CPA Trendlines

Economy Weighs on Busy Season Outlook

Still, many CPAs see a better year ahead.

by Rick Telberg

CPAs appear to be headed into Busy Season 2010 with cautious optimism that this year will be better, or at least no worse, than last year’s, when the economy seemed to be careening out of control.

A survey of 151 professionals shows that 38 percent of respondents expect the 2010 busy season to be “better than last year,” compared with 22 percent who are bracing for one “worse than last year.” The rest, 40 percent, expect “about the same” according to the CPA Trendlines poll by Bay Street Group LLC for the AICPA Insider.

Michael Kelfer of Kelfer & Associates in Granada Hills, Calif., may not be typical of every tax practitioner when he reports a surge in referral business buoying his outlook for tax season. Yet, he’s wary. “I think the economy is still suffering and I do not see any relief in the near future.” His strategy is simple: “Service. Service. Service.”

Among those preparing for a more difficult year is Jerry L. Eden, at Eden, Sprowls & Co. in Elk City, Okla., which, he describes as “an area where oil and gas activity dictates revenue.”

Eden’s anxiety and anger surfaces easily when you ask him about the business situation. “The downturn seems to be leveling out, depending on what segment of the business world you’re in.” But he’s “not sure how things can improve substantially if jobs continue to be shifted to foreign countries.” Jerry is going to do what he knows how to do best: Focus on “continued hard work and knowledge.”

At this early stage of planning, it’s clear that the general economic situation tops the list of chief concerns this year, with 62 percent of practitioners mentioning it, followed by late or unprepared clients and getting up-to-date on the new tax issues.

(Source: CPA Trendlines survey by Bay Street Group LLC for the AICPA Insiders)

As uncertain as the economy appears, and as difficult as it may be, accountants remain more optimistic for themselves than the economy-at-large or even some of their own clients. Only 12 percent rate busy season at all positively for the nation’s economy in general, with more than half (54%) expecting further deterioration.  Less than a quarter (19%) see upticks in the next few months for their clients and customers, but more than a third (39%) see declines.

That said, more than one in three (38%) accountants see improvements in their own firms and businesses, while less than one in four (22%) are bracing for tougher times. And, personally, when it comes to their own families and themselves, more than one in four (29%) accountants are optimistic for their economic lives at home, with 23 percent expecting conditions to worsen.

Terence Niewolny of White Bear Lake, Minn., doesn’t claim to be an economist or even to own a crystal ball. But he voices a common opinion when he says, “2010 will be fairly flat,” and the “economy won’t turn around until the second or third quarter of 2011.”

On the other hand, he’s still hoping to get enough business this tax season to put on some additional part time help. Let’s hope he’s wrong about how long it will take the economy to get going and that he’s right about needing more help this tax season.

Copyright 2009 AICPA

Wanna find Freed Maxick CPAs on Twitter?

Just look up… at the billboard. Rush-hour tax tips, anyone?

Interested? Visit FreedMaxick.com. And on Twitter at http://twitter.com/FreedMaxickCPAs.

In a nutshell, Freed Maxick is one of upstate New York’s largest public accounting firms and one of the nation’s 100 largest. They operate as an “alternative practice structure” with RSM McGladrey.

Not shy about marketing, this is a digital billboard, changeable at an instant or on a schedule.

SURVEY RESULTS: What’s hot in CPE?

We’ve been asking here. And your answers kind of look like this:

Tax and IFRS appear to be at the top of most accountants’ CPE schedules this year.

The survey, “What’s on Your CPE Agenda?  How CPAs Are Re-Tooling for Busy Season,” remains open. Join the survey here; get the answers. Or add a comment below.

Meanwhile, here are the verbatims that formed the pictograph above…

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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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