AICPA Report Shows High Level of Accounting Degrees, Enrollment

The number of students who graduated with accounting degrees in the 2007-08 school year surpassed the previous year’s record level, according to a new report by the American Institute of Certified Public Accountants. More than 66,000 achieved bachelor’s and master’s degrees in accounting, 3.5% higher than in 2006-07.

This represents the largest number of graduates since 1972, the year the AICPA began tracking the data, according to the report, 2009 Trends in the Supply of Accounting Graduates and the Demand for Public Accounting Recruits. The gender ratio is 51% female, 49% male, a 1% uptick in the male cohort.

“The historic growth of accounting degrees is especially significant now because it coincides with the CPA profession’s programs and efforts to attract young talent,” said Jeannie Patton, AICPA vice president – students, academics and membership. “Students clearly recognize the attractiveness of accounting as a rewarding and fulfilling career path.”

Other important findings include:

Accounting degree enrollment (bachelor’s, master’s and doctoral combined) climbed 4.7% in 2007–08.

A strong demand for hiring in firms with 50 to 200 CPAs and a reduction in hiring among smaller firms from the previous year’s totals. The demand forecast for the coming year shows that among all firms, 64% expect hiring to remain the same as this year with 26% predicting a decline.

Universities are preparing for the U.S. transition to IFRS: 80% of accounting programs surveyed indicated that they offer courses in IFRS material; 15% plan to add IFRS to the curriculum by fall 2009.

Larger firms have more than 500 full-time employees, on average, currently enrolled in classes to satisfy CPA license requirements – suggesting that firms support employees’ efforts to obtain the CPA credential, according to the AICPA.

Although the hiring of new graduates has declined overall as a result of the weakened economy, midsize/large regional firms (50 – 200 CPAs) did report an increase in recruiting new accountants.

As the U.S. capital market system readies for a transition to International Financial Reporting Standards (IFRS), 80% of the accounting programs participating in the Trends study reported that they currently offer IFRS material in their curricula, and an additional 15% said they will add it by Fall 2009.

CPA Practice Mobility Laws, AICPA Turns to Nationwide Implementation

Forty-five states have passed CPA practice mobility laws as of July, marking a national success in the collaborative efforts of CPA state societies, the AICPA, and the National Association of State Boards of Accountancy.

The CPA mobility initiative has swept through the country in the last three years, and the enactment of the legislation allows CPAs and CPA firms to serve their clients across state lines with minimal licensing barriers. These measures had overwhelming bi-partisan support in legislatures across the country and were backed by governors and attorneys general in these states.

“The success of 45 states enacting CPA mobility provisions created a new pathway for the profession to serve consumers without the lengthy delays and substantial additional costs caused by licensure or notification requirements,” says Barry Melancon, president and CEO of the AICPA. “As we enter into the implementation phase of mobility we are creating resources to help CPAs and CPA firms navigate this new world of mobility.”

Under section 23 of the AICPA/NASBA Uniform Accountancy Act (UAA) adopted by most states, a CPA with a license in good standing from a jurisdiction with CPA licensing requirements essentially equivalent to those outlined in the UAA is deemed to be substantially equivalent, or a licensee who individually meets the following requirements;

150 credit hours with a baccalaureate
Minimum one year of CPA experience
Successful completion of the four-part Uniform CPA Examination

This system provides CPAs with mobility while retaining and strengthening a state board’s ability to protect the public. Out-of-state CPAs and CPA firms practicing under this system give state boards of accountancy automatic jurisdiction over them. It balances trust and public protection.

Two IPA Top 100 Firms Announce Intent to Combine Forces

Two IPA Top 100 firms, Reading, Pa.-based Beard Miller Company (bmc) (FY08 net revenue of $75.2 million) [No. 35 on the 2009 IPA Top 100 ranking] and Philadelphia-based Parente Randolph (FY08 net revenue of $74.3 million) [No. 36 on the 2009 IPA Top 100 ranking] announced their intent to merge effective this fall.

Collectively, the combined firm will have over 170 partners and more than 1,200 team members throughout Pennsylvania, New York, New Jersey, Maryland, Delaware and Texas.

“Our new firm will have even deeper resources and broader areas of expertise to serve our clients, including more industry-specific expertise, specialized tax consulting and other business advisory resources,” bmc Chairman and CEO Lamar Stoltzfus says in the announcement.

“This is truly a complimentary merger. It fills in gaps in geography, industry niches and service areas,” Bob Ciaruffoli, Chairman and CEO of Parente, tells IPA. “This merger will catapult us to the top regional firm in the Northeast – we will be stronger, more diverse, and have even greater talent.”

