Sunday, February 27, 2005
STUDY PREVIEW: Identifying Key Staff Issues
Good management starts with accepting responsibility and giving credit where credit is due, according to the top-line results of our latest study.
In as competitive a job market as today’s — where accountants and financial managers are in a seller’s market — companies and firms should take heed. As they say, your assets walk out the door every night. Here are some clues to what keeps them coming back tomorrow.
How well is your organization handling these staff issues?
(Great, OK or Not at All?)
1. Making sure employees know they’re important. Staff knows they play a vital role in the company’s success. Staff knows company couldn’t achieve its goals without them doing what they do every day.
Great: 23%
OK: 52%
Not at All: 25%
2. Management encourages loyalty through appreciation. Your employer shows gratitude, gives credit for extra effort sounds like a little thing, but demonstrating appreciation for discretionary effort motivates people to continue performing at high levels.
Great: 20%
OK: 47%
Not at All: 32%
3. Provides you with the support and resources they need to achieve their goals. Management asks, “Do you have what you need to get the job done? What else can we do to make your job better?”
Great: 26%
OK: 47%
Not at All: 28%
4. Company makes people feel rewarded in a way that goes beyond compensation and benefits. Top performers look forward to being given challenging, significant assignments.
Great: 21%
OK: 50%
Not at All: 29%
5. Management understands the crucial importance of giving credit and accepting blame. If a company achieves its objectives, it’s because its employees performed well. If the goal is missed, it’s often because the leader didn’t align employees with the objectives, didn’t equip them properly, or didn’t provide the resources necessary for them to get the job done.
Great: 17%
OK: 52%
Not at All: 32%
6. Top staff helps employees achieve a sense of accomplishment. They communicate the importance of what workers have achieved so they know they’re making a difference.
Great: 18%
OK: 52%
Not at All: 30%
Friday, February 25, 2005
CAREERS & MANAGEMENT:
How Does YOUR Raise Rate?
Most say: Expect about the same as last year. But what does it take to earn more?
by Rick Telberg
At Large
Accountants are only slightly optimistic about an improvement in income this year, and most say it’s their organization’s performance, not their personal performance, that will primarily determine any change in income.
Sixty-three percent of our respondents said they expect raises at their organization to be about the same as last year. Eighteen percent expect more; 19 percent expect less.
With cautious optimism, most see raises exceeding inflation by a bit.
The biggest single group – 37 percent of all respondents – expects raises to average a modest three percent. Another 12 percent expect raises of one to two percent. And five percent expect no raises at all at their company.
But on the upside, about 31 percent are looking at raises of five or six percent and another 16 percent are forecasting seven percent or more.
Half the respondents expect their own raises to be about the same as everyone else’s. An optimistic 37 percent think they’ll get more than their colleagues, but 13 percent think they’ll get less.
Responses to an open-ended question about key factors that might affect one’s income showed that the health of CPAs own organizations was perceived by far as the most prominent. Over half the respondents mentioned it. Several summarized it in two words: “Company performance.” And just as many said, “Company profits.”
A senior partner at a small accounting firm reflected a common concern with internal and external factors: “Condition of the agricultural economy, costs of upgrading to a paperless office.”
Personal performance ran a distant second behind economic factors. Half as many mentioned it, though most also referred to business performance. Words like “billable hours,” “chargeability” and “collectability” came up a lot.
A staff member in a medium-sized company expressed a common combination of factors: “Accounting group’s overall contribution to the company’s bottom line and my own individual value.”
Sarbanes-Oxley and new technology came up often. “Billable hours, technical knowledge, understanding of integrated audit methodology, SOX 404 experience,” said one staff member of a large CPA firm.
Competition came up, too. In some cases, it was salary competing with the cost of technology. In other cases, it was the organization’s competition for qualified staff, which meant less money available for raises.
Quite a few times the big bad boss was mentioned or implied, rarely without a note of cynicism. A rather well-paid CFO in a small, privately owned company, said the factor affecting his income was “Amount of my raise, which I have always had to ask for in order to get.”
Other factors mentioned included “politics,” “mood,” “greed,” “face time” and “glass ceiling.”
But apparently the bosses have their own problems. One staff member at a small firm saw his income dictated by the “ability of the firm to absorb increases in health insurance premiums,” adding, “Generally, premium increases have resulted in reduced salary increases.”
Health insurance was the most commonly cited cost factor, but there was broad concern for generally meeting budgets.
Raises may indeed reflect performance, but that means economic performance as well as personal.
Thursday, February 24, 2005
BOOMERS, X-ERS AND Y’S:
CPA Generation Gap Is Real
” ‘Old school’ partners think you should be at the office all the time because that’s how they made it.”
by Rick Telberg
for Career Insider
It’s well established that there are distinctly different personal preferences and work habits among the four generations in the workplace.
For instance, as we reported in “What Your Workforce Really Wants,” the generations fall into a few basic categories: the so-called Mature generation, born before 1946; Baby Boomers, born between 1946 and 1964; Generation X, born between 1965 and 1980; and Generation Y, born after 1980.
Indeed, a study by the Society for Human Resource Management found that 58 percent of human resource professionals have observed conflict among employees as a result of “generational” differences in their organizations.
We wondered: Could such a generation gap exist within the CPA profession, and if so, how does it affect the delivery of services? To find out how CPAs feel about an issue that is simmering or perhaps already boiling over in many work environments, we surveyed our readers.
With the 51 percent responding from public accounting and 40 percent from business or industry, we found an overwhelming “Yes!”
” ‘Old school’ partners think you should be at the office all the time because that’s how they made it,” said one Gen-X-er (25 to 40 years old), a male staffer at a local CPA firm.
In fact, 86 percent of the CPAs say they believe there is a generation gap in the profession.
“I work part-time in a CPA firm but I’m not the standard. As I think of the people at my office and other friends and peers, I agree that there is a generation gap,” said Diana M. Torres Cancel, a senior staffer at a larger local CPA firm in Trujillo Alto, PR.
