2017 INSIDE Public Accounting Benchmarking Report Pre-Publication Offer

The 2017 Benchmarking Tools will be available in September.

IPA’s National Benchmarking Report is one of the most thorough, complete and insightful analyses of CPA firms in the U.S. The report is well-respected throughout the profession for being independent and accurate.  Benchmarking is one of the most effective processed firms can do to improve operations, increase profitability and productivity.

ORDER BEFORE AUGUST 15 AND SAVE!

Note: some associations have partnered with IPA to provide some of the benchmarking products to member firms. Please contact our office with any questions.

The Internal Operational Benchmarking Reports

The Firm Administration, Human Resources and Information Technology reports assist firm management uncover trends, areas of policy improvement, operational and procedural issues and to assist firms with planning, budgeting and implementing needed changes to move ahead in best practice style. Click on any one of the images below to find out more, and to view an excerpt from 2016.

Information Technology Human Resources Firm Administration

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The Financial and Operational Report Card

Understand Your Performance Relative to Your Competitors

This customized report provides firms with exclusive benchmarks of how their firm compares, in more than 20 metrics to hundreds of other firms across the U.S. The report is broken out by Top, Middle and Bottom Quartiles, and provides a visual of your firm’s overall performance. The report enables you to determine which processes and procedures could benefit the most from improvement, and in which areas these improvements might yield results. Why spend hours sifting through financial records, survey data and a host of internal reports, when you can find the answer in a financial and operational report card specific to your firm?

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Deloitte Study: Only 13% of U.S. Workforce Is Passionate About Their Jobs

Despite 2017 corporate spending estimated at over $100 billion for training and over $1 billion for employee engagement, 68% of the U.S. workforce is not engaged at work, a new Deloitte’s Center for the Edge study says.

Further, the study found that only 35% of the workforce had the disposition to seek out challenges in their organization; even among engaged employees, more than 60% didn’t seek challenges. This lack of passion for work exists at all levels surveyed and job types in the workforce with 64% of all workers and 50% of executives and senior management surveyed being neither passionate nor engaged in their work.

These findings indicate that employers might be focused too narrowly on employee engagement, rather than developing a workforce with the necessary passion to solve complex challenges and pursue new opportunities during this period of rapid technological change. In addition, the findings indicate a shift to new types of learning and collaboration environments could in fact address key barriers to a more engaged and passionate workforce.

“We are in the early stages of a shift in the global economy that will require us to transition from an angst economy, driven by fear and erosion of trust, to a creative economy focused on markets with expanding opportunity,” says John Hagel, managing director, Deloitte Services LP and co-chairman, Center for the Edge. “Worker engagement may no longer be sufficient for performance improvement. In an environment of mounting performance pressure and increasing unpredictability, companies need a workforce that embraces challenge. Worker passion is becoming a key attribute for employees with the skill set that will contribute to sustained performance improvement for companies in increasingly competitive markets.”

According to the study, passionate workers generally exhibit three attributes: long-term commitment to making a significant impact in a domain; questing disposition that actively seeks out new challenges in order to improve faster; and connecting disposition that seeks to build trust-based relationships with others who can help them get to a better answer.

Respondents fell into three clusters:

  • Passionate Employee – 13% of respondents have all three attributes of worker passion.
  • Contented Employee – 23% of respondents score high on an index of engagement indicators, but do not have all three attributes of worker passion.
  • Half-hearted Employee – 64% of respondents do not have all three attributes of worker passion and do not score high on engagement.

The study found that only 38% of engaged employees had the questing disposition, and nearly half of engaged workers also lacked a desire to make a significant impact in their industry, function or specialty. Engagement seemed to have the most significant effect on workers’ tendency to reach out to others to solve challenges and improve their own performance.

Of those employees who are “passionate,” the study revealed the following:

  • 71% report working extra hours.
  • 89% report feeling focused, immersed and energized in their work.
  • 68% are optimistic about the future of their company.
  • 71% feel they are encouraged to work across the company.
  • 67% the company collaborates well with customers.

