MGI INTERNATIONAL: Why Join an International Association?
TRENDS IN CPA FIRM ASSOCIATIONS
Patrick Riley, CPA, the MGI North America coordinator, deputy chairman of MGI and Managing Shareholder of Braver and Co., P.C., talks about the profession’s new global landscape.
Rick Telberg (RT): What are the major trends or issues impacting your members and your association today?
Patrick Riley (PR): The most significant trend affecting our MGI members is the impact of changes to the profession caused by Andersen, Enron, WorldCom, Sarbanes Oxley, PCAOB, and Parmalat. These changes have created substantial opportunities for second and even third-tier firms. Those firms that have proactively recognised the importance of membership of, and active participation in, an association like MGI 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.
RT: What are you and your firms doing about it, or, what should the profession be doing about it?
PR: 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. In a strong association in which 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.
The profession seems to be recognizing the value of membership in an association. By continually reinforcing the benefits, more firms will eventually realize what they are missing.
RT: How’s it working? Do you have any examples of the results?
PR: There have been several significant opportunities that MGI 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, including the following:
A Joint proposal to a publicly traded German company with operations throughout Europe and 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 accounting firm (a Big Four firm). Through the proposal process, the MGI 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 USA. A large publicly traded US company (with worldwide operations whose audit and tax services were being provided by Big Four) was concerned about their escalating audit and tax fees. They were introduced to an MGI member firm with strong local tax talent. They were quite concerned about the services required around the world, but after a review of MGI?s worldwide offices, the work was awarded to the local MGI firm.
While these are significant opportunities, they are not the norm. The more realistic opportunities are generally mid-market companies that historically have not recognised 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 MGI.
RT: Why should a CPA firm belong to a firm association, and what criteria should be used the selection process?
PR: Clients demand greater sophistication in all areas of work performed by their CPA’s. This sophistication not only impacts work performed at local level, but also on a national and international level. In order to meet these demands, CPA firms need to be able to bring solutions that reflect specializations at the local, national, and international levels.
In addition to meeting client needs, the 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.
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