Among the 14 percent who reported they did not believe there was a gap, well over half were from business or industry. Hardly anyone from public accounting reported seeing no gap.
“As a Boomer,” said a female middle manager in a medium-sized business, “I definitely feel there is a different expectation of jobs/careers by younger generations. Younger CPAs expect to change jobs numerous times (seem to me to be ‘trying out’ different jobs/lines). I’m considered a dinosaur or fixed asset because I found my niche as an internal auditor and have been given opportunities for growth as my company as grown. (I’ve been with the same employer for 24 years and still like it).”
Interestingly, the percentage of chief executives and managing partners who say they see no evidence of a gap slightly exceeds the overall percentage. Approximately the same number of Baby Boomers as Generation X-ers reported seeing no gap: 48 percent are Generation X-ers, 47 percent are Boomers, 13 percent fall in the Mature category, and just 1 percent come from Generation Y. The survey was gender neutral, with 53 percent of the responses from women.
CPAs from all generations differed on the level of value that each generation brings to the workplace. While several Boomer CPAs surveyed complained that Generation X and Y-ers put a lower priority on work and ethics than do the older generations, other Boomers marvel at the advanced technology skills and greater willingness to look for new opportunity that the younger generations bring to the job.
Some of the Gen X-ers surveyed acknowledged that they may not focus on work as intensely as their elders but, perhaps as their backlash to being raised by work-obsessed parents, the Gen X-ers also noted they can instead pay more attention to their families. One noted that his generation was raised to be “more choosy,” which can boil down to being positive for work because it makes them better able to choose what’s right for them and for their employers.
While it would be foolish to even ponder if there is a “Greatest Generation” among CPAs, understanding the differences among the generations is a first step to bridging any gaps.
Wednesday, February 23, 2005
CAREER ADVISER:
Accounting among Top 10 Jobs in Turnover.
Accounting is No. 6 on the Top 10. Here’s why…
CPAs are in high demand and feeling confident about changing jobs, especially if they have SarBox or 404 skills.
What do they want? Simple: Higher salaries and better work arrangements elsewhere.
Of course, some accounting firms have high turnover by design through internship programs for entry-level investment bankers and management consultants, Bill Coleman, senior vice president of compensation at Salary.com tells Marketwatch.
“They like young, smart people,” he said. “They work them to death and in exchange you get the credential of working there for two years.”
But some consultants further into their careers find the expectations difficult to manage long-term and head for the door, says John Challenger, chief executive of outplacement firm Challenger, Gray & Christmas. “There’s a lot of burnout in consulting when you have to travel five days a week.”
Here’s the full list of the top 10 highest turnover jobs:
1. Fast-food workers
2. Low-level retail jobs
3. Meter readers
4. Nurses
5. Child-care workers
6. Accountants, consultants and auditors
7. Telemarketing and customer-service representatives
8. Movie-theater employees
9. Hotel and restaurant workers
10. Sales people
Well, at least movie-theater employees get free popcorn.
Monday, February 21, 2005
SMALL BUSINESS:
Washington Tinkering Could Hurt Some
And you thought the Small Business Administration was supposed to be fighting for the little guy.
But with half it’s budget slashed in the last four years, the SBA is under pressure to streamline.
So one way to scale the job to the resources seems to be to simply say there are fewer small small business in the U.S. than we thought.
A year ago, the SBA proposed changing from revenue-based standards to measuring firms from 50 to 1,500 employees. About half of the 4,500 comments the agency received on the proposal were opposed to it, and the effort was abandoned.
But it’s back. And some small business lobbyists are up in arms. Under last year’s proposal, 34,100 new small businesses would have lost their small-business designation.
“Instead of bidding against 50 companies, I may be bidding against 300 companies. It’s always harder when you have to compete with large companies,” Annetta Vickers, owner of TAB Co. Inc. told the St. Louis Post-Dispatch.
It may be up to Congress to stop it from happening.
To Comment, E-mail: restructure.sizestandards@sba.gov
Include “RIN 3245-AF22” in the subject line of the message.
TAX SEASON PRO BONO:
Wipfli CPAs Give Free Tax Services to Returning Soldiers
Gail Jackson, a senior marketing coordinator with Wipfli in Wausau, Wisc., said the firm decided a few weeks ago to help the soldiers out of gratitude for their service. And help they will.
Jackson said the firm has uncovered a number of tax breaks for soldiers. “When all these tax breaks are available, you really want to make sure these things are taken care of,” she said.
The first to take advantage of the offer, Sgt. 1st Class Luke Leslie, lived in Iraq — a tax-free zone — for 10 months in 2004, so he does not expect to get much, if any, money back in the form of a tax return. But while he was away, his wife returned to school and worked a part-time job, so he hopes there are tax breaks for returning adult students.
COMMENT: Three cheers for Wipfli. But it seems to some of us that this country owes more to Iraq vets than a free tax return. Don’t you think?
posted by rt at Monday, February 21, 2005 0 comments
Saturday, February 19, 2005
SELF-ASSESSMENT: Are You Asking the Right Questions?
If you don’t ask the right questions, you can’t get the right answers.
by Rick Telberg
At Large
Questions are the lifeblood of consultative selling. By asking the right ones, savvy CPAs can discern operational and finance problems that their clients or their employers in business and industry are not aware of themselves and can step forward with solutions before the problems cause damage.
But what if CPAs asked themselves the same kinds of questions? Would they find that their businesses and finances are better or worse off than they suspect?
In a rare CPA self-assessment, we asked our readers to answer a list of client questions compiled in a program designed specifically for accountants by consultative selling authority Paul Dunn. Paul is well known for Results Accountant Systems and now providing services to CPAs with Shannon Vincent through a firm called The ReNew Group. We launched the study from the recent column “What You Don’t Know Could Hurt You.”
Our sample for the study includes more than half from small businesses with ten or fewer people; 32 percent from organizations of 11 to 50 or 51 to 100, with the remainder from larger organizations. Chief executives and managing or senior partners accounted for 74 percent of the responses.
The sad fact of the study: CPAs could definitely use some consulting services.