Stoltzfus will serve as Chairman of the new firm, while Ciaruffoli will serve as CEO.

This will truly be a merger of equals. “Lamar and I started talking over lunch last December and we clearly saw the benefits of our two firms coming together. Our firms have known each other for quite a few years and we’ve competed against each other. We knew it was a long shot, but the more we spoke, the more we realized how similar our firms are,” he tells IPA.

Already the leader in Central and Eastern Pennsylvania, the new firm will be positioned as a significant practice in the New York City, New Jersey and Philadelphia markets. The firms’ presence in key markets such as Maryland, Western Pennsylvania, upstate New York, and New Jersey will also be strengthened. These markets are imperative to the new firm’s growth and development in the coming years. The new firm will be headquartered in Philadelphia, and management of the firm will be decentralized into eight regions. The new firm is committed to maintaining its local presences and serving and supporting local communities.

The name / logo of the new firm will be announced at the close of the merger.

Gainer, Donnelly & Desroches Names New Managing Partner

Houston, Texas-based Gainer, Donnelly & Desroches (FY07 net revenue of $16.3 million) has named George A. Hawkins as the firm’s new MP.

Hawkins becomes the firm’s 4th MP since its founding in 1948. Hawkins succeeds Rod L. Desroches, who served in that position since 2005. Desroches will remain a partner and continue to serve the firm and his clients.

During Hawkins’ tenure with GD&D, he has played an integral role in the overall success of the firm. A partner for over ten years, Hawkins has been with GD&D since 1989. In addition to his specialization in income tax planning and compliance, Hawkins is also the partner in charge of the estate and trust taxation department.

“George will assume this leadership role in a firm that has grown significantly in size and stature in the last few years,” said named partner David Donnelly. “We are confident in George’s leadership abilities and have no doubt that the firm will continue to be successful even in this challenging economic climate.”

McGladrey & Pullen Announces Decision to Terminate Agreement With H&R Block

McGladrey & Pullen LLP issued formal notice of its intent to terminate its administrative services agreement with H&R Block. While McGladrey & Pullen’s audit practice is an independent, partner-owned firm, related professional services have been offered through RSM McGladrey under an agreement with H&R Block since 1999.

McGladrey & Pullen anticipates it will take at least seven months to fully unwind its relationships with RSM McGladrey and H&R Block. The process is expected to be seamless to the firm’s clients.

“This arrangement made sense in 1999,” said Dave Scudder, managing partner of McGladrey & Pullen LLP. “However, that operational and financial model does not serve us well as we address our future goals of client service, opportunity for our partners, and continued growth.”

“We are taking this action because we believe it to be in the best interests of our partners, our employees and our clients. We see great opportunities for success and growth for McGladrey & Pullen as a traditionally structured firm able to provide full service across all industry segments,” Scudder noted.

On the heels of the announcement, Block and RSM McGladrey filed a lawsuit in Minnesota state court against McGladrey & Pullen and each of its 10 partners. RSM alleges in the suit that M&P has no intention of abiding by the terms of non-compete clauses, restrictions that prohibit it from encouraging or instructing RSM employees to quit, and financial agreements that prohibit it from obtaining new loans or debt. Scudder, said in a statement that he was disappointed Block chose to pursue litigation. IPA contacted a Block representative for comment but did not receive a return call.

What the 2009 PCPS Top Issues Survey Says about the Economy’s Impact on Firms

The PCPS CPA Firm Top Issues Survey is a bi-annual study that identifies the most significant challenges facing practitioners across the country.

Based on the survey results, firms appear to be weathering the storm remarkably well. When asked about the economy’s greatest effect on them, a solid proportion of firms with 20 or fewer professionals picked “no impact.” In fact, almost 25% of sole practitioners chose this answer.

The question was asked: What is your firm’s top priority for generating new business during this economic crisis? When planning ways to generate new business in a bad economy, increasing service to existing clients was the top choice of virtually every firm segment. The one exception was firms with 21 or more professionals, which set a top priority on getting more team members involved in the marketing effort. The second choice for most firms was using their relationships with spheres of influence, which was chosen by about 25% of all firms with 10 or fewer professionals and 20% of all other firms.

When projecting expected revenue in the year ending May 2010, roughly 45% to 60% of every firm segment expected some growth, a very encouraging response in the midst of a tough recession.

For more details, visit http://pcps.aicpa.org

The Platt’s Perspective – Coddle And Kowtow to the Next Generation? No How!

