An asset to any business, CPAs and accountants have a multitude of challenges when it comes to staying on top of new laws and advising their clients. Recently, executives representing this industry met at the Las Vegas office of City National Bank to talk about the changes they’ve seen recently and what is on the horizon.
Connie Brennan, publisher and CEO of Nevada Business Magazine, served as moderator for the event. The magazine’s monthly roundtables bring together leaders to discuss issues relevant to their industries.
Is staffing a challenge for this industry?
Tamara Miramontes: I’d say probably the number one challenge, which it has been forever, is staffing qualified people to do the amount of work that we have. There is a lot of work out there.
Jessica Sayles: We’re all looking for the unicorn out there, the three to five year [person who is] not entry level and not wanting to be a partner or manager, a just come in and do the work person. That’s our biggest challenge.
Dana Tompkins: I think it ties to the complexity of the public accounting arena now versus the wages that you receive. A lot of individuals are deciding to go into industry and it’s not as complex and yet, in some cases, the payroll is even higher. It creates a real challenge for the public accounting firms.
Does the next generation want to put in less hours?
Miramontes: They’re definitely working at least eight hours. They might not want to work 60 or 70 hours, but they’re more than willing. They know that this profession requires more than 40 hours a week.
Doug Winters: [The hours are] a limiting factor why some are not picking [this profession]. As we go back to universities and try to find some of their three or four year graduates that have been in public [accounting firms], they’re finding very few of them want to stay. For many of them, there’s a lot of opportunities in industries outside of a firm, and it’s very hard to attract them to stay because of a lot of it is the work/life balance.
Tom Donohue: The next generation of people don’t mind working, they just need different motivations. There are definitely other generations coming up behind us and my philosophy wasn’t the same as theirs. Their philosophy is, they don’t mind getting paid a little less, they want a better work/life balance. I was all about, I want to get paid the most and I’ll work as hard as I have to to get it. That’s not what we’re seeing with some of the folks that are coming up through our firm now. They want that balance, like you were saying.
Can we expect more mergers and acquisitions of CPA firms?
Miramontes: Definitely. We are always looking for additional mergers and acquisitions, it’s part of our growth model nationwide, to grow through mergers and acquisitions as well as through natural [means].
Alisha McClellan: I do think there are more mergers coming but it’s mostly due to succession problems at existing firms. You may have a firm where there’s only a few partners. What’s the exit plan for that business owner? How are they going to ensure that their retirement obligations are met or that they can monetize their business? For them, a lot of times, the answer is to roll up into a larger firm. I see more coming as boomers age and retire out of their accounting firms.
Donohue: I find it kind of ironic that, a lot of times, we are tasked with helping clients with succession planning and CPA firms generally have the worst succession planning of any industry. I think that’s what bigger firms target. They look for firms that are aging out and don’t have a deep bench of people coming up behind them. I wouldn’t be surprised if maybe two new national firms are here in a couple of years, that aren’t here now.
Have client expectations changed?
Donohue: I think clients, in general, expect more value for what they’re paying for. They expect us to differentiate ourselves from the typical audit or tax return, whatever that may be. It’s an intangible thing you can’t really put into words. They expect to see the partners and the managers out there on the jobs and have the interaction with the higher-level people.
McClellan: I feel like there is a higher expectation for response times now. When I started in the profession 15 years ago, it would be customary to respond to an email within two or three business days. Now, the expectation is less than four hours. Sometimes, if you don’t respond immediately, clients will text you. We’re happy, absolutely, to serve our clients, to do what it takes and to be accessible, but the expectations are higher.
Do you think clients view CPAs as a commodity?
Sayles: We’re fighting hard not to be.
Curt Anderson: That’s been the problem in this industry for as long as I’ve been in it. The commoditization of our industry has been going on since the early 80’s. We’ve been fighting this battle for a long time. It’s intellectual skill and knowledge versus just doing paperwork. With paperwork, you can find somebody to do it cheaper. If you want someone that can take the paperwork and do something with it, to help you run your business better, that’s what we provide. That’s what this industry provides. All of us like to have clients who really do value the relationship and they understand that we provide more value than what we bill. But, they also understand, we’re running a business. They see us as necessary. Necessary not only because they have to comply with various [regulations] but also necessary because they need help.
What should businesses expect regarding taxes in the near future?
