AICPA Survey Sees Bleak Profit and Sales Outlook Ahead

As the full scope of the economic swath cut by the COVID-19 pandemic begins to emerge, a new survey of CEOs, CFOs, controllers and other CPAs in U.S. companies paints an ugly picture of the road ahead.

Only 20% of respondents in the second-quarter AICPA Economic Outlook Survey expressed optimism about the overall outlook for the U.S. economy over the coming year, down from 61% in the first quarter and now at its lowest level since late 2011. Meanwhile, as companies have cut their profit and sales outlooks in response to pandemic-related impacts, executives now expect revenue to contract by 5% over the next 12 months (down from an anticipated 4.3% growth rate last quarter) and profit to drop by 5.5% (down from an anticipated 3.3% growth rate). In addition, while less than 8% of business executives said their companies had made downward adjustments to their forecasts in light of the pandemic in the first-quarter survey, 81% had done so this time.

Adding to the parade of dire news, the percentage of U.S. executives expressing optimism about their own company’s prospects over the next 12 months fell from 66% to 30%, quarter over quarter, while respondents who said they expect their organizations to expand in the coming year dropped from 64% last quarter to 24%. In terms of top pandemic-specific concerns, respondents cited customer demand/ability to pay, the safety of employees and cash, financing and capital challenges.

“Not surprisingly, this quarter’s survey documents the severe impact the pandemic has had on the outlook for U.S. businesses,” says Ash Noah, AICPA managing director of CGMA learning, education and development. “Moving forward, the reopening or ramping up phases in different states will be critical but the rise of liquidity concerns and the uncertain social and economic environment, including potential second-wave infections and prospects of additional layoffs, continue to present an extremely challenging environment for businesses.”

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Examining Strategies For Success – For Free

Business leaders are always on the lookout for ideas that will help put their companies over the top, but it’s not often that they come across anything truly worthwhile without having to pay for it.

But for this week only, author Jake Hanes is sharing his new book “The 7 Strategies of Highly Successful Business Owners” as a free download in the Amazon Kindle Store, allowing readers to check out the resources, insights and best practices that this CPA and entrepreneur has discovered across a number of ventures throughout his career.

In addition to lessons drawn from his first-person business experiences, Hanes shares tools he learned from mentor and business coach Kevin Weir, ActionCOACH Global founder and CEO Brad Sugars and leadership expert John Maxwell. Touching on ideas that translate across industries, Hanes shares strategies ranging from establishing predictable cash flows and better leveraging resources to dealing with economic uncertainty and building a powerful team.

The free download of Hanes’ books is available only until June 5.

Aprio Adds New Private Equity Services Team

Atlanta-based Aprio, an IPA 100 firm, has announced the formation of Aprio Private Equity, an integrated service team designed to serve private equity and strategic buyers in the middle market.

Led by partner Michael Levy, Aprio Private Equity provides fund services, post-merger integration services, portfolio services and exit strategy services, in addition to transaction advisory services.

“Aprio Private Equity will draw on our advisory, audit and assurance, tax, wealth management and outsourced accounting services expertise to provide an integrated approach to our private equity clients that will create opportunities for improved financial and operational performance, minimized tax liabilities, and elevated marketplace credibility,” says Aprio MP and CEO Richard Kopelman.

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Leaders: The Pandemic Has Revealed the Truth About Your Heart. Do You Like What You See?

Deb Boelkes says how you behaved during the coronavirus crisis reveals some essential truths about whether you lead with your head only or also with your heart. The good news? It’s not too late to switch to a more heartfelt leadership style. Here’s what that looks like.

A couple months ago, a crisis hit the world—one that changed almost everything about how companies operate. We all know the details, so no need to enumerate them here. But as we continue to navigate this fearful, uncertain, emotionally charged stretch of history, Deb Boelkes wants leaders to ask themselves a big question: What has the pandemic taught you about the role your heart plays in your leadership style?

