAs in industry drawing up very different lists, as I reported in "The Next Big Thing in Software." In public practice, the top item is construction accounting software. Among members in industry, it's help desk and call center solutions.

Or try this one: Ask clients, "What else can your CPA do for you?" And about three in four will say, simply, "Nothing." Then ask, "What do you wish your CPA could for you?" And you'll get a raft of answers, ranging from financial advice to legal services and back again.

Here's a third example: The biggest single issue facing small- and medium-sized businesses, year in and year out, has been health insurance costs. And yet, few, if any, CPA firms are helping clients with the problem.

So it's positively refreshing that a new program is afoot in the profession that could help CPAs start asking the right questions and actually delivering good, valuable and actionable answers.

To be sure, systems for consultative selling have long been available -- in checklists and manuals, and from consultants and trainers. But a new solution leveraging the considerable experience of Paul Dunn, famous for Results Accountants Systems and the Accountants' Bootcamp, holds out the promise of partially automating the process with Web-based software.

At its height, Dunn's operation had enrolled maybe 3,500 small CPA firms in his army of go-getters. Then in 2000 he sold the business and retired to the south of France. Now Paul Dunn is back. That alone is news. But what Paul Dunn is doing with longtime associate Shannon Vincent is even bigger news. They've formed The ReNew Group and are launching a nifty little program called TRUST. It's still mostly beta, but nevertheless worth a look.

But don't take my word for it. "It's an awesome program," raves D. Michelle Golden, a CPA firm marketing consultant based in St. Louis. "If just one or two Trust sessions per month were on each partner's or manager's personal marketing plan, it would make a big difference in any firm, not just in sales, but in improvement of service and expansion of relationships in general."

Here's how it works: The CPA invites a client, at least annually, to fill out an online questionnaire -- not unlike the idea of a tax-season questionnaire.

From the answers received, the program pinpoints issues and challenges from -- and this is critical -- the client's perspective. The questionnaire takes about 40 minutes and client answers are likely to be at least as honest as, if not more honest than, they would be if the CPA were spending the time face-to-face. The plethora of data divulged is huge. And the information is immediately actionable. It's also broadly customizable.

Still, the starting point for the system is the range of questions Dunn and Vincent have devised.

Measure yourself against these questions, and decide if you're asking the right questions, and getting actionable answers, from your clients or your company:

1. How confident are you that all of your income tax returns have been completed and liabilities agreed with the tax authorities?
2. How do you rate your understanding of the responsibilities and risks of being a Director under corporation/company law?
3. How do you rate the quality of the management information you receive from your systems?
4. How well has your business lived up to the expectations you had when you started it?
5. How do you rate your personal investment plan as a means to achieving financial independence?
6. How proactive are you at ensuring that any differences between forecasted and actual profit are addressed, at least on a monthly basis?
7. How frequently do you prepare and review financial statements to monitor business performance?
8. How confident are you that you have adequate retirement funds?
9. How recently did you carry out a financial modeling exercise, examining various what-if scenarios for your business?
10. If a prospect asked you to describe what you do in 30 seconds, how confident would you be that you could get your key messages across?

Even if The ReNew Group's solution isn't right for you, Dunn and Vincent are moving the profession forward by prompting CPAs to bear down on the right business issues.

And isn't that what CPAs should be doing all along?

EXECUTIVE SUMMARY:Set the President’s Agenda

2004-11-11T11:12:00.000-05:00

With the elections over, those in the Bush Administration find themselves gainfully employed for a while longer. Now, however, is the time when the President must set the tone for his second term. Will the Bush Administration be friendlier toward American businesses, both large and small, or will energy costs and taxes continue to plague business owners? Just in case the Commander-in-Chief is open to listening to some advice, we conducted a survey of our readers and asked them what they thought should be at the top of the President’s agenda over the next four years.

Sample: Respondents to our online poll came primarily from the public accounting industry (55 percent). The vast majority said they work for small businesses with 50 or fewer people (73 percent). Individually, most respondents fell into the upper echelons of management, either CEO/managing partner (38 percent) or senior executive/partner level (25 percent).

Results: Not surprisingly, Cost of Health Insurance was the No. 1 concern on almost everyone’s list as the most pressing issue facing businesses today. A whopping 93 percent of respondents agreed that the President must do something to control the upwardly spiraling costs of health insurance premiums, something that can easily make or break a small business. Research has shown an alarming trend of small businesses that have ceased offering health insurance all together. If costs continue to skyrocket as they are, then businesses will stand to lose valuable employees and will suffer for it competitively.

Coming in at a distant second was Cost and Frequency of Law Suits (68 percent). The topic of frivolous lawsuits was addressed by both of the candidates in this election, mostly as it pertains to medical malpractice (something which indirectly affects the issue of high health care costs addressed above). Small companies often do not have the luxury of being able to retain a team of pricey lawyers, unlike their larger counterparts. As people become more litigious in today’s world, small businesses find themselves in the crosshairs of predatory lawyers and their unreasonable lawsuits. Even if the business is not found at fault, the legal costs alone are enough to plunge some companies into deep debt.

Tied for third place are two loosely-related topics – Energy Costs and Unreasonable Government Regulations, both at 67 percent. It has become painfully apparent to all Americans that the days of $1.30/gallon gasoline are over. With the decreasing oil output by the OPEC cartel and the increasing demand for more fuel from developing industrial countries like China, the energy crisis is likely to worsen before it gets any better. Once again, small businesses often bear the brunt of such seemingly far-removed dynamics. Raise the price of gas and diesel, and a small company pays substantially more for shipping its goods. Not only is fuel for vehicles an issue, but electricity has jumped and the portents for high heating oil prices this winter are very ominous. All of these factors can add up to significantly higher operating expenses for businesses of all sizes.

Of equal importance to respondents are government regulations that go too far. These can encompass any number of areas. Environmental regulations, for example, can be so strict in some parts of the country that it simply is not worth doing business there. Or what about the new overtime regulations enacted by the U.S. Department of Labor just a few months ago? Although getting companies into compliance was not the total nightmare critics had envisioned, the reforms still left some companies scratching their heads for one reason or another.

Conclusion: These are just some of the findings that can be found in Set the President’s Agenda. The results of our study are clearly in line with the general feelings of America’s small businesspeople today. The Bush administration would do well to listen to the people in the trenches, the small business people, about how to keep America competitive.

What the President Could Do for YOU

2004-11-10T15:31:00.000-05:00

In a campaign overshadowed by security issues, economic initiatives took a back seat. Here's what small business wants now.

by Rick Telberg
At Large

Now that President George Bush has secured his office for another four years, he and Congress face a host of problems and issues barely addressed in the last year on the campaign trail.

In a political season dominated by fear and terror, war and security, charge and counter-charge, many of the pocketbook issues facing the nation's consumers, investors, small businesses and their accountants have gone largely unaddressed.

Let's hope Bush will start his second term by reaching across the political and ideological divides of this nation to focus on what really seems to concern hard-working and job-producing Americans.

So, Mr. President, here's the list, with thanks to Bruce Phillips, research chief at the National Federation of Independent Business, who can cite persuasively...

"The 10 Most Severe Problems for Small-Business Owners"
1. Cost of Health Insurance. "Health insurance costs were a 'critical' issue for 66 percent of respondents, the highest percentage for any problem in the survey's 22-year history," according to Phillips.
2. Cost and Availability of Liability Insurance
3. Workers' Compensation
4. Cost of Energy (Natural gas, propane, gasoline, diesel, fuel oil)
5. Federal Taxes on Business Income
6. Property Taxes (real, personal, or inventory)
7. Cash Flow
8. State Taxes on Business Income
9. "Unreasonable" Government Regulations
10. Electricity Costs (rates)

Interestingly, some of the 10 least severe issues garnered more than their share of attention during the campaign.

For instance, the top 10 LEAST severe issues, starting with the least of the least:
10. Exporting My Products/Services
9. Competition from Government or Non-Profit Organizations
8. Competition from Internet Businesses
7. Increased National Security Procedures (a new problem in the 2004 survey)
6. Competition from Imported Products
5. Obtaining Short-Term (Less Than 12 Months or Revolving) Business Loans
4. Winning Contracts from Federal/State/Local Governments
3. Obtaining Long-Term (Five Years or More) Business Loans
2. Protecting Intellectual Property
1. Cost-Effective Mail Service

And then there are items that once were problems, and today are not any longer, perhaps for any number of reasons -- they've been fixed, or economic circumstances have changed.

For instance, interest rates were a major issue the last time the comprehensive survey was conducted in 2000. But this year it tumbled 29 ranks to 58th place. "Death (Estate) Taxes" became a non-issue, despite all the campaign rhetoric, falling 13 rungs in the rankings.

CAREERS IN FINANCE:Recruiters Rush to Keep Pace with Demand

2004-11-01T08:54:00.000-05:00

'All found work and are making good money.'

With workloads up 40 percent due to Sarbanes-Oxley, CPAs and financial managers are in hot demand again across the nation. Even in the dot-com wasteland of the Pacific Northwest, one recruiter says, "Every unemployed CFO, every unemployed controller, financial people laid off from dot-coms -- they've all found work and are making good money."

WHO'S HIRING: RSM McGladrey, Grant Thornton, Moss Adams, even little Williams & Webster in Spokane, according to Puget Sound Business Journal. More: Jefferson Wells has gone from 40 to 240 people in the Northwest, and is looking for another 65 people

BACK TO SCHOOL: Accounting enrollments went from 86 in 2001 to 176 this year at Seattle Pacific. University of Washington Business School accounting professor Gary Sundem reports a 20 percent increase.

Success Experts Share Their Secrets

2004-10-31T19:08:00.000-05:00

Got issues? A virtual roundtable has the answers.

by Rick Telberg
At Large

It's hard to know where to begin when trying to list and address the biggest issues and opportunities facing the CPA profession.

Is it the changing competitive landscape? Unpredictable career paths? Technology? Regulation?

It's overwhelming. So I've assembled a virtual roundtable of advisors for you. By e-mail, four of the profession's leading lights shared with me some of their biggest concerns, greatest passions and essential success strategies for CPAs today.

The panelists are:
* James C. Metzler, CPA, vice president in charge of small-firm interests at the AICPA. Based in East Amherst, N.Y., near Buffalo, Metzler has led his own CPA and technology consulting firms.
* Charles C. Larson, CPA, based in Saint Joseph, Mo., a driving force behind the Missouri MAP conference and one of the most experienced practice consultants in the profession.
* Bob Wilson, director, firmwide human resources, RSM McGladrey Inc. Based in Charlotte, N.C., he's head of staff recruiting.
* Donald P. Danner, chair of the Missouri society MAP committee and chief financial officer of Aspen Marketing Services, the largest privately held marketing services company in the U.S., based in Chicago.

All are involved in the 32nd Annual Management of an Accounting Practice Conference, produced by the Missouri Society of CPAs, next week, Nov. 8-9, in Kansas City, Mo. It may be the oldest continuously running MAP conference in the profession.

