with small accounting firms coming out of a tough tax season, hugh duffy figures this would be a good time to look ahead for the balance of 2010.
duffy
duffy, a practice development adviser, outlines his forecast at the progressive accountant, starting with…
the top three economic trends
1. the current recession has many small accounting firms on edge because the duration of this recession has been so long. since 1854, the average length of a u.s. recession has been 17 months from peak to trough, according to the national bureau of economic research. for perspective, the great depression lasted 43 months. our current recession started in december 2007 and the end is not yet in sight. and when things improve, economists are saying it will be gradual. to compound this issue, there is still a liquidity crisis which makes it difficult for the small business market to pick up the slack and reverse this crisis.
2. shift in type of employment. small business employers are shifting from full-time employees to part-timers, freelancers, outsourced services, partnership arrangements and other forms of contingent workers.
3. micro-businesses will rise. as more and more skilled workers are on the sidelines and become disenchanted with the prospects for gainful employment, there will continued increases in micro-businesses (solo owners with no employees). this movement will be fueled by the internet, low-cost of technology, and ease with which a home-based business can be created.
and these…
4. top 100 firms will reduce overall staff levels another 3% to 7% this year.
5. small accounting firms will dramatically increase use of cloud computing, saas, portals and hosted solutions.
6. microsoft 7 and office 2010 will fuel replacement of dated computer equipment.
7. the army of un- and under-employed accountants will create a new wave of small and solo start-ups.
8. shifting away from staffing and retention, firms will drive sales, marketing and business development into high gear.
9. the march toward paperless accelerates and broadens.
10. with the bleak economic outlook, the trend towards home-based businesses surges.
11. local non-profit membership organizations (networking type) will see continued declines in enrollment as networking tools (linkedin, facebook) make it more efficient online and cheaper.
watch for her new book, “social media strategies for professionals and their firms: the guide to establishing credibility & accelerating relationships,” due out from wiley & sons in september.
cpas could help help avert the next financial catastrophe by joining the new multi-disciplinary movement for governance, risk and compliance.
by rick telberg
not too long ago, cpa norman marks was sitting through a conference on the emerging issues in governance, risk and compliance (grc). he listened for two days as dozens of speakers and panelists — consultants, internal auditors, independent accountants, vendors, lawyers, and others — sought to define “grc.” marks counted 23 different definitions.
marks
so what, exactly, is grc? and why do corporate finance cpas need to care?
you only need to go as far as the front pages of the newspaper to understand why grc is surging as a new corporate discipline and professional practice. if the wall street crash taught us anything, it’s the importance of sound corporate governance, hard-nosed risk management and serious regulatory compliance.
to grc proponents like marks, it’s just a pity that it’s all coming too late. to be sure, some few companies are not waiting for new government regulation to avert a catastrophic failure on their watch. but most have yet to get the message. according to the “report on the current state of enterprise risk oversight,” co-sponsored by north carolina state university and the aicpa, 60 percent of companies still have no formal enterprise-wide approach to risk management, and three-quarters of the time, management is not informing the board of directors of the company’s risk exposures.
“if the financial crisis has taught us anything, it’s how critical it is to link a holistic, comprehensive view of risk management with management and strategy,” marks was saying from his home office, where you’ll find on his wall a framed article from the november 1998journal of accountancy featuring his ideas on internal auditing. today marks is vice president at sap businessobjects as — using his own terminology — an “evangelist” for “the grc market.” but really, he’s a man on mission. he maintains two blogs on the subject, one personal and the other for the institute of internal auditors, where he’s also a member of the professional issues committee and a contributor to the association magazine. with his help, grc is morphing from a market into a movement.
insiders have yet to really agree on what grc means. john h. capobianco, president and ceo of lumigent technologies, a grc business apps developer, says the term grc has been kicked around so much that it “means nothing to everybody or everything to nobody.”
the questions abound:
by “governance,” do we mean the role of the board, or also top management? with “risk,” how do we measure it and bring the issues to top decision-makers? in “compliance,” don’t we really mean the risk of “non-compliance?”
is grc a legal discipline? financial? or actuarial? the answer, so far, is all of the above. a bank’s grc program, for example, will look a lot different from a retailer’s.
some companies will need a chief governance officer; others already have a chief compliance officer, or a chief risk officer. but is the issue best tackled by a single executive office with direct access to the board and chief executive, or by a distributed system of specialists working in a flatter, matrix-like structure?
