CPA Trendlines

Are the Big Four accounting firms too big to fail? Ask IFAC’s Bob Bunting

Bunting tackles the hottest topics in talk to students. How would you grade him?

In a speech last week at Loyola Marymount University, Bunting, new head of the International Federation of Accountants (IFAC, in French), told accounting and auditing students they were needed now more than ever.

In addressing the credit bust, he chiefly blamed “corporate governance failures.” And said the solution lies in new global-sized initiatives:

Bunting

What makes all of these problems so much worse, of course, is our global interconnectedness. There’s no such thing as a local meltdown anymore-and shockwaves don’t only emanate from the most powerful nations. Who would have thought, for example, that banking failures in tiny Iceland would be felt in Russia, the UK, and Scandinavia, and that they would put the life savings of thousands of retirees in those countries at risk? This is only one example of how the interconnections that work so well in good times-as we sell, borrow, and do business with entities a continent away-can cause such havoc in bad times.

Suffice it to say that no national system of regulation can protect its citizens unless it is integrated into an equally rigorous international system.

Are the Big Four too big to fail? He said:

Plain and simply, the combination of unlimited audit firm liability in many countries coupled with limited choices of audit firms for the largest international corporations injects additional risk into the financial system. The majority of large global corporations use the Big Four accounting firms for auditing work. If one of the large firms should fail for any reason, and liability is the most likely possibility, the viability of the whole system would be placed in jeopardy. This concentration issue is thus one we must address.

and

Putting the public interest first is a priority for our profession, but we must ensure that there are professional accountants who can carry out this responsibility.

He also covers convergence and auditor rotation, among other hot topics.

Read the whole speech: READ MORE →

What’s your audit committee worried about?

These are the things should be keeping CFOs awake at night.

According to a survey of 150 audit committee members, the top five concerns are:

1. Liquidity, access to capital and cash flow;
2. Risk management;
3. Financial statement issues;
4. Maintaining internal controls; and,
5. Alignment of business goals, incentives, culture, compliance, controls and risk.

The survey also showed:

• 89 percent said the financial crisis had caused their company’s board or audit committee to change the nature and scope of its oversight.
• 53 percent said that they are only or not satisfied that their board exercises appropriate skepticism about management’s risk perceptions and assumptions.
• 50 percent said that they are only somewhat or not engaged in discussing the assumptions that underlie management’s accounting judgments and estimates that might be impacted by the financial crisis.
• 38 percent said that they are only somewhat or not satisfied that management has timely and accurate financial forecast information about earnings and cash flow.
• 31 percent of the representatives from those companies that issue earnings guidance said that the audit committee has reconsidered the company’s policies regarding earnings guidance in light of the financial crisis.

How Twitter launched a CPA firm into the top Google rankings

Are you Twittering yet? Here’s what can happen.

Andrew Rose, director of marketing and business development at Naden/Lean CPAs in Timonium, Md., reports on the Association for Accounting Marketing listserv that he went from Twitter newbie to Twitter success story. (The listserv alone, by the way, is worth the price of AAM membership.)

Here’s his tale:

I was a little leery of jumping on the bandwagon, but after the talk, I began to formulate a strategy. I put up four accounts, one personal, one for the firm, one for a niche practice area that is hot, and one for a project I’m working on related to the niche practice area.

Once I set them up, I started Twitter searching to see what people were saying, er, tweeting, about us. You can imagine my surprise when I found a post related to an industry niche blog we run describing how valuable our advice was. It was from someone I didn’t know. So I began following him and thanked him for recognizing us in this public fashion, unsolicited.

And, the kicker? His tweet, reposting a link to our industry blog now ranks in the top 20 for a keyword in an organic Google search….

Not bad eh?

Not bad at all, indeed.

Rose and like-minded CPA firm marketers will be swapping more stories at AAM’s annual conference in Austin, June 2-5.  See you there.

And don’t forget to follow the firm at www.twitter.com/nadenlean.

