Practice Management

A regional accounting firm recently announced that it sold its financial outsourcing solutions practice to another accounting firm. The outsourcing group provides internal auditing and compliance services, primarily to financial institutions. A stated reason for the sale was that independence regulations restrict many companies from using the same accounting firm to provide both external audit and internal audit services, and the growth of the group was limited in the regional firm by these restrictions given the firm’s growing number of financial institution audit clients. I wonder what else influenced the sale, and if the sale is indicative of a trend of divestment of practice areas by accounting firms? As more and more firms establish affiliates and specialized practice groups, it would make sense that firms would continue to evaluate their profitability and whether it pays to divest. Businesses are constantly evaluating their units, so why shouldn’t accounting firms? Am I talking about apples and oranges, as most firms are looking to recruit and retain staff? Maybe, but I think firms, especially the larger ones, are increasingly applying a corporate business philosophy to how they operate. There are consultants that match up firms for mergers, so why can’t these consultants also act as the brokers for a transfer of a firm’s practice group or affiliate? You also might see more firms being broken up more by practice areas, with the staff from each practice area joining different firms because of the greater value that can be obtained in contrast with the dissolving firm merging with one firm. The accounting firm is an evolving business model. Consolidators, technology, independence requirements, and globalization are just a few of the factors driving the changes that influence firms differently, often by the size and location of the firm, as well as by the competition the firm is up against. Some firms are being very creative and thinking outside the box so why shouldn’t firms, when appropriate, consider and explore all available options?

After years of sounding the fiscal imbalance bell, Comptroller General David Walker, the head of the Government Accountability Office, has committed a to-do list to paper for the 110th Congress.In a letter dated Nov. 17, Walker outlines a number of areas his federal watchdog agency, says the newly-elected politicians should consider in getting a “jump-start” on legislative planning.

If we achieve what we measure, then is it true that we become what we think about most of the time? Philip E. Humbert, Ph.D., wrote, "The human brain is a goal-seeking, problem-solving machine, and the things we think about, focus on and worry about inevitably shape our destiny."Let's take this down to the reality of a managing partner. What do you focus on and worry about? If your answer is everything, you are filling your mind with too much stuff. No one can worry about everything. However, there are a handful of things you should be worrying about when it comes to the health of your practice.

TREASURY, IRS UPDATE ANNUITIES RULES: The Treasury Department and the Internal Revenue Service issued proposed regulations addressing the tax treatment of an exchange of property for an annuity contract.The proposed regulations would apply the same rule to exchanges for both private annuities and commercial annuities, tightening a popular tax-deferral strategy.

With the Democrats winning control of the U.S. House of Representatives and Senate, the tax legislative outlook has shifted to new priorities and concerns, according to Mel Schwarz, a partner in Grant Thornton’s National Tax Office.

Business tax reform needs a bipartisan, national consensus, but is absolutely necessary for the country to remain competitive in a global economy, according to Senate Finance Committee chair Chuck Grassley, R-Iowa."I think the consensus is there that the business tax system is in desperate need of reform," he told a recent hearing on the business tax system. "But we need to start building consensus on how to do it."

The use of private annuities to shelter gain on appreciated property has come to an abrupt halt, if the Internal Revenue Service has its way.Whether the IRS can withstand pressure to withdraw or substantially amend new proposed regs before they are made final, or whether the final regs can withstand judicial challenge, remains to be seen. For now, however, effective for annuity transactions after Oct. 18, 2006 (subject to a relatively brief six-month "estate planning" exception), the division between "old rule" and "new rule" is dramatic.

After working with Anchorage-based Dudley Consulting on accounting software projects for the past decade, CPA firm Finley & Cook announced the two businesses will merge.

Accounting firm Elliott Davis LLC has acquired the Galax, Va.-based practice of Larrowe and Co. PLC.Financial terms of the deal, which became effective Nov. 17, were not disclosed.

CCH, a Wolters Kluwer business, announced the creation of a new Small Firm Services group, which will comprise the employees, services and products of two recently-acquired businesses.The formation of the entity follows the August and September deals for tax-prep software suppliers ATX/Kleinrock and TaxWise.