CPA Trendlines

Five Things CPAs Need to Know About Social Media

No. 1: It could change how you do business.

by Rick Telberg
At Large

No one would mistake Alan Vitberg for a wild revolutionary. But the ideas he’s bringing to bear on business strategies at The Bonadio Group in upstate New York could be.

Vitberg is a seasoned and well-respected professional services marketer, who, for the last seven years has been a part of some phenomenal growth at The Bonadio Group, which is based in Buffalo, N.Y., and now has five more offices along the busy corridor toward Albany, the state capital. Of course, he’s working for Tom Bonadio, who founded the firm in 1978 with one partner and his mother, and ever since has charted a course of expansion, innovation and leadership for his firm and the profession.

Vitberg has done award-winning work in marketing, and today he’s looking at the next frontier: social media marketing and how CPA firms can use it.

“Except for the very largest of firms,” Vitberg notes, “accountants have generally lagged behind the curve when it comes to innovations in marketing and marketing communications. Now, we’re in the midst of a revolution where it’s highly likely that those firms who are early social-media marketing (SMM) adopters and innovators will gain competitive advantage down the road.”

Here he’s talking about Facebook, LinkedIn and Twitter. But he goes further. “Web sites as we know them today will disappear,” he says. In their place, Vitberg envisions companies migrating to a new era, call it Web 3.0, in which, “instead of just pushing information out to viewers, sites will be used to create communities where dialogue and engagement with all types of stakeholders will be the norm.” Imagine a cocktail party where all your clients and referral sources can meet and mingle. Your firm may already do it once a year. But now imagine it 24/7/365 online, with your firm as the host.

Firm’s like Bonadio are already doing it. “Webinars are replacing putting fannies into seats for an event; LinkedIn connections are replacing meets and greets, blogs and postings are replacing feature articles, and so on,” Vitberg says. “It’s just that SMM does it faster, with broader reach, more ‘stickiness’ because it will always be out there, more impact on corporate branding and lead opportunities as a result of its search engine optimization capabilities, and more opportunity to initiate conversations.”

For firms that don’t know where to start, Vitberg has five suggestions:

1. Start by integrating video into your Web site. “YouTube is the second most-used search engine in the world,” he says.

2. Institute upward mentoring. “Our younger, more social-media-literate staff should be teaching partners and senior leadership about social media marketing.”

3. Start recruiting online. Social media will soon become the dominant channel for recruiting staff. After all, it’s in social media where you’ll find them.

4. Begin with your own firm first. “Internal uses for social media are not being given the attention they deserve. Why shouldn’t we be using social media to engage and dialogue with employees?” In other words, social media may finally be providing the platform the profession has long sought in knowledge management.

5. Social media marketing needs to be driven by objectives, not tactics. “Once the organization knows what they want to achieve — lead generation, customer service, or trends analysis, for example — objectives can be established and metrics identified.”

But where’s the return on investment (ROI)? In fact, digital marketing is the most measurable tactic available today. But Vitberg goes further even here.

“We face a series of uphill battles in bringing social media into our firms,” Vitberg says, citing intransigent attitudes, skeptics, budget and resource allocations and infrastructure and training requirements.

But the discussion must move soon beyond mere ROI measured by anecdote to solid, quantifiable research. “Perhaps the metric we should be using when discussing social media marketing is not ROI, but ROIn — Return on Influence.”

Interesting thought. But then, it’s always interesting talking with Vitberg.

Copyright 2009 AICPA. Used by permission.

Accounting gains 3,800 jobs in October

… while U.S. unemployment hits 26-year high of 10.2%.

click to enlarge

The Accounting and Bookkeeping sector of the economy gained jobs at a seasonally adjusted rate of 3,800 in October, according to today’s Bureau of Labor Statistics report from the Department of Labor.

October’s total employment in the sector came to a seasonally adjusted 937,700, according to the BLS, compared to the year-ago month’s 946,400, a net decline of 8,700 positions, or less than 1 percent.

Without the seasonal adjustments, October’s industry headcount stood at 876,100, up from September’s 860,500, but down from the year-ago’s 881,1000. The not seasonally adjusted figure for August was 864,200.

The 3,800 jobs gain in the seasonally adjusted estimate for October represents a bounceback from September’s loss of 5,900 jobs from August’s 938,000 level. Until the numbers are revised again, August could stand as the worst month for job losses in the sector in a while.

Overall, the U.S. economy lost 190,00 in October, raising the unemployment rate to 10.2 percent.

For some perspective, here is the current 10-year look at accounting and bookkeeping:

From a peak of 968,700 jobs in January 2008, the second month of the recession, accounting and bookkeeping has lost 31,000 jobs. But appears to have recovered earlier this year and since March has steadied with some slight month-to-month variations.

