Two IPA 100 Firms Join Forces

IPA No. 16, Chicago-based Baker Tilly Virchow Krause (BTVK) (FY12 net revenue of $259 million) and IPA No. 87, Melville, N.Y.-based Holtz Rubenstein Reminick (HRR) (FY11 net revenue of $34.7 million) combined forces today, April 24. The merger will be effective on June 1. The combined firm will be  known as Baker Tilly Virchow Krause, LLP.

HRR will be the platform for BTVK’s New York practice and further expands the firm’s presence on the east coast.HRR was affiliated with DKF International.

“We’ve been looking for the right merger partner in New York and we found that partner in HRR. They have a strong reputation, considerable technical excellence, and a record of success,” Tim Christen, Chairman and CEO of BTVK says. “The combination of these two well-respected firms will result in a $300+ million firm with more than 1,600 professionals, deepening our capabilities to better serve our clients.”

“Baker Tilly and Holtz Rubenstein Reminick are complementary firms,” Barry Garfield, regional MP of HRR says. BTVK’s Executive MP Ed Offterdinger will expand his role and lead the integration of the two firms.

“We are very excited about this expansion of our east coast practice,” Offterdinger says. “With anchor offices in D.C. and New York, the merger will allow us to better serve existing clients and pursue strategic growth opportunities in the highly active corridor that connects our nation’s capital with the largest commercial market in the U.S.”

Allan Koltin, CEO of Koltin Consulting Group who advised both firms on the merger commented, “this discussion started almost exactly two years ago for HRR at a strategic planning retreat. HRR is one of those high achieving firms that could easily have stayed independent but saw even better growth opportunities for their people and clients by virtue of the combination. BTVK had a couple other discussions over the past few years with other New York firms but chose HRR because both firm’s strategic plan for greater New York was identical. Together I wouldn’t be surprised to see the size of the practice double in the next five years.”

Marcum Acquires Cornerstone Accounting Group

New York-based Marcum LLP (FY12 revenue of $275.5 million) announced the merger with Cornerstone Accounting Group, an accounting and assurance firm, focused on the real estate industry, with headquarters in New York City. The merger is effective immediately.

The Cornerstone team consisting of five partners and 75 staff will join Marcum. Cornerstone’s MP Daniel Vitulli will become National Leader of Marcum’s Real Estate industry group and will join Marcum’s Executive Committee.

Cornerstone provides a full range of accounting and assurance services to its industry-leading clients, including private equity funds, hedge funds, real estate investment trusts, pension advisors and private real estate companies. “Daniel Vitulli and the Cornerstone team are a best-in-class national organization and this transaction firmly establishes Marcum as a premier national real estate accounting group,” says Jeffrey Weiner, Marcum’s MP.

“As a national accounting firm with a footprint in over 20 regional markets, Marcum provides the Cornerstone Accounting Group the opportunity to significantly expand our reach and grow services for both our local and national clients,” says Vitulli.

CliftonLarsonAllen Co-MP McMasters Announces Departure

McMastersKrista McMasters, Co-CEO of CliftonLarsonAllen announced her retirement from the firm following 35 years of distinguished service. McMasters’ retirement is effective April 1, 2013.

When the firms officially joined forces on Jan. 2, 2012, it was announced that McMasters, CEO of Clifton Gunderson, and Gordy Viere, CEO of LarsonAllen, would lead the firm together. Viere would oversee the CLA holding company, the wealth advisory practice and the outsourcing practice, and McMasters would oversee CLA LLP, the public accounting practice.

Steve Meindl, Chairman of the CLA Board said, “At the first anniversary of our merger, the CLA Board reviewed the firm’s co-CEO structure and determined that operating under the leadership of one CEO will increase the pace of integration of our two firms and give better definition to our firm’s strategic initiatives. As a result, Kris elected to retire and Gordy Viere will assume the sole CEO role.” Meindl added, “Kris has been an incredible asset to our firm during her 35 year career. Her vision, passion and dedication to our firm played an integral role in our growth and success over many years. Her legacy lives on in our firm through the many people she mentored and developed.”

McMasters joined Clifton Gunderson as an associate accountant in 1978. She was admitted as a partner in 1985, became Director of Assurance Services in 1991, and served as Chief Practice Officer. McMasters succeeded Carl George as CEO of Clifton Gunderson in 2009, becoming the firm’s fourth CEO in its 60-year history. McMasters became the first and only female to serve as CEO among the nation’s current IPA Top 25 firms. Under her leadership, the firm rolled out and executed an aggressive growth strategy focused on external expansion and increased specialization, collaboration, discipline and communication.

