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Wednesday, Mar 27, 2024

Firms Expand Offerings

Time was accountants with small or mid-sized business clients saw them a few times a quarter, computed taxes, helped with the balance sheet and did a little planning. But as the pace of the business environment accelerates, the regulatory environment becomes more complex and the demands placed on business owners by the market increase, accountants are increasingly finding themselves not on the fringes of a business owner’s world, but right in the thick of it. Added to taxes, many accounting firms now report they are providing assistance with a range of services, from litigation support to business valuations and even merger and acquisition consulting. “Our accounting and auditing practice has grown dramatically in the past few years. These other services have grown at a similar rate, or maybe even a little more rapidly,” said Mark Bagaason, managing partner for the Southern California practice of Grant Thornton. White, Zuckerman, Warsavsky, Luna, Wolf & Hunt LLP in recent years formed a strategic alliance with mergers & acquisitions firm Crown Capital Advisors LLC to expand its business valuation practice. Rose, Snyder & Jacobs added a human resource consulting practice. And Adams, Swartz & Landau LLP has had several projects heading up M & A; teams for its clients. “For many of our clients, we represent the highest level of financial expertise,” said Mike Landau, a partner with Adams, Swartz & Landau. “So yes, we do get involved on behalf of our clients in M & A; or restructuring work. We also on occasion do some litigation consulting work.” The areas of expansion are not new for many Valley firms. But as business has become more complex, these types of businesses are taking a more important role at CPA firms. At Rose, Snyder & Jacobs, where human resource consulting using something called the Kolbe System, which attempts to gauge what moves a person to action, has led to a range of consulting projects including management succession planning and wealth counseling, partners say that the areas of practice also help to provide better financial counseling. “Right now the businesses are relatively small, maybe five or 10 percent of our practice,” said Tony Rose, the firm’s CEO. “What it really does is give us the opportunity to do more meaningful tax planning and other kinds of business planning with the client. We did one business succession project where the clients decided they didn’t like the business anymore. They would never have gotten to that place unless they engaged in the process of thinking about it.” Unheeded advice Rose said that in his career he has found that often accountants’ advice goes unheeded by clients, sometimes because they don’t address the heart of the client’s problem. These processes help to avoid those types of results. At the same time, many accountants at small and regional firms are finding that larger firms are often prevented from helping clients with some tasks because of conflicts of interest with other work they are performing. So some of this work has trickled down to the smaller firms. “We have a very large specialization in employee benefits funds,” said Mannon Kaplan, managing partner at Miller, Kaplan, Arase & Co. LLP. “What’s happened is because of the shortage of help and all the work for the national firms, they’ve made choices. You can’t do audit, tax and employee benefit funds, because you’re overlapping, so a number of national firms have selected us to be their resource for that.” Litigation support services and business valuations have perhaps provided some of the greatest opportunities for expansion to CPA firms. Because they are intimately familiar with the financials of their clients, accountants are well-equipped to provide counsel and to measure the losses a business involved in litigation may have suffered or what the business is worth if it is to be sold or transferred. “The Big Four used to have big valuation projects and they used to do all these extra projects for their publicly-traded companies, but one of the things SOX (Sarbanes-Oxley Act) did is to tell them this is a conflict of interest,” said Bill Wolf, partner in charge of tax and accounting services at WZWLWH. “So now all these ancillary services, valuation, pension consulting, now that’s trickling down to the smaller firms too. I’m not saying we’ve capitalized on them yet, but I’m looking forward to capitalizing on them.” Wolf said there is a new terminology emerging in the industry around what’s called the second accounting firm. “All these publicly traded companies want to work with a second accounting firm, and that second accounting firm doesn’t have to be a Big Four firm,” Wolf said. “We have lower billing rates, more access to partners and therefore we can be a big resource to these public companies.” But even firms that don’t work with publicly traded companies are finding new business opportunities in the present market. Controller functions Lippe, Hellie, Hoffer & Allison LLP has picked up new business recently offering its services to those who want to outsource controller functions. “We have a couple of clients where their parent companies are foreign, and because they can’t keep a close watch on the operations here, they want some independents,” said Greg Lippe, managing partner at the firm. “One of the reasons one of the firms hired us was they were using an in-house person who ended up embezzling them.” Finally, the whole area of technology has spawned new opportunities for accounting firms who are being hired to oversee the installation of software programs that meet the demands of the firm’s recordkeeping and accounting needs. “Mid-size companies are turning to their CPAs to ensure that whatever system they implement will provide the adequate level of reporting they require,” said Brett Good, district president for Southern California at Robert Half International.

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