Can you afford outdated technology in today’s economy?

James Bourke argues you can’t.

Today, a BlackBerry smartphone is a competitive necessity.

In this week’s AICPA Insider, he says:

Make sure your staff has the correct voice and data plans in place on mobile technologies. To be productive and responsive to clients, your staff needs tools that allow them to talk, e-mail and text. Solutions will run from free to in excess of $500. It would be great to have the latest and greatest handheld technologies with all of the bells and whistles, but given the state of the economy, a device that allows for the basics will suffice.

More at Technology Spending in a Down Economy.

IRS “boast proves false.” Audit rate for millionaires plummets

Contrary to IRS claims last year, audit rate for wealthy Americans sharply declines.

According to agency data obtained by the Transactional Record Access Clearinghouse in Syracuse, N.Y.:

The significant turndown in audits for richer Americans from FY 2007 to FY 2008 sharply contrasts with the IRS claim in a 2008 press release boasting that the agency was making “strong progress in a number of key enforcement areas,” especially for “those with incomes of $1 million or more.”

The IRS data clearly show that the audit rate on the 300,000-plus returns reporting incomes of more than $1 million was substantially down last year — dropping at least 19 percent. But because of admitted agency accounting errors and two sets of conflicting numbers the IRS published just last Friday (March 13, 2009), the actual extent of this decline may be much larger.

Continued here.

Recession Stalks Tax Season ’09

As Tax Season 2009 rumbles toward its climax on April 15, practitioners are suddenly reporting a mounting list of problems – most them stemming from an uncertain and increasingly grim economy.

NEXT QUESTION: How are firms planning to celebrate April 15^th? Join the Busy Season 2009 survey; see the results.

By Rick Telberg

Tax accountants are scrambling to keep up with skittish clients and tardy forms and information. Many are making allowances and concessions to economically strapped customers by delaying or extending payment terms. Others are requiring some clients to pay upfront.

In Lithonia, Ga., for example, soloist Sabrina M. Batts at the Batts Tax Service Center tells me that this season is marked by “clients having a lack of money to pay for fees,” adding, “This the slowest season I have every seen.” As a result, she’s “making client leave post-dated checks.”

For the second year in a row, CPA C.J. Spady has ben giving a 10% discount to clients bringing their information prior to Feb. 13.  It worked great last year. But this it took more “hustle,” Spady says, to get their information.

READ MORE →

12-Question Test of Your Firm’s Leadership

In these tough times, leadership may be the deciding factor in survival.

How does your firm measure up?

Professor John Gaynard writes:

After using many different varieties of opinion survey, the Gallup Organization came to the conclusion a few years ago that the responses to just 12 questions can show why one organization, division, department or any other managerial unit is happier and more profitable than another

1. Does everybody know what is expected of them at work?
2. Do they have the materials and equipment they need to do the work right?
3. At work, do the great manager’s team members have the opportunity to do what they do best every day?
4. In the last seven days, have they received recognition or praise for good work?
5. Does their manager, or someone else in the team, care about each individual as a person?
6. Does every person in the work group or team have someone who encourages their development?
7. Does everybody’s opinion in the team seem to count for the manager?
8. Is the mission/purpose of the company explained in such a way that the manager makes each member feel that his or her work is important?
9. Are all the people in the manager’s team or work group visibly committed to doing quality work?
10. Does everybody in the team or group have a best friend at work?
11. In the last six months, has the manager talked to every member of the team or group about progress?
12. In that manager’s group or team, does every person have the opportunities to learn and grow at work?

A good manager will have high “yes” answers (4/5 or 5/5) when people answer the questions in his or her team.  A manager who is not performing well will have a lot of “no” answers.   Groups or teams with a lot of “yes” answers generate more profit and contentment at work.

The questions, how they were arrived at and their ability to analyze managerial performance are documented in a book by Marcus Buckingham, “First Break all the Rules.”

Source: http://coachingleadership.blogspot.com/2009/03/12-questions-that-show-good-or-poor.html