Over the next few months, McMasters will be exploring new opportunities in business and board service, which leverage her leadership, experience and passion for growing people.


UK Heading Toward Mandatory Personal Finance Classes

The U.K. in early February made it all but official: personal finance instruction will be mandatory throughout the school system beginning in 2014, according to Time magazine.

“It’s encouraging to see an effort that promotes financial literacy nationwide, particularly one that incorporates lessons of finance and economics into subjects already taught in the classroom,” Nan Morrison, CEO of the Council for Economic Education, said of the U.K. development. “This will help students to understand these lesson’s relevance and also build their knowledge over time.”

The CEE and other advocacy groups are fighting for similar steps in the U.S. While the National Strategy for Financial and both private sector and public sector presidential commissions are looking into what works best, individual states determine their own school curricula.

“In the U.S., we need to realize that we’re a very large country that sets educational requirements at the state or local level; so we’re not likely to get nationwide financial education with the flip of a switch,” Laura Levine, executive director of the JumpStart Coalition for Financial Literacy, told the magazine. “But until our consumers are sufficiently financially capable, we’re going to have to keep working to provide that education in schools and anywhere else it makes sense.”

In the UK, personal finance will be incorporated into math classes and a “citizenship” course will be designed to equip all students “with the financial skills to enable them to manage their money on a day-to-day basis as well as to plan for future financial needs,” according to a briefing document. Lessons will be included in budgeting, money management, taxes, credit, and financial products and services.

INSIDE Public Accounting: Platt’s Perspective: March Madness Strategy

By Mike Platt, the Platt Group.

As we settle into March Madness mode and cozy into our recliners to watch college basketball, I wondered how odd it would be to change the rules: no time-outs during the game.

Imagine each team member showing up for the game and setting his own strategy, without checking in with his teammates as the game progressed.

What would be the result if there were no opportunities to review plans, respond to challenges, injuries or changes in the lineup? What if there were no timeouts to decide as a group how to adjust when the opponent changes strategy?

After the opening tip-off, it would be up to the individual players to figure out what the team approach should be and what they should do to win the game.

You can easily see that the coordinated effort that defines the game of basketball could quickly descend into chaos as the team approach becomes a group of individualized efforts with no coordination. No matter how good or how experienced the players, the cohesive team would devolve into anarchy.

Many firms unwittingly operate under this “No Time-Outs” rule. They set the direction, announce it (maybe), hit the court, and as time goes on, it is up to each team member to assess and change course when necessary.

When individual efforts are valued over team strategy, everyone is busy running, blocking and pivoting according to their own interpretations.

What if we could re-introduce the original rules of basketball time-outs to firm managers, and set it up so that the team uses the time to reassess and re-strategize as conditions change? What if the leaders of the firm could execute the strategy of the firm, huddle together, make corrections and execute the updated plan again with the benefit of these pauses in play? How much energy could be saved if they stop the day-to-day activities – “making the doughnuts” as consultant David Maister says – and pull back momentarily to course-correct? How much more progress could be made if firms could harness the benefits of a “huddle” and apply it to the ultimate success of their firm?

Thankfully, mechanisms are available that provide the same benefits that coaches receive from pre-game strategy, huddles during time-outs and after each quarter, and post-game film reviews. Partner retreats offer firm leaders the structure to assess, evaluate and make changes. It’s as important to huddle throughout the year as it is for a basketball team to huddle during breaks.

Business conditions change too quickly to allow the team strategy to descend into anarchy. Firms that regularly work on their business ultimately have a strong advantage over the competition and will be better able to capitalize on opportunities.

So let’s ask for a time-out. Let’s plan how we’re going to make significant forward progress – and take advantage of a firm retreat. Now back to the brackets. . .

What’s Your Take on Banning Telecommuting? Please Share.

First Yahoo announced it will end telecommuting; now Best Buy is following suit.

What do you think?

Does your firm offer telecommuting options? If yes, please share briefly your policy, results, pros and cons. Thank you for sharing.

Overheard At The 2012 AICPA Spring Council Meeting

Top business leaders, MPs of major accounting firms, state societies and financial regulators gathered to discuss the most pressing issues facing the profession at the AICPA’s Spring Council meeting in Washington, D.C. in May.

“The potential changes to audit reports for public companies and mandatory firm rotation proposals may change the auditing process.” – AICPA President and CEO, Barry Melancon.

Melancon foresees a host of opportunities in assurance, including greenhouse gas emissions, sustainability of supply chains and more.