Surprisingly, only 28 percent of CPAs surveyed are very confident about the quality of the management information from their systems. About 51 percent reported being somewhat satisfied.
Among the more than 20 new consultative questions that the respondents devised for what CPAs should ask of themselves and their clients, here are some examples: “How happy is your staff with their jobs?” and “How happy are you with your staff?” Also, “How often do you talk with your clients?” and “In striving to create value for stakeholders, have you seriously considered obligations to create or preserve nonmonetary value to society?”
As might be expected, 73 percent are very confident about the completeness of their personal tax returns, and 74 percent said that they prepare and review their own financial statements somewhat or very frequently.
Financial planners take note: Only 16 percent of the CPAs surveyed are very confident about their own retirement planning, and just 18 percent give the highest grade to their personal investment plans.
On the management advisory services side, just 14 percent of the CPAs surveyed have carried out a financial modeling exercise with “what if” scenarios for their companies very recently. Some 23 percent have not done one at all. And 24 percent don’t know or don’t have an opinion on the topic.
And yet, CPAs are confident about what they do. Are they fooling themselves?
Asked to describe their confidence in their ability to clearly explain in 30 seconds or less what they do, 77 percent said “very” or “somewhat.” About 76 percent are happy with how well their businesses have lived up to their expectations.
Questions are not only the lifeblood of consultative selling, but they are vital to successful business in general and to rewarding relationships.
CPAs are learning all they can about posing questions in a consultative manner to their clients and employers. But are they asking themselves the right questions often enough?
Of course, At Large readers had some questions they’d add to the short list we provided. Some of them may make you stop and think.
— “Are you excited about going to work every morning?”– a managing partner at a small CPA firm.
— “Do you know what your clients expect of you?” — a senior partner at a local firm.
— “Do you run your business or does your business run you?” — Robert D. Blumberg, managing partner, local firm, Cary, Ill.
— How balanced is your life between family, work, and community?” — C. Richard Sarle, chief executive of a large not-for-profit in Belle Mead, N.J.
— “What business are you in?” — managing partner of a local CPA firm.
— “What wakes you up at 3 a.m.?” — senior partner at a large CPA firm.
Friday, February 18, 2005
ECONOMIC PULSE: Small Business Optimism Growing for 2005
Small business owners are doing something unusual this year — smiling.
Intuit, the accounting software maker, says a new survey shows 57 percent of small business are optimistic about the overall business outlook for the 2005.
With this optimism comes a focus on growth, says Intuit. The survey found that 34 percent of small business owners are focused on actively growing their businesses this year. And about 69 percent say they would encourage others to start small businesses at this time.
When asked about how they would invest to achieve growth:
— 39 percent reported purchasing new software and equipment,
— 27 percent said marketing programs, and
— 11 percent cited adding new employees.
Thirty-one percent cited the economy as the top issue facing small businesses this year — down from the 36 percent that reported concern in 2004.
Source: www.intuit.com
Wednesday, February 16, 2005
ECONOMIC PULSE: How Bad Was ’04, Really?
Wages Fell, Job Growth Lagged, and Unemployment Spells Remained Long
The labor market may have showed some signs of improvement in 2004. For instance: Job growth that occurred in every month of the year — first time since 2000. And the unemployment rate fell about 6% in 2003 to about 5.5%.
On the other hand, several other indicators and comparisons depict a labor market that remains distinctly weak, according to the washington-based Economic Policy Institute.
The EPI Report:
Among nearly all groups of workers, wages fell, relative to inflation.
Inflation-adjusted wages grew throughout the recession of 2001 and the jobless recovery that followed. However, by 2003, the persistently weak job market began to take its toll on wage growth, and last year the hourly wages of most workers either remained flat or dropped relative to inflation.
This period also represented a return to growing wage inequality, as wages grew faster among workers at the top of the wage spectrum than among other workers.
For example, among men, the hourly earnings of the worker right in the middle of the wage spectrum was essentially the same in 2004 as in 2000 (down 0.2 percent), while hourly earnings rose 7.7 percent for the worker at the 95th percentile (five percent of workers have wages higher than this worker, 95 percent have wages lower than this worker).
Further, from 2003 to 2004, the only education group that experienced wage gains was the group where workers had been to graduate school. All other groups ? workers with less than a high school education, with a high school education, with some college, or with a college degree ? experienced either flat or falling wages.
Over the course of 2004, job growth fell 1.4 million short of the amount that would be typical for a recovery. Since the end of World War II, at this stage of the recovery job growth has typically occurred at a pace that would generate about 300,000 jobs a month.
This is the same benchmark that was used when, in early 2004, the Bush Administration forecast that 3.6 million jobs would be created from December 2003 to December 2004.The 2.2 million jobs created in 2004 thus fell 1.4 million ? or nearly 40 percent ? short of the level typically experienced at this stage of a recovery.
This shortfall indicates that the drop in the unemployment rate thus did not reflect robust job growth. Instead, it reflected an unusually slow pace of labor force growth. In 2004, the labor force grew more slowly than it had in 13 years.
Due to the relatively modest amount of job creation, long-term unemployment levels remained exceptionally high, with the number of unemployed individuals exhausting their regular state, unemployment benefits and not receiving additional aid hitting a record level of 3.5 million. Though long-term unemployment began to trend down somewhat in 2004 its level continued to be high.
There were more than twice as many long-term unemployed ? unemployed individuals who have been seeking a job for at least a half a year ? in December 2004 as in March 2001, when the downturn began. The long-term unemployed have been more than one in five of the unemployed for 27 straight months, an unprecedented development in the post-WWII period.Also, in 2004, some 3.5 million individuals used up all their regular unemployment benefits before they found a new job, and did not qualify for additional federal aid.
For some period of time, they thus went without either a paycheck or an unemployment check. This level of unmet need was larger than during any other year on record, with data going back to 1973. It suggests that the temporary federal unemployment benefits program ? which provided aid to workers who have exhausted their regular, state benefits ? was ended too soon (the program quit providing aid to new exhaustees as of the end of December 2003).