The conference also features some of the biggest names on the circuit today, including: David G. McIntee, a Kinnelon, N.J., CPA, who has long been involved with the AICPA in practice issues; L. Gary Boomer, the renowned technology guru from Manhattan, Kan.; Gale Crosley, the marketing advisor from Atlanta. And I'm honored to be keynoting the event on opening day.

Here are some of the highlights of our virtual roundtable:

WHAT'S THE SINGLE MOST IMPORTANT ISSUE IN BUSINESS TODAY AFFECTING CPAs?
* METZLER: It's business ethics and corporate responsibility.
* LARSON: Change... in every aspect of our practice, including: technology, personnel, new sources of competition, and new rules and laws.
* WILSON: The supply of new people entering and remaining in the profession.
* DANNER: How to restore trust and balance to the financial markets at all levels.

WHAT EFFECTS ARE SCANDALS, REFORMS AND CONSOLIDATION HAVING?
* METZLER: Re-focusing and elevating longstanding standards such as independence, client acceptance, client retention, code of ethics and code of conduct.
* DANNER: Over-legislation and the ongoing series of unintended consequences.
* LARSON: None, for smaller firms. In local firms, CPAs continue to be America's most trusted advisor. New rules have imposed new costs and often unnecessary requirements on these local firms that were not involved in the scandals and incidents occasioning the new requirements.

WHAT'S THE BIG LESSON IN MARKETING?
* METZLER: A new market has opened up for smaller firms as a result of SOX and the inability for auditors of public companies to do nonattest services. There are now opportunities for the smallest of firms to do business with public companies by performing nonattest services such as tax, reconciliation, accounting, internal audit, inventory work, even write-up for small divisions and branch locations.
* LARSON: You better know what is available in the market. And, you better know your competition from outside the profession.
* DANNER: Expertise and relationships remain the key to provide "full-service" to our clients.

HOW IMPORTANT IS TECHNOLOGY TODAY? CAN YOU GET ALONG ANYMORE WITHOUT A CRM SYSTEM? A WEB SITE? OR E-MAIL?
* METZLER: No. Utilizing the best in technology is a given.
* DANNER: Technology is a key facilitator. But some mindsets create a "slavery" to technology, losing track of the reason for it.
* LARSON: It's as important as you are willing to make it. If you spend the time and money it will pay off.

WHAT'S THE SINGLE BIGGEST MISTAKE CPAs ALWAYS SEEM TO MAKE?
* WILSON: Short-term focus in regard to staffing and people issues.
* METZLER: Firms drive on individual measurements/success rather than firm/group success, thus very many firms have unaligned leadership and fail to get to the next level because of it.
* LARSON: Analysis paralysis.
* DANNER: Being slow adaptors. We must learn to manage our practices from a variety of sources including colleagues in industry.

CAN RAINMAKERS BE "MADE," OR ARE THEY JUST "BORN" THAT WAY?
* METZLER: They can be made. Those who are born that way are naturally extroverted and are great at bringing in new name clients. But they still need the training and the discipline. Those who are more introverted are great at selling expanded services to current clients once they are trained appropriately. Anyone who follows -- and adheres to -- a simple sales process methodology can become a rainmaker.
* LARSON: Easy to make... But it takes a long time to describe how.
* DANNER: With some pre-attitude, they can be made.

NAME A BUSINESS BOOK OR CONSULTANT THAT SHOULD BE CRITICAL TO EVERY CPA'S THINKING.
* METZLER: Zig Ziglar and all of his books and tapes.
* DANNER: "Good to Great." It traces a measured, reasoned approach to success. Jim Collins identifies a number of issues confronting all business entities.
* LARSON: Besides his own "Billing & Collection Methods that Work," he recommends Ron Baker on value billing.

Can You Close a Million-Dollar Deal in Two Sales Calls?

2004-10-30T14:06:00.000-04:00

Maybe. If you follow this partnering strategy.

1. Establish a relationship with a partner. Gardner calls the partner a code breaker. "A partner is someone who already is writing millions of dollars’ worth of business annually with one of your potential clients. He or she usually is a sales rep with another company that is not a competitor," says Gardner. "This is your strategic alliance – the person who can get you in to see the decision maker."

So how do you find the right partner? Gardner suggests researching companies and finding sales reps who are connected to some of the major corporations you are interested in approaching. Contact them with your idea about working together. Once you both agree the foundation of a mutually beneficial relationship exists, research the new account and meet with your partner before the sales call to talk specifically about the strategy you will use with the client.

2. Make the first sales call. "You are already prequalified in the decision maker's mind because of the code breaker," says Gardner. "Ease your way into the meeting by taking a back seat and letting your partner follow up on old business. Then have the him or her introduce you." Remember, says Gardner, you need to be armed with case studies and metrics. "Know your RIO, your differentiators and value-adds before you enter the room," she says.

3.Make the second (and last) sales call. Keep in mind you may be meeting with someone other than the CEO. "If this is the case, try to introduce yourself to the person before your presentation," she says. "You can do this via a conference call or, after your meeting with the C-level person, walk down the hall and introduce yourself. Find out in advance who your allies are. You don't want to go in cold."

The second sales call is a traditional sales meeting where you pitch your product, answer questions and discuss the details. You don’t need the code breaker for this meeting, but you do need to be prepared. "Because you have entered at an exceptional level on the solid reputation of your partner, you will get the commitment and close the deal in this sales call," says Gardner.

4. Keep the code breaker in the loop. If you want to continue to build the relationship with your partner – and you do – you need to keep that person in the loop about everything that is happening with the account. "You build rapport and trust by communicating," says Gardner. "Keep C-level people in the loop, too, but pick and choose what you tell them."

5. Move on. After you close the deal, create a technical team to handle the pricing, proposal and smaller details while you move on to close other deals with your partner.

Source: Patricia Gardner, president of the consulting firm, Maximum Sales Inc., and author of The Million Dollar Sales Call (McGraw Hill, October 2004), via sellingpower.com

CPA MARKETING:Does Advertising Work?

2004-10-27T16:17:00.000-04:00

YES! GOOD B2B advertising works great, especially with innovators.

CPAs and small business owners are the Influentials of our communities... The social leaders who influence our opinions about what to buy and who to believe are more likely than any other influence group to also own their own company.

The elite among these influential business owners are the Innovators. Innovators are those business owners who seek out and try the newest products or services. These active learners search for new information. Market scanning is an innate habit. In addition to being voracious absorbers of information, they also experiment and tolerantly try new products and services, often before development is entirely complete. They are a dream customer for most product marketers and every marketers’ ideal target.

Given their sophistication, these Innovator business owners are surprisingly influenced by good B2B advertising. In fact, more than half acknowledge that good SMB ads make them feel good. More importantly, more than 75% of all Innovators claim that good B2B advertising affects their purchase decisions. Spending by Innovators is vastly more affected by good B2b advertising than Early Adopters, the next group most likely to try new things.

Source: Warrillow & Co.

Do Accountants Have The Skills to Help Save The Planet?

2004-10-24T19:33:00.000-04:00

Can it happen here (in the U.S)?

From London, comes this report: Chartered accountants may have the potential to be major players in the sustainability arena, according to a new report published last Wednesday by the Institute of Chartered Accountants in England & Wales. By assuring corporate performance in areas such as human rights and greenhouse gas emissions, accountants in practice can make businesses more accountable to investors and regulators. Through collecting, reviewing and interpreting information relating to environmental and social impacts, those in business can make sustainability benchmarking more reliable.

While entering this field of work presents many challenges for accountants, not least because of the paucity of suitable reporting criteria, the Institute of Chartered Accountants says the opportunities are considerable. ICAEW President Paul Druckman commented: "Chartered accountants have a long history of responding to new market opportunities and shifts in public expectations. I personally think the profession should take a lead on sustainability because it is in the public interest. But even from a hard-headed business perspective, this is an area of work into which accountants can and should diversify because governments and consumers will increasingly demand sustainable corporate behaviour."

But don't hold your beath. The Institute's own survey of the managing partners of 143 accountancy firms found only 10% had so far received any demand from clients for guidance on environmental or social regulations and taxes. However, this is the main area in which demand for practitioner services is expected to increase in the next three to five years, with 52% of respondents predicting at least some demand for advice.

Accountants may indeed "have the skills to help the planet." But does the planet really want to be saved by accountants? Just wondering.

Tax Pros: Get Ready for 2005

2004-10-22T12:22:00.000-04:00

'Bring it on!' says one CPA. 'It comes too fast,' gripes another.

by Rick Telberg
At Large

With the last of the extension dates passed and gone a couple of weeks ago, tax professionals are gearing up for a 2005 filing season that figures to be one of the best, if not smoothest, of their careers.

A flurry of tax bills in recent weeks, plus the uncertainty of the implications of the quadrennial voting next week, is spicing up an otherwise smooth-running start-up phase. Lessons from last year are being recalled, new tax software is under review, new office procedures are getting a try, and temporary staff is being lined up.

In fact, about 41 percent of the CPAs I've surveyed say they are "about on schedule to be ready" for the new tax season. Another 4 percent are "totally ready to rock-n-roll!"

"Bring it on!" said the owner of one small firm.

Of course, there are always the procrastinators: 19 percent said, "I don't even want to think about it yet."

Overall, nevertheless, CPAs are eager and optimistic.

Check the stats:
-- 75% expect gains in revenue over last year.
-- 72% expect gains in profits to match.
-- 65% expect no change in the number of clients on extension.
-- 64% expect more revenue per client.
-- 61% expect more profit per client.

"People will be more confused than ever," conceded one CPA, apologetically. "Of course, that's good for our business. But it's bad for the citizen's understanding of the government's financial operations."

Still, the usual challenges loom:
-- 63% worry that clients will be late or unprepared.
-- 41% are concerned about last-minute changes by the government.
-- 36% fret about finding enough staff.
-- 29% expect technology problems.
-- 28% say learning all the new rules, regs and forms will be an issue.
-- 28%, again, worry about the overall economy's impact on their business.
-- 13% wonder how the IRS will be operating this year.
-- 8% are warily eying new competitors.

One problem that many preparers hope won't reappear this year is the late 1099's from financial institutions, which were jammed up last year by some late changes in the law.

"As tax law changes are enacted and complexities become greater, our service is much more valuable and goes much further beyond the standard tax return completion, 'see-you-in-8-months' mentality, according to one respondent. "Clients are demanding more attention during the year and we find it a profitable niche. For a small firm, we can offer that kind of attention to the clients that demand it, plus it allows us to know more and more about our client base since we spend so much time together."

Now there's a CPA who seems to know how to run a tax practice.

CPA FIRM MARKETING MINUTE:Now's the Time to Think Ahead for the Holidays

2004-10-20T10:25:00.000-04:00

Yesterday, one marketing advisor was reading her local business newspaper, and was surprised toi find the first Christmas-related article of the season. It was an attorney's perspective on employers' liability for drinking at holiday parties. But it could just as well have been a CPA's views on year-end planning.