Furthermore, while position had some effect, with those in senior positions being more likely to be passionate, age wasn’t a significant factor: Millennials don’t have an edge when it comes to passion.

The study showed that respondents who were not passionate reported a lack of autonomy, inability to work across teams and a lack of involvement in decision-making.

Worker passion clearly needs to be “activated” in the workplace. To begin with, business leaders should evaluate whether they are acting with passion in taking on difficult challenges and pushing boundaries in potentially exciting directions. Tapping into this kind of passion can shift individuals from the fear of change or failure – to excitement about the opportunity to test boundaries. Additionally, some workers would benefit from guidance and role models who can serve as practical examples of how to quest, connect and create impact within the context of a specific organization.

The study suggests that trends such as automation, could open up new opportunities to drive worker passion. As more and more mundane, repeatable tasks are automated, the study identified opportunities for existing employees to focus on high growth areas that tap into capabilities that are uniquely human: curiosity, imagination, creativity, and emotional and social intelligence. Ultimately this has the potential to move the U.S. workforce toward higher levels of engagement and worker passion.

Whistleblower Behind Caterpillar Tax Headache Could Make $600 Million

Caterpillar, the world’s largest maker of bulldozers and other construction equipment, faces a $2 billion IRS bill and possible criminal charges, while the accountant who tipped off the feds may make a windfall, Bloomberg BusinessWeek reported.

Daniel Schlicksup, an accountant who had been with Caterpillar for 16 years, sent emails in 2008 to top executives with the subject line, “Ethics issues important to you, the board and Cat shareholders.” This occurred after a meeting in which he concluded that no one had passed his tax concerns on to the CEO. He had been telling his bosses that the company was engaged in an overseas tax arrangement that he figured had helped it illegally avoid more than $1 billion in taxes.

BusinessWeek reported, “He alluded to his concerns about the tax strategy and described, in emotional terms, a systematic effort to shut him down. ‘I am now an example to my colleagues, peers and others that they made the correct choice when they chose to not report ethical issues and ignore company policy,’ he wrote. Attached to the email was a 15-page memorandum describing how his superiors had retaliated against him for speaking out. The next morning he sent 137 pages of documents purporting to show how, with the help of its auditor, PricewaterhouseCoopers, Caterpillar had devised a way to shift billions in profit to Switzerland to avoid U.S. taxes.”

Since then, the IRS has demanded $2 billion in back taxes and penalties, a U.S. Senate committee has concluded Caterpillar avoided taxes on more than $8 billion in revenue, and federal agents searched the Peoria, Ill., headquarters and took away computers, documents and other evidence that could be related to false financial statements. Caterpillar executives could face jail time if criminal charges are brought.

The IRS typically pays whistleblowers 15% to 30% of what it collects. If Cat pays the full $2 billion, Schlicksup may receive $300 million to $600 million. But nothing is guaranteed. The IRS determines how much a whistleblower contributed to a case and, in turn, how much he or she is paid.

A company spokeswoman says, “Caterpillar believes its tax position is right. We are in the process of responding to the government’s concerns and hope to be in a position to bring this matter to resolution within a reasonable time frame.”

Read the full story here.

IPA INSIDER: May 2017 News

Listed below are the Top 10 most-read stories on the INSIDE Public Accounting blog for the month of May.

  1. Elliott Davis Decosimo Names New Chief HR Officer
  2. Grant Thornton Adds to Cybersecurity Services
  3. Settlement Reached in Andersen Tax Trademark Dispute in California
  4. The Bonadio Group Manhattan Office Moves, Hires
  5. Mowery & Schoenfeld Announces Newest Partner
  6. Marcum Adds Meyers Harrison & Pia
  7. IPA Vendor Spotlight On … Allan Fisher, Premier Financial Search
  8. LBMC Acquiring Intacct Practice
  9. Withum Adds IT Consulting Firm, Portal Solutions
  10. Gail Rosen Merging into Wilkin & Guttenplan

Texas Lawmakers Pass Sales Tax Exemption for CPA Firms

The Texas Legislature passed a bill May 9 that creates a de Minimis exemption for a CPA firm whose work for a client may unintentionally stray into the state’s broad definitions of “insurance services,” the Texas Society of CPAs (TSCPA) announced.

