Blog: AICPA Economic Crisis and Recovery Center

What's new on the housing front?

I met with my mortgage broker the other day.  Mortgage rates are at an all time low.  It’s a great time to refinance.  My broker has been holding me off for two months due to the uncertainty of any government programs for the mortgage industry. As it turns out, the larger banks have been “holding” mortgage applications until the new Fannie Mae/Freddie Mac mortgage programs could be rolled out to the public. The program was announced on April 9^th and now the banks seem ready to get Main Street refinanced.

I never thought I’d qualify for a government-backed program, but as it turns out, I’m on the bubble and it was worth the wait. If you, or a client, holds a mortgage of about 80-105% of the home value AND your current mortgage is held by Fannie or Freddie, you may qualify. With the drop in home values, someone who wasn’t in that bracket before, may be in that bracket now. That turned out to be the case with me with the decline in home values. In North Carolina, we haven’t been hard hit but definitely have been affected.

My mortgage broker told me the time is now to lock in the rate and figure out what program will work best. I still may not qualify for the new government-backed program, but it’s worth the wait to see the options. Of course, once we lock in and get the paperwork done, it will be time to get in line behind all of the mortgages the banks have been holding for the last few months. If you were thinking of refinancing or have clients you were thinking of advising about refinancing, you may want to move now.

For our new accounting professionals and young CPAs, what about you? Have you taken advantage of the new tax incentive for first-time home buyers? An $8,000 tax credit to buy a home offers a wonderful opportunity to become a homeowner! Some may be concerned about their professional future as there is some fear of layoffs. From what I’ve seen nationally, there have been some pockets of layoffs based on geography or firm size (larger firm), but it hasn’t been profession-wide. It seems our profession is holding fairly strong through this economy.

If you feel uneasy in your current position, speak to a mentor or manager about where the firm stands and what your future prospects are. Let them know you are thinking of investing in the area and becoming a homeowner and want to do that with peace of mind. Of course, things could change, but it’s worth asking now just to see what today brings.

Have you been able to help a client or yourself with any government incentives? Post a comment.

– Mark Koziel

AICPA/UNC Kenan-Flagler Business & Industry Economic Outlook Survey packed with information

If you haven’t read the AICPA/UNC Kenan-Flagler Business & Industry Economic Outlook Survey survey yet, it’s worth a look. The survey is loaded with great information. It’s not all bad news, either.

Conducting in the first two months of 2009, the survey included AICPA members in Business & Industry in the C-suite category. Comparative data goes back to January, with nine periods surveyed.

Respondents were asked about their views on the economic outlook, whether they were more or less confident, optimistic or pessimistic on recovery and when recovery would start to take place. It’s safe to say that generally views were more negative than they were in the last survey of November 2008 and prior. Since there has been some slight improvement in the market and economy since March, I am anxious to see what the 2^nd Quarter survey will look like.

Interestingly, there was a sharp increase in positive responses to the question, “Do you think Congress should pass an economic stimulus package to boost the economy?” In July, around 15% supported passage of another stimulus package; that number had increased to a little more than 30% in November. By January 2009, the percentage saying they supported passage of a new stimulus passage had climbed to more than 60%. That is quite an increase in just five short months.

I felt there were some signs, maybe not of good news, but less bad news in the report. The participants were asked which measures they are planning in response to the current economic conditions. Of the seven items presented, layoffs was fifth! Now it’s a tight race in the top 5 with compensation freezes at number one at over 45% followed by capital spending cuts at around 45% of respondents, then hiring freezes, travel restrictions and layoffs between around 44% to a little over 40% respectively. OK, so they are extremely close, but it’s encouraging to me that layoffs aren’t number one since that can be the easy way out for some.

The most encouraging, to me, was how the respondents answered questions about the credit market crisis impact on their company. There was only a slight change downward in the companies not seeing any change in the impact on their company from the credit market crisis with the majority of that change going to problems with customer collections. There were slightly fewer participants who were experiencing higher credit costs and more restrictive terms and a negligible increase in those who were finding less financing options for their business. There is a great article/checklist in the May Journal of Accountancy on Loan Covenants that you should check out.

