Audit & Accounting

Steve Tait, president of H&R Block's accounting subsidiary RSM McGladrey, plans to resign, effective April 30.

Investors of all ages, and especially Baby Boomers, are increasingly turning to their CPAs to help them grapple with the financial planning challenges they will face leading up to and during retirement.CPAs are often the first financial advisor that investors experience, and with whom they build trust. Since the CPA firm also understands important aspects of their clients' financial picture, a solid foundation already exists for offering the goal-planning and investment advice that today's investors are increasingly seeking.

The Securities and Exchange Commission has released its congressionally mandated report on mark-to-market accounting, calling for improvements in the standards, but not their suspension. The 211-page report's recommended improvements include reconsidering the accounting for impairments and the development of more guidance for determining the fair value of investments in situations where market prices are not readily available.The report noted that investors generally believe that fair value accounting increases reporting transparency and facilitates better investment decision-making. It also indicates that fair value accounting did not appear to play a meaningful role in the bank failures in 2008.

Though the Governmental Accounting Standards Board expects to issue only one new standard in 2009, the year should be productive enough to position the board for significant advances over the subsequent two years.You could call it a year of research and deliberation - some of it conducted in-house by staff, and some by requests for comments and ideas from the field of state and local governments and the users of government financial information.

On Dec. 16, 2008, the Internal Revenue Service released the long-awaited final tax return preparer regulations. Although they had been expected to be issued in November, they were further delayed by the changes to Code Sec. 6694 included in the Emergency Economic Stabilization Act of 2008. In addition to the final regulations, the agency also promulgated Notice 2009-5, providing some interim guidance for the 2008 tax filing season, and Revenue Procedure 2009-11, updating the list of IRS forms that are subject to the preparer penalties.The final regulations do not differ significantly from the proposed regulations, but make several changes in response to comments received. The interim guidance responds to the statutory changes made by the Emergency Economic Stabilization Act and can be relied on by tax return preparers until final guidance is issued. Tax return preparers will want to make sure that they are familiar with these new requirements to avoid penalties as the 2008 tax return season gets underway.

The Senate has approved Mary Schapiro by a unanimous vote as the next Securities and Exchange Commission chairman.

Carl Famiglietti is managing partner of Moody, Famiglietti & Andronico, based in Boston. He says that accounting firm management often finds itself locked in a tug of war between applying theory and being pragmatic, a struggle that can dampen capabilities and in some cases, the overall development of a firm. “For firms of fewer than 30 professionals, the tendency to avoid creativity in favor of traditional tactics can create a stifling atmosphere--or worse, it can lead them to rationalize that remaining static in size or approach is justifiable.” He points out that in this difficult economic environment, sustained, substantial growth is very much attainable and to achieve revenue growth that better enables innovation, leaders must drive towards a vision of what their firm will look like when their goals are achieved. In this respect, he says that the approach requires the eradication of three myths: Myth #1: Competition for Worthwhile Business is Too Intense Famiglietti notes that in a needs-based business such as accounting, the economic viability of the entire country depends on CPA expertise and involvement. “This means that although competition is intense (as it is in all fields), there is business for every capable participant.” He says that while large national firms control the lion’s share of the market, open opportunities are all around us. “The keys to capturing these opportunities lie in the investments a firm is willing to make. Some CPA firms view expenses in infrastructure, education, recruiting, and marketing as costs to be minimized. However, for real sustained growth to be achieved, the mindset of CPA firms should be more aligned with some of the best run companies in America.” Myth #2: Good Talent is Hard to Find According to Famiglietti, good talent is everywhere. “Virtually every candidate that enters into an interview process has great gifts to contribute as long as they are properly motivated, empowered, and rewarded for their contributions.” He adds that the ROI on education, regardless of the curriculum, is without limit and it is the only investment that provides sustained agility and immediate adaptability to the many external forces the market may impose upon a firm. Myth #3: Control Rests with the Partners Famiglietti notes that before transparency was an essential ingredient to trust among companies and stakeholders, markets and investors, and providers and clients, relationships were built on seniority. “To win a client’s trust, partners served as exclusive client contacts. Virtually all correspondence needed to be routed across their desks, and accounts were considered in jeopardy should a client be exposed to junior professionals.” He feels that clients relate to all types of individuals. “Indeed, they may relate to less experienced firm members equally if not more than they do to more senior professionals. In the end, clients want reliable and timely results and professionals want a challenge; for those two reasons alone, it is increasingly imperative for more seasoned professionals to yield control to those yearning for experience.” To Famiglietti, growth is often repressed when leadership’s belief in traditionalism and “how things are” exceeds their vision and passion of “how they could be.” He says that firms which experiment continually will find that just as in industries such as technology and pharma, innovation is a risk worth taking. “It is applying a theorist’s passion and creativity that will break the vicious cycle of stagnation and draw a trajectory of progression, talent recruitment, increased revenues, and profitability.” Above all, he concludes, leaders are those who adapt to external factors but do not let their fate be determined by the market. “Those firms that form a management strategy devoid of myths, that remain aligned with their mission, and that create an environment of trust and development will be poised to capitalize on the opportunities at hand.”

CCH has created a CCH Financial Crisis News Center with news about the financial crisis and links to the text of source documents.

The U.S. Chamber of Commerce has sent a letter to Congress signed by 27 U.S. companies asking for a two-year easing of taxes on debt purchases to be included in economic stimulus legislation.

Accounting firm Wipfli has created a task force to help companies cope with the financial crisis.