Thought Leaders Predict the Future

Source: Inside Public Accounting

Each year, IPA names the Most Recommended Consultants in the October issue, as named by the firms participating in IPA's Annual Survey and Analysis of Firms. We asked these leaders to share with us their predictions, trends and issues for 2009 and beyond. The following highlights are excerpts, reprinted with permission:

Allan Koltin (www.pdiglobal.com) 
As firms are reducing payroll, they are also cutting quite a few other costs along the way and finding that, when they come out of this recession, they will be more "fiscally fit" firms and probably even more profitable in 2010.

What firms are finding is that the CFO or audit committee is also looking at how to reduce costs and looking for a unique alternative roughly between half and two-thirds of the price. I'm seeing this play out at firms of all size.

Gale Crosley (www.crosleycompany.com)
Companies are now extra-sensitive toward costs for their accounting services. Include the impact of SOX, where companies realized that mid-sized firms are a viable alternative to Big Four. All of this is creating opportunities for mid-market firms to snatch clients away from the nationals.

Firms will look more closely at efficiency in service delivery to enable better price competitiveness. This will result in investment in methods and tools such as Lean/Six Sigma and workflow software.

Steve Erickson (www.steveericksoncpa.com)
Mid-market firms can benefit from anti-large company sentiment. Process improvement and resource management will be at the center of changes during the balance of 2009 and 2010, as firms look to leverage their high-cost professionals. Processes will become more formalized, and the work will be triaged to take advantage of less costly labor without sacrificing quality. With these process improvement efforts, utilization rates in most firms will increase significantly, which will start to reduce labor and benefits costs as a percentage of net revenue for the first time in many years.

The use of bi-lateral, time-sensitive engagement letters will become more important in the short term to make sure client expectations are met.

Roman Kepczyk (www.itpna.com)
Workflow tools integrated with document management systems such as Thomson GoFileRoom, Doc-IT, Acct1st, or via Web-based services such as XpiTax XCM, are helping firms optimize production. Firms need to get rid of manual and spreadsheet-based due date lists and utilize today's workflow tools that track every step of production, while at the same time promoting standardization in processes. 

Jennifer Wilson (www.convergencecoaching.com)
Firms are on the cusp of a major practice management application transition.

Unfortunately, partner groups that aren't unified will bicker more than usual, putting pressure on firm executive and management committees to deal with some long-standing tensions and issues, especially around compensation and buy/sell, and will hold partners more accountable than ever before.

These impacts have potentially positive outcomes for firms. The economic downturn, like a forest fire, can leave responsive firms in a healthier place that fosters re-growth when the economic bounce occurs.

Robert Gallagher (www.rjgallagher.com) 
With the current recession, many retirement portfolios are losing over 50% of their value, so partners over 65 will continue to work on a contract basis. This situation will help firms with their succession planning by giving them more time to recruit and develop experienced professionals.

The climate of the merger and acquisition market will continue to be extremely active and it will be a buyer's market. It is difficult to determine whether the reduction of 3,500 firms is because firms are no longer members of the AICPA or they are no longer in business. In any event, I predict there will be 30,000 CPA firms in 10 years.

The implementation of the new auditing standards, the move to international standards, new peer review requirements and the continued blizzard of pronouncements (all of which seem not to provide much value to the client from their perspective) present significant challenges for firms to maintain good realization on audit engagements.

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From Inside Public Accounting, June 2009, p. 10, The Platt Consulting Group, www.plattgroupllc.com. Subscription $409 per year; back issues--nonsubscribers $50. 317-733-1920.