“Times of crisis and extreme change have a way of revealing hidden truths,” says Boelkes, author of Heartfelt Leadership: How to Capture the Top Spot and Keep on Soaring. “It shows us what we’re made of. It shows the people around us what we’re made of. And while many leaders have had to make really tough decisions in the upheaval caused by COVID-19, the way they did those things speaks volumes.”

In other words, if you had to lay people off, did you do it with love and concern? Were you patient as employees struggled to balance their newly remote jobs with home schooling and child care? Did you say thank you? Did you double-down on efforts to keep people engaged and inspired? Did you continue to nurture their growth and push them to live up to their potential?

All these are the attributes of what Boelkes calls a “heartfelt leader.” They mean you don’t lead only with your head—always putting goals and profits ahead of people—but you also care deeply about employees’ well-being. (It’s not an either/or proposition, she says. People who truly believe you care work harder and are more engaged, making it a smart financial strategy.)

In Heartfelt Leadership, Boelkes lays out the path to leading with the heart. Full of real stories and lessons from top heartfelt executives, the book will help you learn to transform from a person people follow because they have to, to one they want to follow.

Now that the dust is starting to settle and businesses are—ever so slowly—starting back down the road to normalcy, Boelkes urges you to take a good hard look at your own “heartfelt quotient” and see how you stack up. Here are a few things heartfelt leaders regularly do:

They give their personal best every moment. “My first job working for a major corporation was at Disneyland,” says Boelkes. “My high school drill team auditioned and was selected to perform together throughout the winter holiday season. I was a ‘marching card,’ the ace of clubs with the Alice in Wonderland dance unit. Once we had the job, we each gave our personal best every single moment. We competed against ourselves to set new personal best records with each ensuing performance. If any one of us made a wrong move, it impacted all of us, and it certainly impacted our ‘guests.’ We all depended on each other. Disneyland depended on us. The audience who had paid so dearly to attend depended on us. If any one of us failed individually, we all failed. We had to work together at peak performance, in perfect unison, every single time. We had to be perfect. No excuses. Ever. Disneyland set a bar for job performance and work ethic against which I have measured every other career and customer service experience I have ever encountered throughout my life. My heartfelt thanks will forever go to Walt Disney and all the Disneyland cast and crew members for that incredibly important lesson.”

They build a culture of love. (That’s what draws the talent.) Tim Hindes, co-founder and CEO of Stay Metrics, a provider of driver retention tools, believes that successful companies are the ones that lead with love from the top down. He says, “When we started with two of us in 2008, we basically grew the company to $30 million in under three-and-a-half years. It wasn’t the two of us who did it. By the time we were done, we had thirty-five team members. We constantly had people coming into our offices saying, ‘This guy is talented. He wants to be part of this.’ If you dare to create this type of environment, one so unorthodox, you’ll find talented people will come to you who don’t want to play the old game. So, not only is it the right thing to do, it’s a brilliant move. I do think a lot of the problems we have in business, if you root down to it, are an absence of love and culture at the top.”

They live by the Golden Rule in good times and bad. It’s the foundation of trust. Colleen Barrett, president emeritus of Southwest Airlines, says, “You just have to practice the Golden Rule, on or off the clock, with each other, with your customers, with anybody you come into contact with. It’s really simple. I’m not saying we never fight with our unions. You know, we’re 86 percent unionized. At Southwest, you could be in the middle of a ferocious negotiation over something or somebody or some work rule, whatever. But…if you walk into the room at the beginning of the day, when you walked in as a total stranger, you would not know who was who, because they’re not on one side versus the other. They’re intermingling. They’re talking. They know each other by their first names. They know their families. They know something about them because that’s who we are. Do we argue? Yes. But do families argue? Yes. Do we have disagreements? Yes. But there is such a trust there.”

They use the magic words—”I don’t know”—and use them often. Garry Ridge, chairman and CEO of the WD-40 Company, shares the power of admitting that you don’t have all the answers. He says: “I love three words so much, ‘I. DON’T. KNOW.’ I think they’re the most powerful words we can use as leaders, to say, ‘I don’t know. Tell me what you know.’ Suddenly these barriers come down. Fear goes away. Conversation happens. Dialogue. Learning. Eventually, we come toward a position we both then say we think we agree on.”