Tuesday, February 15, 2005
AUDITS: 1 in 4 Companies Switch
2,514 changes reported over the past two years
That’s about one-fourth of all U.S. publicly traded companies.
More than 1,600 companies changed their outside accounting firm in 2004, up 78 percent from 2003, reported proxy research firm Glass Lewis & Co.
Smaller businesses were more likely to changes auditors. According to the study, 85 percent of the companies that did so rang up $100 million or less in revenues last year.
The most common reasons that companies switched auditors:
— Audit firms discontinuing public-client work because of extra regulatory demands;
— Corporate mergers; and
— Lower fees at the new firm.
Only 19 companies last year, versus 27 a year earlier, switched auditors because of disagreements over accounting matters.
The increased changes are “inconsistent with the arguments put forth in the past by the accounting firms, that changing auditors reduced audit quality,” a Glass Lewis analyst said.
The biggest beneficiaries are the second-tier audit firms, which got a net gain of 117 clients last year.
The Big Four netted a loss of 400, 200 from Ernst alone.
BDO Seidman picked up the most new clients, 109.
And 61 companies changed auditors at least twice last year; most had less than $25 million in revenue. The report explained it as “opinion shopping.”
Saturday, February 12, 2005
TECH TRENDS: You Can Run, But You Can’t Hide
Financial managers and CPAs are uniquely equipped to take the lead in tech trends. They don’t at their own peril.
by Rick Telberg
At Large
The evolution of the Internet is making technology an even larger factor in the CPA profession in 2005. So much so that firms that do not respond to the newest Web trends risk losing business.
Financial managers, practitioners, vendors, academics and consultants responding to our survey (launched with an interview with AICPA Chair Bob Bunting) about the New Year show that advanced Internet technologies are driving the following trends:
More direct communications between vendors and suppliers, companies and customers, and practitioners and clients.
The weeding out of fraud in financial reporting.
Improved marketing to the point that the technology itself generates new business.
“As clients become more and more comfortable with Web-based banking, brokerage (and other services), they will naturally begin to expect similar services from their accountants,” said Greg LaFollette, executive editor of CPA Technology Advisor magazine and president of the consulting firm Accounting Technology Resource Network.
“Internet savvy and connectivity will be the rainmakers of the 2000s,” LaFollette noted.
He particularly advised practitioners to become familiar with instant messenger (IM) technology, which enables parties to correspond real-time in e-mail, so e-mail dialogue is more like a telephone conversation than a letter. It accelerates communication from hours or days to minutes or seconds.
Bruce Clark, chief executive of New Clients Inc., a Mullica Hill, N.J.-based provider of marketing services, says that some smart firms are already utilizing Internet-based media such as interactive Web sites, e-mail marketing, electronic newsletters, “e-advertorials” and Web-based seminars, while others are learning about cross-marketing and bundling techniques.
Barry J. Friedman, chief executive of BizActions, a Potomac, Md.-based developer and manager of newsletters for professional services firms, foresees a re-emergence of push technology that enables information to download directly to someone’s desktop and bypass e-mail. For CPAs, this could be used to distribute newsletters and financial reports.
Technology market analysts Aberdeen Group support Friedman’s expectation, noting that the clogging of e-mail systems will add demand for push technology in more industries than just accounting.
Dana R. Hermanson, accounting professor at Kennesaw State University in Kennesaw, Ga., is hopeful that accounting fraud will be significantly contained as the Internet allows software developers to create systems that provide for real-time financial reporting. He noted that he is advising the developer of a “continuous monitoring software” designed specifically to detect fraud and other misstatements in financial reports.
When it comes to fraud prevention and technology, there is much to keep up with. A Google search for auditing software turns up 47,000 links, and a search for fraud prevention turns up almost 1 million.
While vendors are developing new and more sophisticated systems every day, accounting and finance professionals must also be ready to cope with some vendors’ plans to simplify their existing software products in 2005.
“Our expectation is that the year ahead will be about simplifying the lives of accountants and their clients,” said Richard Walker, director of accountant and advisor relations for QuickBooks developer Inuit Inc. “Technology has over the past few years created some of the exact problems that it was trying to solve — to help users be more productive by performing complex tasks quickly and easily.”
CPAs, anxious to cash in on an expected boom in business, are waiting and trying to keep up-to-date with the ongoing technology advancements. Said Charles Larson, CPA, of St. Joseph, Mo., “This is a year that I am focusing on re-looking at options in technology to see if there is any way to further upgrade or re-think my approach to any activity. I will be looking especially close at communications as an opportunity.”
Friday, February 11, 2005
SELLING & RAINMAKING: What Is a ‘Buying Mood’?
Creating the right atmosphere can have a profound effect on clients and prospects.
Think about it: When you go into a retail store, what are you expecting? Welcome signs? Clean floors? Upbeat music? Special deals? Happy, knowledgeable employees? The right selection of merchandise, that’s also easy to find?
In professional services or business-to-business sales, clients and prospects have expectations too.
How many of these items are you providing?
— Client service people with a “yes” attitude.
— The right words to use in a professional greeting.
— Refraining from ?selling.? Instead, solve problems.
— Employees who tell the truth, even if it costs a sale.
— Clean rest rooms.
— Welcome sign with the visitor?s name on it.
— Tour the office and introduce them to the people they?ll be dealing with after they sign on.
— Superior food and drink.
Thursday, February 10, 2005
CPA/TECH ADVISER: New Entrant in Backup Derby
Sonasoft Announces Point-Click Recovery Solution for Small Business
Sonasoft Corp. of San Jose, Calif., is bidding for CFOs’ and CPAs’ attention in the market for backup and disaster recovery.
They’ve released the so-called conceive Point-Click Recovery Solution for Small Business. The new offering is “an affordable and easy to use solution specifically designed for addressing the pain points of small businesses.”
SCARY FACT: National Archives & Records Administration reports that 93% of the companies that lost their data center for 10 days or more filed for bankruptcy within a year.
