What’s XBRL? Start thinking data, not reports

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XBRL Ficpa May 29 2009

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From Neal Hannon at the Gilbane Group.

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Posted on May 26, 2009
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Tax Season ‘09: CPAs Dodge a Bullet

Economy impacts end-of-season parties.

Are job cuts next? Join the survey; get the answers.

By Rick Telberg

CPAs closed out Tax Season 2009 last week feeling dazed, confused, weary and maybe even a little bit lucky.

Despite a dismal and dismaying economy, most tax practices were apparently bucking the recessionary downdrafts and mostly holding their own or even gaining ground.

So if you’re superstitious, kiss your lucky charm, knock on wood and throw some salt over your shoulder. Most CPAs seem to have dodged the economic bullet - at least for now.

In the last days of Busy Season 2009, 34% of 1,451 accountants surveyed were reporting better business than the year before, with 42% holding steady, and only 23% posting declines, according to the CPA Trendlines straw poll for the AICPA.

The 76% of CPAs reporting business as steady or better represents markedly stronger performance than 2008’s 66% or 2007’s 60% — making 2009 the best year for CPAs since 2006’s 81% net positive rating.

HOW WAS YOUR BUSY SEASON?

WHAT’S NEXT FOR THE PROFESSION IN THIS ECONOMY?

Join the survey; see the results.

(Free. Confidential.)

To be sure, many accountants are worried about their clients and about getting paid. And their busy season is getting longer with an ever-increasing number of extensions.

Furthermore, many firms will be scrambling in the coming days to re-fill a depleted business pipeline for the traditionally slow summer months. But in these recessionary times, CPA firms are generally among the survivors.

Still, CPAs are concerned. And you may be hearing about some significant reductions in force at a few firms whose fortunes are disproportionately tied to especially volatile segments of the economy, such as banking, housing or construction.

“The firm is firing or has fired 15 percent of its professional staff,” according to a senior partner at a major firm, which is forecasting no improvement in the economy until the second quarter of 2010.  “First our customers,” he says, “then our firm, will bounce back.”

At another firm — a mid-sized one — they hired additional staff going into busy season, according to a high-level partner, “which reduced workload and stress.”

“Now,” he adds, “we have to figure out what to do with everyone during the summer months.” He’s expecting some “slight” staff reductions and an intense drive “to replace lost revenue due to the economy.”

At a smaller mid-sized firm, they’re feeling the repercussions of their clients’ problems. “Clients were much more apprehensive about the economy” this year, according to one partner. And it’s easy to understand why when he adds, “We are seeing a 7 to 8 percent drop in revenue for our clients.”

Nevertheless, CPA firms are coming out of busy season relatively strong. The recession may have hit hardest during the accounting busy season, softening the blow. The vast majority of CPA firms are expecting to weather the recession intact and unmarred.

“The economic climate is rough and people are not happy,” says a senior staffer at a regional firm. But the “forecast is for slight improvement” with “no additional hiring.”

At Dauby O’Connor & Zaleski CPAs in Indianapolis, partner Ted Zaleski reports, “We expect to expand and add staff.”

Staying productive and positive may have been one of the biggest personal challenges through a tumultuous tax season.

But for Rich Levy at Levy & Associates in Fairfax, Va., his feelings of grace and gratitude come daily. “My office is upstairs from a kidney dialysis franchise,” he says. “It’s easy to stay positive when you see real adversity on a daily basis.”

NEXT QUESTION: Now that tax season is over, what’s next for accountants in this economy? Join the poll; get the answers.

Comments: Questions, ideas, rants or raves? Send email to Rick Telberg here.

Get my daily updates: Follow me on Twitter. (What’s Twitter?)

Posted on April 20, 2009
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Obama team’s tax problems: So who’s perfect?

And what are the lessons for CPAs?

Nellen

“These problems raise the question as to whether return preparers are asking the right questions and seeking sufficient documentation,” according to Prof. Annette Nellen in this week’s AICPA Tax Insider.

Nellen groups the tax errors into five main categories:

  1. Overlooked income, such as due to a missing 1099 or income not reported on a Form W-2 or 1099.
  2. Missing documentation, such as for charitable contributions or entertainment expenses.
  3. Lack of preciseness in the law, such as how to allocate tax preparation fees between Schedule A and Schedule C or E.
  4. Insufficient research, such as misclassifying overnight camp expenses as qualifying for the dependent care credit or not reporting income donated to charity.
  5. Insufficient attention to other taxes, such as employment taxes on household help.

