Blog: AICPA Economic Crisis and Recovery Center

CPA Firms Give Economic Outlook

Last week, the AICPA’s Private Companies Practice Section (PCPS) announced an Economic Outlook survey to which just over 1,000 CPA Firms responded. Questions on the economy were added to this year’s PCPS bi-annual CPA Firm Top Issues Survey. Results of the top issues will be announced later this week.

There are some good signs for the profession in this economic survey. First, when asked what the greatest impact economic downturn has had on their firm, between 15%-25% of firms with 20 professionals or less reported no impact, while just over 10% of firms with 10 professionals or less are actually seeing additional client opportunities. When combining firms with no impact and firms seeing additional opportunities, nearly one-third of firms with 10 professionals or less, in the survey, are seeing no impact to growth.

Now, look at another category: strain on Accounts Receivable. Around 30% of all firms said that strain on A/R has been the greatest impact. Strain on receivables is a growing concern for all businesses these days and those firms and organizations able to manage cash flow will make it through just fine. The two areas of greatest concern going into the survey launch for me were reduction in revenue, layoffs and reductions in new hires. Reduction of revenue is a concern with 25%-30% of each firm size category saying that this is the greatest impact to their firm. But again, it seems positive that it is ONLY 25-30% of the respondents and if you were to drill deeper, you’d likely find that these firms are in certain geographies that are harder hit by the economy than others.

Regarding layoffs, less than 15% of firms with 21 or more professionals stated this as the greatest impact, which also shows that the layoff issue isn’t large for our profession. Firms with 20 or fewer professionals each had less than 5% of respondents state this as an issue.

As I’ve traveled the country I’ve been speaking to various size firms and this survey confirms what we hear about our profession. Larger firms have been harder hit than smaller firms, but not significantly. This has caused some layoffs for some larger firms, but the cuts aren’t deep and are really more performance based (Rather than calling it performance based, I like to consider it differences between firm culture and where the person can succeed).

Small firms seem to be just fine. In fact a few are looking for talent.

The economy has affected the world in many ways; what do you think has been its greatest impact on our profession as a whole? Post a comment.

– Mark Koziel

Possible Extension of the Home Buying Credit

Yesterday, USA Today reported that Congress is considering an extension of the first-time home-buyer credit due to expire this fall. Some in Congress are even proposing to raise the credit from $8,000 to $15,000 and apply it to anyone who buys a home.

It seems likely the credit will be extended beyond the fall as there are a few proposed House bills to do so. Each bill carries a different twist beyond merely extending the credit past the fall.

According to the article,  four separate proposals and ideas to continue to spur the housing market have emerged:

1. A Senate bill submitted by Sen. Johnny Isakson, R-Ga., and co-sponsored by Senate Banking Committee Chairman Chris Dodd, D-Conn., proposes raising the credit to $15,000 for any homebuyer with no income limitation. This bill was entered last month.
2. Rep. Kenny Marchant, R-Texas, last month submitted a House bill that would extend the current $8,000 credit for first-time homebuyers through June 2010 and would also provide a $3,000 tax credit to current homeowners who refinance.
3. Rep. Eddie Bernice Johnson, D-Texas, introduced a bill that would extend the $8,000 credit to 2010 and now include ALL homebuyers.
4. The Business Roundtable, a separate group composed of CEOs from large companies, earlier this month asked Congress to raise the credit to $15,000 and make it available to all homebuyers.

Of the four options, tell us which one you think is best and why. Post a comment.

– Mark Koziel

Is your business post recession ready?

I’ve just finished a week full of travel being in four cities in eight days. I’ve listened to many of our members and firms discuss their current state and their prospective future.

I hear pessimism from some, worried what the future will bring, but overwhelmingly, the look on our firms and profession is optimistic. Even firms who have reduced head count did so because there wasn’t a good fit between the firm and employee and it’s something that maybe should’ve happened a year or two prior.

Firms are now focused on planning for the future, controlling growth and focusing on the remaining team members to ensure they stay.

Growth has been so fast and furious for many businesses in the last four years that this “break” helps businesses get back to the basics, reconsider their strategic plan (for those who didn’t have one, they now have time to create one!) and focus on what the future can bring.

What are you doing in your business to get ready for post recession? Post a comment.