Six Leadership Lessons for Tough Times

Finance execs can glean a few insights from how some Fortune 500 CEOs are riding out the recession.

by Rick Telberg
For the Finance Executive

Few business people accurately predicted exactly when the global economic bubble would go bust, nor how much carnage would be caused.

But a few savvy business executives knew how to react adroitly to limit the damage. What they did and how they did it, offer lessons for finance and accounting professionals.

In a series of interviews with 14 CEOs and chairmen of major firms including Fortune 500 companies, McKinsey & Co. highlights a few of the keys to corporate leadership in this time of turmoil. They produced a now widely-read report titled “Leadership lessons for hard times.”

The consultants devised six useful principles that any CPA can take to heart:

1. Confront reality — and do it early.

McKinsey tells the story – soon to be legendary, I’m sure – that Ingersoll Rand’s business was still booming when Chief Executive Herbert Henkel noticed a line in an operating report that alarmed him: a sudden slump in the company’s transport refrigeration business. To Henkel, falling demand for perishable foods spelled big trouble in the global economy. “I couldn’t help thinking, what if that figure really is indicative of what’s out ahead?” he told McKinsey researchers. “What are we going to do about it?” Henkel cut the division’s growth forecasts to zero, though analysts thought he was crazy. It turns out he was wrong; growth fell by only 15 percent. But, Henkel said, “by not ignoring that one indicator, we did get a head start.”

2. Put strategy at the center of every decision.

Top companies are putting strategy on the agenda at every top-level meeting. “The world moves at a pace that requires strategy to be front and center all of the time,” NCR chief executive Bill Nuti told McKinsey. “There are too many variables that come into play in a normal cycle, let alone this one, that can rapidly change the course of your company, so I bring strategy up at every single meeting.”

3. Be transparent with employees …

McKinsey predicts that “one legacy of the current downturn will be a reinforced belief in the value of frequent, transparent communication with employees.” Uncertainty can cause its own calamities. So savvy leaders work hard to dispel rumors and keep people focused on the job at hand. “The only way to address uncertainty is to communicate and communicate,” said Terry Lundgren, Macy’s chief executive. “And when you think you’ve just about got to everybody, then communicate some more.”

4. …and with investors, bankers, suppliers, partners and other stakeholders.

Much to the consternation, I’m sure, of corporate lawyers, investor relations reps and the finance execs responsible for the U.S. Securities and Exchange Commission (SEC) filings, Northrop Grumman Chief Executive Ron Sugar told McKinsey, “Our policy is: ‘If in doubt, communicate.’ We always want to conduct our business with integrity and forthrightness.” And Pepsi Bottling Group Chief Executive Eric Foss agreed: “We’re facing up to our issues” and in this way, “demonstrating that we have a management team that knows what it’s doing.”

5. Build and protect the corporate culture.

“A healthy company enjoys not only strong financials but also a culture and values that bind it together,” according to McKinsey. They tell of the story of AutoNation, the car retailer turned around by Chief Executive Michael Jackson. When he came to the company, he confronted a “growth at any cost” mentality. “We wanted entrepreneurialism, but we also wanted the highest standards of integrity.” Over the next three years, he purged many of the “high-performing money makers whose risk profile would keep you awake at night.” This amounted, McKinsey said, to “a cultural revolution that has delivered a sustainable competitive advantage — and one that he isn’t about to jeopardize by shedding his best talent.”

6. Keep faith with the future.

Despite daily crises and emergencies, top executives need to remain focused on the long term. McKinsey calls it keeping faith with the future. But, just as importantly, many of the chief executives McKinsey talked with seem to have seen the economic downturn as an opportunity.

McKinsey doesn’t directly address painful layoffs, plant closures, divestitures or restructurings. Instead, the consultants say, “Many of the CEOs we interviewed were determined to ensure that their companies emerge from this recession with a competitive advantage by setting the course for higher productivity, acquiring a footprint in a new market, or not squandering a company’s talent or reputation in pursuit of lower costs.”

Proctor & Gamble, for instance, is increasing investments in research and development and innovation, McKinsey says.  “You can’t cut the things that will impact your ability to reach your vision,” said NCR’s Nuti.

None of this, of course, is revolutionary. And the CEOs and chairmen McKinsey interviewed are the first to admit it. What is clear, however, is their resolve in pursuing principles they thought were right, often in the face of opposition and equipped with uncertain information.  They could have guessed wrong. Only time will tell. But in the meantime, they demonstrate how leadership becomes both more important and more difficult in tough times.

Copyright 2009 AICPA. Used by permission.