Melancon called creating more diversity in the profession “an economic imperative.”

“Big data will likely change our thoughts about how we audit and what we audit to increase relevance and reliability.” – Barry Melancon.

“We’re the most trusted professional in the business space. Other professions would love to have the type of reputation that people in this room have.” – Barry Melancon.

“Cloud computing has transformed the relationship between the practitioners and their clients. Technology is a driver of change today and into the future of our profession. We have to embrace it.” – Barry Melancon.

John Veihmeyer, CEO of KPMG, says he has a simple litmus test when it comes to regulatory changes: “Will it help? Or make it more difficult to retain and attract the best people into this profession?”

“We have a crisis at the audit partner level, they put their career on the table every single day.” – Lou Grabowsky, COO of Grant Thornton.

Audit practices are stressed, says Bill Freda, Vice Chair of Deloitte.

“I look at proposals using the lens of whether it improves audit quality and enhances governance. I don’t think mandatory firm rotation meets that test.” –  Steve Howe, MP of Ernst & Young.

“Let’s change the dialogue from defensive to offensive or aggressive.” – Lou Grabowsky on the need for good dialogue with executives and CEOs of the companies. “We’ve moved so far to a compliance discussion that we forget about the business discussion.”

“The level of accountability for the profession is higher than it’s ever been and it’s moving in the right direction.” – Bill Freda, Vice Chair, Deloitte, on the strides the profession has made.

“Assurance is seeing a lot of growth and the potential is enormous. If we continue to hire the best and the brightest, we’ll continue to be the profession that brings our clients the solutions.” – Jean Hobby, Assurance Technology, Entertainment and Health Industry Leader, PwC.

“Diversity in the profession is a necessity and 10 years from now it will be an absolute requirement.” –  Jean Hobby.

“Our profession is becoming much more of a team activity.” – Jean Hobby.

Dan Griffiths, co-founder, Proficio Services Group, says empathy is a “gaping hole” in the strengths of the profession. It’s important to work with people with diverse backgrounds and understand where they’re coming from. “We’ve got to get more comfortable working with diversity.”

Gen Y says, “Hey, the technology I’ve got in my pocket is better than what I have at work.” – George Colony, CEO of Forrester Research.

“I think it’s important that we emphasize creativity and intuition just as much as rational, logical, fact-based thinking.” – Gerardo Godinez, Business Assurance Senior Manager, Moss Adams, commenting on soft skills.

“What’s not motivating to our generation is ‘pay your dues, put in your time and there’s this pot of gold at the end of the rainbow.’ ” –  Dan Griffiths on meaning and purpose being more important than a paycheck.

“LinkedIn is “incredibly powerful” and is being “underutilized.” Dan Griffiths advises firms to stop blocking staff from using it.

On social media bans: “You’re not going to get the best and the brightest to work at your “company. This is the air they breathe and the water they swim in.” – George Colony.

“I think technology is going to enable us to get to the point where there’s no busy season.” – Gerardo Godinez.

“Collaboration is key. The days of financial people sitting at their computer, sitting at their desks all day, are long, long gone.” – Brad Dickerson, CFO, Under Armour Inc.

“Are you a problem solver? Or are you an accountant? Don’t tell me accounting stuff. Tell me a business solution.” – Kenneth Kelly, Senior VP and Controller, McCormick Corporation.

“How do we as financial professionals move up the value chain – not just counting the beans but how to grow the beans?” – Kenneth Kelly.

“I think maybe 15% of your [CPA’s] work is black and white and 85% is gray.” – Brad Dickerson.

“I always thought I had to be the expert on whatever issue was out there. Be an expert in your swim lane. Be comfortable where you’re an expert and be comfortable where you’re not.” – Brad Dickerson.

“Make sure the information is clear and concise and it’s not information overload. I think it’s our [professions’] job to be storytellers.” – Brad Dickerson on leadership.

“I believe many of the assurance engagements we’re doing outside of opinion audits are where clients are seeing the most value. That’s where the market is taking us. If we don’t take advantage of that, we’re going to lose that opportunity.” – Charles Allen, CEO of Crowe Horwath, regarding investors seeing audits as important and having confidence in the audit process.

U.S. Sen. Bob Graham, who served two terms as Florida governor and 18 years in the Senate, called for regulatory reform and said three issues should be considered: acting in a timely manner, creating simple, clear regulations and ensuring they are sustainable.

Neal Spencer, CEO of BKD LLP, said he would take a “hard look” at eliminating some regulations. “It’s causing a lot of pain with our clients today.” Some regulations make sense, “but we’re piling on, quite frankly.”