She wonders:

Talk in the press and on blogs questioned whether the tax problems were just a sign of tax law complexity. Arguably, some errors, such as overlooking a Form 1099, are not due to the complexity of the law, but perhaps to complexity of one’s work situation. Some errors, such as inadequate documentation for charitable contributions or thinking that both overnight and day camp qualify for the dependent care credit, are due to complexity. However, additional research, time and attention might have caught these errors prior to filing. But, how much time is needed to generate an error-free return and is such a goal achievable?

And she offers suggestions for avoiding errors:

For example:
– Employment: Typically, employees are paid a cash salary and fringe benefits such as health care. If you received anything else from your employer, please let us know.
– Income: Most individuals receive income in the form of wages, interest and dividends. If you received any other types of payments, such as from consulting, speeches, odd jobs, online sales, auctions, or gambling, please let us know.

So, how many of your clients could stand a Congressional review?

Full article here.

Posted on April 9, 2009
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AICPA, Intacct Deal Could Bring Cloud Computing Down to Earth for CPAs

Venture gives Intacct access to millions of small and mid-sized businesses through CPA channel.

Cloud computing, software-as-a-service, or web-based software — whatever you call it — has long been evolving as the next step beyond CD platters, downloads and endless versioning. With the AICPA deal, Intacct (a dramatic business story in it’s own right) may get the push it needs to challenge Intuit, Sage or Microsoft among small and medium-sized businesses.

But more than that, the AICPA’s imprimatur on a SaaS model could well accelerate adoption of the delivery method, overcoming a common stumbling block — the reluctance of CPAs to be pioneers. With the AICPA behind them, CPAs need no longer feel like trail-blazers in adopting and recommending cloud computing.

Here’s the full news release: Read more

Posted on April 7, 2009
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Kennedy & Coe moves to “value” billing

Top 100 firm “inspired” by Ron Baker.

Over the past year, the Wichita-based CPA firm has been moving to a new revenue model it calls “value creation.”

“When you talk about pricing you ought to be talking about value,” CEO Kurt Siemers tells the Wichita Eagle. “Pricing is really driven by what the customer thinks (a service) is worth.”

Highlights:

The value creation agreement process starts when Kennedy and Coe has its meetings with clients to determine what services they need for the coming year. Those meetings lead to a value creation agreement, which lays out the services and payment terms for the year.

Siemers

Siemers said prices for services are determined in part from the client’s “expected value” of the service.

“It’s a pricing model that understands that value in the client’s eyes,” he said.

As a rule, he said, Kennedy and Coe is not generating any more or any less money from these agreements than it was using the billable hours model.

“From a client’s perspective it’s much more accepted,” he said of the agreements.

He said that if, in the course of the year, the need for additional services or another project arises, then the client and Kennedy and Coe get together to develop a change order to account for the extra work.

He said fewer than 25 percent of Kennedy and Coe’s clients are operating under a value creation agreement.

But he hopes to have converted all of its clients to the agreement by March 31. “The realist in me says it might be June or September (2010),” Siemers said.

Original here.

Posted on April 4, 2009
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Why Your Clients Need Your Optimism

As many busy season clients - individual and corporate alike - get hammered by a crashing economy and uncertain business conditions, CPAs are doing their best to help.

by Rick Telberg

“Clients are overwhelmed by the current state of the economy, imploding asset values and credit issues,” according to Daniel J. Domancich, a CPA and CFP in Huntington Beach, Calif. The best you can do, he advises other CPAs, is: “Stay positive.”

“Make sure you are adding value to your services,” Domancich says, “by offering personal, attentive, proactive and knowledgeable services.”

Read more

Posted on April 1, 2009
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11 Questions to Ask BEFORE Buying into an Accounting Practice

Whether you’re looking to grow your own practice or take a stake as a partner in the practice where you already work, a few key questions need to be asked, answered and considered.

And, as this list from a U.K. consultant proves, the basic economics of an accounting practice are well nigh universal.

