[IMGCAP(1)]While I was working full-time early in my accounting career, I was also picking up clients that I did on the side, also known as moonlighting.

One of the clients was a franchised ice cream store. I used to go there one night every quarter to record his checkbook transactions into a regular set of accounting books. Today, in one form or another, this would be done on a computer with software such as QuickBooks, but in those days it was written up in ink by hand.

Using the amounts I entered into the books, I then prepared payroll and sales tax returns and whatever other forms needed to be done. Finally, I would write out the checks, including mine, sit down with the client, chat a few minutes and then leave with my payment. This whole process took me about three hours.

One night, and I still can’t explain why, everything I had to do only took a little more than an hour. I felt that if I sat down with the client after that short period and handed him my check, the client might feel I had taken a short-cut on something and perhaps had not earned my fee. It took me a few moments to decide to stay, and try to do something extra to fill in the time.

Since he was an ice cream store, I decided to go through his bills for the last two years and see how many cones he had purchased. I picked this because his sales had steadily increased and I was curious about the increasing volume of what he was selling. I really had no motive but felt this would give me a better handle on how he did business.

Well, I was stultified by the result. He had actually purchased far fewer cones in the current year than in the previous year, but his sales revenues had increased. I equated the cones purchased with cones sold since he bought what he needed when he needed it and kept almost no inventory. I had no clue why this happened.

After thinking about it, I decided to share the result with my client and ask him why this was so, wondering if maybe something that was not accounted for properly. When I told him what I found (not telling him that I just wanted to fill in some time), he seemed puzzled and thought about it for a while. He then said that he thought it could be right because he seemed to be selling more packaged ice cream than cones, but really had no explanation and would need to think about it.

He called me about a week later and asked me if I could stop by some evening, which I did. He told me that he believed the neighborhood could be changing, with unsavory characters hanging around a small park that was across the street from his store. His shop was open until midnight each night. Instead of children coming down at night to buy cones, he had noticed that their parents came down and bought packed pints and quarts. That accounted for the sales growth and explained the drop-off in cones.

He started to keep track of the sales by hour and eventually started closing at 10 pm, reducing some costs. But a long-term projection indicated that the business would decline and lose value and stop being the source of his living. This led to his deciding to sell the business and buy a new franchise in a different area.

I felt that my advice and counsel contributed to his decision and a positive change in his situation. Since then I have always looked for ways to bring something to a client’s attention that they might not have thought about. That night made me a consultant.

Edward Mendlowitz, CPA, is a partner in WithumSmith+Brown, PC, CPAs. He has authored 20 books and written hundreds of articles for business and professional journals and newsletters plus a Tax Loophole article for every issue of TaxHotline for 27 years. Ed also does a blog twice a week that addresses issues his clients have at www.partners-network.com. He is the winner of the Lawler Award for the best article published during 2001 in the Journal of Accountancy. He has also taught in the MBA graduate program at Fairleigh Dickinson University, and is admitted to practice before the U.S. Tax Court. Ed welcomes practice management questions and can be reached at WithumSmith+Brown, One Spring Street, New Brunswick, NJ 08901, Tel: 732.964-9329 e-mail: emendlowitz@withum.com.