So, what are you seeing? Do you think there are signs of small improvement? Post a comment.

– Mark Koziel

New COBRA law could be new opportunity for CPAs

The Economic Stimulus Plan included new provisions on COBRA you need to be aware of.  To give you proper perspective, I’ve asked the experts at Paychex, Inc. to help you better understand both the plan’s requirements and your opportunity to craft an action plan for delivering needed client value.  Also, check out the article by Paychex, Inc. on this Economic Resource Center.

Here’s what they had to say:

By:	Darlene White, Accountant Marketing Manager, Paychex, Inc. Jennifer Ozminkowski, COBRA Compliance Specialist, Paychex, Inc.

Although April 15th has passed, be careful not to escape too soon to the golf club, beach, or other well-deserved “relaxation haven.”  Several specific provisions of the Economic Stimulus Plan, signed on February 17th, came with a 60-day deadline – which was April 18th, 2009.

The Stimulus Plan includes changes that businesses will quickly need to accommodate if they have had, or anticipate, a reduction in workforce from September 1, 2008 through December 31, 2009.

New COBRA requirements effective for periods of coverage beginning on or after February 17 2009:

• Employers subject to federal COBRA are required to accept a 35 percent premium payment from eligible former employees as payment in full for their monthly health insurance premium.
• Employers must pay the remaining 65 percent of the premium on behalf of COBRA participants. Employers are entitled to a credit for these COBRA premium assistance payments on their Form 941 tax return.
• A newly revised Form 941 must be used to report the number of COBRA premium assistance individuals and the total dollar amount of COBRA premium assistance payments.  This newly required information is necessary for FIRST QUARTER 2009 returns – due April 30^th.
• The deadline for employers to send Participant Election Notices in connection with the special 60-day election period to eligible participants (those involuntarily terminated since Sept. 1, 2008) is April 18, 2009.  This notice provides details on how to take advantage of this special election period as well as details regarding the premium subsidy.  Recipients of this notice include those who may have been originally notified at the full premium cost and declined COBRA coverage as well as those who may have elected and subsequently terminated COBRA coverage.
• Through state continuation laws, these regulations may also affect employers that offer group health insurance plans with less than 20 employees.

Action plan:  Identify which clients offer group health and educate them on the new requirements, due dates, and implications to Form 941.  Be sure to consider your state-specific laws (if applicable).  TO MAKE YOUR KICK-START EASY, we have created a simple client letter that you can put on your letterhead, e-mail, or e-newsletter to push out to clients right away.  You’ll find this firm-customizable tool – in both English and Spanish – at www.paychex.com/stimulus.

**To listen to a pre-recorded Economic Stimulus webcast hosted by Paychex, AICPA, and distinguished lecturer Sid Kess, CPA, which contains specific Making Work Pay and COBRA provision details, please visit www.paychex.com/stimulus.

CPAs have a tremendous opportunity to deliver critical client value right now.  The liability exposure to business owners subject to COBRA is at unprecedented levels.  With unemployment so high, many individuals will be seeking benefits and calling upon former employers to take appropriate action, or expose those employers who do not.  You, the CPA, can be the reason why your employer clients remain free of scrutiny or penalty.  Your effort provides enhanced protection to clients from COBRA fines of up to $110 PER DAY. Most importantly, you’ll be demonstrating to your clients that you are the trusted adviser necessary to their business’s overall health.

The material contained above is current only as of the date of publication. These materials are for informational purposes only. They are not legal advice and should not be relied on as such. You should contact your attorney to obtain advice with respect to any particular issue or problem.

– Mark Koziel

Social media to increase your networking and business development efforts

OK, so last week I finally joined Twitter. I’ve heard so much about it and I’m not sure what took me so long! It’s amazing to see who and what is out there. In fact, Ashton Kutcher just won a competition with CNN to see who could reach 1 million followers first!

So what does this have to do with the economy and economic resources? Plenty. The new social media outlets can help CPAs find employment, network and identify new business opportunities.