The Sonasoft service covers Exchange, SQL and Windows File Systems. Customers can buy the SonaSafe Small Business Suite that provides a total backup and recovery solution for anything to do with Microsoft, i.e. databases, emails, files, applications etc.
If you’re looking for a network backup solution, consider:
1. Total cost of ownership, including installation, training, and maintenance
2. Ease of use and start-up time
3. A company’s history in the market
It’s too early to tell whether Sonasoft is the right choice for most CPA firms or finance departments. But for details and pricing, contact www.sonasoft.com.
And… Let me know what you think.
CPA/TECH ADVISER: Securing Financial Data with eVaulting
Offsite electronic storage should be accountants’ first choice in backup systems.
by Rick Telberg
for HP
With most businesses now extremely or entirely dependent on their computer-based information systems, electronic data vaulting systems have become as important to operational futures as banks are to their financial fortunes.
Vaulting service providers operate from their business and individual customers’ own bandwidths to back up their server-based and computer-based data and e-mail or upload files to secure vault centers, where systems and personnel dedicated to data security monitor, mirror and constantly back up the files to disc.
Users can access their data anytime including, most importantly, when their local IT systems are unavailable due to technical malfunctions or emergencies. Data is transferred from user to vault via highly secure private online networks that enable files to be transferred, stored and backed up just minutes after they are created.
By contrast, companies that back up only periodically or at the end of the day risk losing any data lost due to a system breakdown or break-in between back-ups. In addition to insulating data from problems the businesses’ may incur on-site, vaulting also eliminates the expenses for additional hardware, software, tape media and manpower required for on-site backup and the annoying downtime that onsite backup can create.
For businesses with multiple locations, vaulting provides uniform and more secure back-up of data from multiple department servers, desktop computers and laptops. Web-based vaulting has been around since the early 1990s but began attracting more attention after the Sept. 11 terrorist attacks in which the parent companies of many of the World Trade Center-located business operations destroyed also lost those operations data, which was stored on nearby servers.
Demand increased in 2002 with passage of the Sarbanes-Oxley Act accounting reform law that makes public company CEOs and CFOs personally responsible for the integrity of their companies’ financial data. Fueling future vaulting demand are the exponential growth of financial records, with some businesses seeing their volume of data grow 40 percent or more a year, and no end in sight to the natural catastrophes and manmade computer viruses, works and hacking attacks threatening electronic data everywhere.
At the same time, businesses remain na?ve about how to safeguard their data.
Noting that 53 percent of organizations either don’t have a backup strategy at all, or leave it up to individual users to back up to a network drive, IDC says corporations are “in a very vulnerable position, without protection for the majority of their data.”
With many vaulting services now available and more in the pipeline, businesses should choose wisely.
For starters, look for a provider with a good reputation for service and high-quality products and is financially strong enough to remain in business for years to come. Your data is only as secure as the vault where it’s stored.
Along the same lines, businesses should look for a vaulting company that can advise them on their overall IT security strategies The level of security in the connection between the customer and provider’s vault, as well as the physical security of the vault itself are also paramount.
Systems with advanced data encryption and digital signature policies for data transfer and ones whose vault centers are protected from natural disasters and power outages are preferred.
MARKETING: The True Value of a Client
Practicing Customer Loyalty in Professional Services
Once you’ve landed a client, what’s it take to keep them?
“In today?s hyper-competitive environment, loyalty is critically important to most businesses and is an important key to increased profitability and long term survival,” according to a new report from Martiz Inc. a consumer-marketing researcher. ” Companies that do not actively measure and manage loyalty do so at their own peril.”
But what sustains customer loyalty?
Translated for the professional services sector, the answers are:
>> Client care standards and procedures
>> Product and service enhancements
>> Targeted (one-to-one) communications and dialogue marketing efforts
>> Flawless internal operations
>> Regular advertising, promotion
>> Employee training programs, and
>> Incentives.
So How about incentives?
What are the top incentives? In the consumer sector they are:
Merchandise……………………18%
Gift Certificates……………….45%
Experiential Rewards………..9%
Travel……………………………..18%
Other…………………………………9%
Professional services, of course, are another breed of cat. Loyalty programs begin with great service and one-to-one contact, and stretch through adding real business value and innovation, such as educational services or market news and intelligence.
So don?t be fooled by all the iPOD (as cool as the gadget is) give-aways.
BOTTOM LINE: True professionals want value, relationships and results. Strrategically structured communications is just one element for success.
Wednesday, February 09, 2005
CAREER ADVISER: Rate Your Raise
Here are the early results from the Rate Your Raise study we launched in January, “CPAs Primed to Find a New Job.”
Compared to last year, will the average raises at your organization be More, Less or About the Same?
More ……………….. 18%
Less ……………….. 19%
About the Same ……………….. 63%
How much will the average raise be at your organization this year?
0% ……………….. 5%
1% ……………….. 2%
2% ……………….. 10%
3% ……………….. 37%
4% ……………….. 20%
5% ……………….. 11%
6% ……………….. 4%
7% ……………….. 2%
8% ……………….. 3%
9% ……………….. 1%
10% or more ……………….. 6%
Personally, are you expecting your own raise to be More, Less or About the Same as the average raise at your organization?
More ……………….. 37%
Less ……………….. 13%
About the Same ……………….. 49%
What is your current annualized total compensation category?
Up to $30,000 ……………….. 0%
$30,001 to $40,000 ……………….. 4%
$40,001 to $50,000 ……………….. 7%
$50,001 to $60,000 ……………….. 12%
$60,001 to $70,000 ……………….. 14%
$70,001 to $80,000 ……………….. 14%
$80,001 to $90,000 ……………….. 13%
$90,001 to $100,000 ……………….. 10%
$100,001 to $125,000 ……………….. 13%
$125,001 to $150,000 ……………….. 6%
$150,001 to $200,000 ……………….. 4%
$200,001 and Over ……………….. 3%
DEMOGRAPHICS
In what type of business do you work?
