CPA Practice Alert: Are you ready?
While presenting a series of seminars recently, I had occasion to visit with three CPAs who had each made significant business decisions a year ago. These proactive decisions had earned them hundreds of thousands of dollars, millions in one case. While the signs of the times a year ago had begun to indicate the need for conservatism in business practices, these CPAs were all looking beyond what they could see happening in the economy and marketplace and paying attention to their intuition. Although it didn't seem time to sell parts of their businesses, two sold segments before they became worthless a year later. The other CPA made some personal investment decisions that generated funds for his early retirement which would not have been possible had he waited. Trusting their personal assessments of the immediate future, and their intuition, enabled them to prosper in difficult times.
Management personnel of many smaller CPA firms have begun to look beyond media rhetoric and politicians' words to consider the potential impact of the economic and political environment on their firms and clients. Having an intuitive feeling that the economy may not improve for a few years, some are changing their normal methods of operation.
Here are a few changes CPA firms should be considering:
- Pay daily attention to reliable news sources within our profession. For example, knowing that proposed changes to the Internal Revenue Code include the elimination of the LIFO method of accounting, the intangible drilling credit and percentage depletion may mean opportunities to help clients plan and respond to such changes to minimize tax burdens.
- Consider the different services clients may need due to new legislation, changes in professional standards and the affects of economic downturn on their operations, customers, and vendors.
- Evaluate clients' worth to the future of the firm and outplace those that have no or little potential benefit. Considering both client profitability and their potential in the future should be part of this decision making.
- Reconsider the nature of services performed by the firm to minimize risk and meet emerging client needs. Look for opportunities to specialize in "niche" areas such as cash flow forecasting or accounting for certain proposed tax law changes.
- Read, evaluate and respond to exposure drafts of new pronouncements that affect firm services. Current amendments to risk assessment SASs and compilation and review standards are important examples.
It is time to get ready!