For CPAs out of work, or at risk, make sure you are on LinkedIn at a minimum. Facebook also may be good, but be careful. Facebook is more of a personal and social network and casual pictures and comments could affect your job search rather than enhance it. LinkedIn is an excellent professional source for networking. Make sure you also join as many CPA groups as you can follow. The AICPA has a number of groups, including those for every member section. On many of the CPA groups, there are plenty of recruiters scouting for talent. There are some helpful tips on the AICPA’s Young CPAs Network Group as well.

If you’re not on Twitter, sign up. When on an interview, ask the interviewer if they tweet as you’d like to follow them. This is a good way to show your enthusiasm for the company and provides you an opportunity to follow that recruiter to see how many interviews are taking place. Naymz is a new social media network that makes getting recommendations easy. It works well off of your LinkedIn contacts so getting set up is simple.

For companies looking to hire, social media make fantastic recruiting tools. Start using it for recruiting today so it can pay off in the future. Any person that interviews with you should get connected to you on LinkedIn. If they were a good candidate now, but you didn’t hire them, in the future, when a new position opens you have their most recent contact information in LinkedIn.

Finally, business development is also possible in social media networks. For LinkedIn or Facebook, set up your company as a group. If you have a certain customer niche, set up a LinkedIn group for that niche and invite current clients and prospects to join and send out periodic notes to that group. You can do the same thing on Facebook. Better yet, have your young CPAs get all of this set up for you. It will get them involved in the business development process.

Do you allow your young CPAs to carry their own blogs? Maybe you should. They have a keen interest in social media so it may be a great way to get them involved in business development as well. I read a recent post on the AICPA Young CPAs Group on LinkedIn on this very topic where a young CPA was asking if companies encourage or frown on the practice.

What about you, would you allow your young CPAs to blog?  Post a comment.

Find me in social media LinkedIn: Here’s my profile http://www.linkedin.com/in/mjkoziel and for Twitter: http://twitter.com/markkoziel

– Mark Koziel

Cost savings that can lead to increased profitability

Last week I read the press release on the new alliance between the AICPA, CPA2Biz and Intacct with great interest.  Intacct has a cloud computing offering for a company’s total accounting need AND I’m told it works great with Bill.com, which CPA2Biz is already providing to members.  I started to think what a great time for such an innovative solution as companies and firms are looking for new ways to cut costs and leverage technology given the current economy.

This application is useful to all segments of our profession and there’s a different program for public accounting and members in business, industry and government.  The real value is that it is only available through CPAs!  Details on the offering are available here.

Business, industry and government members:

A 10 percent discount is available for controllers or CFOs who are CPAs.  This product can offer you not only streamlined operations but also an opportunity to demonstrate how your AICPA membership can translate into cost savings for your company.  Sure there’s the conversion and startup costs, but if your current software is old and tired, now’s the time to look at this solution.

Public accounting members:

Big firm or small, this is a great way to provide an age-old service to your small business clients.  In the 2008 PCPS/TSCPA National MAP Survey of more than 2,700 firms, respondents indicated that 11% of revenues came from writeup work.  Many firms out there are providing this service already and are probably trying to support a variety of retail accounting packages for their different clients.  With this solution, which CPA2Biz and Intacct are offering exclusively through CPA firms, you could have a more professional offering to provide your small business clients.

The unique differentiator for you on this product is saving the client money by outsourcing the bookkeeping, controller or CFO function to you along with savings on the actual software and more timely information at the touch of a button rather than waiting for you to arrive at their office to fix the problems.

If your firm is in the IT solution sales business you may also want to become a reseller of this product as well to offer this to year mid-tier business clients.

If your firm is one of the many looking for new ways to work with your clients, you should check out the CPA2Biz information on this program today.  I already know of one really large firm and one small firm working with this platform.  Contact me at mkoziel@aicpa.org if you’d like to speak to either firm.

But you don’t have to listen to just me on this.  Progressive Accountant, Greg LaFollette, wrote, in his blog, “I’m particularly pleased about the value of this alliance to the main street CPA. With tens of thousands of sole practitioners and very small firms serving nearly 25 million small businesses, most with fewer than 10 employees, this solution seems very well targeted.” Read more at http://www.theprogressiveaccountant.com/news/cpa2biz-and-intacct-form-alliance.html.