Marketers must always be thinking ahead. It's not too late for deadlines at local newspapers, weekly magazines, radio, TV and the web.

Here are three strategies:

1. A news release. Journalists and producers search online
for holiday content ideas, so this can inspire them to use you as a source.

2. An advice, personal experience or opinion piece related to the holidays.

3. Pitching yourself to the media as a resource on an issue
that often comes up during the holidays: plum pudding, the etiquette of mistletoe, family stress, car travel with kids, electrical safety, interfaith conflicts, or, obviously, end-of-year tax planning and business strategies, charitable gifts, etc. Approach media folks by calling, emailing or enclosing a business card or Rolodex card with a postal letter.

Something for Everyone in New Corporate Tax Bill

2004-10-18T08:53:00.000-04:00

A supposedly simple technical corrections bill to fix problems in trade subsidies becomes a Christmas tree.

by Rick Telberg
At Large

The American Jobs Creation Act of 2004, passed by Congress and headed for the President's desk for signing, began more than two years ago as an effort at ending illegal U.S. trade subsidies. It may have done that; but it has done so much more. In fact, the bill turned into a 633-page Christmas tree of corporate tax breaks (Watch Out for Election-Year Tax Issues).

Some items, of course, are needed and commendable. Bob Scharin, editor of the Thomson RIA Practical Tax Strategies, for instance, points out that the bill closes an oft-abused tax break for individuals donating used vehicles to charity. "Because the crackdown on donations of automobiles to charity will take effect in 2005," he advises, "taxpayers intending to make such donations should consider doing so before year end."

Sen. John McCain called the bill "a classic example of the special interests prevailing over the public's interests," and Sen. Ted Kennedy agreed: "Elite corporate interests are the winners at the expense of average Americans."

Mainly, the new corporate tax bill grants about $136 billion in supposedly revenue-neutral tax breaks over the next decade. The $10-billion buyout of tobacco farmers and tax breaks for big companies like GE, Caterpillar, Boeing and Microsoft have gotten the most news coverage, but true tax mavens looking at the bill page-by-page are finding all sorts of little gems.

"The basic plan to replace the exemption was simple, but the bill became more expansive, and pretty complex and convoluted in the legislative process," noted Mark Luscombe, JD, CPA, principal federal tax analyst for CCH. "To gain support for the bill, all sorts of things were tacked on to appeal to specific groups, such as farmers, the film industry, residents of states that don't have an income tax and so on."

For instance:

-- Ceiling Fans: Suspends a 4.7 percent duty on ceiling fans, which Home Depot is one of the main beneficiaries. This is for any ceiling fans purchased before December 31, 2006. Cost: $44 million.
-- Shopping Malls: $231 million in taxpayer funds to finance $2 billion in bonds for mall developments in Syracuse, NY; Shreveport, LA; Lakewood, CO and Atlanta, GA.
-- Dog and Horse Race Tracks: A $27 million provision included to lure more foreigners to gamble at U.S. horse and dog racing establishments.
-- Cruise Ships: A $28 million provision allows the cruise industry a delay in paying taxes on the airplane tickets, hotels, and other excursions it sells in the United States. The tax delay would save Carnival Corp $15 million and Royal Caribbean would save $8 million to $10 million.
-- Fishing Tackle Boxes: Reduces the excise tax on fishing tackle boxes to 3 percent from 10 percent. One of the biggest beneficiaries will be Plano Molding Co. of Illinois. The company has been making plastic fishing-tackle boxes for more than 55 years. Cost: $11 million.
-- NASCAR: A $101 million provision which allows track owners to write off the cost of grandstand facilities over seven years - the only such tax break for owners of a sports facility.
-- Trial Lawyers: This $327 million tax break establishes costs incurred as a result of attorney and court costs paid to prosecute a claim of unlawful discrimination as a tax deduction.
-- Hollywood: A $336 million break that allows studios to expense up to $15 million in the first year of production of small and independent films in the United States. Studios could expense an additional $5 million if a significant amount of production expenditures are incurred in low-income communities or in the Delta Regional Authority. The Delta Regional Authority includes counties in Alabama, Arkansas, Illinois, Kentucky, Louisiana, Mississippi, Missouri and Tennessee. Hollywood also benefits from the new manufacturing tax break.

The list goes on: $247 million break for manufacturers of corporate and private jets on top of a $995 million break for companies that lease planes; $501 million break for railroads and even a $9 million break for archery companies.

But, most troublesome for tax professionals may be the new, separate rates on manufacturing and service companies.

For the first time in memory, if not history, according to AICPA taxation vice president Tom Ochsenchlager (The New Tax Bill: Washington at Work), they will be taxed at different rates -- 35 percent for services and lowered to 32 percent for manufacturers.

Last week, I wrote wistfully wishing for real tax simplicity. This, of course, isn't it.

"Major tax overhaul may indeed be a pipe dream, depending on what you put in the pipe and whether or not you inhale," quipped reader Richard W. Blalock, a St. Charles, MO, CPA, in an e-mail. "But it's clear that the ever-growing volumes of tax legislation, tax code, tax regulations, letter rulings and on, and on, and on, are growing tiresome to even the most studious of the tax specialists in this country. I cringe every time I hear someone jump on his or her soapbox and preach tax simplification. But if by simplification they are talking about abolishment of the income, estate and payroll taxes in favor of let's say a national sales tax, well, you've got my attention and could well gain my support."

CPA Margaret E. McConn in Houston might agree. "The federal income tax is supposed to be a self-assessed tax," she said. "It is now so complicated that even the intelligent are best-served hiring a professional tax preparer. This will only get worse. I am one tax preparer who would love to see a tax law change to put me out of business, in the interest of fairness."

Some have suggested a VAT, CPA William Seth suggests instead a "FAT tax."

"Fat is killing the country. A slow agonizing death just as insidious as cigarettes and just as sure as the Red Sox not winning the series," he writes on his blog. "Here's a thought: Taxation based upon fat. The ultimate consumption tax, eh?"

Follow his thinking: The Federal budget is roughly $2 trillion. Divide that by a population of 350 million, and that equals about a $6,000 tax burden for every citizen. So, if you're 10% overweight, you owe an additional 10 percent or $600; 10 percent under, pay less.

Who knows? Seth's solution sounds about as reasonable as some of the items in the new tax bill.

Watch Out for Election Year Tax Issues

2004-10-11T13:00:00.000-04:00

Candidate positions could have a huge and lasting impact on how practitioners work and plan.

by Rick Telberg/At Large

Just as President Bush was preparing last week to sign the tax extenders bill, officially known as The Working Families Tax Relief Act of 2004, I was sitting down with four of the best tax insiders in the business in their lower Manhattan offices. What they told me is essential information for every tax professional -- maybe even every taxpayer.

Seated around the conference table at tax and legal publisher, Thomson/RIA headquarters were:
-- Bob Scharin, who focuses on individuals and small business,
-- Bob Fuerst, for international and corporate issues,
-- Bill Massey, estate and gift tax planning, and
-- Dick O'Donnell, the pensions specialist.

Their attention was already shifting from the new tax bill to the next tax bill and the long-term ramifications of the upcoming election. Remember, they warned, Americans will be voting for more than just a President. One-third of the Senate is up for re-election and every seat in the House is open. With an election season as unpredictable and volatile as this, anything could happen. And it might. CPAs will need to maintain constant vigilance going into tax season.

For one thing, as soon as the election is over, no matter who wins or loses, there was still a chance late last week that there would be a lame-duck session of Congress to pass the ETI-FSC bill, which could be a 630-page whale of new, and perhaps retroactive, changes affecting almost every business, not just corporations, and adding a brand new wrinkle to tax accounting: differentiating between "service" and "manufacturing" incomes.

"They're going to do something, sooner rather than later," Massey said confidently.

But if the lame-duck session ends empty-handed on Nov. 20, it all starts over again in January. And that could cause real problems as CPAs get rolling into the 2005 filing season.

"Practitioners will have to look at the bill just to see how it affects their companies and clients before doing anything else," said Fuerst. "They'll need to be thinking, 'If we're not affected this year, what should we be doing to set up and qualify for the benefits next year?'"

And then it could all change again with a new Congress and new Bush or Kerry Administration. The presidential candidates' fundamental views of the tax system represent a major difference, hardly surfaced yet in the campaign.

Kerry, for instance, would roll back the Bush cuts and seek new revenues from those earning over $200,000 a year.

"There'd be more means-testing" under a Kerry presidency, according to Scharin. But the details remain murky and unpredictable, dictated by what Kerry could find on his desk when, if, he takes office.

Bush, on the other hand, has laid a strong vision of an "ownership society" that could radically change retirement planning, by replacing 401(k)s, SEPs, and SIMPLEs with LSAs, RSAs and ERSAs ("Lifetime," "Retirement" and "Employer Retirement" savings accounts).

"It's good for the small business owner, but not so good for the employee," according to O'Donnell's analysis, because it would eliminate the requirement that employers who set up plans for themselves must also offer coverage to their workers.

Plus, O'Donnell is quick to add that the defined-benefit Pension Benefit Guaranty Corp., already underfunded by maybe as much as $11 billion and under pressure by possible bailouts at struggling airlines, faces potential insolvency. It might need its own bailout, he said, reminiscent of the Resolution Trust Corp. after the savings-and-loan catastrophe of the 1980s.

During the campaign, Bush has briefly raised the issue of eliminating the income tax, without suggesting whether he'd replace it with a flat tax, a VAT, or a national sales or consumption tax. The one thing that the Group of Four agreed on was that a dramatic overhaul of the tax system, however desirable, remains a pipe dream.

But at least we can dream, can't we?

The New Tax Bill: Washington at Work

2004-10-04T23:06:00.000-04:00

But score at least one 'win' for simplification.

by Rick Telberg/At Large

The Working Families Tax Relief Act of 2004, more commonly known as "the extenders" bill, flew through Congress last month. Democrats and Republicans alike approved the bill despite the fact it would add $146 million to the federal deficit, and despite the senate rules requiring offsetting expenses with revenues.

The new tax law's key provisions extend four tax cuts from the 2001 and 2003 tax acts scheduled to expire this year, and a package of regularly expiring tax provisions that would otherwise expire at the end of this year.

But in the true sprit of election-year politics, Congress added a variety of unrelated tax breaks. Among the winners: soldiers in combat, businesses with research and development costs, Caribbean distillers and teachers who spend their own money on classroom supplies."

"Who would contest these types of things?" said Rep. Charles B. Rangel (D-N.Y.), the ranking Democrat on the House Ways and Means Committee (who was, in fact, one of only two on the conference committee to vote against the bill).

So it's with not a little irony that the new bill it may actually be good news for tax professionals, if only to the extent that it keeps many things unchanged.

"In effect, the Act smoothes out ups and downs in these tax benefits to keep them in effect at basically their current level through 2010," said CCH Principal Federal Tax Analyst Mark Luscombe.