John Sharbaugh, TSCPA managing director of governmental affairs, testified on behalf of the bill, which was signed by Gov. Greg Abbott on May 22, and will go into effect on Jan. 1, 2018. The bill, SB 1083, addresses the murky sales tax issue that arose in 2015 when the comptroller performed a routine audit and determined that a Texas CPA firm conducted insurance services and owed back sales tax. TSCPA worked with the comptroller’s office on the matter. SB 1083 states that insurance services do not include a service performed by:

  • A CPA firm as defined by the Texas Public Accountancy Act; and
  • If less than 1% of the firm’s revenue in the calendar year is from services in this state that would otherwise constitute insurance service.

“The passage of SB 1083 is a win for Texas CPAs and the TSCPA governmental affairs volunteers who worked so hard to lobby for this important issue,” Sharbaugh says in a statement. “It’s important for CPA firms to have some protection in the event they inadvertently perform insurance services, as defined by the Texas Comptroller, as part of their work for their clients, and this bill accomplishes that by providing a limited safeguard for CPAs.”

IPA Vendor Spotlight On … Allan Fisher, Premier Financial Search

Name: Allan Fisher

Allan Fisher

Allan Fisher

Company: Premier Financial Search

Title: President and Founder

Accomplishments:

  • 20 years of recruiting specifically for public accounting firms
  • Works with 25 of the IPA 100 firms, 42 of the IPA 200 firms and 64 of the IPA 300 firms.
  • Placed 1200+ candidates within CPA firms
  • Actively involved in CPAFMA
  • Acted as ‘matchmaker’ on multiple firm mergers

Many accounting firms have their own recruiters on staff, but what extra value can an outside recruiting service bring to the table?

Internal firm recruiters are a key part of the HR and talent acquisition process, and that is why we partner with them to fill their staffing needs. They do an outstanding job of promoting the benefits of their firm, and we do an outstanding job of identifying candidates they might not reach. Our team has created a strong national network. This enables us to target specific candidates by job, geography and industry specialization. We have built our success on relationships, and see this again and again in referrals. We see the big picture, and come at recruiting from a different vantage point. When combined with what CPA firms have in place for staffing, the value we add is tremendous.

What’s the biggest opportunity for CPA firms that Premier Financial Search can help them with?

Two of the biggest challenges facing CPA firms are staffing and succession planning. These are two of our largest areas of focus. As we work solely with public accounting firms, our entire inventory consists of candidates coming from local, regional and national firms. Our candidate interview process is in-depth and allows us to determine a candidate’s ultimate career goal. We can then make ideal matches based on the needs of the hiring firms.

How has the staffing industry changed with the rise of social media, specifically LinkedIn, in your years as an executive recruiter?

Much has changed in the industry since I started recruiting in 1998. LinkedIn has leveled the playing field when it comes to identifying talent. Recruiters and HR professionals alike can easily determine a talent pool at a particular level within a geographic area. Candidates tell me that they receive five to 10 emails via LinkedIn from recruiters and firms per week. This has created a Tinder-like atmosphere in which candidates feel they can be selective, swiping past opportunities until they find their perfect match. Recruiting is, and has always been, about relationships. For us, Monster, Indeed and LinkedIn open the doors to relationships. A positive for us is that LinkedIn allows us to reach more candidates on a national level. Interestingly, 30% of the candidates we place are relocating from one geographic area to another.

What makes Premier Financial Search different than other staffing companies?

We recruit and place nationally. We have placed candidates from almost every state into Top 100, 200 and 300 firms. We know what differentiates one firm from another. When a candidate considers making a move, their knowledge of firms is often focused on the very recognizable national firms. We assist by educating candidates on many things: the differences among national, regional and local firms; which firms offer industry specialty services; how one firm’s succession plan may be vastly different than another’s; how one firm’s culture compares to others. We know the market. With 20 years of expertise focused on one area, we know the trends, firms to watch, M&A rumors and important details not included on firm websites.