Whether business, industry and government or in public practice, this solution will give you a step up on the competition.  Your best implementation strategy may be to get one of your younger CPAs involved in the research of this project.  There are upcoming web seminars to give an introduction to the program that you or one of your younger team members should participate in.

What new technologies are you working with to save money and increase profitability? Post a comment

– Mark Koziel

Position yourself as a trusted financial business advisor

The AICPA’s Business, Industry and Government (BIG) team along with the AICPA’s Communications team has put together a pretty cool tool for CPAs. It’s called “Navigating the Current Economic Crisis: What It Means for Businesses,” a presentation that explains all that’s going on in this current economic environment.

This presentation has a ton of potential for CPAs. While the presentation was originally put together for CPAs in business, industry and government, it also applies to CPAs in public practice. Not only is the slide deck well done, but the accompanying notes are incredibly detailed and user-friendly. With no more than an hour or two of prep time in reviewing the notes and practicing on the slides, you’ll be ready to hit the road.

Let’s talk about potential uses:

Business, Industry & Government

This presentation would be great for any type of audit committee, board of directors or senior leadership that you deal with on a regular basis. This presentation will give them great insight and provide you with an opportunity to show your knowledge and skill in the financial arena. Take the information in this presentation, then incorporate work-related stories to tell the “what’s in it for me” for your company.

You can also give this presentation to various employee groups in your company. This will help those who may not be as financially savvy to understand what’s happening around them.  Whether your company currently is prospering or struggling, this presentation can be a great lead  into how your company is doing and what they can expect in the short term. If you’re not communicating with your employees on this topic, your employees will see only the big picture painted by the media, which is usually all gloom and doom. Even if you too have bad news to convey, the presentation gives you an opportunity to provide context, answer questions, and demonstrate professional maturity in facing tough economic challenges.

Public Accounting

Like business, industry and government, having this discussion with your employees would be a great idea. Again, if your firm is doing well, let them know the state of the financial situation and how your firm is not as affected by it. By providing this presentation to your team, you can also see who is excited by it and has the potential to present it to your local community.

This brings me to the local community opportunities. First, you have the potential of getting in front of your local chamber of commerce, banks, not-for-profits, or other local bodies. Offer this presentation to the local small business community to better explain all of the things happening around them. It gives the firm a great opportunity to be out there marketing in a soft sell environment.

As I hear of firms talking about the struggle to keep clients or attract new clients due to price constraints, this presentation can also be a good client retention or client attraction tool.  As part of the proposal for new work, how about offering this presentation to the potential client’s employees?  This is a great way to set yourself apart.  I’ve been saying the last few years that firms, as part of their business proposal, should be offering the financial literacy presentation the AICPA has available in the CPA Marketing Toolkit. And by the way, April is financial literacy month, so now is a good time to volunteer in your community to talk about personal financial accountability too.  Many presentations are available on the Financial Literacy Resource Center.

In the AICPA’s Private Companies Practice Section (PCPS) we encourage this type of outreach as part of the business development accountabilities for younger CPAs in firms.  Let the younger CPAs go out to these clients and potential clients and give these presentations and sharpen their presentation skills.

So whether you’re a CPA in business, industry, government or public accounting, take advantage of this great resource provided by the AICPA.  This is a great way to set yourself apart as the trusted financial business advisor in the community.

What are you doing to educate your employees and community? Let us know. Post a comment.

Post tax season business decisions

April 15^th is fast approaching and as tax season ends, many CPA firms will be taking a deep breath and evaluating their state of business, both past and future.  For those facing slowdowns in volume or even client payments, tough issues may surface, including the prospect of cost-cutting measures and layoffs.  As we’ve seen in recent months, many organizations – including a few public accounting firms – have resorted to layoffs in order to survive the economic downturn. More companies will weigh their options as we enter the second quarter of the year.  The good news is, things are looking up. However, if personnel changes become inevitable, there are alternatives to layoffs for both firms and their clients.

My March 10th blog post talked about how this current economy would affect the CPA profession and we’re still looking at the same scenario. The CPA profession will be affected in pockets, but as a whole we will remain a strong profession with great opportunities. It’s encouraging to see that the CPA Job Finder on CPA2Biz continues to add job postings. Firms are still growing and hiring, and there are plenty of great jobs in business, industry and government.