Public accounting ……………….. 36%
Business or Industry ……………….. 52%
Government ……………….. 3%
Not-for-profit ……………….. 7%
Education ……………….. 1%
Other ……………….. 2%
How many people work in your office or location?
1 to 10 ……………….. 14%
11 to 50 ……………….. 29%
51 to 100 ……………….. 13%
101 to 500 ……………….. 23%
More than 500 ……………….. 21%
Which best describes your position?
Chief Executive/Managing Partner ……………….. 3%
Senior Executive/Partner ……………….. 16%
Middle Management ……………….. 53%
Staff ……………….. 21%
Other ……………….. 7%
In your opinion, what will be the key factors affecting your income this year? (Please explain.)
(Sampling of Verbatim Responses)
? Increased competitive pressure have decreased Company’s Financial Results
1) Whether or not my boss lets me have a promotion. 2) State of the business as a whole. 3) My performance.
? 404 transition, staffing movements
? A new job in another organization. There is little to no mobility in my current organization. The environment is getting worse every year for our business.
? a poorly designed incentive plan and no concern for market value related to the position I hold
? A well orchestrated tax season and the effective implementation of new policies & procedures. Additionally, the utilization of my new CVA certification will have a major impact on my compensation.
? Ability of department and company to meet budgets.
? Ability of organization to meet budget
? ability of the firm to abosrb increase in health insurance premiums, generally premium increases have resulted in reduced salary increases
? Ability to hire and retain qualified staff so that we can continue to grow.
? Ability to retain clients and bill what our services are worth.
? ability, communication, hard working, smart
? Accomplishments in the area of special projects (BSA and Sarbanes-Oxley)
? Accounting group’s overall contribution to the companies bottom line and my own individual value added.
? achievement of goals, education level
? Utility, fuel & food costs
? utilization and bonus
? We all get std cost of living raise which has been 3% last several years. 2005 we got 4%.
? We are a performance based organization with income affected by number and quality of audits with emphasis on dollar savings and value added to our stakeholders.
? whether or not I find a new job.
? Whether or not I leave this job for another
? Whether or not I stay with the same company.
? Whether or not the company makes money.
? whether our company is sold or not.
? whether our company meets its performance targets which trigger bonus compensation
? Whether the Company achieves significant profitability
? Whether we increase staff & I see a promotion out of it.
Monday, February 07, 2005
SUCCESSION PLANNING: Exit Plan? What Exit Plan?
Plenty want to retire. Few plan for it.
In its survey of 364 CEOs of fast growing, privately-held companies called the “Trendsetter Barometer,” PricewaterhouseCoopers found that 65% of the respondents said they planned to leave their company within 10 years.
But few are actually planning for it.
When asked about their exit plan, a majority of the respondents (51%) thought they would leave via a sale to another company. A measly 3% minority said they were counting on an IPO payoff.
But a huge 43% of the respondents said they had done little or no succession planning.
“Like many of us, these CEOs have a sense of their desired future, but they are overloaded with managing for today and are short of time fro developing comprehensive plans for tomorrow,” said Mike Kennedy, leader of PricewaterhouseCooper’s Personal Financial Services practice.
“Unfortunately, unless a key event occurs such as the company being sold, important corporate/shareholder documents like the buy/sell agreement are often not reviewed on a periodic basis,” he adds.
How many CPAs are helping clients develop a plan? How many have one of their own? Answer to both questions: Not enough.
SELLING & RAINMAKING: Hire First Borns
Here?s an exercise you might find interesting: Ask your top-performing producers if they are first-born children.
Chances are, according to Thomas Connellan, author of “Bringing Out the Best in Others!” (Bard Press, 2003), most of them will say “yes.”
First-borns make up about 35% of the general population, but in study after study they make up a vastly higher percentage of high achievers.
Of the first 23 astronauts, for example, 21 were firstborns, and more than half of U.S. presidents have been firstborns.
So does that mean you can blame their mothers?
NO LAUGHING MATTER: City Worker Slapped for Adding Jokes to Tax Forms
Taxes are no laughing matter… Certainly not in Middletown, Ohio.
The city’s tax superintendent apparently sent out annual tax forms with such lines as, “If we can tax it, we will.”
And, “Free advice: if you don’t have a profit in a five-year period, you might want to consider another line of work.”
Revised forms were sent out immediately at a cost to taxpayers of about $5,500. And the official has reportedly been suspended without pay for a week.
Friday, February 04, 2005
FROM LONDON: U.K., Europe Face Twin Issues of SOX and IFRS
As if trying to conform to Sarbanes-Oxley as a foreign company isn’t hard enough, the European Union accounting and finance community is also grappling with new financial reporting standards of its own.
by Rick Telberg
At Large
LONDON– If the United Kingdom and the United States are cousins separated merely by the same language, as is sometimes suggested, then the familial relationship may extend as well to Sarbanes-Oxley rules and regulations.
Sir Howard Davies, a former chairman of the U.K.’s Financial Services Authority and now head of the London School of Economics, says more than a few of the 113 U.K.-based companies with a dual listing on a U.S. stock exchange are considering pulling out of the U.S. bourse.
BP, the British petroleum company, for instance, is spending up to $125 million to comply with SOX. In another example, Wolseley, a heating and plumbing supplier with annual sales of about $17 billion, is spending about $10 million, with 20 full-time staffers at work and KPMG as adviser.
An estimate by the Association of Chartered Certified Accountants, one of three professional institutes covering the accounting profession in the U.K., put the total cost to U.K. companies at $350 million.
Some of the companies are household names in the U.S.: Barclays, British Airways, Bank of Scotland, GlaxoSmithKline and British Telecom.
By the way, the same week we were in London, KPMG reported 6 percent revenue gains for the year, 9 percent raises for partners and a 23 percent revenue jump in the unit handling SOX and Section 404 issues. The rest of the Big Four are probably doing as well or better, according to our U.K. sources.