“managing risk starts with an awareness of what the risks are, followed by an ability to prioritize them,” according to cpa mike bechara, a grc consultant based in brewster, n.y.
marks insists that, to truly benefit from grc practices, an organization must commit to obtaining a holistic view of all the enterprise’s risks — legal or financial, operational or strategic, external or internal, environmental or technological and on and on.
“fundamentally,” he says, “grc is a way of thinking about management.”
it’s so basic you have to wonder why it’s taken so long for some to understand.
10 tips from one of houston’s fastest-growing firms.
by rick telberg
while some other cpa firms have been immobilized by fear and uncertainty in this economy, houston, texas-based malonebailey has been charging ahead with a new managing partner, a new marketing manager, a daring acquisition on the other side of the country and new growth on the other side of the globe.
middleton
“we’ve taken this time to become more focused on our strategic plan and our marketing plan so that we are better prepared to rebound as the economy improves,” according to managing partner wesley middleton.
but there’s more to middleton’s plans for malonebailey than that. the firm is unusual in several ways. malonebailey garners about 80 percent of its fees from u.s. securities and exchange commission work and is fast developing an audit practice in china. middleton may demurely credit the firm’s fortunes to simply “the right time and the right place.” but for all his soft-spoken gulf coast drawl, middleton is as hard-driving a cpa entrepreneur as any of his texas oil-and-gas wildcatter clients. the firm’s surge in growth is relatively unlikely, though not unique, in these tough economic times.
middleton is writing a new playbook for his firm — one other firms and cpas may be able to take some lessons from, such as:
charging ahead when others are in retreat
being prepared for new opportunity in m&a
moving quickly to sew up a deal
benefiting from networking at industry events
adopting paperless processes
going “virtual” wherever possible
actively supporting telecommuting
branding new service packages for carefully targeted client groups
marketing with a commitment to consistency and innovation
setting clear and inspiring goals for the team
when middleton, a tax j.d. in addition to a cpa, joined malonebailey in 2008 from the eminent and formidable gainer, donnelly & desroches, founder john malone had spent 16 years creating the country’s largest sec practice outside the national firms with 120 registrants and a couple of broker-dealers. soon the firm had dropped the ampersand from its name, gone totally paperless and added a marketing manager.
a year later — dec. 16, 2009 to be exact — middleton moved up to managing partner and malone became sec practice leader.
a day later on dec. 17, 2009 — malonebailey announced the acquisition of solo-owned kempisty & co. in new york city. the deal fell together quickly because middleton, malone and phil kempisty had been old acquaintances, meeting at industry conferences. kempisty gave malonebailey a new york office with an additional 10 professionals, 20 sec clients, 25 broker-dealers and wider chinese audit capabilities.
middleton called the move, “one more step in the realization of our vision to have an international presence.” few firms are as committed to the china opportunity as malonebailey, but those that are will tell you (and few like to talk about it) that, while it may difficult to crack, it is highly profitable and fast-growing.
today malonebailey has seven partners, 75 staffers and a run rate of $15 million to $17 million a year.
a month later, in january, the firm launched the private companies practice team for its non-sec clients and promoted auditor david forrest and tax accountant stan raines as partners to run it.
operationally, technology has been and will remain a major factor in the firm’s future growth. the firm is pioneering remote auditing strategies and has gone “virtual” with 100 percent paperless audits. tax returns are delivered completely paperless, either through the firm’s online portal or on a cd. “we file 99 percent of our tax returns electronically,” middleton says. “we have found that clients truly appreciate the paperless experience, finding it efficient, time saving and innovative.” in addition, many staffers have computer set-ups at home with multiple monitors and firm-based internal and external portals for clients and staff to post and access information via the internet.
malonebailey is also blazing new trails in social media marketing, including facebook, twitter and linkedin, to promote the firm and to keep contacts and prospects close and updated. “our firm prides itself in being linked in to the digital world,” middleton says. “we are a young firm with a significant percentage of gen y staff and we recognize the prevalence and significance of accessing and providing information through digital avenues.”
still, acquisitions will be a major tool for growth in coming years. middleton says he’s already in the final stages of talks with two other firms.