They strive to never hurt anyone. This should be a given, but as a leader, your goal should be to enhance the lives of your employees and certainly to do no harm. Garry Ridge says, “When we put on the badge of leadership every morning, we take on the responsibility of other people. As leaders, we have no right, by our actions, to mess up other people’s lives. We leaders need to take that extremely seriously. Too many leaders out there, through their overinflated self, their ego, who are driven by short-term goals instead of long-term thinking, make decisions that hurt people every day. They have no right to do it. The Dalai Lama says, ‘Our purpose in life is to make people happy. If we can’t make them happy, at least don’t hurt them.’ Our purpose as a leader is to help people engage and enable, NOT to hurt them. We want to apply to their positive, not to their negative.”

They keep asking, “How do I help you grow?” Britt Berrett, former president of Texas Health Presbyterian Hospital Dallas, emphasizes the need to show your people who don’t necessarily share your values that you care. “I had a funny experience with one of our chief officers,” says Berrett. “I adore her and work very closely with her. For me, my time is very precious. I don’t have a lot of slack time; for me, it’s my faith, my family, and then my job. I knew there was time we needed to spend together. She needed that one-on-one time. It was in the afternoon, so I said, ‘Let’s go grab lunch.’ My favorite lunch restaurant is Wendy’s. So, we went off to Wendy’s for lunch. I didn’t think anything of it. We sat down. I thought we had a good conversation. Later, I found out she was a little put off we went to Wendy’s. The message to her was I didn’t really care. I didn’t really know. She was absolutely right. In the frenzy of the day-to-day, I kind of forgot that. We laugh about it now, but whenever we go out to lunch, it’s always Wendy’s. We’ve made a joke out of it. But I needed to understand what was important to her and how I needed to show up as a boss. That’s what genuine leaders, I think, do. They ask the question, ‘How do I need to show up to help you?’ You’ve got to modify your strategy and your behavior to help them grow.”

They don’t treat employees like assets. Howard Behar, former president of Starbucks Coffee, says, “We hear leaders all the time say, ‘People are our greatest asset.’ They’re not assets. You don’t own them. They can choose or not choose to be part of your organization. There’s nothing keeping them there, except maybe fear of loss. The more we treat people with caring, with love, the more they want to perform, the more they want to be part of the organization. Here’s how it works in the real world. When you trust people and you give them more responsibility and accountability when they’re ready for it—sometimes even when they’re not ready for it—the more they want to perform, the more they don’t want to let you down. They don’t want to let their teammates down. They don’t want to let themselves down. It just works. There’s no magic here.”

They recognize that everyone who works for them is a somebody. Paul Spiegelman, former CEO of BerylHealth, says, “Everybody is a ‘somebody.’ We’re not taking ‘nobodies’ and making them feel like a ‘somebody.’ We’re recognizing they are ‘somebody.’ I can ask people questions. I can learn enough about them and show I care about them to make them feel good about themselves. To me, that is probably the secret sauce, so to speak: Make people feel good about themselves.”

“Even if you have to admit you haven’t been acting like a heartfelt leader, now is the perfect time to turn things around,” advises Boelkes. “Right now, many people all over the world are taking stock of their lives and vowing to become better, kinder, more loving human beings. No reason leaders can’t do the same. Let this crisis be a growth experience—one that inspires you to start making a positive impact on your company, on your employees, and on the world.”

Platts’ Perspective: Firms Are Put To The Test On Just How Agile They Are

As the COVID-19 pandemic grinds on into month two of social distancing and work-from-home orders, firms around the country are finding ways to adapt. Although it may at times feel like learning to fly while building the plane at 30,000 feet, MPs in many firms are seeing the resilience and adaptability of team members shine through this otherwise dark chapter.

But that’s not true for everyone, and astute leaders need to recognize the disparity that may exist in their own firms.

For some, embracing remote technology and managing their own time is empowering and uplifting, and they are maximizing their productivity. For others, staying focused and keeping priorities straight is proving to be a real challenge.