I don’t want to wave the “sky is falling banner.” We see enough of those flying around us every day. At the same time, the smart business person has to be prepared for good and bad times. So what if you’re in the situation where you need to make cuts in your company and you’ve exhausted every avenue except people? First consider my blog post on March 12th which discussed alternatives to layoffs. I do believe there are other ways to cut payroll costs without cutting people altogether.

So let’s say you’ve done all that and there’s still the need for a layoff. If you don’t have a Human Resource professional in-house or haven’t consulted an outside HR professional, you probably should. There are laws and regulations that may affect your layoff situation. At the Federal level, there is the Worker Adjustment and Retraining Notification (WARN) Act, which requires a layoff to provide notice to employees affected within a certain time frame. From this there are several states that have instituted their own regulations on this topic, so be sure to check with your state Department of Labor before any move is made. The U.S. Department of Labor has assistance on layoffs for employers. For state contacts, the U.S. DOL also has a website with contacts.

For financial executives in manufacturing or a CPA firm with manufacturing clients that are considering layoffs, the DOL site also provides a link to the Manufacturing Extension Partnership (MEP).  MEP offers assistance to manufacturers to help make the U.S. manufacturing industry more competitive.

The AICPA’s Private Companies Practice Section (PCPS) has created a memo to firms along with an outplacement checklist that firms can provide to an employee being laid off to help with their job search. This checklist has been given rave reviews from HR professionals in firms around the country as a very useful tool.

If you have found yourself recently unemployed there are some great resources to help you. The Department of Labor has a dedicated website for those who have recently lost their job. Also, be sure to use the checklist on this Economic Resource Center that PCPS created for firms to provide to employees who were laid off.

– Mark Koziel

The Sweet Smell of Recovery?

A blog post I read last week gave me hope for an economic recovery soon. (OK, so there was some profit taking back in yesterday’s market, but it was still a good March!)  It was written by Bill Sheridan from the Maryland Association of CPAs, a truly innovative thinker for the profession. Here are some stats Bill cited in his post:

• The Dow Jones industrial average was up 7.7 percent in March, its first month of gains in six months and the Dow's best March since 2002. The NASDAQ was up 10.9 percent, its best March ever.
• Orders for durable goods (big-ticket items like cars, appliances and furniture) unexpectedly jumped 3.4 percent in February
• Consumer confidence rose slightly in March.
• After sinking to all-time lows in January, new-home sales rose 5 percent in February.
• Existing-home sales rose 5 percent in February and mortgage applications were up more than 30 percent in late March.

Bill also addressed the cynics who may not think this is enough, but Bill, you sold me. I hear some good news as well from some firms. While larger firms are seeing anywhere from flat to just slight declines in revenue, smaller firms are seeing flat revenues to slight growth. That’s right – growth in this economy. It seems small businesses that are struggling turn to their CPAs for additional guidance and services, and firms are responding. It makes sense. CPAs offer an objective, rational approach that provides for a sense of calm.

This reminds me of a recent Podcast the Private Companies Practice Section (PCPS) recorded on CPA firms helping clients with Projections. Eric Rigby of The Rigby Group spoke about conducting a client planning meeting where the client arrived concerned about their future given the recession and left with a realistic, logical plan showing their future was actually quite bright. That’s what we need to continue to do as a profession – calm the fears of small businesses and get them to look at their business strategically and realistically.

For CPAs in Business and Industry, there still seems to be a strong sense of anxiety.  But as a financial leader in your business, you can help regulate that anxiety so it doesn’t ripple throughout your company? Have you looked at how your message of cost cutting measures has affected company morale? Are employees’ anxiety levels raised because of emails and messages about reducing expenses? Don’t you think customer service could drop when employees have heightened anxiety? The AICPA’s Business, Industry & Government group put together a great Business Brief on this topic “Downturn Presents Leadership Opportunities for B&I CPAs”.

We’ve all seen the bad news as the TV, web and old time newspapers have sold plenty of advertising around it. Bad news does sell, no doubt. But imagine what a little bit of good news can do for your employees and organization once in a while.

What about you? What good news have you heard recently? Post a comment.

– Mark Koziel