U.S. Securities and Exchange Chairman William H. Donaldson has offered some relief, telling Davies and others gathered at a symposium at the London School of Economics, “We do have some thoughts on how we can lessen the restrictions.” For starters, he said, the SEC is considering pushing back the deadline for foreign issuers from July to as late as December to give them some breathing room. Davies said Donaldson’s “statement is to be welcomed.” And certainly, the New York exchanges have a lot at stake in the outcome.
U.K. financial managers and accountants are almost as concerned, meanwhile, by the report that maybe 600 U.S. companies face shareholder litigation and higher capital costs after admitting “material weaknesses” in their Section 404 reviews.
THE GLOBAL VIEW FROM LONDON
But relations with the U.S. under Sarbanes-Oxley is just one of the many factors reshaping the global auditing, accounting and financial reporting scene these days.
The European Union, for example, is pushing through a series of measures to standardize and make more transparent financial reports from all businesses in the trading sphere.
Starting this year, E.U.-listed companies must start issuing financial reports under the new International Financial Reporting Standards. The rules hit banks, especially France-based banks, hard. But Vodaphone, because of changes in goodwill rules, could come out ahead. U.S. companies have until 2007 to get into line.
It’s a fact of life that the SEC chairman was clearly aware of when, at the London School of Economics, he said, “Many companies outside the U.S., especially in Europe, face additional challenges in the near term that go above and beyond those faced by U.S. companies as European companies adopt International Financial Reporting Standards for the first time in 2005.”
From London, it becomes almost painfully clear the global importance of clear, consistent accounting standards. Luckily, on both sides of the Atlantic, and in many other places and tongues, the worldwide accounting profession and financial community are pushing hard to advance the one universal language of business: accounting.
CPAs Still Learning Lessons from Grade School: The Hard Way
Stuart Hartley, of FocusROI, is incensed. Here’s the note he’s circulating to friends and colleagues:
A CPA firm under fire for its audit of a Long Island, N.Y. school district is reportedly shutting its doors. This came right after the scandal-plagued school district filed a $12 million lawsuit against the firm and the release of a scathing report by New York State Comptroller Alan Hevesi in which he blasted the accounting firm for failing to identify a multi-million-dollar fraud, not meeting professional standards, and violating auditor independence standards in its audit.
Specifically, a press release from his office indicated:
The CPA firm did not meet nine mandatory professional standards for conducting audits.
When a whistleblower first exposed the fraud in 2002, the CPA firm investigated and found only $223,136 in inappropriate payments. Using the same methodology, State auditors found $1.6 million in questionable payments.
In its testing of school district spending, the CPA firm didn’t look at cancelled checks and a cursory review would have revealed instances where the actual payee on the check was different from the payee listed in the firm’s workpapers.
The firm’s workpapers, supposedly created in 2002 and 2003, allegedly contained payment information that was put in the district’s records by district officials in 2004 to cover up fraud.
The CPA partners sold financial and other software to the district creating a conflict of interest and violating professional standards requiring auditors to be independent.
Hevesi opined the work of the firm was “so appallingly inadequate that it would shock anyone associated with the auditing profession and certainly the taxpayers who depend on the firm to safeguard their money. Our auditors found fraud so pervasive that it would have taken significant effort not to uncover it. Even a rudimentary review of disbursements and cancelled checks would have revealed many instances of wrongdoing,” He concluded that he was “extremely troubled by our findings, and I urge the State Board for Public Accountancy and the Nassau County District Attorney’s Office to pursue this matter aggressively.”
What strikes me as so interesting is the tone and references in the release. Here we are two and one-half years after Sarbanes-Oxley and the focus is back on the auditor. The terminology being used refers to conflict of interest and failure to maintain independence. We also see claims of other revenue than for auditing services. In this case, it concerns software.
The Actual Testimony of Hevesi:
In March the public became aware of the alleged theft of $223,000 of Roslyn School District funds that had been discovered, and then covered up, 18 months earlier. Over the next three months, spurred by an investigation by Nassau County District Attorney Denis Dillon, the public became aware that the fraud at Roslyn was much more extensive and involved more people than had previously been thought. So far, three officials have been indicted and charged with stealing or misusing more than $2.3 million.
Subsequently, allegations arose concerning theft by officials at the William Floyd School District, where two officials have been arrested and charged with nearly $1.5 million in theft of public funds. In the Three Villages School District, the former Superintendent is alleged to have charged more than $40,000 in personal expenses on a district credit card. In addition, there have been a continuing series of public disclosures alleging questionable behavior by board members and school officials at the Hempstead School District.
These allegations have created a crisis of confidence throughout Long Island. The clearest evidence has come in voting on school budgets on Long Island. In 2004, well over one-third of school budgets were rejected by voters, an all time high.
Given this public turmoil and erosion of confidence, it is imperative that State leaders and elected officials take immediate steps to restore the public?s confidence and ensure that the resources we have dedicated to our children?s education are used exactly for that purpose. I would like to describe just some of my Office has done in response.
The best defense against fraud is strong internal controls in every school district. My Office has worked with a coalition of various education organizations to develop policy solutions to improve the internal control structures in school districts and increase the effectiveness of some of the oversight mechanisms. The Schools Financial Accountability Coalition is comprised of representatives from my Office, the New York State School Boards Association, the New York State Society for Certified Public Accountants, the New York State Council of School Superintendents and the New York State Association of School Business Officials. We also worked with representatives from the State Education Department in developing our plan, and their assistance has been invaluable.
In addition, I have redirected resources within my Office and initiated audits of 21 school districts on Long Island, including in-depth audits of operations in five districts and audits of administrative expenses such as credit card usage, meals and travel in 16 other districts.
To-date we have issued three final audit reports from this effort. Two of those were reviews of the Baldwin and Plainedge school districts. I am happy to report that in both districts we found no wrongdoing, although we did recommend some administrative improvements in each.