For some, social distancing and working from home has allowed them to reconnect with those they love, and technology has allowed them to grow even more connected to their coworkers. For others, isolation has led to bouts of stress, anxiety and loneliness, and social scientists have reported a disturbing increase in domestic violence during this pandemic.

For some, there is a new level of enthusiasm for the technological changes that have been thrust onto their firms, breaking through the barriers and obstacles that existed before and pushing them solidly into the future with new ways of working. For others, getting back to a normal routine in familiar settings with the usual processes is the ultimate goal.

For some, the disruption of everyday life has led to an energizing search for new educational opportunities or even a recommitment to their New Year’s resolutions. For others, simply surviving the pandemic and returning to a familiar routine will be a triumph.

Our hope is that a majority of the good men and women who make up the public accounting profession fall into the first group – agile, resilient and ultimately dedicated to creating permanent change for the better. But we all need to look out for those in the second group – they will need extra help getting through the coming weeks and may feel disconnected from the progress once this is over.

While we encourage all firm leaders to wrap your arms around everyone, please be sure to pay special attention to those who may need a little extra TLC to get through this. Stay safe, and most of all, stay focused on the end goal.

Armanino Rolls Out COVID-19 Tracking Tool

As businesses in many areas begin formulating plans for a gradual return to physical workspaces, San Ramon, Calif.-based Armanino LLP (FY18 net revenue of $267.2 million) has introduced the new COVID Recovery Tracker tool.

The free tool captures county-by-county COVID-19 case trends in real time, tracking over a 3-, 7- or 14-day period to get a sense of where there are increases in infections versus areas in decline or holding steady. The tool also allows for customizable county filtering to capture only the specific data a particular user may need.

The firm plans to add more features in the coming weeks including traffic mapping at various locations such as retail establishments, malls, restaurants, airports and more – as well as a compendium of which business locations are open or plan to open versus those that are still closed, and overall trends by industry vertical.

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Updated May 11, 2020: CFOs Forecast Lasting Changes in Latest PwC Survey

The latest CFO survey from Big 4 firm PwC largely reflects the developing general consensus as to how the country will eventually emerge from the COVID-19 pandemic – slowly, cautiously and with eye toward structural and behavioral changes that may very well turn out to be permanent.

The new installment of PwC’s biweekly survey canvassed 288 finance leaders during the period of May 4-6, when an increasing number of states were loosening stay-at-home orders, cases were still on the rise in many areas and unemployment continued its steady upward trajectory. More CFOs agree that the path going forward is going to be a long one. For the first time, more than half expect their company to take at least three months to recover once the virus recedes.

That said, as they approach some new version of normal, two-thirds of respondents are “very confident” their company can create a safe workplace (even if employees aren’t as sure), 68% believe that crisis-driven transitions to remote work will make their company better in the long run and fewer are considering pushing back or canceling planned investments (58%, down from 70% two weeks ago).

Managing Change

Companies seem to be getting a better handle on conducting business in a transformed environment, with concerns over productivity losses due to remote working conditions declining. In fact, 44% of respondents say they’re finding new ways to serve customers, with many noting that social technologies routinely used in our private lives are now being absorbed into operational planning in the workplace. Despite these silver linings, however, 55% still expect their company to suffer a decline of 10% or greater in revenue and/or profits for this year, a slight uptick from two weeks ago.

Cost Containment

Even as costs remain under scrutiny for almost every company, many CFOs believe they’ve done what they can and will wait to see how things develop before making additional cuts. In addition to the aforementioned optimism toward pullback on planned investments, fewer respondents anticipate furloughs over the next month – 36% in the current survey versus 44% two weeks ago. Further, 34% say they are “very confident” their companies are identifying new revenue opportunities – a number PwC believes will increase as demand becomes clearer.

Heading Back

As they ponder what a return to the office may look like, CFOs are getting more concrete about how their companies will prepare, as evidenced by rising numbers since the last survey in three of the top areas of expected change – reconfiguring work sites to promote physical distancing, changing workplace safety measures/requirements and changing shifts or alternating crews to reduce exposure. Even so, a separate PwC survey of 468 employees found that 51% who have been forced to stop working or forced to work remotely say the fear of getting sick would prevent them from returning to the workplace if their employer requested it tomorrow. In other words, no matter what protective measures companies put in place, they’ll likely still have to sell the idea of a return to the office to a worried and skeptical workforce.

