Going on vacation? Ponder these vexing issues for the profession.
By Rick Telberg
With the dog days of summer fast approaching, many CPAs and financial executives will be taking a well-deserved breather.
For some, just thinking about work could take their breath away. The reason is that the profession, for all its strength in rebounding from adversity, faces a bevy of vexing issues.
Here are five of the most important issues, as gleaned from the reports of several of the profession’s savviest people.
Issue No. 1: The Demographic Dynamic
AICPA Chairman Bob Bunting, who for many years has managed one of the profession’s most successful firms, Moss Adams, has warned managers at public firms and in industry to tend the “demographic dynamic” ? the large numbers of Baby Boomer accountants, those aged approximately 40 to 60, who are fast approaching retirement age and the smaller number of new entrants to the accounting profession. Managers have got to determine what works best for their businesses and for their professionals’ work and personal needs and establish work arrangements that ensure keeping all people on board for a long time, Bunting advised.
Issue No. 2: Operating for Staff Shortages
Tom Marino, managing partner of another large, successful firm ? J.H. Cohn in New York ? has long been aware of that workplace issue. He warned that the biggest issue in 2005 is and will continue to be “managing the limited number of staff that exists today,” in the face of what he and others say will be a business boom through 2005.
Accounting is enjoying a resurgence on college campuses. Nevertheless, it may not be enough. Dana R. Hermanson, accounting professor at Kennesaw State University in Kennesaw, Ga., foresaw the following major concern for firms in 2005: “Finding enough qualified people to do all of the audit work now.”
Issue No. 3: Absorbing New Rules and Regs
What’s creating much of the additional work is the Sarbanes-Oxley accounting reform law, which has increased the financial reporting needs of public companies and in turn heightened reporting awareness of private companies and some nonprofits. Joel Sinkin and Terrence Putney, principals with Blacklake Transition Solutions, a mergers-and-acquisitions consultancy for accounting firms, noted the SOX phenomenon has created a supply-and-demand imbalance at larger firms that is trickling work down to local and regional firms.
It’s been widely predicted that this will be a banner year for almost all firms; Maryland Association of CPAs Chief Executive Thomas Hood said demand for CPA services should grow because the profession’s image is “back to pre-Enron highs.”
Issue No. 4: The Value of Trust
Yet, we have also been warned of a risk of renewed damage to the profession’s image. Bunting warned of the potential for the public to misinterpret reports of restatements, disclosures or allegations of reporting fraud in past years as indications that SOX is failing.
Hermanson is among several accounting professors who pledged to modify their schools’ curriculum to increase classroom focus on reporting fraud, its prevention and accounting ethics. The message to firms in public practice and industry is not to be complacent about ethics.
Issue No. 5: Technology, Fast and Furious – and Fickle
The Internet’s ongoing evolution into a tool that touches almost every aspect of the profession, including training, fraud detection and prevention, productivity and client contact has become a far-reaching issue. Academics, managing partners, business strategists and accounting profession consultants alike advised us that accountants must be ahead of their clients and all of business in utilizing the Internet.
“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, president of the consulting firm Accounting Technology Resource Network. “Internet savvy and connectivity will be the rainmakers of the 2000s,” he said.
Technology in general will be more critical than ever for accountants’ success. But don’t be intimidated if you are not tech savvy. Rich Walker, director of accountant and advisor relations for QuickBooks developer Intuit Inc., said the technology development industry recognizes that its systems have become too complex to meet its original goal of making users more efficient. “Our expectation is that the year ahead will be about simplifying the lives of accountants and their clients,” he said.
Simplification? We can only hope!
One Response to “The Top 5 Things to Worry About”
Harley Pottroff
The CPA firm does not need more productivity. They need higher revenue per person. To charge more for the work done. Generate higher fees by combining services into packages, and selling the package not individual services.