“We need to be balanced between independence and accountability.” – IRS Commissioner, Douglas Shulman.

“I’m a big believer that there’s a link between transparency and integrity.” – Douglas Shulman.

“Over 60 action items are in this report that can move us to another level, but it takes support from leaders in this room and in the accounting profession.” – William Ezzell, Commissioner of the Pathways Commission, on the future of accounting education.

AICPA Council Meeting…CEO Panel

Kenneth Kelly, senior vice president and controller, McCormick —

“What are the things making you successful? Is it the innovation pipeline? You should be measuring that, but it may not be a number on a balance sheet.”

McCormick is a fairly old company, from 1889, and in 1932, C.P. McCormick took over company. He had a totally different concept. He gathered employees together in factory and said, ‘Listen you are one of my most important assets. We need to work as a team and get better here.’ He raised salaries 10 percent. Took the work week from 56 hours to 48 hours and the next year they were in the red, productivity increased hugely. People started to work as teams to increase that productivity. They were more empowered.

“We’re teaching leadership, we’re teaching collaboration and we’re teaching a broader knowledge of processes in our business.”

“Are you a problem solver? Or are you an accountant?”

‘Don’t tell me accounting stuff. Tell me a business solution.’ “I think you need to listen broadly to your customers…what are their issues? What problems do they have and how do you solve those problems? That can lead you to innovation.”

“How do we as financial professionals move up the value chain — not just counting the beans but how to grow the beans.”

Brad Dickerson, CFO, Under Armour Inc.

“Employees make customers happy, which ultimately makes the shareholders happy.”

“You have to have a good work force with an aligned vision.”

“How do you attract talent in this virtual world? I think it will be interesting to see how companies are going to react to that.”

“Collaboration is key. The days of financial people sitting at their computer sitting at their desks all day are long, long gone.”

On financial professionals’ skills:

“Connecting people to solve problems is a very, very important trait to their success.”

“I always thought I had to be the expert on whatever issue was out there.” After MBA program he learned, “Be an expert in your swim lane.”

“Be comfortable where you’re an expert and be comfortable where you’re not.”

On leadership:

“I think maybe 15% of your work is black and white and 85% is gray.”

“Make sure the information is clear and concise and it’s not information overload. I think it’s our job to be storytellers.”

AICPA Panel discussion… “What We Need to Do to Stimulate the Economy”

Sen. Bob Graham, D-FL, called for regulatory reform and said three issues should be considered: acting in a timely manner, creating simple and clear regulations and ensuring they are sustainable.

Traci Lynn, CEO of Traci Lynn Fashion Jewelry: “I believe the entrepreneurial spirit is alive and well.” She said so many people are “hungry to make a change,” to find an opportunity to help themselves. She says it’s an excellent time to start a business.

Neal Spencer, CEO of BKD LLP, said health care is one of the biggest industry sectors at his firm. Many clients are sitting on a lot of cash and want to make capital investments, but they don’t know where the economy is going, so the uncertainty is keeping them from spending money.

Question posed: If you had the power to do a few things to help the economy what would it be?

Sen. Bob Graham, D-FL: “I would simplify the tax code. I don’t think there’s an area that’s more complex and more consequential than the enormous complexity of our tax code.”

Traci Lynn, CEO Traci Lynn Fashion Jewelry: Make sure people get the best education they possibly can to give them the confidence to pursue their dreams. Also, she said business incubators can help people identify their entrepreneurial talents.

Neal Spencer, CEO of BKD LLP, said he would take a “hard look” at eliminating some regulations. “It’s causing a lot of pain with our clients today.” Some regulations make sense, “but we’re piling on, quite frankly.”

Timothy Christen, CEO of Baker Tilley Virchow Krause LLP: “Make it not be a crime to be successful.”

AICPA Council Meeting…On the Relevance of Financial Reporting

Charles Allen, CEO, Crowe Horwath LLP, said investors see audits as important and they have confidence in the process. “I believe many of the assurance engagements we’re doing outside of opinion audits are where clients are seeing the most value.” That’s where the market is taking us, he said. “If we don’t take advantage of that, we’re going to lose that opportunity.”

Lou Grabowsky, COO, Grant Thornton: Investors are making decisions on lots of nonfinancial information. “The call to arms on relevancy, and again to be proactive with it, to ensure we stay relevant, is to step out there and challenge ourselves.”

Jean Hobby of PwC: “We have to listen to what the marketplace needs and we have to adapt to meet those needs.”