Mike & Kelly Platt

Mike & Kelly Platt

Let us start by saying that we are big believers in understanding generational differences. We buy into much of what we’ve been hearing for years about the unique nature and characteristics of Generation X (born between 1965 and 1976) and Generation Y (also known as The Millennials, born between 1976 and 1998). But we’ve got something to say that has been building up for a while. “Enough is ENOUGH!”

We’ve heard consultant after consultant tell audiences what the next generation and Millennials will demand in the work force of tomorrow. We’ve heard firm after firm describe how they are reconfiguring themselves to fit into the preferences of today’s younger staff. Whether we care to admit it or not, our generation (Baby Boomers/Generation Xers) created and is directly responsible for the actions and worldviews of the “entitlement” generation. In schools today, everyone is a winner. Decades of excess has yielded a generation that doesn’t know how (or why) to work hard to get something. The “you-can-have-whatever-you-want” encouragement, coupled with the aggressive actions of “helicopter” parents who micromanage the lives of their teens, has led to many Millennials not knowing what they want or how to find out without trying a little bit of everything throughout their (many) career(s).

Now, before you start labeling us as curmudgeons and old coots, you must admit there is some truth to what we’re saying. No one is looking over your shoulder right now so you can be honest with yourself. It’s not a truth that we speak about in public because it is not politically correct and would offend. But let’s take responsibility as the generation that created the Millennials and stiffen our resolve to mentor, not coddle; to guide, not enable; to lead, not to protect. Let’s give them the credit they deserve.

The recession is a scary place for everyone in the workplace, but especially for the younger generation that has never experienced an environment of adversity. There were always many options for this generation to consider – and frankly none was terribly painful. Our generation has bent over backward to create a world for our kids where there is no harm, no hurt, no pain and no sacrifice. But now the younger generation has to learn some hard truths and make some difficult choices. Unfortunately, “going without” and sacrificing for a better tomorrow is a new concept for many of our younger staff.

As consultant Sam Allred says, “Thank goodness for recessions – they don’t come often enough.” Maybe now we can see that in our quest to create a pain-free world for our kids we shortchanged them on many of the life lessons we all had to learn the hard way. Maybe now we can employ some of the much-needed tough love to equip this generation with the tools they need to succeed. Maybe, instead of rebuilding our organization out of fear that they won’t choose our firm as their preferred place of employment, we get back to the basics of professional service businesses – superior service, strong client relationships, pride in our work, technical superiority and making a difference in the communities in which we live.

We have a faith in the quality of the generation that is coming into the workplace today and its capacity to make a difference. But we worry that we are handing over our responsibilities to guide them to a brighter future by simply giving them what they want – without the hard work, sacrifice and satisfaction that goes along with a job well done.

Mike and Kelly Platt

July 2009 Of Interest

Work-Life Balance Gets a Reality Check at BDO: BDO Seidman, and Work+Life Fit, Inc. a national work life flexibility consulting firm, co-sponsored the 2008 CFO Perspectives on Work Life Flexibility study to gauge CFO points of view on work life flexibility’s potential impact on business growth. Work+Life Fit, Inc. also conducted a study of working individuals to get a “realiity check” on the progress being made in work-life balance. See the results here.

Bonadio’s Dual RenSquare Roles Raise Some Eyebrows:
Thomas Bonadio’s dual roles in the operations of Renaissance Square are raising questions about his ability to be an independent auditor for the project. “I can’t say it’s slam-dunk bad. … It just doesn’t look good,” says said Robert Waxman, chair of the New York State Society of Certified Public Accountants’ Auditing Standards Committee. (Democrat and Chronicle)

PricewaterhouseCoopers Releases Statement on Potential Fraud – Using Coopers & Lybrand Name:
PricewaterhouseCoopers announces that an organization calling itself ‘Coopers & Lybrand’ or ‘Coopers & Lybrand Law’ has been approaching potential investors to sell or buy shares in certain companies which PWC believes are worthless. PwC insists the use of the Copers & Lybrand name is illegal and infringes their intellectual property rights.