And the profession did gain a significant advance in the battle for simplification. Tom Ochsenschlager, the AICPA vice president-taxation in the Washington office, notes that 30 pages of the bill are dedicated to creating a uniform definition of "child" under IRS rules.

But the big battle over tax law may be yet to come. Congress is working on a 900-page bill known variously as the "J.O.B.S." bill (for "jumpstart our business strength") or the "ETI-FSC repeal" bill (for "extraterritorial income exclusion-foreign sales corporation"). It's supposed to mollify United States trade partners who have slapped heavy and still-escalating tariffs on U.S. farm goods in retaliation for U.S. moves to subsidize manufacturers.

It could come out before the election, but more likely will surface next year. Hopefully it won't complicate the tax season with a raft on new complexities.

But it could have a longer-lasting effect. Ochsenschlager points out that the ETI-FSC bill could set up a new regime in which corporate income would need to be categorized between "manufacturing" and "services." Under this concept, McDonald's is already lobbying to be classified as a manufacturer.

Stay tuned. The election isn't over and tax season is just around the corner.

The 'Next Big Thing' in Software?

2004-10-03T23:02:00.000-04:00

Well, that depends on what kind of CPA you are. But some answers are already clear.

by Rick Telberg/At Large

CPAs in public practice and in business and industry are struggling to make the leap beyond basic accounting software, but their needs and expectations are by no means monolithic.

That is to say, each firm, each business, each individual client seems to have different objectives and requirements. CPAs are clearly working hard to stay on top of the trends and deliver real value to all their constituencies.

But it's not easy, as the first glimmers of one of my ongoing studies suggests. I launched the subject with the question "What's Next for CPA Software?" And the survey is still open as we further analyze the data. Please join the professional panel here.

Meanwhile, the jury is still out on whether so-called "basic" accounting software is reaching maturity.

"Yes," says a senior executive at an Ohio hospital. "Debits and credits are readily recorded and linked throughout the various financial reporting packages -- eliminating past practices of many accounting departments."

On the other hand, the same CPA wonders, too, about "the next big thing" in business and accounting software. For starters, this finance professional would like to see "more focus on timely and quick implementation."

But to many others, there's still a lot of life left in the business of "basic" accounting software.

Is it a mature industry? "No," says a controller at a small business. That "would imply the evolution has stopped."

"By no means has this 'art' been perfected," adds a research analyst at one large company.

Furthermore, CPAs are finding fertile ground in the theoretically "basic" QuickBooks and Peachtree market. "You still need trained personnel to operate the software," according to a senior partner at a local CPA firm. "We find that QuickBooks Pro is not for the untrained."

And one managing partner of a small local CPA firm suggests, "There is a dearth of software in the mid-range, between $1,000 and $10,000 in installation costs."

Separately, my new study is also helping to pinpoint the software solutions sought most by CPAs in public practice and CPAs in controllership. Importantly, there are vast differences.

For instance, CPAs in public accounting say they want and need solutions mostly for:

1. Construction accounting,
2. Estate and financial planning,
3. Networking and communications,
4. Not-for-profits, and
5. A mobile workforce.

The top five for members in business and industry is strikingly different. To wit:

1. Help desk and call center,
2. Sales management,
3. Business intelligence and customization,
4. Logistics, and
5. Supply-chain management.

The savvy CPAs -- in either public or private practice -- who can bridge the gap of demand in the marketplace will be the winners of the future.

September 27, 2004

CPAs know how the economy is doing from a ground-level perspective - Business First of Louisville

2004-09-25T09:55:00.000-04:00

OPINION

From the September 17, 2004
Letter to the Editor

Dear Editor,

Want to know how the economy is really doing? Just ask a CPA. We know what the economy is like at ground level.

But this year, we seem to be divided in our opinions.

Columnist Rick Telberg's soundings of 700 CPAs this summer found that about half think the economy will improve during the next 12 months, while the rest think it will be more of the same. You can find his column at www.cpa2biz.com.

These differences of opinion are stark, Telberg writes. Some say business is great while others say everyone they know is out of work. This sounds like red states versus blue states.

Still, Telberg found that clear majorities of CPAs see these problems in the current economic picture:
-- lack of affordable health care;
-- new government rules and regulations such as the Sarbanes-Oxley Act;
-- constricted access to financing;
-- pressure to cut payrolls;
-- tight capital spending budgets.

Ironically, one CPA told Telberg that he's been having a great year on account of the Enron scandal. That CPA reports: 'The demand for auditors and experienced accountants has gone through the roof.'

And another CPA adds: 'The outlook for smaller CPA firms is very good as they experience the continuing trickle-down effects of the new financial industry regulations.'

-- Tom Louderback, Louisville

© 2004 American City Business Journals Inc.

Never Eat Lunch Alone Again

2004-09-17T10:25:00.000-04:00

...And other essential career and marketing tips from the experts.

by Rick Telberg
At Large

There was a time when (and there still are places where) marketing and accounting mixed like oil and water - they didn't. In fact, until 1977 it was actually illegal to try to promote accounting services.

Even today, marketing is considered irrelevant, unimportant, or unprofessional by too many in the profession.

In fact, marketing is integral to any and every business, every career, every professional. If you're part of the free-enterprise system, you're already marketing, whether you know it or not, and whether you like it or not.

That, at least to Sally Glick, chief marketing officer of J.H. Cohn CPAs and president of the Association of Accounting Marketing, is the key difference in the accounting profession today.

"Marketing is integral to the firm," she says. "It is as essential as paper and pencils and CPE and technical skills. You can't just cost-segregate it out anymore. Without marketing you don't have clients; without marketing you don't have a business."

Glick, along with other luminaries of professional services marketing, such as Larry Bodine and Gale Crosley, will be joining me at The Accounting Firm Marketing Forum, Oct. 21-22, at AICPA headquarters in New York. Download color brochure in PDF.

So I asked a few of the faculty members for their current thinking on the state of marketing in the profession. Their answers are honest, and sometimes provocative - perhaps a preview of what conference-goers will get.

To Crosley, an Atlanta-based consultant, CPA firms are racing to adjust to the fallout from the auditing shakeup. "Sarbanes-Oxley is driving large opportunities down-market and creating opportunities for new offerings," Crosley notes.

And yet, many CPAs, expert in business as they are, still misunderstand the difference between marketing and sales. "The single biggest mistake CPA firms make is confusing marketing with sales and product management," Crosley says. "They can't build out a comprehensive practice growth initiative if they don't know the difference in the functional elements."

Is there hope for the shy or socially challenged CPA? Yes, says Crosley decisively. "Rainmakers can be made," she says. "No question about it."

Larry Bodine, a veteran of professional services marketing based in Glen Ellyn, IL., picks up where Crosley leaves off.

"The profession is starting to embrace the sales function right now," he says. "So far, only 12 percent of accounting firms have hired a professional salesperson to develop targets, leads and meetings. There is huge interest in the topic; however, most marketing professionals are limited to conducting research, strategizing with partners, editing new business proposals, identifying new business prospects and writing new business proposals. It's time to take the marketing director along on the sales call."

Today it is more important than ever to distinguish yourself and your firm. "Recent events have created brand confusion," Bodine says. "I can tell because when people discuss their current accounting firm, they have to explain what their name used to be. A great deal of brand equity was lost by scandal, reform and consolidation."

After chatting with Bodine, five key steps emerged as critical to making marketing a habit:

1. Never eat lunch alone. Get out of your office and take a client or referral source to lunch. "Business comes in belly-to-belly," Bodine says, "as one partner told me who had the belly to go along with the advice."

2. You can't get along without technology. You can, but only if you want to be invisible. Without a customer-relationship management system, you can't tell whom you know as a target client and which partners know them; it creates marketing anarchy. Meanwhile, the Web has become the new Yellow Pages; clients even use the Web to look up phone numbers. Certainly they will use the Web to profile your firm before they ever call the firm or request any printed marketing materials. A bad Web site will actually cause your firm to be disqualified from new work. And not using email - to send out e-newsletters and alerts - is equivalent to not having a phone, fax or FedEx. Staying behind on technology is a great way to go out of business gradually.

3. Focus on your clients, not yourself. Firms too often will describe their practices on their Web sites and printed marketing materials. They will elaborate on their internal administrative structure in an approach I call "marketing your organization."

Bodine says he saw this mistake at a Midwest firm that has a real estate practice, a real estate taxation practice, plus a taxation practice. "These distinctions serve only to confuse clients. They can't tell which practice they should choose."
Instead, accounting firms should focus on how their clients think: they see themselves as members of an industry, Bodine advises. Therefore, accounting firms should present themselves according to the industries they serve. An easy way to start is to print out a list of the firm's top 50 clients. Sort them roughly into industries and focus on the issues of that industry.

4. Rainmakers can be made, through training and practice, but they have to want to market. If accountants just want to bill hours and stay at their desk, you can't make them market. These service partners will do fine so long as there are major clients to inherit. Other partners are naturally comfortable with networking, speaking and writing. These are all learnable skills. But the trick is to figure out what aspects of marketing individual accountants like - some may hate networking but love writing; others may be willing to join a charity board but not want to speak in front of a crowd. They should build a personal marketing plan around the activities they enjoy.

5. Finally, don't try to wing it. "Write down your strategic marketing plan," Bodine urges. "Most firms don't have one. It reminds me of Alice in Wonderland by Lewis Carroll, where Alice asks the cat, 'Would you tell me, please, which way I ought to go from here?'"

"That depends a good deal on where you want to get to," the Cat says.
"I don't much care where," said Alice.
"Then it doesn't matter which way you go," said the Cat.

The question for you, whether you're trying to build a practice or even a career: Do you know where you're going?

What's Next for CPA Software?

2004-09-10T21:46:00.000-04:00

If it's true that plain-vanilla accounting software is a maturing line of business, your career and your company could depend on grasping business solutions holistically.

by Rick Telberg
At Large

Sometimes accountants can forget the fact that business is more than just about accounting, or finance or tax. It's also about customer service, marketing, business intelligence, and human resources -- all the things, really, that make business go ka-ching!

CPAs are doing a masterful job of automating accounting and finance processes. An entire industry -- the accounting software world -- has been created to fill the need for computerized accounting.

But the business of accounting as seen through the lens of the accounting software business is changing fundamentally. And too many CPAs may be unprepared for the next stage of development.

"Accounting was just one part of the business problem we were trying to solve," according to Taylor MacDonald, now executive vice president in charge of channel and sales operations for mid-market products at Best Software. "Today America is looking for business management solutions. It's not just about debits and credits anymore. It's about customer-relationship management, business intelligence, key performance indicator reporting, human resources, and so on. All the things that a business does."

