The Bucks Effect


There were two notable exits from software reselling this year, as Moss Adams sold its EnTech Solutions unit and Hein+Associates similarly got rid of its technology reselling operations. Reports are there have been many more such divestitures among CPA firms.

So should we blame Sarbanes-Oxley and increasing strictures on what services firms can provide to audit clients? Perhaps. Both Moss Adams and Hein mentioned the regulatory environment in selling the operations.

But maybe something else is at work. After all, an interview with Bill Martin of Cole Martin, a three-partner firm in Vernon Hills, Ill., showed that the much-smaller operation was taking the one partner who had devoted most of his time to installing Peachtree and QuickBooks, and bringing that person back to traditional services. Technology services “sort of slowed down,” Martin noted.

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Technology comes, goes, and changes, and the preparation of tax returns continues as more and more Americans turn to paid preparers to meet their obligations to the government.
In recognition of the importance of this business, Accounting Technology once again devotes most of its October issue to the tools that make the tax prep business work. This year, the important trends are the increasing importance of Internet-based preparation, and attempts to reduce the amount of paper generated by the process.
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Trial balance and engagement software has not moved to the Web, yet. But these tools are increasingly part of the drive to reduce paper, as noted in the Trial Balance Review by Wayne Schulz.

You can talk about the SOX effect, but the bucks effect, the lack of business, the fact that things sort of slowed down, seems to be playing a bigger role in the decision of CPA firms to exit technology reselling than has government regulation. While Moss Adams made note of the regulatory climate after it sold EnTech, a Great Plains reselling operation, to Omega Business Solutions, the partner in charge made a bigger deal of the fact that the business wasn’t growing.

One of the comments touching on this motivation was made by John Higgins, president of CPA Crossings. When Accounting Technology asked its readers about the impact of regulation, Higgins replied, “The firms that have not been successful, by and large, made the decision to move out of this service area prior to Sarbanes-Oxley and the like.”

Even with Moss Adams, the withdrawal from technology was not complete. It still provides technology consulting services. It just doesn’t sell software anymore.

As to regulation, if accounting firms think they can make money with these services, they can probably find a way around the rules. We’ve been there before.

At one of the first Great Plains Stampede reseller conferences I attended, I groused to a table full of resellers that I had not met many resellers from CPA firms. “Everyone at this table works for a CPA firm,” replied one surprised VAR.

While these VARs sported name tags that did not have CPA firm names, every one of them worked for a CPA firm affiliate or co-owned operation, many in states that prohibited CPA firms from reselling software.

It’s also hard to believe that the pressure vendors feel to get more distribution will not keep many firms in software sales. Microsoft made a real effort to turn CPAs into recommenders with its Small Business Manager. While that hasn’t been a booming success, it’s probably an initiative that won’t go away. And CPA firms still seem to be the ideal sellers of not-for-profit accounting software.

The one wrinkle is that the software market, even with an uptick in sales, is different than it was during that Stampede discussion. The climate favors larger resellers. But it’s hard to shake the belief that those CPA firms that are committed to selling and who believe they will continue to make money as software resellers will find a way to stay in the game.

So is the SOX effect important? Probably, but it’s more a matter of whose Oxley is gored.

Robert Scott — Editor

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