A New Recipe for the CPA Profession, With Richard Savich, PhD
A New Recipe for the CPA Profession
Presented by: Dick Savich, PhD, CPA,
President of ABKO Consulting
Tuesday, January 9
4:00 - 5:00 p.m., Eastern Time
Visit the AccountingWEB Workshop Calendar for upcoming workshop sessions.
Richard Savich presented a live, interactive workshop focusing on the future of the accounting profession and the role consulting will play. He addressed anticipated changes to the profession and to firms, as well as changes that the individual accountant will be expected to make in the future.
Topics for this workshop included:
Read the full transcript of the workshop, below.
Richard S. Savich, PhD, CPA
President, ABKO Consulting
Dr. Richard S. Savich, CPA, has consulted on six continents and in over three dozen countries. His specialty has developed over the years from primarily management accounting to information systems to executive development to its current emphasis on strategic financial and personnel planning in professional service organizations.
His former positions as National Director of Management Consulting - Professional Development and Training with Ernst & Young and Coopers & Lybrand, along with his recent service as chairman of the AICPA's Management Consulting Education Task Force and member of the Management Consulting Executive Committee have provided him with the background and experience necessary to help organizations achieve their full potential. He now is chairman of the AICPA's Continuing Professional Education Executive Committee.
He has taught and performed research on the faculty in the Graduate School of Business Administration and the School of Accounting at the University of Southern California. In addition, he has been a visiting professor at several universities, as well as Director of Executive Education at the University of Pittsburgh and Director of Information Systems Programs at the University of Redlands. He has published over twenty-five books and articles in various academic and professional journals around the world.
Workshop Moderator: Welcome everyone and thank you for joining us today! I am happy to introduce Dr. Richard Savich who will be presenting our workshop today, "A New Recipe for the CPA Profession." Dr. Savich is a CPA and has consulted on six continents and in over three dozen countries. His specialty has developed over the years from primarily management accounting to information systems to executive development to its current emphasis on strategic financial and personnel planning in professional service organizations. He has taught and performed research on the faculty in the Graduate School of Business Administration and the School of Accounting at the University of Southern California. He has published over twenty-five books and articles in various academic and professional journals around the world. He now is chairman of the AICPA's Continuing Professional Education Executive Committee.
Workshop Moderator: Welcome, Dr. Savich - the floor is yours!
Richard Savich, PhD: Thank you. We always like to get a feel for the audience. What types of practices are you all involved in?
Brenda Richter: Solo practitioner doing business dev & taxes.
Bob Holmes: I teach Principles at a community college.
Jim Donald: Systems and Tax.
Daniel Scarberry: Sole prop small bus in Las Vegas.
Robert Askey: two partner/10 person cpa firm/member RAS.
Deborah Dungy: 12 person/3 partner firm.
Richard Savich, PhD: This is a good group to be talking to about changes in the profession. My outline is to look at future consultants you might hire to help you or at least compete against as they enter the field. Followed by some practice opportunities emerging, then look at future trends in our own industry, and then conclude with questions and answers.
But first, any pressing questions from you? A consultant today needs technical skills, industry knowledge, interpersonal skills, a knowledge of the consulting process, and most of all listening ability. Your knowledge of accounting and tax and systems is what your core competencies are related to. You need to look at specific industries to see where you can apply those competencies. What industries are you all currently practicing in?
Ronald Hudson: When you say industries, can you be more specific as to what is an industry?
Richard Savich, PhD: You could use entertainment, agriculture, dot.com companies, transportation, auto dealerships, etc. as examples.
Deborah Dungy: Construction, small business & not-for-profit.
Nicole Valenti: So you're looking for vertical market specialties?
Richard Savich, PhD: Yes.
Jim Donald: I'm not industry specific, but the bulk of my practice is service, law firms, and restaurants.
Brenda Richter: Various small business mostly service oriented.
Richard Savich, PhD: These are good examples. The question you should be asking your clients is what is their core competency. That is what do they do best?
Nicole Valenti: Probably not accounting.
Richard Savich, PhD: Typically core competencies are related to customer service, product innovation or cost reduction. You are correct about accounting. That's why we are so successful. It must be our core competency.
