Tom Marino, the chief executive of J.H. Cohn, visited the Accounting Today offices on Tuesday to talk about how his firm is preparing for International Financial Reporting Standards.
While the Securities and Exchange Commission has not yet approved the use of IFRS by U.S. companies, J.H. Cohn has brought in its U.K. affiliates from the Nexia International network to help familiarize clients with IFRS. “They already know it and how it ultimately is going to get used,” he pointed out.
However, he believes clients are awaiting the outcome of the SEC’s decision on incorporating IFRS into the U.S. system before they try to familiarize themselves with IFRS. In some ways, it harks back to uncertainty over whether the Sarbanes-Oxley internal control requirements would ever apply to smaller companies.
“There’s a track record that if you wait long enough, it’s going to go away,” said Marino. “Why get ready now if there’s no reason to?” However, he added that there were a number of reasons, including Canada’s decision to switch to IFRS. “Everybody’s using it now,” he said.
But he sees problems with the SEC’s proposed work plan for incorporating IFRS into the U.S. financial reporting system, especially the concept of “condorsement” for the final remaining standards in the Memorandum of Understanding between the U.S. Financial Accounting Standards Board and the International Accounting Standards Board. Marino believes that if those standards have to be endorsed one at a time by FASB, it could mean further delays. He wants a “date certain” for using IFRS, even if it’s not until 2016.
Marino also commented on the PCAOB’s decision to issue a concept release on mandatory rotation of auditing firms (see PCAOB Proposes Mandatory Auditor Rotation). He doesn’t think it will be practical. “It will add more cost and lend itself to more error,” he noted. “How many firms can audit an auto manufacturer?”
Marino perceives a bigger problem in the low-balling of fees by many accounting firms trying to win business away from other firms. He sees that being done not only by the smaller firms, but by large firms as well. He believes that’s hindering the recovery of many firms, but he doesn’t intend to follow suit. “We’re not going to be the McDonald’s of accounting firms,” he said.
J.H. Cohn has slowed down the pace of its acquisitions in recent years and has taken time to integrate some of the boutique firms it has bought. “Before you do too many, you have to give them time to mature,” said Marino. His firm is currently eyeing a $25 million acquisition, though.
Meanwhile, J.H. Cohn has been attracting attention with spokesman Joe Torre, the legendary Major League Baseball manager, who appears in ads for the firm. In Asia, the firm’s director of economic research, Patrick O’Keefe, also draws media attention.
Marino cited several valuable niches for growth at the firm, including health care consulting and the biotech industry. He also believes IFRS will be important for firms to learn, and the unexpected effects that it can have in areas such as state taxes.