Electronic Accountant: How did you get into the business of advising accountants?
Allan Koltin: Somewhat by mistake. I came through the ranks as a practitioner, and was promoted to partner in one of the largest regional firms. During this time I identified a passion for working with other professional services firms and helping them with their growth and profitability issues. Often when there is a problem many theories are available on how to solve it. My background as a practitioner allows me to see the "practical reality" in helping to develop a solution.
EA: What makes accountants different from other business people?
AK: There are quite a few similarities but I find accountants to be nice people, committed to integrity and honesty. This is not to say it’s not true in the business world too, but accountants seem to play at a higher level. Having said that, I do feel accountants are generally still risk adverse and continue to struggle with the many changes that take place within their professional life and their business.
EA: How did the profession get itself into this mess and can it get itself out?
AK: The first part is a tricky one. I’d like to say it was as simple as Arthur Andersen being too loose in terms of its quality control relative to Enron, Worldcom and other public companies. The reality is that while this was an issue I also believe that corporate America got into a feeding frenzy in the last 5 – 10 years to post profitable results. What they found was a big gray area in accounting and financial reporting and were able to abuse these areas. The investing public and the media don’t want to accept that over 99.9% of CPA firms are committed to quality and have the highest ethics and standards. It will take us some time as a profession to reestablish ourselves in these areas, but I believe eventually the world will come to realize that there are bad seeds in every industry and profession and that the accounting profession as a whole does possess high standards and integrity.
EA: Will the new Public Accounting Oversight Board be able to succeed in its mission?
AK: My only bias towards the Accounting Oversight Board is that the media attention has focused way to much on this Board whereas the real answer lies within the inner sanctums of the national accounting firms in terms of what their quality control policies will be and what they will and will not tolerate in terms of risky audits. Clearly the pendulum has swung form the CPA firm being somewhat at the client’s mercy to the CPA firm having the upper hand with corporate management. While the demise of Arthur Andersen was sad and traumatic, that lesson will resonate with all of us within the accounting profession for many years to come and will serve as a real wake up call to what can happen if we look the other way.
EA: In your view, what will the profession look like in five years?
AK: The potential of Sarbanes-Oxley, if passed at the private company level, will have a devastating effect on local and regional firms for many years to come. Right now the hottest issue within the accounting profession is what state accounting boards and state legislatures might do. The advisory role of the CPA firm and their closely-held client could potentially change and, unfortunately, negatively impact small and medium-sized business throughout the country. Because of the public outcry against the accounting profession, some politicians have gotten too deep in the forest and forgotten about what is good for closely-held businesses. These companies need their CPA firm in an advisory capacity.