But is it related to product innovation? In a way, yes. We have a service, which is our product, and we must constantly innovate it to keep up with the competition. Jack Welsh of GE said, If the change outside exceeds the change inside we are doomed. Does this apply to your practice? Are you farmers tilling the same soil year after year or hunters always looking for new prey? Most graduates today are coming out with not only accounting knowledge but also extensive IT skills.
Nicole Valenti: Richard, are you familiar with online accounting services?
Richard Savich, PhD: If you are talking about ASPs, yes. Many CPA firms are providing these services to their clients. This improves the quality of the accounting records and reports. One potential drawback is the ownership of data. The client cannot easily change CPAs if the data is resident on the ASP.
Nicole Valenti: It gives CPAs access to the clients' data online, so CPAs can stay in their offices and see live data. The data is actually owned by the client, not the ASP.
Richard Savich, PhD: That's true, but getting the data back is not always feasible, especially if the format is not compatible with other applications. But let's look at some needs of your clients to see what consulting opportunities exist.
Paul Dunn: Richard, please clarify for me - what is the "new recipe" referred to in the promotional material for this workshop?
Richard Savich, PhD: Paul, I am looking at what new services and practice opportunities exist for you. The tried and true recipe we have been following is changing rapidly. If you look at what changes have occurred within the AICPA within the last few years you can see that the way we used to practice is changing.
Nicole Valenti: Has anyone here heard of the E-Practice program offered by Intacct Corp? It's definitely a new way to offer consulting services to clients.
Jim Donald: Can you elaborate on those AICPA changes?
Richard Savich, PhD: The AICPA has created cpaweb.com0 In addition; the shared services corporation has reduced much of the back office work for state societies and the AICPA. The Institute has also put out Infobytes, an on line training facility with 1200 hours of CPE for only $95/year. They are also trying to get an international designation called Cognitor accepted.
Richard Savich: PhD There are many organizations that offer programs to improve the practices of CPAs. One of you mentioned you belonged to RAS. How is RAS working for you?
Robert Askey: Yes that would be me. RAS has helped us change our focus and approach to servicing clients from the traditional compliance oriented practice to more of a business counselor/mentor relationship with willing clients.
Workshop Moderator: Dr. Savich - what do you recommend as the direction accountants should take, given these changes in the AICPA and the profession as a whole?
Richard Savich, PhD: The Institute has a similar program called CPA Performance View PLUS. The major agenda item should be listening to their clients to see what types of decisions they need to make to help them with their business. They need to go beyond just providing financial information. You all know about specific types of industries and have seen what the issues are in a number of companies in that industry.
Nicole Valenti: I agree Richard. In fact, it's important that CPAs become business consultants to their clients.
Richard Savich, PhD: Can the information be applied to other businesses?
Jim Donald: True, but I like to think that has always been my focus.
Richard Savich, PhD: There are some specific offerings by small firms. Business valuations, Economic analysis, Succession planning, personal financial planning, forensic accounting, operational audits, benchmarking.
The industries serviced by small firms are, healthcare, environmental services, other professional service firms, NAFTA related, Real estate, Energy, Gaming, Entertainment, Education.
What other questions do you all have? The other changes in the Institute are the introduction of Assurance Services. They concentrate currently in Electronic Commerce, Health Care Performance Measurement, Entity Performance Measurement, Information Systems quality, Comprehensive Risk Assessments and Elder Care.
The CPE Executive Committee is currently polling various interest groups to see what specific types of training programs are needed. Do you have any suggestions for this group?
Nicole Valenti: Training programs for what?
Richard Savich, PhD: Training programs for CPAs to continue their education and enhance their practices.
Richard Savich, PhD: Jim Donald - What percent of your practice is compliance and what percent is advice?
Nicole Valenti: I don't mean to "plug" this organization, but what they are offering is very exciting. Intacct (www.intacct.com) is offering a service that absolutely enhances how you run your practice. Maybe the Committee should look into that.
Jim Donald: Very little in compliance. Almost all in some type of advisory capacity.
Richard Savich, PhD: We did. That's why we settled on Mentor Plus that offers the CPA Performance View PLUS program I mentioned.
Nicole Valenti: Got it.
Richard Savich, PhD: That's good, Jim.
What industry do you specialize in?
Jim Donald: Unless you count tax compliance. The majority of clients are law. Revenues about 1.5 to 3 mill annually.