“The shutdowns showed many companies that they can work virtually better than they thought,” the study concludes. “These leaders are seeing the results of being able to move quickly and decisively during a crisis, even while away from the office, and they’re making connections to the longer-term health of their companies. Ultimately, however, the longevity and success of remote work will be driven by the opportunities businesses create for employees to interact, learn and be part of a community. For some organizations, culture also drives innovation and can deliver higher returns, outweighing the costs of on-site work.”

 

Updated April 28, 2020: CFOs Weigh the Risks of Reopening and the Potential Economic Impacts in Latest PwC Survey

As the country begins contemplating when and how to restart the economy amid the ongoing COVID-19 pandemic, the latest CFO survey from Big 4 firm PwC published on April 28 shows the level of concern among corporate leaders holding steady.

The new installment of PwC’s biweekly survey series took the pulse of 305 finance leaders for the push-pull week of April 20, as coronavirus cases in many states had started to level off, several stay-at-home orders were further extended and plans for reopening certain businesses began to take shape. Against this backdrop, 72% of respondents continue to believe COVID-19 has the potential for “significant impact” to their business operations, down only slightly from 74% two weeks prior. What has emerged in recent weeks, however, are more serious discussions about companies returning to some semblance of pre-lockdown operations.

“U.S. finance leaders are focused on shoring up financial positions, as U.S. businesses head into a period of even more operational complexity while they orchestrate a safe return to the workplace,” according to the study. “Back-to-work playbooks put workforce health first, as companies set course for a phased-in return to the workplace that will not be uniform across the U.S. or internationally. Returning employees and customers are going to experience a work environment that will differ in marked ways as a result.”

To illustrate the potential changes that lie ahead, 49% of respondents say remote work is here to stay for some roles, as companies shift to alternate staffing and reconfigured worksites that promote social distancing. Meanwhile, 77% of surveyed CFOs expect to see new safety measures like testing put into place, and 50% are planning on higher demand for enhanced sick leave and other policy protections for employees.

But companies are also beginning to realize that the business recovery from the impacts of the virus will take longer. As measures of manufacturing and service activities continue to drop and demand continues to shift, 48% of CFOs believe it will take at least three months to return to normal, up from 39% in the previous survey.

In terms of the financial fallout they expect from the pandemic, 53% of respondents are projecting a decline of at least 10% in company revenue and/or profit this year. And as cost pressures intensify, 32% of these CFOs expect layoffs to occur (up from 26% two weeks ago) and 70% are considering deferring or canceling planned investments, mostly in the areas of facilities and general capital expenditures, but not as much in investment programs considered important to future growth such as digital transformation, customer experience or cybersecurity/privacy.

As the recovery from COVID-19 slowly evolves, the study advises leaders to remain committed to the spirit of open communication and people-first policies.

“With most firms expecting to bring people back on-site in phases, leaders will need to help employees adjust to a changed environment while still managing the well-being, engagement and productivity of all workers. Purpose-led communication will continue to be critical to keep people informed, and leaders should demonstrate empathy while helping employees adjust to what will likely be an extended transition period.”

 

Updated April 14, 2020: PwC Survey Finds CFO Concerns Growing As Pandemic Continues

Big 4 firm PwC, in its third survey since COVID-19 stay-at-home orders took effect, finds that CFOs are increasingly worried about financial impacts, recovery time and cost-cutting, including layoffs and furloughs.

This survey of 313 finance leaders covered the week of April 6, when unemployment claims surged and attention turned to the federal stimulus package as deaths from COVID-19 mounted.

The top concern of respondents is the financial impact of the coronavirus as a recession looms and cash flow tightens. The survey says 75% are worried about the pandemic’s effects on results of operations, future periods, and liquidity and capital resources. A potential global recession is feared by 70%.

Also, CFOs are far less optimistic about the time it will take for their businesses to recover.

