FIRMS GREW STRONGLY PRIOR TO CRISISNew York-A large majority of CPA firms reported continuing strong growth during the past two years, according to a new survey by the American Institute of CPAs and the Texas Society of CPAs, but the survey was taken before the financial crisis hit home in recent quarters.
Seventy-five percent of the 2,722 firms surveyed reported growth ranging from 1 to 19 percent over the two years from May 2006 through June 2008, according to the 2008 National Management of an Accounting Practice survey. Average net client fees per partner rose 10 percent to $664,847.
Fewer firms are reporting turnover. Thirty-one percent of the CPA firms surveyed said that they had lost professionals in fiscal 2007, a significant improvement from the last survey, when 45.6 percent of firms reported losing professionals.
Succession planning and professional training remain weak spots. Only 22 percent of all firms surveyed had a succession plan and only 10 percent of the smallest firms had a practice continuation agreement to protect their practices in the event of death or a disability that leaves the owner unable to work.
SOX OPPORTUNITIES STILL SIGNIFICANT
Florham Park, N.J.-Significant opportunities still exist for optimization of Sarbanes-Oxley Section 404 programs and reductions in compliance cost, according to a new report.
The report, from BMR Advisors and Financial Executives Research Foundation, the research affiliate of Financial Executives International, identified program scope and program structure as the two principal drivers of SOX program efficiency. Although scope has the more direct impact on overall compliance cost, companies at the higher levels of SOX maturity have also made efforts to optimize the structure of their SOX programs such that internal and external costs are controlled.
Many organizations began to benefit from Auditing Standard No. 5 and the new SEC interpretive guidance before they officially came into effect, and the overwhelming feedback is that the new approach has driven significant cost reductions. However, companies have not reaped the full reward of AS5, and some have shown little or no reduction in scope since the early days of SOX.
The report is online at www.ferf.org.
GAO: IRS HAS INTERNAL CONTROL ISSUES
Washington, D.C.-The Internal Revenue Service continues to have problems with its internal controls and financial management systems, according to a new report from the Government Accountability Office. The GAO acknowledged in its financial audit that the IRS's fiscal 2008 and 2007 financial statements were fairly presented in all material respects, but noted that "serious internal control and financial management systems deficiencies continued to make it necessary for the IRS to rely on resource-intensive compensating processes to prepare its balance sheet."
Because of these and other deficiencies, the IRS did not, in the GAO's opinion, maintain effective internal controls over financial reporting or compliance with laws and regulations. However, the GAO acknowledged that the IRS has made significant strides. In particular, it singled out the IRS's progress in addressing problems with the collection of unpaid taxes and the issuance of improper refunds. The IRS has also improved in the past year its controls over safeguarding hard-copy taxpayer receipts and data. But problems remained with the IRS's control over financial reporting, management of unpaid tax assessments and information security. The GAO saw improvements in controls over revenue collection and refund issuance, but still noted problems with the IRS's enforcement collection activities. The GAO also found that the IRS was not always in compliance with the law concerning the timely release of tax liens.
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