Smaller Accounting Firms Reap the Benefits of New Mandates

Midsize firms are more than happy to scoop up the audit clients being rapidly discarded by the larger accounting firms, the East Bay (CA) Business Times reported.

With the large firms focused on the more lucrative consulting work-which limits their ability to audit the same clients under Sarbanes-Oxley Act rules-midsize firms are filling the gaps in audit and other areas.


Advertisement


Click HereDon’t miss the FRx Express-the traveling FRx Software product and training road show, coming soon to a city near you! Discover helpful FRx Software tips and tricks, see product demonstrations, and attend a product Q & A forum. Register now


FRx Software Home Product Information
Training & Consulting Product Demo
Webcasts Customer Testimonial Video



The RINA Accountancy Corp. of Oakland is a good example of a company experiencing a boom in business. The firm, which employs 65 people, focuses and private and family-owned businesses.

Managing partner Jim Kohles said his firm now counts among its clients several private companies that used to be big-firm clients.

"Big accounting firms have decided to focus mainly on Sarbanes-Oxley compliance work and they have raised their prices 140 percent," Kohles told the Business Times. "They are literally telling long-term clients that they would rather do compliance work for big public companies than auditing private businesses."

The consulting firm Corporate Executive Board recently conducted a survey that found the average increase in audit fees among the big four accounting firms was 100 percent. A Massachusetts firm that tracks auditor changes, AuditAnalytics, reported in November that the nation's seven largest accounting firms either resigned or were dismissed by 526 clients in the first nine months of 2004, the Business Times reported.

Kohles predicts that if current trends continue, his company will have more work than it can handle and he sees the accounting market being transformed by the new laws.

"Our hope is that privately held business will see the benefit of being with a firm of our size and stay with us," Kohles said. "I think Sarbanes-Oxley work is going to peak and start to decrease in the next 18 months and I am not sure firing your long-term clients is a good strategy at all but that is essentially what the big accounting firms are doing."

You may like these other stories...

School tax breaks get House support as Democrats objectRichard Rubin of Bloomberg reported that the House of Representatives on Thursday voted to expand and simplify tax breaks for education as Republicans continue to pass...
Many senior US tax professionals believe that a streamlined audit process will be the top benefit resulting from the IRS Transfer Pricing Audit Roadmap, a new toolkit organized around a notional 24-month audit timeline,...
Tax accounting to be simplified for money-market fundsThe US Securities and Exchange Commission (SEC) voted 3-2 on Wednesday for sweeping changes to institutional money-market funds, Emily Chasan, senior editor of...

Upcoming CPE Webinars

Jul 31
In this session Excel expert David Ringstrom helps beginners get up to speed in Microsoft Excel. However, even experienced Excel users will learn some new tricks, particularly when David discusses under-utilized aspects of Excel.
Aug 5
This webcast will focus on accounting and disclosure policies for various types of consolidations and business combinations.
Aug 20
In this session we'll review best practices for how to generate interest in your firm’s services.
Aug 21
Meet budgets and client expectations using project management skills geared toward the unique challenges faced by CPAs. Kristen Rampe will share how knowing the keys to structuring and executing a successful project can make the difference between success and repeated failures.