“our goal is to be a top 100 firm,” he says. as his competitors are learning, middleton is not to be underestimated.
these won’t be the static financial statements which are digital paper like html or pdf. i am talking interactive information, xbrl in the background allowing all sorts of interesting things to happen, things no one has seen before.
whether or not you can make it to the #140conf in new york april 20-21 at the 92nd street y, the list of speakers represents a veritable who’s who of business-savvy twitterers worth following.
the event could be the largest gathering of it’s kind as participants take a hard look at what organizers are calling “the state of now” and the effect of the real-time internet on business.
some of the 150 speakers at #140conf worth following are: read more →
signed into law by president obama on march 18, the hire act has the potential to be a direct boost to a business’ bottom line because it will both help employers and at the same time encourage job creation.
butler
by gary butler president and ceo of adp
far too many americans are currently unemployed, yet many small- and medium-sized businesses remain at the cusp of resuming hiring. it is hoped that the hire act will serve as a catalyst that will help our economy recover. i believe this jobs bill is a good piece of legislation that comes at a very opportune time.
the hire act provides incentives for businesses to hire new employees sooner rather than later. the incentives for businesses are straightforward, immediate and are available for each job created. the bill eliminates the current 6.2 percent employer social security tax for eligible new employees, generating immediate savings that will positively impact a business’ bottom-line. it also requires any new hire to certify his/her previous employment status by signed affidavit. additionally, companies are afforded a significant income tax credit of $1,000 per qualifying worker once the worker is employed for at least 52 consecutive weeks.
while these measures are welcome by employers, staying compliant in this complex and quickly changing business environment can be a burden for companies of all sizes. adp, the leading provider of outsourced hr, payroll and benefits administration services, is committed to making it easy for clients to remain compliant while reducing expenses and increasing cash flow. we’ve done this before, helping businesses reap the benefits of special legislation such as the katrina tax credit and the cobra stimulus plan.
for employers already stretched thin, administration and compliance can be a somewhat complex and time consuming process. pre-selection and screening of eligible employees, affidavit certification, eligibility reporting, compliance support, documentation and audit support as well as tax credit administration are all tasks that the business must execute either on their own, or with support of companies like adp which has helped businesses for over 60 years to reap the benefits of special stimulus legislation.
at a time when employers are challenged to do more with less, outsourcing non-core or administrative tasks is one way to enhance employee productivity and increase profitability. legislative reform is a major focus of the current administration, and regulations like the hire act will continue to put pressure on employers to understand and respond to new requirements. helping clients understand and take advantage of legislation like the hire act is a primary benefit of partnering with adp.
gary butler is the president and ceo of adp, serving some 570,000 clients worldwide. for more information and to obtain an estimate of a company’s potential hire act savings, visit www.adp.com/jobtaxcredit or call 1-888 5 adp save.
electronically filed tax returns are on track with last year and overall refunds are running nearly 10 percent higher so far in 2010, according to statistics issued today by the internal revenue service.
the statistics issued today, covering the period through march 12, show that while the overall number of tax returns filed this year is down slightly, the percentage of returns using e-file remains strong. more than 82 percent of the 69 million returns received this year have come in via e-file. home usage of e-file is up almost 7 percent compared to this time last year.
additionally, the average federal refund totaled $3,036, an increase of $266 compared with the same period a year ago.
the refund increase follows a number of federal tax incentives enacted last year as part of the american recovery and reinvestment act, such as the homebuyer credit and the american opportunity credit.
“there are several new credits and deductions this year, so we encourage taxpayers to see if they qualify when they fill out their tax return,” said irs commissioner doug shulman. “to get their refunds quicker, the irs reminds taxpayers that the fastest, easiest way is to e-file and use direct deposit.”
2010 filing season statistics
cumulative through the weeks ending 03/13/09 and 03/12/10
how to find new success by shifting your firm’s focus from service-centric silos to client-centric goal-setting. by rick telberg most accounting firms believe they provide pretty good client service. and most of them are probably right. but there are other firms … continued
set to launch in june, the academy for business development will bear many of the signature characteristics of upstream academy’s other programs.
allred
“everything we do at upstream emphasizes timeless principles, proven processes, and practical accountability,” said sam allred, who founded upstream academy nearly a decade ago. “we’re thrilled to have graham wilson, a world class trainer and expert on business development in public accounting firms, join us for this new program.”
“with clients hunkered down trying to ride out the recession, increased client attrition, and the baby boomers retiring in ever-greater numbers, a lot of firms are worried about where new business is going to come from next year, three years from now, and five years from now,” allred said. “graham and i want to be part of the solution to that problem.”
key features of the intensive, 18-month program include the following:
creation of personal business development plans by each participant
multiple levels of accountability to ensure participants follow their plans
three 1-day, face-to-face, highly interactive workshops
monthly conference call presentations by wilson and allred
mentoring and reinforcement by “guides” from within the firm
interested firm leaders can learn more about the academy for business development by participating in a free conference call presentation on april 22nd or may 5th. to register for the call, contact upstream academy at 406-495-1850.
roll call…
the event could be the largest gathering of it’s kind as participants take a hard look at what organizers are calling “the state of now” and the effect of the real-time internet on business.
