outlook & analysis

how the aicpa betrays the public and undermines the profession

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decline and fall

professor william dennis huber at capella university in minneapolis argues that public accounting today has abdicated its place as a privileged profession by bounding into an ever-growing alphabet soup of designations and specializations far beyond its public mandate – and for work with no connection to its original purpose: the audit. do cpas now share a berth in society no better than acupuncturists, dental hygienists and massage therapists? we wonder. – the editors

by wm. dennis huber, jd, dba, cpa, cfe
professor of accounting, finance and business law

huber
huber

the accounting profession in the usa has been embodied in the american institute of cpas since 1936. thus, the history of the rise and subsequent decline and fall of the american accounting profession is as much a function of state and federal laws and regulations as it is a function of the actions of the aicpa.

we can divide the rise, and subsequent decline and fall, of the american accounting profession into six periods. each period begins with a radical discontinuity with the previous period. each discontinuity is marked by legislation or legislative-like events at either the state or federal level that impacted not just the way public accounting was practiced, but also the way the profession was organized. read more →

when value pricing works

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what econ 101 and inelastic demand curves teach us about billing rates.

rubber band istock_000009459899smallby frank stitely, cpa, cva

before we turn our hymnal to page 10 and sing that old favorite “we’re not selling time. we’re selling knowledge,” let’s consider if clients are buying what we’re selling.

when you go to the grocery store, do you ask, “i’d like to buy the cow milking knowledge of a farmer?” of course not. you ask for a gallon of milk. customers buy outcomes, not inputs. read more →

pricing, billing, costing: don’t blame clients

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communication negotiation pricing istock_000020509177how good communication habits can head off problems.

by ed mendlowitz
implementing fee increases

professional fees are typically billed based on time. yet, clients want outcomes and place a value on results, which doesn’t necessarily relate to time spent.

ingrained habits are hard to break away from. for ages, many professionals quoted jobs by providing hourly rates and possibly a range of expected hours. some projects are open-ended in the sense that no one knows where it will take them and what will be uncovered once work commences. this might include a forensic investigation, litigation where the discovery process becomes acrimonious, unraveling transactions in a complicated bankruptcy, a first-time audit of a multinational corporation or a tax audit for a reasonably sized business.

however, for most work, there is an understanding of what will need to be done and the approximate value to the client. this could include an annual audit, tax return, setting up a cost accounting or internal control system or a transfer price study. read more →

the 8 traits creating the firm of the future today

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future informationa cpa firm in san francisco hires programmers! do you?

by hitendra patil
pransform

several discussions across multiple thought leadership groups, industry experts and advisors have boiled down to the crux of the question for the future, i.e.: what is needed by cpa firms to become sustainably successful? what are these traits “the firm of the future” must have? i think there are eight:

1.     redefine profitability

when partners and talented accountants perform routine tasks such as scanning documents and data input, the leverage on intellectual capital reduces. that impacts profitability. and the well-settled definitions of profitability are getting unsettled by technology, new generation thinking and sea change in regulations. efficiency gave you optimal returns in your time. it won’t in the future. your profits will be driven by the effectiveness of your combined intellectual capital (knowledge, wisdom) and your infrastructure (systems, software, communication channels). you will create measurable value for your clients and this value will drive your profits. it is all hinting to a complete overhaul of your pricing strategies, ground up.

trait needed: effectively priced intellectual capital on demand read more →

5 tech tools for managing remote staffers

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by sandi smith leyva
the accountant’s accelerator

when you are working out of your home and have reached the point where you want to hire someone, you have many options, but one of them may not be having employees come to your home to work. and although i have had employees working out of my home when i was single, it was not an option in 2010 when i was ready to hire an assistant. so i hired a virtual one.

today you might be surprised to know that my employees work from home two days a week each, and i only see them in person once a month. how do we do it? we keep our heads in the clouds. here are five tools that keep us seconds away while we’re miles apart. read more →

big four slump in china

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paul gillis phd cpa
paul gillis phd cpa

five years of losses to second-tier firms.

by 卡塔尔世界杯常规比赛时间

in what the world’s leading china-watcher in accounting calls “bad news for the big four,” kpmg was dropped a notch and ey was pushed out of the top four rankings by chinese-owned firms.

paul gillis, phd, cpa, and professor of practice at peking university’s guanghua school of management, termed the new rankings “bad news for the big four,” adding, “the big four had better find their game soon. if the trends of the past five years continue, china may be the place where the big four are beaten by the second tier.” read more →

high-impact learning: 4 ways to maximize cpe roi

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and the fatal mistake cpa firms make in their training budgets.

by michael ramos

for years cpa firms have tried to measure the roi from their learning and development spend, an effort that has produced mostly unsatisfactory results.

standard learning and development metrics provide some insight into the training function, but firm partners are more interested in measuring something much more elusive: tangible economic benefit from training spend.  what the profession has struggled with is, while measuring costs is easy, measuring direct return has proven to be quite difficult.  faced with an incomplete roi model, firms turn to the only side of the equation they can control, the cost side, which leads them to take the only option that seems viable – cutting costs as a way to drive roi.

the problem is firms are asking the wrong question. instead of focusing on precise measures of return on training dollars, cpa firms would be better served by asking the more subjective question, “what should we do to make sure our training dollars are being spent wisely?”  the answer to that question may lack the precision firm leaders desire, but it does have one distinct advantage over precise objective measures: it is a question firms can answer.  and the answer, if thoughtfully considered, may achieve the ultimate goal: providing high-impact training at an affordable cost. read more →