Thomson Launches “Next Generation” Write-up and Payroll

Baron unveils new features in Accounting CS at user conference

Here’s the Thomson Reuters’ news release (or you can  follow the tweets on Twitter at #09uc)…

At the opening keynote address at the 29^th Annual Users’ Conference today, The Tax & Accounting business of Thomson Reuters announced the unveiling of its next generation products, Accounting CS^™ and Virtual Client Office^™, along with new enhancements made to its Source Document Processing offering. Other news celebrated at the conference included the widespread adoption of the Practice CS^® Staff Management module released earlier this year, and recent mobile device synchronization enhancements linking Practice CS with professionals on the go

In his opening address, Jon Baron, president, Professional Software & Services, Tax & Accounting, Thomson Reuters, discussed the need for tax and accounting professionals to embrace change and described the powerful applications and software enhancements designed to help firms increase profitability and use technology to accomplish their goals. Trends in the tax and accounting profession, and in society as a whole, increase the urgency for businesses to embrace change.

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Jean Caragher asks: Is the Accounting Profession Setting the Bar Too Low?

She finds an interesting detail in Business Week’s “Best Place to Launch a Career 2009″

At her blog, “What I’ve Learned So Far,” Jean writes:

The Big 4 firms hold the top four spots: Deloitte (1), E&Y (2), PWC (3) and KPMG (4). Grant Thornton (51) and RSM McGladrey (66) also make the list. Kudos to the accounting profession! However, when asked to identify the most desirable trait in new employees the responses were either “College GPA” or “College Major.” Are we setting the bar too low? Companies like General Mills, Nestle, Johnson & Johnson, Marriott, and CIGNA are looking for leadership; Booz Allen Hamilton, Merck, and Walt Disney are looking for communication; and, Wells Fargo, Progressive, Amazon.com, and Prudential are looking for analytical skills. Think of the competitive advantage you could create by expecting more from your recruits than a college degree!

Our webinar on November 10, 1:00 p.m. Eastern, Creating a Great Place to Work, will explore the characteristics of the best companies to work for, what great CPA firms have in common, and hiring/career trends. Register here.

Jean reminds us, “It’s not all about the benefits. It’s about the people.”

Seven Big Ideas for 2009 Year-End Tax Planning

Year-end tax planning is challenging enough in normal times.

by Rick Telberg
At Large

With the wild swings in the markets and in clients’ personal economic lives, CPAs face an especially complex pre-season busy season of consultations. And they need to hurry because some opportunities expire at the end of this month.

The list of tax planning opportunities and complications is a long one this year. We started it last week here in the AICPA Insiders with “CPAs’ Top Year-End Tax Tips for Trying Times.” New ideas and suggestions are still pouring in from tax professionals across the country. Send your ideas here.

“High-net-worth and high-income earners typically find that year-end planning can result in significant tax savings. This is especially so this year,” says Robert Spielman, CPA, LLM, tax partner, Marcum LLP, with offices from New York to Florida. “Many tax benefits are being phased out or disappear in 2010. Also, tax rates may increase in 2010, and no one knows what will happen to the current 15-percent tax rate on qualified dividends and long-term capital gains.”

Today we focus on a few ideas related to IRAs and investment issues. We’re simplifying here for space. So, as every professional knows, you should do your own homework before deploying any of these strategies on your own.

Spielman starts his list of “things to consider” with:

1. Plan ahead to convert IRAs and qualified plans to Roth IRA accounts in 2010. If you believe capital-gains rates are likely to increase, then take such gains now and defer losses to later years when they may become more valuable.

2. Self-employed can create pension plans before year-end. Contributions can be made that reduce 2009 taxable income. Again, if you believe rates are going up, accelerate income into 2009, take out extra retirement plan payments, then fund your plans in 2010 and take deductions at higher effective tax rates.

3. And, be sure to take into account any state tax increases for 2010 as you do your planning.

Patricia A. Thompson, CPA, at Piccerelli, Gilstein & Co., in Providence, R.I., and a member of the AICPA Tax Executive Committee, offers up:

4. Minimum distributions from retirement plans are not required in 2009. Some clients may have received minimum distribution earlier in the year unaware of the elimination of the minimum distribution requirement. Maybe the financial institution had special procedures in place to require the client to take action not to have the minimum distribution for 2009. Clients can rollover into an IRA or other retirement account the minimum distribution received earlier this year. The rollover must be completed by Dec. 1, 2009 (or within 60 days of the receipt of the distribution, whichever is later).

5. Multiple beneficiaries on an IRA may be problematic for the beneficiaries. The minimum distributions are calculated on the life expectancy of the oldest beneficiary. The beneficiaries may not have the same investment philosophy. Beneficiaries may not agree on when to take additional distributions from the IRA. To eliminate these issues the beneficiaries can split up the IRA into separate accounts for each of the beneficiaries. The beneficiaries have until Dec. 31, 2009, to split up an IRA inherited from someone passing away in 2008. The minimum distribution for 2009 is not an issue since there are no required minimum distributions for 2009.