– Mark Koziel

Billing & collections, business development at the top of Emerging Partners’ minds

I am just returning from the AICPA/PCPS Emerging Partner Training Forum where new and emerging firm leaders learn how to succeed as a partner in today’s firm.  This is the event’s fourth year and it was nearly sold out. It’s good to see in today’s economy that some firms have not cut back on a learning opportunity for their younger leaders and their firm.

In past years, the emerging partners aimed to achieve success for the firm and for themselves by focusing on attracting, retaining and developing people in their firms. This year, the economy has certainly changed the emerging partner concentration to billing, collections and business development. At the end of each day, Jim Metzler, Vice President of Small Firms at the AICPA, and I split the group up by firm size and facilitated roundtable discussions on the emerging partners’ implementation action plans from the Forum. There were plenty of great ideas for helping their firms improve on billing, collections, business development and even retaining the best and brightest talent.

I’m always excited about these future leaders when I leave the program. There’s plenty of brain power in these emerging leaders. I hope when they return to their office that their firms will allow them the opportunity to implement some of these great ideas for the benefit of the firms.

If you are a new leader, or about to become a new leader in your organization, what about you?  What’s at the top of your mind?  Post a comment.

– Mark Koziel

SBA staying active during the economic crisis

As I travel the country speaking to practitioners, I typically ask how easy or difficult they find getting a  Small Business Administration (SBA) backed loan for their company or clients.  I get mixed answers on this question, but primarily, many firms and companies have found in the last few years that it has been easier.  As Jim Metzler, the AICPA’s Vice President of Small Firm Interests, and I try to tell firms, “this isn’t your mom and dad’s SBA!”  Jim was a driving force behind getting the alliance between the AICPA and the SBA to completion a few years ago, and we’ve found the relationship to be beneficial to our members and to the small business community.

In order for the alliance to work, CPAs need to take advantage of what is there. Gaining a better understanding of what the SBA does is a good start.  The PCPS section of the AICPA Web site can help do just that.  Next,  find out what is available in your specific region.  I’ve found that the primary need of the SBA is lending and this couldn’t be a better time to try to help small businesses access critical funds.  Many practitioners have said that while the funds are available and the SBA backed loans are slightly easier to get than in past years,  you need to know where to find them and how to get started.  Small businesses go to a bank to get a loan and think they are seeing all loan options, but they may be dealing with a bank that doesn’t even offer an SBA backed loan and, therefore, may be missing out on great opportunities.

One practitioner gave me some great advice to pass along.  He said to go to the local SBA and find out which local banks have SBA backed loans available, then start with those banks and find all of your lending opportunities.

On March 19, 2009, my blog post was on the changes to the SBA loan program under the 2009 American Recovery and Reinvestment Act.  Hopefully you or your clients have started to take advantage of this program.  This was the first step toward trying to help small businesses survive the current crisis.  Practitioners around the country have told me that they’ve had some clients take advantage of this program with good success.

A few weeks ago the SBA announced a new loan program scheduled to go into effect on June 15, 2009.  The SBA ARC Loan Program is designed to help small business meet current expense needs in this down economy. Small businesses can borrow up to $35,000 that can be used to make payments for up to six months on certain qualifying small business loans they currently have.

This program is only for established small businesses, not for startup businesses.  Also, the business must show a profit in one of the last three years of financial statements.  The SBA site has additional information on eligibility and who the program is intended for.

What about you, have you dealt with an SBA backed loan recently?  If so, how did it go? Post a comment.

– Mark Koziel

What are Young CPAs doing to adjust to this economy?

The Young CPA Network conducted a survey to see what young CPAs thought about this current economy.  Results were published in the most recent Edge Newsletter, the newsletter for the Young CPA Community.

The survey asked many open ended questions of the young CPAs which provided some interesting insight.  The first question asked “How, if at all, do you feel the broader economic situation has impacted your personal and professional life?”  From this I found two underlying themes to the responses.

First theme I could see is based on the personal side of responses.  For those young CPAs who responded about the economy affecting them personally, there were many responses about tightening the financial belt, watching spending, telling others to watch spending, etc.  The AICPA has been working hard over the last few years to raise awareness on financial literacy.  Now the younger generation really is focused on this topic and that’s a good thing!

On the professional side, I couldn’t help but think of the opportunities for firms to retain their top talent. Responses like being “stuck” in public accounting longer, uncertainty about career options and delays in finding the “dream job” make me think of the opportunities firms now have to be different.  We now have our people’s undivided attention and if firms were to sit down with their people and ask them what their “dream job” may be, firms may find its not that far off from what they can offer.