On January 6, we completed our review of the external audit process at Roslyn during the period the alleged thefts were occurring. The fact that each school district is required by the State Education Department to undergo an annual audit is intended to give the public some assurance that taxpayer funds are spent appropriately. In fact, it was the presence of this annual audit requirement that led Comptroller Edward Regan more than 20 years ago to suspend the State Comptroller?s routine audit efforts in schools. Comptroller Regan made this point clear in a May 10, 1984 letter to then Assembly Speaker Stanley Fink, when he wrote that the State Comptroller was not doing regular school districts audits, because of ?the fact that State Education Law requires school districts to be audited annually by certified public accountants.? This rollback of the OSC audit coverage was necessitated by budget cuts that resulted in substantial reductions in the number of Comptroller auditors. In fact, the number of the local government auditors was reduced by half during the 1980s and early 1990s.
Our report on the Roslyn outside auditor, Miller, Lilly and Pearce, was designed to determine why this outside check on the school district failed to operate effectively. The results of our review were remarkable. We found a complete failure of oversight.
The CPA firm knew, as early as 2002, that a fraud had occurred, but in its audits it never looked for more fraud. The CPA firm looked at what were clearly fraudulent transactions in the sample that it tested, but did not identify them as fraudulent. The CPA firm?s workpapers contain evidence of significant internal control weaknesses, but it never followed up to see what might have resulted from those weaknesses or pointed out that they could cause problems. District officials had to post millions of dollars of accounting adjustments at the end of each year to cover up massive theft, but the CPA firm failed to identify any unusual activity in its annual audit reports. In fact, in both the years we examined, the CPA firm gave the District a clean, unqualified opinion on its financial statements.
We found numerous deficiencies in this audit. Nine of 22 required professional standards for such an audit were violated. Violating any one of those standards can lead to professional sanctions. For example, an auditing firm is required to be independent of the school district it is auditing. We found obvious conflict of interests, clearly prohibited by professional standards. The CPA firm had designed and developed computerized accounting software and sold it to the District. The CPA firm also provided ongoing support and periodic upgrades and maintenance for this software. Thus, when the firm was auditing the accounting system, they were auditing their own work. In addition, the firm was involved in selling to the District student tracking software. They therefore had a financial relationship with the District outside the audit, a direct conflict of interest.
When testing transactions, the CPA firm did not review cancelled checks. Such a review is basic and elementary. In fact, the name on some checks was different than the vendor name for those checks shown in the District?s records. Because they didn?t review the checks, they missed this obvious fraud.
In another case, we found that the vendors listed on the CPA?s workpapers for certain payments were not the vendors listed in the District?s records at the time the audit was done. They were phony names put into the District records to cover up the fraud. And they were put into the records after the CPA?s audits were completed. In other words, the CPA had fraudulent information in its workpapers supposedly completed in 2002 and 2003 that was not put in the District?s records until 2004.
We asked the CPA firm to explain this discrepancy. The CPA told us that he was given the vendor names by the former Assistant Superintendent. This is an extraordinary admission for two reasons. First, the auditor is admitting that he simply accepted the verbal representation of a member of the organization he was auditing without verifying these assertions by checking them against the written records. That would be bad enough. But consider, the Assistant Superintendent is the person the auditor found to have stolen $223,000. She had resigned before the second audit reviewed by us was done. So she was not around to provide the fraudulent information during this second audit. The fact that the workpapers presented to us, and ostensibly produced in the summer of 2002 and 2003, contain phony vendor names that do not appear in the District computer records until February 2004, when someone changed the vendor names in an attempt to cover up the theft, is more than troubling.
In 2002, a whistleblower went to the CPA firm with evidence that a theft had occurred in the District. As a result, the District asked the firm to identify the amount taken. The CPA firm calculated that $223,000 had been stolen from the District by the Assistant Superintendent. The firm then helped District officials keep this fact secret from the public and other interested agencies, such as the State Education Department, the District Attorney, and my Office. Even though it was aware of this theft, the CPA firm made no effort in its audit for the 2002-03 fiscal year to actively look for fraud or other questionable activity, as required by national audit standards. It is of course now obvious that had the CPA firm done its job and looked for additional fraud, it would certainly have found plenty. In addition, when we replicated the work that the CPA claimed he did in calculating the $223,000 theft in the fall of 2002, we identified $1.6 million in questionable transactions, not $223,000. How this could have occurred, what actually happened, how more than $1.3 million in additional questionable transactions could have been ignored, is a job for the Nassau County District Attorney to determine.
Hartley sums it up: “In short, one of the fundamental safeguards we have all come to depend on, the outside independent audit, failed.”
So You Think You’re Smart?
That Won’t Buy You Lunch in This Business
In a survey of 316 LPL Financial Services representatives, “intelligence” came in 9th in a list of 10 traits for success in financial planning:
1. A service mentality = 31.6%
2. Strong ethics = 28.8%
3. Determination = 21.8%
4. Wisdom = 5.1%
5. Empathy = 4.7%
6. Patience = 3.2%
7. Candor = 1.9%
8. Friendliness = 1.6%
9. Intelligence = 0.9%
10. Luck = 0.3%
Source: Career Adviser/financial-planning.com
Tuesday, February 01, 2005
NOTES FROM LONDON…
The Some-Things-Are-Universal Department: A corporate treasury manager who stole almost $20 million over five years to fund his Internet gambling addiction was convicted and sentenced to five years in jail. Colleagues described him as “quiet, unassuming and polite.” The theft was discovered when he handed in his notice, but couldn’t explain discrepancies to his replacement. His modus operandi, by the way, was to log on to the system as various company executives and withdraw small amounts at a time. …
Government Accountants at Work: U.K. taxpayers are losing about $2 billion a year to waste, fraud and abuse in the nation’s sprawling work and pensions system. Of course, this is only the 16th year the auditors have issued such a finding. …
Where Else but the U.K.? Accounting is taken seriously over here. The prestigious Times of London lists in a special four-page section every candidate who passed the test to join the Institute of Chartered Accountants in England and Wales, the AICPA’s closest cousin in the U.K. …
Death and Taxes: An inheritance tax imposed in 1986 to target the “Brideshead Revisited” set is now sweeping up about a third of all homeowners, whose property values have risen rapidly in recent years. Their heirs could owe 40 percent at settlement.