So, whether you’re buying or selling, ask…

What services does any practice offer? In seeking to place a value on the goodwill of an accounting firm it is useful to look not just at its historic and projected performance, but also at its potential. Some key questions to consider are:

  1. Does it provide more than just a compliance service to its clients?
  2. Could it supply value added services?
  3. Could it get involved in the needs of its clients for investment, pensions, life insurance, mortgages, the inheritance tax planning sector, probate, litigation support and management accounting services, and of course, business advice?
  4. Rather than simply trying to protect its clients against paying too much tax, are they advised on how to make money?
  5. Is the business profitable?
  6. Looking inwards, what is the firm’s gross payroll cost? Is it more than one third of the turnover?
  7. Are the employees remunerated in line with the local competition?
  8. Do the key fee-earners have suitable restrictive covenants in their contracts of employment?
  9. Are the premises owned or rented? (If the answer is the latter, is there a heavy contingent liability in the lease?)
  10. What is the firm’s working capital requirement?
  11. Is the business managing its debt efficiently? The amount of working capital tied up in debtors is critical to most practices. It has a direct impact on cash flow and the overall level of funding required. Many firms are extremely lax and the level of debt within the average practice is far too high.

And, by the way, the going rate in the U.K. is much the same as in the U.S. — 0.9 to 1.2 times annual revenue (or “turnover” as they say there).

Source: Jeremy Kitchin – APMA


Posted on March 30, 2009
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SURVEY RESULTS: Tax Season Workflow Trends Show Improvement

Most tax professionals are having at least as good or better season this year. But the economy threatens fees and collections.

Join the survey; get the updates.

The latest data show for the week ended March 15, 34% of practitioners report the season is running “better” than last year’s season, up from 25% in the previous week, ended March 8.

Meanwhile, the number reporting “worse” conditions dropped to 21% from 27%. And the “about the same” has remained, well, about  the same.

(Week ended March 15 2009)

Economic problems seem to be characterizing Tax Season 2009, with about 73% of accountants now calling it a real challenge, compared to about 62% a month ago.

Clearly, accountants are more worried about matching last year’s revenues and profits — and, to an extent, to getting paid at all.

And that’s borne out in the comments. A sampling:

What’s different about this year?
(sample verbatim)

Leave your comment below. Then: Join the survey; get the updates.

Related posts:

[Research by Bay Street Group LLC. Data Copyright AICPA 2009.]

Posted on March 15, 2009
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Congress Can’t Handle the Truth in Accounting

Can you handle the truth? Reps. Ed Perlmutter (D-CO) and Frank Lucas (R-OK) apparently cannot.

They are proposing in HR 1349 to create the Federal Accounting Oversight Board to supposedly ease the economic downturn. In fact, says Ed Ketz at SmartPros, ” Its real purpose is to halt accounting truth-telling via fair value accounting.”

Ketz

The legislation, Ketz says, “would condone lying in accounting reports so that investors would feel gleeful about companies and bid up the stock prices to produce healthier stock markets.” Ketz says:

The bill not only would create this new oversight board (FAOB), but also it would instruct the FAOB to “look beyond current accounting standards and balance sheets to consider broad national and international financial markets and economic conditions when applying GAAP.”  The authors claim that only FASB can create GAAP, but the bill would create an “environment where FASB will have the tools and flexibility it needs to adjust GAAP for future economic conditions.”

The premise behind the bill is incorrect.  The Representatives, who know little about accounting, believe that the current economic mess is being hindered by the use of fair value accounting.  They have listened to bankers who continue their propaganda effort in order to get the media focus off their greed and ineptness and, in some cases, criminal behavior.  Bank managers are the main culprits of this recession because they loaned money to those who could not repay it, they created derivatives they themselves did not understand, they organized special purpose entities to keep as much debt off the balance sheets as possible and lie about their financial leverage to investors, and they provided insufficient and late disclosures about their problems.  Why do the Representatives not put the blame where it belongs and try to reduce foolishness and criminal activities by bank managers?

The bill is misguided in two fundamental ways.  First, it would decrease the power of the SEC in its oversight responsibilities.  Second, it would allow Washington politicians to twist and bend accounting pronouncements in an effort to improve macroeconomic conditions.

J. Edward Ketz is accounting professor at The Pennsylvania State University. Dr. Ketz’s teaching and research interests focus on financial accounting, accounting information systems, and accounting ethics. He is the author of Hidden Financial Risk, which explores the causes of recent accounting scandals. He also has edited Accounting Ethics, a four-volume set that explores ethical thought in accounting since the Great Depression and across several countries. He is the co-author of a monograph, Fair Value Measurements: Valuation Principles and Auditing Techniques (with Mark Zyla, Managing Director, Acuitas, Inc.) published by BNA in 2007.

