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!