Final thoughts?

Our passion is placement within public accounting. In an overheated market for talent, we provide top candidates, allowing our clients to grow and properly plan for partner succession.

Do you know someone else who would make a good Spotlight? Contact Christina Camara.

IPA INSIDER: April 2017 News

Listed below are the Top 10 most-read stories on the INSIDE Public Accounting blog for the month of April. IPA Logo - with tag line

  1. KPMG Fires Head of U.S. Audit, Others After Improper Warning of Inspection
  2. IPA Spotlight On … Loretta Doon, California Society of CPAs
  3. BDO USA Acquires Hilton Consulting
  4. Elliott Davis Decosimo Admits Ten New Shareholders
  5. Cybersecurity Firm SDGblue Joins Crowe Horwath
  6. Settlement Reached in Andersen Tax Trademark Dispute in California
  7. Grassi & Co. Welcomes COMPASS-Regulatory and Compliance Advisers
  8. Montana Society of CPAs Announces New Executive Director
  9. Sikich Strengthens Employee Benefit Services with Acquisition of Milwaukee-area Firm
  10. Dean Dorton Acquires Metro Medical Solutions

After 25 Seconds of ‘Irritation’ Accounting Firm Callers May Hang Up

Accounting firms in North America risk losing business by making customers wait on hold for more than 25 seconds, new research has revealed.

Every call made to companies in the accounting sector, as part of the study conducted by audio branding company PHMG, was put on hold, compared to a North American average of 70%. Those callers are being forced to wait for 25.81 seconds on average, slightly less than the North American average of 28.05 seconds.

In addition, callers are left listening to inappropriate audio, which could increase the risk of caller hangups. The research discovered 51% of accounting firms leave customers waiting in silence, while 31% use generic music and 14% subject callers to beeps.

Mark Williamson, CEO at PHMG, says, “The research results do not reflect particularly well on the accountancy sector, as few firms appear to be employing a best practice approach to call handling. It’s worrying that customers are being left on hold for over 25 seconds as this can be a major irritation for customers, but what makes matters worse is that they are left in silence or listening to poor-quality music, which increases the risk of hang-ups.

He says that a previous study of 2,234 U.S. consumers found 59% will not do business with a company again if their first call isn’t handled to satisfaction. The same consumer study also revealed 65% of customers feel more valued if they hear customized voice and music messages on hold, he says. “By ensuring all audio is professional and brand-congruent, companies can drastically improve customer experience and begin shaping behavior by tapping into the psychological power of sound.”

This latest study also found accountancy firms answer the phone within an average of three rings, but only 2% use an auto-attendant service to greet callers outside of normal business hours.

Four Disruptive Cyber Trends That Could Slow the Bad Actors

Jason Bloomberg, president of industry analyst firm Intellyx, has written in Forbes about four broad trends that reveal transformational aspects of the cybersecurity marketplace after recently attending a huge RSA cybersecurity conference in San Francisco.

Disruption No. 1: Targeting the Links in the Cyber Kill Chain

Vendors are improving their ability to understand how bad actors behave, and can thus take steps to prevent, detect or mitigate their malicious activities, says Bloomberg. This may be the broadest of all the disruptions. Today’s vendors are understanding the ‘Cyber Kill Chain,’ or the steps a skilled, patient hacker will take to achieve his or her nefarious goals.

The product of U.S. Defense contractor, Lockheed Martin, The Cyber Kill Chain contains seven links: reconnaissance, weaponization, delivery, exploitation, installation, establishing command and control, and actions on objectives. Today’s more innovative vendors target one or more of these links, with the goal of preventing, discovering or mitigating the attack, Bloomberg says.

Disruption No. 2: Leveraging AI to Better Understand Human Behavior

One area where vendors are successfully applying Artificial Intelligence, Bloomberg writes, “is to tell the good guys from the bad guys, and furthermore, to tell the good guys from the bots simply by analyzing their behavior.” Insider threats are among the most pernicious. Cybersecurity vendors are identifying, investigating and blocking insider threats by tracking the behavior of users and identifying when that behavior violates policy.