It seems that the young CPAs are still concerned about job security in their current positions and firms have opportunity to make young CPAs feel more secure and appreciative of where they are.

Stay tuned to the Young CPA Network on aicpa.org for more interesting information in the next few weeks.

What is your organization doing to talk to young CPAs? Post a comment.

– Mark Koziel

Department of Labor provides support to displaced workers on COBRA

My blog post on 4/23/09 discussed the Cobra coverage benefit through the new American Recovery & Reinvestment Act. This was a guest post from Paychex, Inc. The U.S. Department of Labor has now provided additional guidance on their website to displaced workers. You can read an updated article on the AICPA Economic Crisis Resource Center.

Compliance with this provision is very real and employers should take note that the DOL is providing employees, past or present with the information necessary to make sure they take full advantage of this program in the event of a layoff.

CPAs in practice should alert their clients of this new information. It will make it easier for businesses to provide instant information to past and present employees about the program. CPAs in business and industry should alert their human resource department of this section of the DOL site.

– Mark Koziel

Accounting Jobs still looking strong

Forbes.com reported in their May 15^th “Where the Jobs Are: Accounting” that accounting jobs still remain strong.

In this article, Bill Demario, chief operating officer of Ajilon Professional Staffing stated, "Over the last six months the nation has lost at least 500,000 jobs a month — but when you look at accounting, the profession has added 3,000 jobs a month."

The article discusses general accounting positions and looks more specifically at CPA positions. The article reinforces the need for accounting in the business community and the need for CPAs showing that accounting is still a great career option.

The CPA profession can always use positive press and it proves even more in this down economy how great this profession is as a career option. I’m still proud to be a CPA. And I’m even prouder that my chosen career offers growth and opportunity during good times and bad. This can be a great retention point for young people working in firms or businesses and a recruitment point for young people looking for a recession-proof career.

What about you, are you proud to be a CPA? Post a comment.

– Mark Koziel

AICPA/UNC Kenan-Flagler Business & Industry Economic Outlook Survey update shows small signs of economic improvement

On April 28^th my blog post was about the first quarter’s survey results and at that time, while there was a bit of pessimism, there were some signs of slight improvement. Fast forward to 2Q 2009 and the trend from the AICPA C-Suite members are showing signs of continued improvement in the economy. The 2Q results of the survey are now available on the AICPA Financial Management Center.

I found it interesting that respondents were more optimistic about their own organization than the economy as a whole.  Also, respondents expecting to expand have almost equalized with respondents expecting to contract.  To me, that’s positive.

There was a slight increase in respondents thinking of layoffs, compensation freezes and hiring freezes in the 2Q.

No doubt we’re still in this recession, but I like to look at the positives in this environment.

Are you seeing signs of recovery? Post a comment.

– Mark Koziel

Where will I take my car for service?

USA Today on Monday reported that GM notified 1,100 dealerships they’d be closing and Chrysler notified 789 of the same thing.  So I wonder, where will I take my car for service?

I don’t know about you, but whenever I had to take my car for service, it seemed to take 2-3 weeks for the earliest appointment.  So, if I’m driving a GM or Chrysler, will it now take 6-8 weeks since there’s less choice?

In the last ten years, dealerships have taken on a different look and feel.  Dealerships today offer popcorn and latte’s for those waiting patiently for service.  You can buy logo’d shirts, steering wheel covers and hanging dice for your mirror.  Going to the dealership is now an experience rather than a chore.  This was done to increase the service experience as you were having repair work done. The dealership experience now is around the corner, but in the future may be across town. Will you make the drive?

The Internet certainly has changed the old dealership model.  The old days of haggling over price just don’t hold true with Edmunds.com and other sites that will tell you what you should expect to pay.  For dealerships, the annuity income comes from the service, not always the auto sale.  Customers will still need their cars serviced, especially for warrantee work.  As dealerships close, it may be more difficult to find a dealer, let alone an appointment.

This shows how unusual and deep this economic crisis is for Americans.  It’s no longer business as usual.  How we conduct our lives has changed, possibly forever.  Even the simplest, most automatic decisions of the past—taking a car in for service—has been disrupted and displaced.

And that’s not all bad. It means that it’s time to re-look at the way we conduct business, shore up our finances and focus on sustainability. When the next downturn comes—and it will because that’s the way of the economy—we have an opportunity to be prepared.

So my question to you, what will the auto service model look like in the future as dealerships close? Post a comment

– Mark Koziel