MacDonald is worth listening to. He's spent 20 years or more in the accounting trenches, much of that running his own business. And now he's carrying the flag for Best, a subsidiary of the United-Kingdom-based Sage Plc., which is covering as much of the small business market as it can with brands like Peachtree and Act!, MAS 90 and SalesLogix, FAS and Timeslips, and, most recently, with the acquisition of AccPac. With $1 billion in annual revenue, Best is bigger than Microsoft in its market. Few other companies can say that.

To Best, Microsoft and Intuit, basic accounting software, maybe like basic accounting, has become commoditized in the marketplace--its price and value marginalized. To put it starkly: Accounting software is dead. Dead as a business. Dead as typewriter repair, buggy whip manufacturing, or buggies.

So savvy CPAs are moving fast to the next level. Beyond mere accounting, they are finding bountiful new frontiers in customer-relationship management, business intelligence, logistics, analytical reporting, and a whole range of human resources functions.

Still, like many CPAs, business owners are hunkered down, according to MacDonald. They may already have a system that works and that's enough for them. Or they haven't been convinced of the competitive advantage new technology can deliver. Or they are simply fazed by the maddening failure of producers, installers, or consultants to offer a complete solution of inter-operability between programs.

Smart CPAs and technology dealers know their limitations. So what they can't do alone, they're finding partners for. In Dallas, for instance, MAS 90 dealer ERG has teamed with SalesLogix reseller Ascendix. They haven't merged. But they are sharing office space. It's a little like shacking up, but not getting married.

And yet, "There's no reason CPAs can't be equipped for this," MacDonald said. Because CPAs remain the trusted advisor, they have a responsibility to be knowledgeable of the systems on the market and the providers locally."

The message is clear: Get with it, or get left behind.

3 Hot Tips for Getting Back to Work

2004-09-06T19:50:00.000-04:00

Summer's over. Kids are going back to school and accountants are getting down to work. Here's what you should be thinking about BEFORE busy season.

By Rick Telberg
Special for HP

It's September. While parents are rushing their kids off to school and kids are hitting the books, accounting professionals are gearing up for another busy season.

Whether you are girding for a new tax season or looking toward the final close of the fiscal year's books, if you're an accountant, then summer is definitely over and it's time to go back to work.

But before you settle in for the long haul ahead, pause for a minute or two to see if you're really ready. Here are three of the most important trends or issues that you'll probably be dealing with to one degree or another over the next few months.

So let's get started:

(1) Update and safeguard your passwords -- Password breaches are among the top 10 most critical vulnerabilities in most offices. But today, a password leak is more than a problem; if you're an accountant, it could be a crime. That's because the Gramm-Leach-Blilely Act and the Health Insurance Portability and Accountability Act require that client information remain impenetrable. To be sure, password-protection isn't the only issue in security, but it is the best place to begin communicating to an organization that you're serious about digital assets and liabilities.

Just how easy is it to crack a password? The typical four-character password many of us use is pretty tough to break -- but only if you're human. A person trying a new combination of four characters every ten seconds could work six months to break the code. A computer, running at a million tries a second, could crack it in two seconds. And consider this: The federal government's intelligence agencies aren't publicizing it, but it took a single journalist exactly one good guess in 2002 to figure out the password for Saddam Hussein's email account. Ah, if only we'd known then, what we know now!

(2) Ride the Upgrade Wave -- Too many accounting firms and departments are still using systems, procedures and technologies from the 1990's. But we are already well into the 21st Century. In the past few years, we've gone from deskbound desktops to mobile computing, from running cable for networks to running from one Wi-Fi hotspot to another, and we've gone from thinking of technology as a cost to understanding that technology is a critical business differentiator. Second only to a spouse, consumers now rely on Internet search engines to make purchasing decisions about major appliances. More people are now getting their news from the Web than from TV. And a newspaper? What's a newspaper?

Fueled by an economic uptick, continued low interest rates, the mounting obsolescence of older equipment, and a nice tax benefit (remember the Jobs and Growth Tax Relief and Reconciliation Act of 2003), small- and medium-sized businesses are going shopping this year like it's Christmas. If your plans for September don't include a close look at upgrading and expanding your hardware, you could be left behind.

(3) Take the Leap into CRM -- Accounting firms and corporate finance departments are being dragged, sometimes kicking and screaming, into the marketing department to help on customer relationship management installations. The green-eyeshade breed of accountant is shying away from CRM. But visionary business-minded accountants understand intuitively the vast potential in winning direct involvement in raising new revenue, better gauging returns on investment through performance management techniques, and adding directly to the bottom line.

Sure, the software is great at keeping track of client birthdays and favorite haunts and hobbies. But a good and flexible CRM system can forecast revenue, find new growth opportunities, make key management decisions and control and optimize marketing costs. Besides, every business already has an accounting system to measure and record internal activities; a CRM system goes outside the business to the world beyond, giving accountants a newly holistic view of the environment and making them essential go-to people for business strategy.

This short list goes from the mundane (in the care and feeding of passwords) to the strategic (in pushing the accountant into the role of corporate visionary). But that's where accountants are headed anyway. And that's the way clients and employers want it. You resist it at your own risk.

CPAs Sound Off About the Economy

2004-09-02T09:14:00.000-04:00

FROM THE MAILBAG: A slew of e-mail shows readers divided about the economy, passionate about the profession.

by Rick Telberg
At Large

The polls and pundits suggest it. But CPAs live it.

And, if e-mail is any indication, then the e-mails confirm it: How you feel about the economic future depends a lot on your economic present.

In a series of "At Large" columns, most recently "Recovery? What Recovery?", accountants and financial managers have been voicing their views on the business outlook. The results are mixed, to put it mildly. In fact, I've characterized CPAs' outlook for the economy "as divided and polarized" as this year's presidential election.

Not surprisingly then, the columns have generated a ton of feedback. So let me just get out of the way for a moment and let the readers speak for themselves. There's nothing scientific about this sampling of the mailbox. But I think it may be representative of what I'm hearing from the grassroots.

Greetings Rick,
I just felt compelled to reply to this article "Recovery? What Recovery?" and I have to say that never in my professional career have I had such a challenge in seeking employment. It has been about 10 months now since moving from Florida to Virginia to join my husband; there is nothing out there for me in this area.

There sure are plenty of entry-level positions but nothing for a person with my background. I am certified with over 15 years of management experience; I guess the only thing I lack is a graduate degree. But with this experience I am stumped and confounded as to the claims that it is a wonderful time to be an accountant (maybe for recent graduates starting out). I have expanded my search to larger metro areas close by, but to no avail. I can relate to the person mentioned from Dallas who is the only one with a suit on the food stamp line! I am basically in the same predicament as she is and feel her pain.

Well, enough venting, I just wanted to ask if there is a way to gain some "Sarbanes-Oxley" experience without knocking at the door of some CPA firm that does not even "look" at a person like me (I am 45 years old, out of public accounting for over 20 years). I have got to say this has been the most trying and stressful time of my professional career.

Sincerely,
Sandra M., CPA

Dear Mr. Telberg,
The next time you decide to write an article about the U.S. economy, consider leaving out references to the state of nation's politics. I prefer to get my daily political briefing from objective news sources. We don't need your subjective inference that perhaps the president is somehow responsible for the uneven economic recovery. Perhaps there is a micro economic reason for the uneven recovery. Perhaps state and local regulation is the cause for the uneven recovery.
May all your blues be reds!

Bernard E. Benson, CPA
Benson, Benson & Company

Dr. Telberg,
We have so much prosperity in this county... it's unbelievable. I see people in $45K jobs driving $40K cars. It may not be wise, but I think consumer confidence is evident by all the new vehicles and trade-up houses. We need to reduce the size of government and the economy will take off.

Robert B. Porter, CPA
Chief Financial Officer
Brentwood, TN

Rick:
Is the glass half empty or half full? I prefer to see it as half full. Our office's income is up 70 percent through the end of July. We have found new services to provide to meet the demands of our community. Our community is booming and we have taken advantage of it by keeping a positive attitude!

Most people should quit blaming others for their problems. Our motto here is "get it done".

Dave Anstadt, CPA
Anstadt & Associates, LLC

Rick,
As a CPA in the private/government sector, I would like to share some thoughts. Attaining my MBA at 41 and CPA at 45, I learned in 1991 that age discrimination was alive and well at public accounting firms. Looking elsewhere, I discovered forensic accounting/audit. Last summer I lost my 11+-year position as a financial investigator with a multi-jurisdictional drug task force during Illinois state budget cuts. I found myself in the unemployment line.

The local economy continued its downward path while housing starts for the upper income employed thrived. During this time I achieved CFE status while seeking a challenging position that would allow me to pursue my career goals in forensic accounting/audit. After 10 months I was fortunate to attain a position in fiscal management of federal grants. After chasing drug dealers and money launderers, I am now honing skills in government accounting, cash management, grant monitoring, and GASB 34 compliance.

I have learned that nothing lasts forever, so I am taking advantage of this position to learn as much as possible and to give back to my employer more than possible. After this - who knows? My first love is forensic accounting and audit, so I know that I will eventually return to working with law enforcement in "money cases".

Thanks for the chance to share,
Joanne

Rick:
One analogy you could have used: If, in the midst of a war if you ask the person(s) getting paid to bury the bodies, how's business and what are the prospects for the future, they're going to say "great" on both accounts.

In many ways that is what is happening in our economy right now: some of those you interviewed are benefiting because someone else lost their job. I guess there's one way to determine if the economy is getting better: count the dead bodies.

D. Miller
Texas

Rick -
Quite frankly I really don't think this expansion has legs. I think it's a result of the advanced tax refunds from the credits, the large refunds this year due to the tax cut, and the massive increases in spending on the Iraq conflict. Because the initial tax cuts were focused on the lower and middle income taxpayers we got a lot of bang out of them. These taxpayers tend to spend any tax savings, immediately causing a short-term uptick in the economy.

Giving the wealthy 90 percent of the tax break gives the high-income taxpayer increased money to invest. A logical business person will invest it in technology that will allow them to reduce the factors of production... a logical business person will use it to reduce labor because it is the most expensive factor of production. The effect of this will be to replace higher paid jobs with lower paying ones. Combine this factor with the massive deficits and the following rise of interest rates, and the economy will stall mid to late 2005. I fully expect us to enter into a period of stagnation by next year that will continue for several years.

Fortunately I have strong skills as a CPA and I make money in good and bad economies. I for one have invested in technologies. The firm I had 10 years ago employed three clerical people to do write-up, now I have all my clients on QuickBooks. I still review the accounting much like in the write-up days, but now I review my clients' work instead of my employees'. I still bill the clients the same amount.

Bradley R McGrew, CPA
Sole Practitioner
Austin, Texas

AND WHILE WE'RE AT IT, here are a few more from the "At Large" mailbox:

Rick,
As a CPA who has been in the financial services business for almost 20 years, am I missing something? [Re: "...has created limited partnerships with units priced as low as $25,000 in existing broker-dealers, thus sidestepping a lot of regulatory and administrative costs and headaches.] Why would any CPA want to join a BD or form a BD when they can just be an RIA and sidestep the absolute nonsense of compliance that the NASD pursues? Operating as an RIA is so much more flexible and allows a CPA with his own practice, an entrepreneur by nature, to continue to make his own rules and not have a BD insist that they must review every letter and e-mail, every seminar slide, and every page handed to a prospect or client. Ever since CPAs have taken an interest in financial services, it has boggled me why they would get involved with broker-dealers -- unless they simply don't know any better?

