Art of Accounting: CPAs Who Go to Work for a Client
IMGCAP(1)]I know many CPAs who left public accountancy to take a “better” job. For many of them this was a mistake. For some it worked out, so if you are one of the lucky few, you can stop reading what I have to say.
There are basically three types of companies the accountant could work for—a small client that does not have an in-house controller or CFO, one whose controller will be replaced by the departing CPA, or a large company that has an entire accounting staff already in place. I will talk today about working for the small companies that do not have a controller and the other two types of organizations next week.
In many situations the accountant is hired to bring in-house much of the work the independent accounting firm was doing, with the client anticipating substantial savings in fees. At the same time the accountant is told the client wants to expand their business and needs a sharp numbers person as a key participant in that growth.
The growth part could be true and in that case the accountant would play a key role. However, if growth was the reason, the framework would have already been taking place. The product line would have been expanded, along with the customer base, distribution and marketing, while additional personnel would already have been hired. It is logical for the company to need an in-house accountant if it is expanding. However, in many cases this is not what happens. The owner thinks that hiring the CPA working on his account (and sometimes it is a partner) would pay for itself with reduced accounting fees.
So, the accountant quits his or her job and starts working for the client. What they think will be an exciting adventure and career boost becomes a dead-end slot where about 75 percent of the work is what they were doing already, with not much time left for managerial assistance or to venture into new fields. In effect, their learning ends, along with the stimulation of working daily with other professionals and a wide range of clients. So is the ability to share complicated situations with colleagues. The new controller can’t call the accounting firm because that will generate a time charge. What happens is the accountant surrenders their career and the client no longer has the support of the accounting firm with varied specialists and access to the most experienced partners who also are great door openers with bankers and others that clients occasionally need. The accountant becomes dead ended in an overhead position with the prospect of pretty low raises. These people usually last about five years and then they switch jobs, spending the rest of their careers locked in a time warp.
This obviously is not the case where the company they are joining is really growing. Then it might be stimulating and last longer than five years.
There are many reasons these people leave public accounting, but I suggest they are illusory and might deal with an immediate frustration for which the good is being ignored while the bad is concentrated on too much. Not advisable for managing a long-term career.
Even when things work out great, the future of a family-owned business will be somewhat clouded by other family members potentially joining the company, and the owner becoming incapacitated, dying or selling. If the business really takes off, it is probable that someone more experienced will replace you.
Next week I will discuss replacing someone or working for a large company.
Edward Mendlowitz, CPA, is partner at WithumSmith+Brown, PC, CPAs. He is on the Accounting Today Top 100 Influential People List. He is the author of 24 books, including “How to Review Tax Returns,” co-written with Andrew D. Mendlowitz, published by www.CPATrendlines.com and “Managing Your Tax Season, Third Edition,” published by the AICPA. Ed also writes a twice-a-week blog addressing issues that clients have at www.partners-network.com. Art of Accounting is a continuing series where Ed shares autobiographical experiences with tips that he hopes can be adopted by his colleagues. Ed welcomes practice management questions and can be reached at (732) 964-9329 or firstname.lastname@example.org.