Social Media – New Marketing Technologies for CPA Firms:
View Rick Telberg’s slide presentation on new media presented to the Maryland Association of CPAs BizExpo. (MACPAS)

Study: Top CEOs Still Shunning Twitter, Facebook:
If you are still not participating in social media techniques, you are apparently not alone. A new study finds only two Fortune 100 CEOs with a Twitter account and only 19 with a Facebook account. (Computerworld)

AICPA Seeking Members to Profile in CPA Recruitment Campaign:
As part of a refresh to the AICPA student-recruitment campaign’s Web site, StartHereGoPlaces.com, the AICPA is looking to feature some current members who truly break the mold of the CPA stereotype inside and outside of the office. (AICPA)

AICPA Wins 2009 American Business Award – ‘Stevie’ Award:
The AICPA has won the American Business Award ‘Stevie’ for Communications Team of the Year. (AICPA)

How Good Is Your Audit Firm?:
Find out what Businessweek is telling your clients about what their audit committee needs to know in order to choose and oversee an independent auditor. (BusinessWeek)

Managing in a Turbulent Economy – Survival or Opportunity:
Practice management consultant Tim Michel shares his views on what CPAs should be doing to help their clients navigate the choppy waters of the economy. (Tim Michel)

FASB Explains Free and Subscription Access to Codification:
The Financial Accounting Standards Board has stated its terms for access to advanced research functionality for the new accounting rule book that took effect July 1. (FASB)

FASB Adopts New Rule on Subsequent Events:
The Financial Accounting Standards Board has published its final word on when companies should consider the effects of “subsequent events,” or game-changing events that occur after the balance sheet date but before financial statements for the period are published. (Compliance Week)

GAO: IRS Halts Development of Customer Account Data Engine:
The IRS has halted development of its Customer Account Data Engine (CADE) because of unexpected complexities, according to GAO.
CADE is a part of the IRS Business Modernization Program that is intended eventually to replace the legacy Master File processing system and enable faster refunds. (Government Computer News)

PCAOB Adopts Rule Amendment on the Timing of Certain Non-U.S. Inspections:
The PCAOB has voted to adopt an amendment to a rule on the timing of certain inspections of registered non-U.S. public accounting firms. (PCAOB)

PCAOB Rips E&Y on Revenue Recognition:
Ernst & Young failed to note when two clients strayed from revenue-recognition rules, according to the latest inspection report on the Big Four firm by the Public Company Accounting Oversight Board. (CFO.com)

KPMG Should Be Tougher on Testing, PCAOB Finds:
KPMG did not show enough skepticism toward clients last year, according to the Public Company Accounting Oversight Board, which cited the Big Four accounting firm for deficiencies related to audits it performed on nine companies. The deficiencies were detailed in an inspection report released last week by the PCAOB that covered KPMG’s 2008 audit season. (CFO)

Former HealthSouth Boss Found Liable for $2.9 Billion:
Former HealthSouth Corp boss Richard Scrushy was ordered to pay $2.9 billion on Thursday after a judge found him responsible for an accounting fraud that nearly brought down the hospital chain. Scrushy, serving a seven-year prison term in a bribery case, was acquitted of criminal charges
related to the massive HealthSouth fraud in 2005. (Reuters)

IRS Should Evaluate Penalties and Develop a Plan to Focus Its Efforts – GAO Recommends

The (GAO) Government Accountability Office recommends that the IRS needs to create a plan to comprehensively evaluate the administration of civil tax penalties and their impact on voluntary compliance.

The GAO suggested that the IRS’s Office of Service-wide Penalties should collect information to evaluate penalties and penalty administration, and to determine the effectiveness of the penalties in promoting voluntary compliance.

Civil tax penalties are an important tool for encouraging compliance with tax laws. It is important that the IRS administers penalties properly and determines the effectiveness of penalties in encouraging compliance. In response to a congressional request, GAO determined (1) whether IRS is evaluating penalties in a manner that supports sound penalty administration and voluntary compliance and, if not, how IRS may be able to do so, and (2) whether IRS’s guidance for a new penalty for failure to disclose reportable transactions was issued in a timely manner and was useful to affected parties, and whether and how IRS has assessed the penalty. GAO reviewed IRS documents and guidance, and interviewed IRS officials and tax practitioners.

 For the full report, go to: www.gao.gov/highlights/d09567high.pdf

UHY Advisors Acquires Step3 Consulting

Chicago-based UHY Advisors (FY08 net revenue of $245.6 million) acquired Step3 Consulting, a provider of comprehensive performance improvement services to companies in a variety of industries.

 The acquisition caps off a three-year relationship UHY Advisors has with Step3. The two firms formed a joint venture to meet the rising demand for financial and operational consulting service among companies in the manufacturing and service sectors.

 According to Ajax World, “The integration of Step3 provides us a competitive advantage in the marketplace by meeting both the financial and operational needs of our clients,” said Tony Frabotta, CEO of UHY Advisors. “We now cover the comprehensive landscape of our clients’ professional services needs.”

 Step3 Consulting has relocated into UHY Advisors’ Atlanta office.