Larry Klein CPA/PFS, CFP
President
NF Communications
www.nfcom.com

Dear Mr. Telberg,
Thank you for your positive comments regarding WorthMark Financial Services in your column. The CPA community has responded very favorably to our new broker-dealer model. Your analysis of our structure was accurate; however, in speaking with you I may not have mentioned that we have two broker-dealer options for firms... The first is a $25,000 capital contribution (which remains an asset in the firm's capital account), as you correctly stated. The second is a $3,000 capital contribution. The broker-dealer structure is identical for both options, although the payout schedule and expense allocation vary. Not surprisingly, the $3,000 option is by far the most popular choice for CPA firms!

Kind regards,
Tim Steele
VP Sales
WorthMark Financial Services, LLC
Newport Beach, Calif.

Dear Rick,
Another great article ("3 Hot Trends from Some Cool CPA Shows," Aug. 9). As a person with my New York CPA license, pending the experience rating, I have just finished an opportunity preparing tax returns in Southern California for clients with a wide variety of needs in investments, partnerships, complicated 1040s and very many "personal bookkeeping documents" that could be done much more simply. A tiny suggestion is to just open up a separate bank account, use only checks, and let those like American Express present you with your statements. With current tax software (ATX Max) and some sort of support like Tax Analyst, the client will have much less to do and probably a lot less duplication of books and records. It is true, accountants are very well trained for detail-oriented work and I found working with clients gratifying and enjoyable with tax systems and tax support systems.

Michelle R.

CPA2Biz Delivers Update to AICPA Council

2004-09-01T16:17:00.000-04:00

CPA2Biz, the AICPA’s marketing and technology provider, experiences steady online growth, releases new site features and develops a set of core business solutions programs to meet the needs of small and midsize public practitioners and CPAs working in business and industry.

[by Rick Telberg for the AICPA Journal of Accountancy, September 2004, as a Special Report]

Over the past year CPA2Biz, the exclusive marketing provider of the AICPA, has launched a pair of new initiatives enabling CPAs to build stronger relationships with their clients or employers. Now it’s looking ahead to several new Web site enhancements and CPA programs for the coming year.

This news was delivered at the AICPA Spring Council meeting by Erik Asgeirsson, CEO of CPA2Biz. The JofA recently caught up with Asgeirsson, as well as CPA2Biz COO Patrick Bonnaure and several AICPA members, to fill out the picture of the current status of CPA2Biz.

CPA2Biz develops and manages client-focused business solutions programs such as the Paychex Partner Program (for payroll) and the Chase CPA Advantage Program (for banking) to meet the needs of small and midsize public practitioners and CPAs in business and industry. Just 10 months after the November 2003 launch of these initiatives, more than 8,000 CPA firms from 47 states are participating in the Business Solutions Program and more than 1,500 new CPAs are signing up for it each month. With built-in benefits for CPAs and their clients, these programs bring large-firm resources to all firms.

“More than 8,000 clients have been successfully referred by enrolled CPAs,” says Asgeirsson, as of the April 2004 Spring Council meeting. Through the Paychex Partner Program, participating CPAs can offer their clients one month of free payroll processing and a six-month satisfaction guarantee. In addition, CPA2Biz and Paychex have put procedures in place to assure the CPA remains the client’s main contact at all times.

CPA2Biz also has teamed with Chase to roll out the CPA Advantage Program. This small business banking program offers CPAs a dedicated hot line, direct access to client financial information, a special small business account manager to work with and preferred pricing for the firm and its clients.

CPA2BIZ REACHES NEW MILESTONES
After two years of improving financial performance, CPA2Biz has attained a new milestone. In its most recent fiscal year, CPA2Biz had positive cash flow from operations as well as overall positive net cash flow. This is a result of the marketing and operational investments that have made CPA2Biz a valuable asset to the CPA community.

“CPA2Biz is meeting the needs of AICPA members,” according to Mark Zinman, name partner in a local CPA firm in Huntingdon Valley, Pennsylvania. His firm is active in CPA2Biz’s Business Solutions Programs. Under the programs, CPA2Biz leverages the voice of the profession to deliver a valuable and unique set of benefits to AICPA members.

“The more we utilize our buying power, the better it will be for all of us—CPAs, firms and especially, these days, clients,” Zinman says.

The CPA2Biz Web site now serves as a key resource for over 50% of the CPA profession. More than 200,000 CPAs and financial professionals regularly use CPA2Biz to search for the latest articles, tools and career resources and to access a selection of more than 1,000 professional products. More than 50,000 site searches are conducted on average each month on topics such as COSO, ethics, SAS no. 99 and CPE. CPA2Biz also recently released new Web site enhancements, including a new capability in the online store to show real-time data on the most popular products customers have purchased, allowing AICPA members to quickly see what professional tools their peers are relying on and what new editions have been released.

CPA2Biz also continues to provide the AICPA with sophisticated online and off-line marketing operations to drive AICPA sales in books, periodicals, online resources, conferences and webcasts. Most of the AICPA’s direct marketing to members is handled by CPA2Biz.

But at the heart of the CPA2Biz culture, officials say, is a dedication to be driven and directed by member needs, experience and input. Major new product strategies and site changes, for instance, are rolled out only after weeks or months of testing and refinement as “beta” projects with rank-and-file CPAs acting as advisers and testers. “This is a customer-driven process,” Asgeirsson says.

CPA Bill Bloom of New York sits on one of those advisory panels. “We’re not rubber stamps,” he says. “They run ideas for new products or services or partnerships past us. And we give them our opinions and reactions—and I mean our honest opinions and reactions.” Feedback from CPA2Biz’s customer advisory group informed the recent rollout of the small business banking program.

NEW FEATURES TO COME
In coming months CPA2Biz will be launching a new e-newsletter service and staging a series of online seminars with CPAs and their clients, covering business issues such as strategic planning and trends in financing. These services will be offered to CPAs participating in the business solutions programs and are designed to cement the relationship between the CPA firms and their clients.

For the AICPA, CPA2Biz will be launching tightly focused direct-marketing campaigns in specialty areas of practice, all the while maintaining the production and mass distribution of comprehensive product catalogs. “We want to give members what they need and only when they need it,” Asgeirsson says. “CPAs are too busy to sift through a lot of random information. It’s our job at CPA2Biz to put together well-organized collateral, the best services from the top providers so our customers are not overwhelmed.”

Bruce Meyer, a third-generation CPA in Melville, New York, says: “The companies CPA2Biz deals with are all good, quality companies. I can rely on that.”

In Tucson, Arizona, Donna Byers, CPA/PFS, tax manager at Clifton Gunderson, registers for live CPE webcasts through the CPA2Biz site. So far, she’s taken online classes in individual fiduciary relationships, the issues involved in net unrealized appreciation and ESOPs. “Excellent,” she says about the courses, “and not too expensive.”

A rigorous schedule of CPA2Biz major site enhancements and minor patch releases is overseen by Bonnaure. CPA2Biz is scheduled to introduce major new site features in fall 2004, some of which include an updated home page with easy access to all areas of the site, including the online store, news center, career center and more; a new “forgot password” system to make it painless for the user who has forgotten his or her user name or password; the facility to purchase and download Adobe PDFs online; and for AICPA conference goers, a series of new site enhancements to make meetings far easier to register for and attend. In the first phase, due this November, CPA2Biz plans to allow online registration for the add-on pre- and post-conference workshops that attract hundreds of registrants every year.

BUILDING ON SOLID GAINS
CPA Ivan Watson is one of the AICPA members who can attest to the changes of recent years. The Middlesex, New Jersey, sole practitioner uses CPA2Biz often to do last-minute research on the AICPA InfoBytes CPE service before a client meeting. “It helps me brush up on the latest developments,” he says. In addition, he remarked on improvements in the Web site’s navigation, structure and organization, and visual look and feel.

Recovery? What Recovery?

2004-08-23T16:53:00.001-04:00

Economic prosperity may be right around the corner. But some CPAs don't have too many corners left to turn. And that's not good.

by Rick Telberg
At Large

Taken together, the voices of CPAs across the nation could be summed up as: "It was the best of times; it was the worst of times."

The profession's outlook for the economy seems as divided and polarized as the electorate is about the choice for president in this election year.

Just listen to a pair of managing partners, both at small, local CPA firms: One reports, "Unemployment in my area is at 3.4 percent or virtually full employment." And the other says, "Unemployment in my area is consistently above 10 percent." Can you guess which CPA is in a so-called Red State and which is in a Blue State?

There's a middle manager in a large public accounting firm who's exultant about the economy. "It's an excellent time to be an accountant," he says. There's another, in Dallas, who, never without work before, has now been looking for a job for almost a year. You'll recognize her at the unemployment office and in the food stamp line. "I'm the only one in a suit with an M.S. degree," she says.

Indeed, my soundings from over 700 accountants suggest barely more than half expect business conditions to improve over the next 12 months, with the rest split between predicting more of the same or some backsliding. Compare that with a study from the National Federation of Independent Business, a Washington small-business lobby, which predicts "the best economy in 20 years."

Nevertheless, some clear majorities of accounting and finance professionals see good signs for some business metrics in their own firms or companies, namely:
1. Revenues;
2. Profits;
3. Demand from clients and customers;
4. The ability to raise prices or fees; and
5. Expanding the business.

The biggest and darkest clouds on the economic horizon are, just as starkly:
1. Lack of affordable health care;
2. New or problematic government rules and regs;
3. Constricted access to new financing;
4. A need for more staffing at the same time as pressure remains to cut payrolls; and
5. Tight capital spending budgets.

To Bernadette Hardcastle, managing partner at her own local CPA firm of Knopp & Hardcastle in Corpus Christi, Texas, it's like a 1980's flashback. "Overall the economy is improving slowly, but there are areas of the country that have not improved and probably won't for a while."

Some companies are taking advantage of some special market opportunities. "Currently our business is playing on the market; we purchased low and we're selling high," says Shelly Munger, distribution division accounting manager at Meridian, Idaho-based Hoff Cos. "Next year we probably will not have that luxury because imports will have increased their pricing by then. However, we hope to have gained more market share over the course of this last year."

One solo accountant is capitalizing on work other companies are leaving behind, even at the expense of other accountants. "As more and more people are put out of work by larger companies downsizing and outsourcing," she says, "the opportunities for small businesses providing outsourcing activities and/or innovative products and services increase."

While other industries may be struggling, Tim Watson, managing partner at Benford Brown & Associates, in Chicago, is having a great year. He credits it, ironically perhaps, to Enron, Andersen and Sarbanes-Oxley.

