Financial reporting

The Internal Revenue Service touted Earned Income Tax Awareness Day as a way to raise consciousness about the credit for low-income taxpayers as the economic crisis forces more Americans into lower tax brackets.

Last year, we published for the second time a ranking of CPAs by AUM (Assets Under Management). The response was staggering. We more than doubled the prior year’s number and went over the 200 mark. We had two criteria for consideration: They must be a CPA firm that has a financial planning practice, even as a subsidiary or affiliate, and the financial planner in the office must hold a CPA credential. In the top list were 18 firms that were in “The Billion Dollar Club,” or as we called it, “Wealth Magnet Elite.” We had 87 firms were in “The $100+ Million Club” or “Wealth Magnet Select,” and then 37 in the “$50 Million Club.” In the eight-figure category that we deemed “Rising Stars,” we had another 40. We also delved beneath the surface of just a ranking and unearthed what share broker/dealers, wire-houses, financial services companies, and the like had. We went even further and revealed the areas of financial planning products that each firm recommended in basic categories such as IRAs, 401(k)s, mutual funds, life insurance, bonds, 529 plans, to name a few. The reaction from the accounting profession has been simply wonderful. No one had ever seen such a ranking before we did the first one in 2007 and it opened the door more. Firms clamored for this to be an annual event, and we are complying. We are contacting everyone on our list from last year for updates plus additional firms that have contacted us. The final list will be compiled on May 1 and we will publish the rankings in the July 2009 CPA Wealth Provider. We encourage you to participate. For a copy of the Survey Form, contact me by email (stuart.kahan@sourcemedia.com), or write to me at Source Media, One State Street

New York Governor David Paterson has signed a bill expanding the regulation of CPAs throughout the state.

The House has approved an $819 billion economic stimulus package despite unanimous Republican opposition.

The Association of Chartered Certified Accountants has created a new site that gives its members the opportunity to share experiences and receive personal support on how to deal with the global economic crisis.

Newly approved Treasury Secretary Timothy Geithner moved to provide more transparency in the controversial Troubled Assets Relief Program by posting investment contracts on the Internet.

The Senate Finance Committee has approved approximately $522 billion in tax cuts, incentives and investments by a vote of 14-9.

Congress and the Obama administration are crafting what is shaping up to be the single most expensive spending bill in American history, and nobody can agree on whether it will work.

The Senate Finance Committee is considering President Obama's economic stimulus package as leaders call for increased tax cuts.

South Florida accounting firm Daszkal Bolton is the latest to offer services to clients who have suffered losses from Bernard Madoff's $50 billion Ponzi scheme.

One of the fastest-growing practice niches among CPA firms over the past several years, forensic accounting has ushered in an era in which CPAs are in constant demand as expert witnesses and in other litigation support capacities.

Here's a smart idea for all you financial planners out there. Target the children of your Baby Boomer clients. Read more on the Accounting Tomorrow blog.

The incoming chair of the Securities and Exchange Commission, Mary Schapiro, criticized the International Accounting Standards Board and expressed reluctance to move to International Financial Reporting Standards.

With the election over, we now must focus on what real changes will advance the markets.

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.

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.

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.