6. For 2010, the $100,000 adjusted gross income (AGI) limit on converting a traditional IRA to a Roth IRA is eliminated. To take advantage of it your client may want to consider making an IRA contribution this year even if you are not able to deduct it. Then next year convert the traditional IRA to a Roth IRA and only pay taxes on the IRA earnings. The taxes on these earnings won’t be taxed until 2011 and 2012 but your client may consider paying the taxes in 2010 while the tax brackets are expected to be lower than in 2011 and beyond.

James Toto, CPA, senior manager, Weiser LLP, with offices in New Jersey and New York, says:

7. IRAs can be powerful planning tools, but the answer is not always the same for everyone. Depending on your income level and age, it may make sense to draw funds from an IRA even if you do not have to or convert to a Roth. If you have a net operating loss (NOL) or no other taxable income, it may make sense to take the money out now, taking advantage of a low or zero tax. Also, 2009 is the last year you can make a Qualified Charitable Distribution.

Copyright 2009 AICPA. Used by permission.

Practice Management: Looking Ahead, Preparing Now

Leaders vs. Laggards and the Seven Keys to Successful CPA Firm Management

Melissa Hoffman Lajara at The New York State Society of CPAs reports in the latest e-zine on my part in last week’s Practice Management Conference:

There are just two types of managers in the world: leaders and laggards, said Rick Telberg, the conference’s luncheon speaker, consultant and former editor-in-chief of Accounting Today.

Leaders “are people who consistently achieve their self-given goals,” Telberg said. “Leadership is an ever-changing thing … [with] adherence to a clear set of values.”

What else do leaders do? Leaders are twice as likely to have management that leads by example, conduct performance reviews that are useful, and hold top management accountable, which Telberg said was exceedingly important. Another sign of good leadership, he said, is continuous and thorough training, with leaders six times more likely to work with the best equipment and software available.

Leaders are also more likely to empower every staff member to “do what it takes to satisfy a client,” monitor client satisfaction, have concrete plans and strategic goals, have a lower turnover rate and have clients who don’t resist fee increases.

In the realm of technology, Telberg said leaders are five times more likely to be “early adopters” of new technologies. “I’m not talking about the ‘bleeding edge’ but the leading edge,” he said. “You have to have the technology in your firm that your kids have, at least.”

By and large, any firm that expects to succeed in spite of changes and obstacles needs to take a leadership approach and “trust that the right activities will yield the right outcomes,” he said.

Thanks again to Phil Whitman and Robert Fligel for the invitation to be part of such a distinguished roster of presenters, and to the great staff at the society for all the hospitality.

AICPA cheers FTC relief on ‘Red Flags’ rule

Exemption sought for CPAs and CPA firms drawn in by billing cycle

via AICPA

The American Institute of Certified Public Accountants said it welcomes the Federal Trade Commission postponement of the Nov. 1 enforcement deadline of the FTC’s Final Rule relating to Identity Theft Red Flags under the Fair and Accurate Credit Transactions Act of 2003.

“The FTC made an appropriate decision in delaying implementation of the Red Flags Rule and we appreciate the commission’s continuing consideration of our request for a CPA exemption,” said Barry Melancon, president and CEO of the AICPA. “We are concerned about the potentially broad application of the Red Flags Rule to the accounting profession.”

The AICPA has requested the FTC consider exempting CPAs and CPA firms from the scope of the rule, or at least exempt the “general account receivables” of CPAs and CPA firms. The Red Flags Rule is designed to help prevent identity theft among credit providers and financial institutions. The rule appears to require that any CPA that defers payments for services rendered, even in the normal course of regular billing, would be covered under the rule and thus required to develop and implement a written identity theft prevention program.

“We do not believe that there is any reasonably foreseeable risk of identity theft when CPA clients are billed for services rendered,” Melancon said. “As trusted advisors, CPAs are personally acquainted with their clients and adhere to strict privacy requirements over identifying information.”

SOX 404(b): A Shot in the Arm, or a Poke in the Behind?

Jim Peterson at re:Balance calls new rules on auditors reports on internal controls trouble for small companies.

He calls it a boondoggle.

Small public companies:  ”Get ready to to bend over and offer a fat and juicy target – to be stuck by a needle-wielding bureaucrat with the fear-inducing cry, “I’m from the SEC, and this shot is for your own good.’ “ via Re:Balance — Jim Peterson.

But you have to remember where Jim is coming from: “Sarbox was never more than a knee-jerk political feel-good exercise – going back to my July 20, 2002 column in theInternational Herald Tribune: ‘any legislation receiving the bipartisan margin of 97-0 is bound to be fundamentally defective.’ “