Michael G Murray: It seems to me that the CPA business had better consider its future and come up with some cost effective ways for us to really make money. The idea of each of us slitting each others throat for a $ is crazy. The AICPA has been dominated by the BIG ? For so long they don't know what the little guys in the trenches even look like.
Richard Savich, PhD: That fits in with the study I referred to where small firms are advising other professional service firms.
Nicole Valenti: You're right about that Michael.
Jim Donald: But I have to admit...I totally understand what Michael is referring to.
Ronald Hudson: In what ways are they advising other professional service firms.
Richard Savich, PhD: You should now look to expand that idea to other professional service firms like medical, outsourcing, recruiting & search.
Jim Donald: Ok, but that sounds like more of a marketing strategy than an accounting issue?
Richard Savich, PhD: That seems like a strange comment. All the committees I have sat on have only had one Big 5 member if they could get one.
Michael G Murray: do you mean i should be offering to do personnel searches for my clients? What do I know about that field?
Richard Savich, PhD: Jim - That's true. You have a niche and need to expand it.
Richard Savich, PhD: Michael - If the search is for someone in the accounting or finance field, who better than you?
Michael G Murray: I have clients who specialize in personnel search why me?
Richard Savich, PhD: By saying you should expand advising to other professional service firms I did not mean you should compete with them, only advise them, similarly to what you do for law firms
The other approach is to establish strategic alliances. I have a client who I did strategic planning with and he now uses me to find acquisition candidates for some of the companies he represents as a sales rep
Nicole Valenti: Wouldn't it be better to enhance or master the core competency of a CPA, rather than start trying to be all things to all people?
Richard Savich, PhD: I have also help CPA firm associations and then worked with the individual members to help them with their practices.
Richard Savich, PhD: What is the core competency of the CPA?
Michael G Murray: Are you saying that in addition to cultivating the referral network I already have in the professional field, I should be attempting to make them clients for my financial, tax and accounting advice?
Richard Savich, PhD: Why does that sound unusual?
Michael G Murray: No, just a different twist.
Richard Savich, PhD: That's the concept of the new recipe.
Jim Donald: Most of my network is also clientele.
Richard Savich, PhD: If we look at our competition they are doing just what I recommend. In that case you need to expand services, which means product or service innovation. That plays off the customer service relationships you already have, CPAs should not be trying to compete on $$$
Michael G Murray: But there has always been the perception that we are less valuable, a commodity, available for $/hr - look at H&R, AMEX, etc
Richard Savich, PhD: So the message is either expand your practice based on learning new services or by marketing existing services to new clients. There has to be some shake out in the industry, but remember we are selling relationships, not form filling. If your advice is worth so many dollars, then charge for it. Remember, advice is worth what you pay for it. And I give you this for free.
In the art of negotiation, if you give up something, you should get something in return. Therefore, if you want to lower your fee make sure you get something from the client in return.
Jim Donald: Any recommendations on such marketing?
Michael G Murray: You asked what the AICPA should focus on for training a while ago - maybe it should be focusing on the concept of enhancing the incomes of its members so we can attract new blood to the field.
Richard Savich, PhD: Jim - look at associations of industries in your geographic area and plan a marketing campaign to contact them and explain your services. Use your existing contacts and ask them if they can recommend some clones of themselves. Michael - New blood is an issue. Most accounting programs now are reduced in size as students move to information systems.
Jim Donald: Ok, but then I'm probably competing against a colleague, right?
Richard Savich, PhD: A recent study by the Institute is called, "Accounting Education: Charting the Course through a Perilous Future."
Michael G Murray: I spoke recently with prof and he said we just don't pay enough.
Richard Savich, PhD: It is an excellent read.
Jim Donald: Not compared to IT salaries, anyway.
Richard Savich, PhD: Pay for something you enjoy is secondary. How do we get them to enjoy the work?
Michael G Murray: Is the study on the web?
Richard Savich, PhD: Certainly not through just debits and credits or tax compliance. Check the AICPA website aicpa.org. We are a little beyond our time so let me conclude and ask if there are any final questions? If not, let me tell you that a planned presentation on this topic in PowerPoint will be attached to the transcript
Workshop Moderator: Thank you all for attending today, and thank you Dr. Savich for a very interesting workshop!
Richard Savich, PhD: If you have any questions, please contact me at firstname.lastname@example.org. Thank you all very much.