“Hopes that the outbreak will dissipate quickly are receding,” according to the PwC COVID-19 CFO Pulse Survey. “Only one in five respondents now believes they’ll be back to business as usual within a month once the outbreak ends. In contrast, during the week of March 9, as shelter-in-place orders started taking hold in the U.S., 66% of U.S. and Mexico respondents estimated that their companies could recover within a month.”

CFOs also noted that since so many changes are taking place now, with employees working remotely and customer interactions changing, that recovery will be complicated, as they try to predict what a new normal will look like after the outbreak ends.

As cost pressures increase, workforce reductions in May are anticipated by 26% of respondents and 41% expect furloughs. “This marks a significant change. Two weeks ago, only 16% of leaders in the U.S. and Mexico expected layoffs, while 44% expected furloughs. Separation of the workforce, or layoffs, is typically considered a means of last resort,” the survey says.

In another effort to cut costs, 67% of the U.S. leaders surveyed say they are considering deferring or canceling planned investments in the following areas: facilities/general capital expenditures 82%, workforce 67%, operations 55% and IT 53%.

To cope, nearly half (49%) of finance leaders surveyed say their company plans to take advantage of various government relief programs, most notably the $2 trillion CARES Act, which covers loans, loan guarantees, grants, assistance payments, contracts and tax incentives. Among the leaders who expect to make use of these measures, 81% expect to defer tax payments.

PwC is conducting a biweekly survey of finance leaders in the U.S., Mexico and 19 other territories. The next set of results will be released April 27.

The PwC survey says that finance leaders are making tough decisions as they prepare for a recession. “Helping people feel more prepared and informed by being transparent about the health of the company is crucial. Company leaders who are forthright about the decisions the leadership team is making — and how the workforce may be affected — can build trust by helping people stay informed, even if the news isn’t good. Trust and transparency are also a key part of stakeholder management. The situation is uncertain, and nobody can be sure what will happen, but providing regular updates means stakeholders won’t be caught off guard.”

 

March 17, 2020: PwC Study: CFOs Anxious About Massive Coronavirus Impact

Fifty finance leaders in the U.S. and Mexico are very concerned that the coronavirus pandemic may lead to a global economic downturn, according to a new survey by Big 4 firm PwC.

That No. 1 concern, cited by 80% of those surveyed March 9-11, is followed by worries about consumer confidence (48%), financial operations (48%) and workforce productivity (42%). The CFO Pulse Survey also revealed that every CFO or finance leader says their business is impacted by the coronavirus.

“We don’t think it’s a time for companies, or others, to hold onto original plans for 2020,” says U.S. Chair Tim Ryan during a media briefing, according to CFO.com. “It’s clear that the virus will change the plans of almost every company.”

Companies that are ready will feel fewer impacts, he adds. “Those that have been working very hard to control things like cost structure and liquidity will fare better, and those that weren’t will be more adversely affected.”

Most of the respondents predict the crisis will impact their revenues and profits, with 58% expecting a decrease and while 40% saying it’s too difficult to assess now. The leaders are considering financial actions as a result of the outbreak, with 62% planning cost containment measures, 44% adjusting guidance and 32% deferring or canceling planned investments.

Optimism was reflected in the survey as well, with 66% of respondents saying “business as usual” could return to normal in less than a month if the COVID-19 were to end today. Another 24% said it would take up to three months.

“The longer-lasting effects of the outbreak on consumer habits are difficult to predict, but some companies are already updating strategies in the face of temporary – and potentially permanent – changes in some markets or business models,” the survey report says.

PwC is conducting biweekly surveys of finance leaders in the U.S. and Mexico. The next set of results will be released on March 30.

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Finance Execs Focus on Three Key Areas in New Survey

Given the fast-moving developments of the ongoing COVID-19 pandemic, the results of the latest Quarterly Priorities Survey from Financial Executives International (FEI) may seem slightly dated, since the 228 respondents were offering their opinions during the period of March 17-April 10, when stay-at-home orders in many parts of the country were still firmly in place and plans for reopening had yet to materialize. Nevertheless, even as several states and regions have now begun partial easing of those initial restrictions, the survey provides a good snapshot of where CFOs were directing their attention in the early going and where they expected to soon be focusing their recovery efforts.