Visit Smartpros

Posted on March 10, 2009
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How to Control Duplicate Payments

In today’s paperless world, it’s tougher to keep track.

Accounts payable guru Mary Schaeffer tells AICPA Insider readers:

With all the new payment and invoice delivery options now available, every CPA firm needs to be concerned about:

  1. Payments being made twice using two different payment types;
  2. Professionals in multiple departments making payments and not using rigid standards to avoid duplicate payments;
  3. Unscrupulous employees or vendors taking advantage of increased “opportunities” to hide a duplicate payment and enriching themselves at your organization’s expense.

See original.

Posted on March 7, 2009
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BLS: Accounting Loses 2,400 Jobs in February

Accounting and bookkeeping services down about 2.6%, month-to-month, seasonally adjusted.

According to this morning’s report from the Bureau of Labor Statistics, there were 920,800 people employed in the industry in February, down 2,400 jobs from 923,200 in January.

Click to enlarge

Click to enlarge

Without seasonal adjustments, the number of accounting jobs in February was 1.063 million, down from 1.099 million in February 2008, a drop of about 3.3%.

Relatively speaking, accounting and bookkeeping are holding up well, compared to the rest of the economy.

BLS said:

Overall employment in professional and business services fell by 180,000 in February. The temporary help industry lost 78,000 jobs over the month. Since December 2007, temporary help employment has declined by 686,000, or 27 percent. In February, job declines also occurred in services to buildings and dwellings (-17,000), architectural and engineering services (-16,000), and business support services (-12,000).

and

Nonfarm payroll employment continued to fall sharply in February (-651,000), and the unemployment rate rose from 7.6 to 8.1 percent. Payroll employment has declined by 2.6 million in the past 4 months. In February, job losses were large and widespread across nearly all major industry sectors

DOWNLOAD the full BLS news release (PDF, 30 pages).

Posted on March 6, 2009
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How Much Liability Is Lurking in Your Email?

E-mail is a double-edged sword, says Camico VP Christopher Piety.

via CalCPA

“While e-mail can serve as an excellent documentation tool,” says Piety, “it is prone to informal, unprofessional or inappropriate messages.”

A personal comment about someone can damage your credibility and undermine a legal defense. And e-mail can never be completely deleted.

Piety’s four rules for safe e-mailing:

  1. Document only facts, avoid speculation and refrain from comments on personalities or performance issues. Remember that nothing is “off the record.”
  2. Only maintain the final version of a tax return or other work product.
  3. Document contemporaneously. If you keep documentation notepads by every telephone, the process becomes a reflex action when the phone rings. Include the dates and times on telephone notes. Phone company records can corroborate these if they are disputed in a claim.
  4. Always document significant communications and follow up. Every client contact that is important can be used for or against a CPA, so it’s essential that all contacts are documented in a detailed manner. Follow-up communications are especially important when there is a change in the scope of an engagement; negative knowledge (e.g., the tax return is already late); a material action to be taken by the client; and a judgment call (e.g., the client has been informed of and has consented to a tax position).

There’s more in Preventing Liability Claims.

Posted on March 5, 2009
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How Business CPAs Are Battling a Tough Economy

What are CPAs doing to cope with recession? Join the survey; get the answers.

By Rick Telberg/For the Finance Executive

CPAs in corporate finance are bravely battling one of their most difficult busy seasons in memory.

At a time when they should be concerned with year-end closes, annual audits and developing next year’s budgets, they are, instead, beset by crumbling revenues, rising costs and mind-boggling uncertainties.

In fact, the general economic situation is a top problem for 75% of the business-and-industry CPAs, according to my research for the AICPA. Tax code changes are running a distant second as a concern, followed by late K1’s and 1099’s and late-breaking changes in audit and accounting rules.

HOW’S YOUR BUSY SEASON SO FAR?

Join the survey; compare results with your peers.

(Free. Confidential.)

“Less staff due to reduction in workforce,” according to the CFO at a small company that builds resort properties, is making it harder to get all the required work done.

Read more

Posted on March 5, 2009
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