Sayles: Their tax preparation bill is going to go up, it has to. Business owners are possibly going to have benefits from the tax law but there’s no way to know without putting in the work. There’s a possibility that they won’t benefit from some of the changes, but we’ll still have to do the work to determine if they do or not. It’s complex and there’s a lot of “If this, then this”. Without putting in the work up front, there’s just no way to know, in many cases.
Miramontes: People really want to be meeting with their CPAs and their accountants earlier, rather than later, to discuss these issues. That’s the critical thing, meeting with their CPAs early enough to resolve these kinds of issues.
Sayles: We can send out every email, every letter, call whoever we want but I’m seeing a shocking lack of people coming in and taking it seriously. We’re pushing out all of this information and with extremely little response.
Winters: There’s some great planning opportunities, but the IRS has not written any regulations for the new tax law yet. [When] those regulations come out, which might be at the end of the year, it might be too late to take advantage of them. There are some really good planning opportunities for people in certain industries and certain tax situations where their tax bill could go down.
What common mistakes do businesses make when it comes to their accounting?
Anderson: We’ve got clients that really value what we do but yet, when it comes to hiring people for their own business, they want to cut corners. They think they can hire somebody who, fundamentally, is an accounting manager, and they think that person can come in and be a controller and a CFO. They undervalue in-house people frequently. What happens is, they get their financials pulled together and then we come in, at our billing rates, to clean it up. It’s a waste of time and money.
McClellan: It is worth the investment [to have a good in-house person] because what is the most valuable information to a business owner? It’s how their business is running, when things are profitable, what isn’t profitable, where costs are. Is there any more valuable information to make decisions than your financials?
Tompkins: They need to have timely and quality records. Whenever we run into a situation where there was embezzlement or something along those lines, the books were behind, the business owner wasn’t getting timely information or it was messy, and then they call. We start getting involved and it just unravels. There’s a reason you weren’t getting timely information, there’s a reason it was so messy.
Winters: If you look at accounting broader, to our clients and the entities, I think the biggest challenge most of them face, that they don’t address, is the risk of fraud and the exposure they have. For large organizations, that can be costly, but most of them survive it. But, you see a lot of small businesses where it’s devastating. It can actually put them out of business.
Anderson: You really have to have a pretty good idea of where you started to figure out where you’re going to go. You’ve got to have good information to plan from, if you don’t have good information you can’t run your business well, then you can’t plan at all. People think of accountants as reactionary bookkeepers that you give information to and they go off and do what they do. We aren’t really that way. I think everybody here is looking at proactively trying to determine what the future can be, not what the past was.
Donohue: The goal is to get our clients to think of us, not as a tax preparer, not as an auditor, but as their business advisors. Don’t just reach out to us when your audit is due or when your tax return is due. Reach out to us throughout the year, let us know what’s going on in your business. We might have some good ideas that can save you taxes or defuse a problem that might be hidden in your financial statements. Being proactive is key on our side and the client’s side.
How has technology changed this industry?
Tompkins: I think we’re all going to be forced to get on the cloud at a certain time. The software just inherently conflicts if you are managing your own in-house server. I see a big push of going to the cloud. We’ve, somewhat, tried to resist it. We wanted to make sure that the confidentiality, security and all that was in place. We’re just getting forced in that direction in order to reduce some of the headaches in working with the technology and the conflicts in the software.
Anderson: We found ourselves shifting more and more to the cloud. Probably 75 percent of our business is on the cloud at this point in time. That’s where it’s going. That’s where the expertise is to protect against a lot of phishing and other attacks on the system. Those guys are big enough that they’ve got capabilities that we, individually, don’t have. We’ve had a lot of this on the cloud for the last four, five or six years and we’ve had no resistance from clients at all.
Donohue: The other thing that’s happening in the industry right now is, technology is evolving. We’ve got artificial intelligence, bots and all this technology that is threatening to take jobs away from the industry. Some people view it as a threat, I tend to view it as an opportunity.
Winters: Accounting has been one of the longest lasting professions. It’s done very well and it will continue to do well. There’s some new technologies and things people talk about but, at the end of the day, so many people don’t understand the finance side of business. Even if you can automate routine tasks and have greater artificial intelligence, you need people that know what that means and can advise you and help with planning and strategy. The future is great. If there’s a young person that’s interested in finance, accounting is a great career. I don’t think anyone here has ever had a problem finding a job, even during the recession. Accounting is a great long-term career for young people to consider and the future is great, it’s not going away.
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