Against the backdrop of the virus and its accompanying economic fallout, three main themes among financial executives emerged from the latest survey:

Digital Transformation

On average, 70% of respondents expected to alter work-from-home or travel policies at their firms in response to mandatory stay-at-home or shelter-in-place orders. Near-term changes would be reactionary based on the current health situation and quarantine restrictions, while long-term changes would be based largely on the impending economic downturn. Many survey participants indicated they will invest more and begin to think about how to provide better remote functionality for workforce segments that don’t traditionally work from home.

Meanwhile, the executives said travel – such as client meetings, staff meetings, and conferences – will be evaluated primarily by how it fits into the overall business strategy, with a higher bar needed to determine whether in-person attendance will be justified moving forward.

Talent Acquisition and Retention

The recent economic disruption has shifted job market equilibrium in favor of organizations at a time when 16% of respondents still see increasing, attracting and retaining talent as a top issue. So even as 46% of survey respondents indicated they were seeking to decrease headcount in the wake of the pandemic, those companies looking to add highly skilled finance professionals may find themselves with a bigger pool of quality options.

While data management, financial planning/analysis and technical accounting professionals were among the most highly sought additions, FEI expects regulatory professionals to become a higher priority in the coming quarters given complexities brought on by the CARES Act and other regulatory changes.

Capital Preservation

Overall, 32% of survey respondents indicated that their organization’s working capital increased over the last quarter, 33% said it decreased and 35% said it stayed the same.

However, given the anticipated duration and severity of the downturn, FEI expects working capital to decrease as companies begin to take measures to preserve capital, such as postponing or cancelling planned investments or trimming corporate payrolls.

BKD Takes on Part of Grant Thornton’s Municipal Government Audit Practice

Springfield, Mo.-based BKD LLP (FY18 net revenue of $662.9 million) has reached an agreement with Chicago-based Grant Thornton (FY18 net revenue of $1.87 billion) to acquire a portion of the latter’s municipal government audit practice, most of which is based in Texas and Oklahoma. BKD will also acquire several not-for-profit (NFP), commercial and benefit plan clients in the transaction, providing a boost to one of the firm’s fastest-growing niches.

As part of the deal, BKD is admitting three new partners: Ben Kohnle joined the firm’s Dallas office effective April 1; Angie Dunlap will join the Houston office on June 15; and Dan Barron will join the Dallas office on Aug. 15.

“We’re excited about the clients that Ben, Dan and Angie will bring to BKD, and we also see tremendous promise in their abilities to help us grow our public sector practice, especially with large cities and public universities,” says BKD CEO Ted Dickman. “The South region’s public sector and NFP practice has grown nearly 14% in FY 2020 so far, and adding this new talent will help us maintain our momentum into 2021 and beyond.”

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Grant Thornton Embraces Blockchain Technology

With global supply chains facing major disruptions brought on by the COVID-19 crisis, Chicago-based Grant Thornton (FY18 net revenue of $1.87 billion) is launching a new blockchain-enabled offering for intercompany transactions. The firm’s inter.x system provides real-time data analytics dashboards to monitor things like transfer-pricing compliance and cashflow management, and can offer deeper insight into rapidly changing supply chains.

By integrating disparate enterprise resource planning (ERP) systems, aggregating real-time data and establishing end-to-end workflows that behave like a single transaction, inter.x is designed to reduce the human capital required for such work. The idea is to allow companies to make immediate decisions based on the data in front of them instead of waiting for the end of an accounting cycle, and to create a permanent and unforgeable audit trail.

“Grant Thornton designed inter.x to provide a simple user experience that can red-flag missed opportunities tied to intercompany transactions and identify instances when transactions may have fallen short of company policies,” says Jamie Fowler, the firm’s chief transformation officer. “The inter.x solution has a simple value proposition: Companies bring their underlying data, while inter.x brings the automation and transparency.”

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