"The demand for auditors and experienced accountants has gone through the roof," says Watson. "The work has doubled and the supply of people has essentially remained the same. As a result, even small firms like mine are getting involved in Sarbanes-Oxley engagements and many other projects that have resulted from the major shifts in business and clients between firms."

James Lewis, audit director at Lincoln University in Pennsylvania, might agree, but grudgingly. "The outlook for smaller CPA firms is very good as they experience the continuing trickle-down effects of Sarbanes-Oxley," he says. "But locally, other business is very dependent on the continued housing boom, and any increase in interest rates over one-half of one percent will likely cause a slight downturn."

Fragile as it may be then, hope springs eternal among CPAs. But with their trademark professional skepticism, they won't get too hopeful. History, they know, has all too often confounded the prognosticators.

Your Job Won't Love You Back

2004-08-19T12:07:00.000-04:00

The top 5 things CPAs really love and really hate about their jobs -- and what it means for management.

by Rick Telberg
Career Insider

What do you like best about your job? If you're like most CPAs, you find satisfaction in the intellectual challenge of the work.

So go ahead and love your job. Just remember, your job won't love you back.

For CPAs, your biggest challenge may be balancing your love of your work and the rest of your life. For accounting managers, the management challenges are as stark: Let your people love their work, but don't take advantage of it.

"I do love what I do," according to Yvette Beaudin, a CPA/CVA from El Paso, Texas, who works in a small CPA firm. She says she enjoys continuously challenging herself as she learns new things.

Or, listen to another happily employed CPA, a middle manager in a mid-sized CPA firm: "Because my boss creates a good work environment and shows his appreciation to staff for work well done, it creates a good work environment, even though the stress of tax season is still hard."

On the other hand, some CPAs feel so overwhelmed they may be ready to throw in the towel.
"I enjoy my job overall," said one CPA firm partner. "But, with the continuous onslaught of tax and accounting standards, I am getting more pessimistic. It is extremely difficult to keep up when you are a small firm with fewer than five professionals."

A middle manger in a mid-sized says he's fed up. "Because of '404' and Sarbanes-Oxley, I will be retiring as soon as I can. The regulatory aspects of that and the shortened deadlines have taken all the fun out of it."

Fun or not, my study of over 400 CPAs pinpoints the pain points that every CPA firm or finance director must manage to.

Overall, CPAs say the "best" parts of their job are, in order:

1. Interesting work
2. Flexible hours
3. Friendships with their colleagues
4. Good pay
5. The feeling of really getting something done

The "worst":
1. Work overload
2. Not enough pay
3. Not enough recognition
4. Lack of respect for accounting standards or ethics
5. Cranky clients

Furthermore, the difference between job-satisfaction ratings in public accounting vs. business-and-industry can be informative. For instance: Business-and-industry CPAs like their bosses more often than CPAs in public practice, by a ratio of 51 percent to 37 percent. But CPAs in public accountancy are happier with their "flexible" hours, opportunities for advancement and the feeling of really getting something done.

Of course, you can always become a sole proprietor, but even that doesn't necessarily give you full control. As one said: "I'm self-employed. My wife is my boss."

New Realities Force CPAs to Play Catch Up

2004-08-13T09:27:00.000-04:00

Amid tumult and reform, two longtime observers assert clients have gained the upper hand in a buyer's market for professional services.

by Rick Telberg
At Large

The scandals, reforms, market shifts and technological advancements of recent years have so changed the landscape of the profession that it is, in some ways, hardly recognizable. In fact, the changes may even have shifted the balance of power, signaling profound new realities for practitioners.

In "Clients at the Core: Marketing and Managing Today's Professional Services Firm," (Wiley, 2004) August J. Aquila, based in Minnetonka, Minn., and Bruce W. Marcus, in Easton, Conn., a pair of veteran consultants, combine their considerable experience, skill and insight into a veritable strategic planning operator's manual for today's consulting firm.

From the outset, they acknowledge "the professional world doesn't need another book on how to write a press release or write a brochure or run a seminar."

Instead, they provide a new perspective on the crucial subject of how to keep firms relevant to the needs of the marketplace -- mainly, creating clients and building a marketing culture.

They don't get tied up in ideas like "vision," or "mission."

Instead they talk about the new realities of the 21st Century and professions in turmoil: dot-coms gone bust, a stock market meltdown, and a rash of frauds, defalcations, misuse of corporate funds; and then a reformist reaction, still unfolding, that the authors term "a helter-skelter regulatory rush that was at least as punitive as it was appropriate. It would seem that the regulatory garment was cut to fit all, when all don't wear the same size."

"The time is past when just the presence of the professional was its own comfort factor. It's long been believed that the concept of the professional was so exalted, and so trusting, that people accepted advice unquestioningly. No more. The scandals of 2002 and 2003 seem to have bred a diminished - if unwarranted -- respect for professionals," they say.

For today's professionals, here are six lessons you can take to the bank according to the authors :
-- Clients are more sophisticated. They no longer accept advice without questioning, challenging, demanding more reasoning and detail.
-- Because of the complexity of business today, clients demand that their professionals know more about the client's business and industry than ever before.
-- Professional services always function best when trust is at the heart of the relationship, but the corporate scandals of recent years have eroded that trust. That trust must now be regenerated. And the workings of trust are more important in the new economy than in the old.
-- Once the narrow structures of a profession were sufficient to serve clients. But clients now demand a broader spectrum of capabilities. The more broadly educated and well-rounded professional is the one with the greater advantage in meeting the needs of today's client. Clients demand that accountants know more than the basic skills of accounting.
-- Competition is now a fact of life. Clients know they have a choice.
-- Clients know the difference between marketing promises and professional services delivery. Today's client demands more real service and solutions -- not just a warm personal relationship.

To Aquila and Marcus, the new paradigm of professional services requires a new demand for partnership with the client and new participatory skills.

As they say: It's a buyers' market. Get used to it.

3 Hot Trends from Some Cool CPA Shows

2004-08-05T15:11:00.000-04:00

The summer's trade-show circuit suggests renewed vitality and confidence in the profession and some hints of new trends.

by Rick Telberg
At Large

As Yogi Berra once said (or is said to have said): "You can learn a lot by watching."

In the business-end of the accounting profession, you can learn a lot by watching, too. Take, for instance, a couple recent strolls through trade shows for CPAs. A couple months ago, it was the New Jersey state society's show. Last month, it was the New York society's show, perhaps, at 30 years old, the grand-daddy of them all. Both shows, run by the avuncular and peripatetic Russell Flagg (who also runs the California society's show), suggest renewed vitality and confidence in the profession, and provide clues to key trends to watch for. And, for the record, the AICPA was well-represented by CPA2Biz with a busy booth very much in tune with new offerings for CPAs, their clients and companies.

Trend-to-Watch No. 1: Document Management Is More Than Just 'Going Paperless.'

It's really about all sorts of new customer and supplier relationships, workflow efficiencies, corporate security and disaster recovery.

CPA Alan Kupperman, from the Parsippany, N.J., office of J.H. Cohn, for example, told how, a year after rollout, his large regional firm was improving productivity, cutting costs, enhancing client service, and mitigating risk with improved security. One key: Administrative assistants each have their own desktop scanners now.

All software vendors are playing into this trend, from tax, accounting and auditing, to practice management and time-and-billing. But a few making a big splash at the New York show include specialists Champion Workflow Systems, eFilecabinet, Immediatech, and a couple new ones: Office Tools Pro, ViewWise, and the British-import Star Computers Ltd., a practice management suite. Mirra Personal Server, whose booth was reportedly thronged at the Los Angeles show, should not be left out of this list for their automatic backup and storage capabilities. And of course, Hewlett-Packard and Fujitsu were there in strength, with HP showing off its standard-setting PC's, laptops and multifunction printer-fax-copier-scanners, and Fujitsu with a small but fast portable scanner. One more note on the HP booth: The new tablet PC seems poised to become a handy cross-breed between a PDA and an ultra-lightweight PC. You have to see it to believe it.

Trend-to-Watch No. 2: Local Bankers and Financial Businesses Are Hungry for CPAs.

How badly do bankers rely on CPAs? Take it from Karen Adler, a senior mortgage consultant at Emigrant Mortgage. She said at the New York show that 25 percent of her traffic comes via CPAs. So, clearly, the competition for the trust and loyalty of the CPA is of paramount interest to bankers and other financial professionals.

The First National Bank of Long Island, for instance, was offering a free gift for every new business checking account opened by Aug. 21, plus special lines of credit for CPA firms and their principals. The Temecula Valley Bank in New Jersey was on the prowl for CPAs with common clients in gas station and convenience stores, a couple of the bank's specialties. Not to be counted out, national powerhouse Washington Mutual was offering a 500-basis-point discount on business real estate loans. CitiGroup is waiving a slew of fees for CPA firms. It's enough to send CPAs laughing all the way to the bank.

On the financial services front, global UBS was at the show looking to hire CPAs as personal financial advisors. Fidelity was hawking their massive IRA rollover capabilities and their groundbreaking Charitable Gift Fund. Financial Analysts Inc. was looking for life insurance sales. The voluble Lance Wallach was pitching VEBA's as passionately as ever.

But most interesting was WorthMark Financial Services of St. Paul, Minn., which is offering a new alternative for CPAs considering the broker-dealer business. Since it can cost $100,000 to $500,000-plus for a CPA firm to set up its own B-D, WorthMark has created limited partnerships with units priced as low at $25,000 in existing B-D's, thus sidestepping a lot of regulatory and administrative costs and headaches.

Trend-to-Watch No. 3: Outsourcing and Offshoring Aren't Necessarily the Same Thing

Everyone knows CPAs "know it all" and "can do it all." But most choose not to. So, since time immemorial, CPAs have been delegating work, referring it out, sending it to service bureaus, or hiring specialists. They're no dummies; it's called "leverage." Since the 1990s, CPAs have been "outsourcing" jobs like computer networking or payroll. Today, the hot-button issue is clearly "offshoring," which the AICPA is monitoring closely and has given clear guidance on, including "AICPA Releases Guidelines on Outsourcing Engagements."

At the New York show, the range of outsourcing solutions ranged from simple bookkeeping, from a company called, simply enough, The Bookkeeping Company, in New York, to the Web-based PayCycle, founded by Rene LaCerte (yes, a cousin of the LaCerte tax family), in Palo Alto, Calif. Of course, stalwarts like ADP, CompuPay, Ceridien, up-and-comer Gevity in human resources, the local Professional Advisor Services in the PEO business, and CPA2Biz's own Paychex programs shouldn't be overlooked. But today, even McBee, once a humble stationery supplier is pitching payroll.

Further up the evolution scale, venture-capital financed Xpitax was at the show, with Datamatics, CCH-owned SurePrep, the Goodrej Group and GT Limited. All, to one extent or another, send some processing overseas. But for all the hubbub over "offshoring," tallied up and footed, the total market for offshored tax returns remains just one-tenth of one percent of the returns filed, according to Greg LaFollette, editor of CPA Technology Adviser.

