Accountants face a serious knowledge challenge and an enormous business opportunity in Spring 2009, as they prepare to meet client demand for business and tax consulting services in a severe downturn and a changed tax environment clearly evident in the recently enacted American Recovery and Reinvestment Act (ARRA). According to a study of 250 accountants and small business owners released in March by Intuit Inc., clients already struggling with the economic downturn will be turning to their accountants more than ever to help them manage their businesses. Interest in business consulting and financial advice has nearly doubled in six months and 80 percent of small business owners surveyed said they would feel more confident having an accountant as a close business advisor during this time.
Implications of the ARRA
Courses addressing the tax provisions in the recently enacted ARRA, and possible state tax implications of the law, dominate CPE catalogs this spring. With additional tax legislation in the pipeline which, when enacted, will require careful study, familiarity with the technical issues in this Act has become a clear and urgent priority for CPAs. CPE providers including the AICPA, state societies, and individual firms are all developing programs to address the new law. The New Jersey Society of CPAs has scheduled three seminars and one Webcast on ARRA for the month of May alone. The Oklahoma Society of CPAs, recognizing the business opportunities the new legislation represents for accountants, will offer a course in June on the ARRA that examines the new law from the perspectives of "planning opportunities, pitfalls to avoid, and ways practitioners can capitalize on the law with their clients."
CPEs to Strengthen Business Advisory Services
As clients press for more business advisory services, professionals should consider courses that will help them to incorporate provisions in the new law into existing tax and business advisory services or to develop new services in the context of both the new law and the economic slowdown. Changes to first-year expensing and bonus depreciation along with longer net operating loss carryback in ARRA will affect many small businesses, as will changes in employment taxes, withholding, and COBRA requirements.
Other provisions of the law that could impact clients include deferral of debt cancellation income, repeal of IRS's built-in loss rules, qualified small business stock, and S corporation built-in gain.
The Pennsylvania Institute of CPAs will offer a conference to CPAs in business and industry as well as practitioners that presents a broad overview of business concerns in the current environment. In addition to the provisions of ARRA, it addresses:
- The global transition to IFRS.
- The rules governing fiduciary conduct, including benefit claims procedures and 401(k) fee disclosures.
- Expanded tax credits, grant programs, and incentives provided by the government to drive corporate green behavior.
- Identity theft is heightened in a technology-driven world.
Lean accounting, prominent in some catalogs, is an area of interest to management accountants and practitioners. Other business services in demand, where CPE programs already exist or are being developed, include forensic accounting and risk management.
More than 90 percent of the accountants and small business owners surveyed by Intuit agreed that in addition to networking, adding new services and training and education were the most important steps they could take in the current economy. Sixty-six percent of the accountants who responded to the Intuit survey said that they had increased the services they offered to help their clients weather the storm. These included:
- Payroll services
- Tax services
- Online accounting
Managers and staff who provide these new services or train others to provide them will need to strengthen their existing skills and train with new software. Courses in business software and Excel that offer CPE credits will support these new business initiatives.
Individual Tax Planning
Clients will be looking for advice on 401(k) plans and individual tax strategies. One popular tax strategy that appears in many 2009 catalogs, that could be the source of additional consulting revenue, involves converting pensions and IRAs to Roth IRAs.
Changes in tax credits and new credits in the ARRA that clients will need to understand as part of their tax planning include the expanded child care credit, new American opportunity tax credit and computers as an education expense, first-time homebuyer credit, unemployment compensation exclusion, transportation fringe benefits, the Plug-in electric vehicle credit, and energy tax incentives.
CPAs who are planning to grow their individual tax advisory services practices by introducing investment advisory services may consider working toward a new credential as a Certified Financial Planner by choosing courses that are accepted for CPE purposes by individual state boards.
Balancing the various demands of clients while managing for growth and trying to find the time to study the technical accounting issues in 2009 seems at first glance to be an overwhelming challenge. But for CPAs who relish both the business and the technical sides of their profession, it is the best of times.