By THOM SENZEE Contributing Reporter This year’s downturn in the economy has been a boon for the local accounting industry. “Good accountants are like doctors,” said certified public accountant Ed Cheeseman, COO of Hutchinson and Bloodgood, LLP. “Even in a downtime you’re still going to need a good accountant.” Although hesitant to seem crass while many businesses in other industries struggle to stay afloat, Cheeseman pointed out that even in bad times companies need to have their tax accounting and audit work done. “But as accountants, we need to shift our focus now by improving clients’ positions by helping them to figure out ways to minimize tax exposure, or by creating ways to improve business.” But nothing is ever perfect in life or in business. “We are seeing a decrease in discretionary spending,” Cheeseman said. While problems in the residential construction industry have taken a toll, Cheeseman said, relative stability continues to make commercial construction profitable for most of the firm’s clients in that industry. And that, he said, is good for business at Glendale-based Hutchinson and Bloodgood. According to Cheeseman, most of his firm’s longstanding clients accept advice from him and his colleagues that now is the time for them to work closely with accountants to find ways to remain strong. As do many new clients. “There are some people in business, though, who get their heads down too far,” he said. “Now is not the time to hunker down.” Quite the contrary, according to Cheeseman. “For a lot of businesses out there, we find some things they can do to improve cash flow, and smart businesses know that,” he said. “That’s why they are turning to us, and that’s why it’s a good time to be an accountant.” Cheeseman said one reason companies are willing to keep paying accounting firms for services beyond taxes and audits has to do with making the most of asset depreciation. “It’s not very intuitive,” he said. “But it’s something that’s available all the time: If you’re building a new building we can do things to improve cash flow by cost segregation, because we actually have an engineer on staff.” With the help of Hutchinson and Bloodgood’s staff engineer, the firm’s accounting team can study different components of a new structure and cash in on their depreciation sooner rather than later. While some businesses only reap the tax benefit of owning a building that has depreciated over time all at once decades after construction, others have their accountants show the loss of value on specific parts of the building several decades sooner. “I would want to write off as much as I could as soon as I could because a dollar in hand right now is worth more than a dollar in ten years,” Cheeseman said. According to him, many companies have overlooked some low-hanging fruit as far as potential cost saving and cash flow measures. Likewise, according to one of Ed Cheeseman’s counterpart’s at another Valley firm, there is also some low-hanging fruit that is ripe for the picking for accountants. “Some firms are bidding on jobs that big-four or big-eight firms wouldn’t even have looked at just a couple of years ago,” said Alan Kazden, partner at Rose, Snyder and Jacobs, CPAs of Encino. “Especially smaller public companies.” Kazden’s view of the economic slowdown is circumspect compared to those of his fellow accountants who do not see much in the way of tangible downsides to their businesses in a slower economy. “In a lot of ways it is a good time to be an accountant and a partner at a firm in Southern California,” he said. “Things have slowed down, so there’s more inventory of staff available not the same as it was in the last couple of years when you couldn’t find staff to hire.” Kazden is familiar with the current pool of accounting professionals available to companies because Rose, Snyder and Jacobs recently completed candidate searches, hiring three new staff members. In Southern California’s accounting industry, a slowdown does not mean layoffs or hiring freezes, it just means there are suddenly people available to take job openings when new positions are created. Northridge-based Breard & Associates, Inc. also went through the hiring process recently. But managing partner Kevin Breard says finding good people has not gotten any easier during the current “unrecession.” “We’re actually beefing up our firm at this point by hiring two more employees,” Breard said. “Frankly, we wish the crop was a little smarter and offered more to choose from.” Popularity grows Ironically, Breard believes the accounting scandals of Enron and Arthur Andersen made the industry more interesting to young people “sexier,” he said. “There’s a little bit of a lag time because of the length of time it takes to get a degree, but I think all that bad press will actually result in more accountants in a couple of years.” Breard’s business is heavy with securities clients. “You’ve probably heard this before; accounting is kind of recession proof,” he said. “Even for us, serving (stock) brokers, we’re still growing.” While growth rates are down from the 20-plus percent range that had graced the industry in recent years, most firms put their current growth at about 10 to 14 percent for their current fiscal years. Sandy Kadekian at Grant Thornton in Woodland Hills says the biggest change in accounting as a business is which practice areas that are picking up steam. “I think you’re seeing much more work in the bankruptcy field,” she said. “We do have folks in that area who are busier now, but you can never make a blanket statement that ‘that is the biggest growth area.'” According to Kadekian, discretionary spending is down, which means consulting revenue is also down. “But to some extent, it is true that accounting is recession resistant.” Other accounting practice areas that have slowed to a degree include business advisory, mergers and acquisitions, and major transactions. Cheeseman, whose company is part of an international consortium of accounting firms, says Southern California has been spared much of the fallout of the down economy because of the diversity of industries in the region. “We’re not dependent on one industry here,” he said. “We have a good mix of entertainment, aerospace, knowledge-based businesses and tourism that has helped insulate us, to some degree, from the kind of impact you might see back East.”