Of course, if a CPA firm really wants to handle payroll all by itself, PenSoft was at the show with the software for it.

And for CPA firms looking to aid clients in Web commerce, Envision's Roger Maggio was fielding questions.

Miscellany: In other news from the show, global ERP leader SAP drew attention with its midmarket SAP One entry, vying against Best Software's MAS 90 and Microsoft's Great Plains. Mergers and acquisitions brokers were also busy, from Max Krotman at GlobalForce, to Leon Faris and friends at Professional Accounting Sales, and the relatively low-profile Strategic Alliance Funding & Equity Inc. of Fort Lauderdale, Fla.

State CPA society trade shows remain the premier gathering place for CPAs and vendors to do business face-to-face. Two upcoming events that are not to be missed include the Illinois show in Chicago Aug. 24-25 and the Florida exhibition in Fort Lauderdale, Sept 29-Oct.1. Be there or be square.

'Best Economy in 20 Years?'

2004-07-31T21:00:00.000-04:00

Hello, please meet Rosie Scenario. But do CPAs really believe it?

by Rick Telberg
At Large

The economic recovery may still be spotty and weak, but most chief executives of the fastest growing companies expect it will only accelerate over the next two to three years. Meanwhile, brisk business at the nation's smallest companies is straining inventories and forcing price hikes, which may signal the best economy in 20 years. But these are only two of the latest reports. {otherwise 3rd graf doesn't work}

Yes, 'tis the time of the rosy scenario. Gee, it must be an election year.

In the first report, issued by PricewaterhouseCoopers, 73 percent of "fast growth CEOs", say the economic upturn will last two to three years or more.

In the second report, released by the National Federation of Independent Business, chief economist William Dunkelberg reports that his Small Business Optimism Index (which kind of makes you wonder if we should call it the "pessimism index" during a recession) has averaged 103 or higher over the past 15 months, unprecedented since the monthly surveys started in 1986. "This is a very strong run," Dunkelberg reported, "confirming the view that 2004 will be the best economy in 20 years."

Sure, that's what you get from a Big Four firm and a Washington-based business lobby, but I'd rather put my money on what CPAs think. Fortunately, I have a few clues, based on input from you readers.

In the last two weeks, more than 200 At Large readers have filed reports on current and expected business conditions. About three in four call conditions now "good" to "excellent" and the same number expect the upturn to continue for at least the next three to six months.

That's not "the best economy in 20 years," nor a long-term boom. But it is a sign of strength and optimism.

"Business is good, has been good and will continue for an extended period of time without any unforeseen catastrophes," according to the managing partner of a local CPA firm in Bellevue, Wash.

Another reader, CPA Vee Cristobal in Los Angeles, says, "I started my practice a year ago. I've been busier every day because of more and more new clients; small businesses are needing my help. This is a good sign for our economy."

Across the country, in Clifton, N.J., a third At-Large reader, reports: "a lot of small business formation going on right now." That's another good sign.

But their optimism isn't limited to their business or the economy in general. Some 78 percent also rate the prospects of the CPA profession as "good" to "excellent." Another 67 percent report their own net earnings up from a year ago. And in the next three to six months, 55 percent will be adding permanent employees to their operations.

CPAs are skeptical by nature and by training. If they've begun to feel upbeat, it can't be ignored.

What's Your Business Worth?

2004-07-29T15:31:00.000-04:00

CPAs take stock of a sellers' market for firms.

by Rick Telberg
At Large

The feedback from my series of reports on CPA-firm mergers-and-acquisitions has been overwhelming.

I've heard directly from over a thousand CPAs so far. Most agree on a few fundamentals:

1. It's a sellers' market.
2. The average sales price runs between 1.0- and 1.25-times annual revenues, with the best deals structured over three to five years as the seller bows out.
3. There are still more opportunities than a single CPA, or small CPA firm, can handle alone.
4. The imbalance between buyers and sellers won't last forever.

Here's a look into the mailbag:

"I believe there is an abundance of potential sellers in the marketplace who have not adequately planned for their firm's succession. Buyers in their 40s with energy and a commitment to adapting to market changes have an excellent opportunity to positively position themselves."
--Erich Rail
Pasadena, Calif.

On the other hand....

"Why should you be so vociferously in the ring attempting to hustle CPAs in their 50s to sell their 35-year-old accounting practices. Life expectancies are now nearing 80 years of age leaving boomers with 30-odd years of life left. If they sell their practices at roughly their gross annual billings they can't manage to call that a retirement trove. So, only those well-heeled (and it is a mistake to feel that all accountants are so well-planned that they could retire without the value of their practice) could survive without their practice incomes for 30 more years. Why all this rush to the registers with the accounting practices? Sage older accountants are wise enough to know that they can hire younger accountants to turn out production accounting, have a place to read the Wall Street Journal and work about four hours a day while commanding all of the respect in their community that they ever did."
---JDFCPA

"I have been reading your articles with great interest since I am a CPA that brokers the sale and merger of CPA firms. I agree that it is a seller's market and this year has been much more active than the past several years. I don't necessarily agree with your numbers. Although that differs based on geographic areas. In California, I seem to have 6-10 (maybe more) very qualified buyers for every good practice to sell. The not so good ones may only have 2-4 buyers, usually those frustrated with looking at the good practices, and not getting them. I also agree that this window will not be open forever. I suspect it will remain a seller's market for a number of years since CPA's tend be less prepared for their own retirement. (The cobbler's kid goes without shoes syndrome)."
-- John R. Ezell, CPA
ProHorizons (formerly Professional Accounting Sales of California, Inc.)

"There are many great opportunities for CPAs. We see many possibilities for expansion, but being a small firm with limited resources and time, its extremely difficulty to decide which is the wise choice. We are working on a plan to identify alternatives, select the best for us, and increase skills step by step over time. The information overload in almost overwhelming."
-- G. Craig Potter
Houston

"If we don't start training more newbies, we shall have no one to sell to."
-- Cynthia Ellis, CPA
McAllen, Texas

6 Things To Do Today To Thrive Tomorrow

2004-07-17T11:48:00.000-04:00

The window is closing on a the sellers' market for good CPA firms. You don't want to be left out.

by Rick Telberg
At Large

A rosier economic climate and a general optimism among CPAs may be fueling a mergers-and-acquisitions binge among accounting firms unseen in years.

And it might be a good thing too: Because long-time observers suggest this seller's market may last only a few years.

In my continuing study of the M&A market for CPA firms, I'm finding a new positivism about the future that that is almost palpable. For instance, my contact with almost 300 CPAs in the last week alone convinces me that 85 percent of CPAs, particularly those in firms, feel good, or even excellent, about the prospects of the profession. And almost as many feel as optimistic about their firms in particular and the market for their services in business or industry.

But it takes a special breed of CPA to see the potential and seize the opportunity. Just ask Jonathan A. Karp, an attorney and CPA in Los Angeles who specializes in succession issues for CPA firms.

"I see this as an extremely active area, becoming more active over time," Karp says. "Many firms have not created an internal succession plan or don't have a second tier of partners able to assume management, operation and vision for the firm. So the partners have no alternative but to sell or merge."

"Buyers, on the other hand," Karp says, "are very actively looking for acquisition/merger targets in order to grow their practices and thus are very interested in locating firms to acquire."

Most partners are quick to acknowledge that their biggest problem is finding, hiring and retaining good staff.

"What is unacknowledged," Karp warns, "is the No. 2 'stealth' issue facing firms, which is the lack of a viable succession plan, either in terms of having qualified 'second tier' or junior partners to succeed the senior partners in firm management or the absence of a viable, financially responsible and feasible succession plan to buy out retiring partners."

Unless firms wake up and face the looming issues of succession and unfunded retirement liabilities, there will be a major change in the accounting firm environment in the next 10 years, Karp says.

"More and more of these firms will be looking to sell to other firms or merge their firms into other firms," according to Karp. Those firms who are not ahead of the game and don't start the process now may find themselves left in the cold, since the firms looking to buy practices will have already done so and may be reluctant to absorb further practices."

What must firms be doing today to survive tomorrow?

Here's my advice:

1. Get on the cutting edge of technology.

2. Build a niche. Some of the hottest niches right now are in low-end accounting software, investment management, business valuation, and estate planning.

3. Hire competent staff, train them, and treat them like you mean it.

4. Pin down your succession plan. It's not easy. It requires a hard look at what you really want out of life.

5. Give yourself time because it's a long process.

6. Get started now.

This seller's market won't last forever. By my estimates, one quarter of firms is looking to sell, a third is looking to buy and another quarter is expecting to grow organically.

What happens when all the good firms get bought up? You won't want to know.

5 Success Secrets for CPAs

2004-07-14T19:55:00.000-04:00

If you think it's just technical skill or good connections, you're dead wrong.

by Rick Telberg
for Career Insider

What's the secret ingredient to succeeding as a CPA? If you think it's just technical skill or good connections, you're dead wrong.

Listening to hundreds of working professionals suggests that the critical success factors are, in fact, common-sense people skills.

"A positive attitude and the ability to get along with all types of people will take you far," according to a middle manager at a large company.

"Always be helpful and do more than what the client expects," says Kimberly Schrant, a CPA at a local firm in Anthony, Kan. "Take people out to lunch and dinner. They appreciate it."

"Good communication skills are often overlooked in our profession," according to Dan Livengood, head of his own firm in Marietta, S.C. "While technical ability is a necessity for all accountants, those that communicate and relate well to their clients definitely have an advantage. This is most applicable to those of us working with small businesses or in industry, where working with the individuals around us, not organizations, is key."

Livengood adds one more tip: "Make time for your personal life and personal development. People trust other people; not human adding machines who only understand numbers and long hours."

The comments were culled from over 600 responses I received from practicing CPAs who read last month's Career Insider.

Five items emerged as keys to success in a CPA career, in order:
1... Ability to relate to people, get along, communicate.
2... Technical skill and knowledge.
3... Integrity and good character.
4... Constant, lifelong learning.
5... Knowing how to balance life and work.

Professionals also appear to be reasonably happy and satisfied with their careers.

"I enjoy my work and am glad to be a CPA in public accounting," says a middle manger at a local accounting firm. "However, I believe it takes a dedicated person with a strong work ethic and the ability to 'change gears' quickly and to handle the stresses involved."

"In exchange for hard work, which is challenging and stimulating, there is a worthwhile trade-off for flexibility and control over your schedule, not to mention career opportunity," said one managing partner.

"It affords great flexibility," said a senior executive at a small manufacturer. "You can work part time or full time - for a small company or a large one. You can take time off to have a family and step right back in when you are ready."

Indeed, if most CPAs could do it all over again, they would. Fully three out of four surveyed say they would "probably" or "definitely choose a CPA career again.

And, they'd recommend it to others. When asked if they'd urge a young person into the field, just about as many, specifically 72 percent, said "yes."