Disruption No. 3: ‘Software-Defined’ Cybersecurity

“Cybersecurity has also joined the Software-Defined Everything (SDX) movement. If we can represent our entire cybersecurity deployment as a software-based model, the reasoning goes, then we have better control, visibility and flexibility,” Bloomberg says in Forbes.

Disruption No. 4: Israel Becomes the Cyber Silicon Valley

The fourth trend is how Israeli cybersecurity startups have come to dominate the innovation in this area. Of the 26 vendors Bloomberg and his colleagues met with at the RSA Conference, they spoke with no less than six Israeli firms. Silicon Valley may still have the edge generally, but Israel is gaining fast in the cyber arena.

Combined with innovations in threat prevention, detection and defense, the long-standing advantage that bad actors have enjoyed may finally be nearing its end.

Seven Myths Of CEO Succession: Are Firms Taking The Right Steps To Find The Next CEO?

The CEO’s departure is, sooner or later, inevitable – but are companies prepared for it?

With CEOs turning over at a rate of 10-15% per year – from jumping to another company to resigning due to poor health, poor performance, or just retiring – both accounting firms and public companies would be expected to be well-prepared for CEO succession. But governance experts from Stanford and The Miles Group have found a number of broad misunderstandings about CEO transitions and how ready the board [firm] is for this major change.

In a piece for the Stanford Closer Look Series, David Larcker and Brian Tayan of the Corporate Governance Research Initiative at the Stanford Graduate School of Business and Stephen Miles of The Miles Group name seven myths surrounding CEO succession – myths shared by corporate boards as well as a large amount of the business community.

“The selection of the CEO is the single most important decision a board of directors can make,” say the authors, but turmoil around these decisions at the top “have called into question the reliability of the process that companies use to identify and develop future leaders.”

What are the seven myths? 

Myth #1: Firms know who the next CEO will be. “The longer the succession period from one CEO to the next, the worse the company will perform relative to its peers,” says Larcker. “But, shockingly, nearly 40% of companies claim they have no viable internal candidates available to fill the shoes of the CEO if he or she left tomorrow.”

Myth #2: There is one best model for succession. “There are several different paths firms can take to naming a successor – including internal and external approaches,” says Miles. “One reason firms fall short at succession planning is that they often select the wrong model for their situation. A firm may need an external recruit to lead a turnaround, for instance, or may have the capability to groom multiple internal executives over a period of time to allow the most promising one to shine through. One size does not fit all.”

Myth #3: The CEO should pick a successor. “Sitting CEOs have a vested interest in the current strategy of the firm and its continuance, and they may have ‘favorites’ they want to see follow them,” says Larcker. “Boards, however, must determine the future needs of the firm, and what kind of successor will best match the direction the firm is headed.”

Myth #4: Succession is primarily a “risk management” issue. “While a failure to plan adequately certainly exposes an organization to downside risk, boards should understand that succession planning is primarily about ‘building’ overall value,” says Miles. “Succession planning is as much success-oriented as it is risk-oriented.”

Myth #5: Boards know how to evaluate CEO talent. “Our 2013 survey found that CEO performance evaluations place considerable weight on financial performance and not enough weight on the nonfinancial metrics that have proven correlation with the long-term success of firms,” says Larcker.

Myth #6: Boards prefer internal candidates. “While, ultimately, three quarters of newly appointed CEOs are internal executives, external candidates still hold a strong appeal for succession – especially at the beginning of a search,” says Miles. “Often boards aren’t given enough exposure to internal candidates, and directors are often nervous about giving an ‘untested’ executive the full reins of a firm. There is a still-prevalent bias against promoting the insider ‘junior executive’ to the top spot one day. So, while the myth may end up mostly true in the end, there is often a long journey of getting the board to that decision.”

Myth #7: Boards want a female or minority CEO. “The numbers speak for themselves,” says Larcker. “Diversity ranks high on the list of attributes that board members look for in CEO candidates, and yet female and ethnic minorities continue to have low representation among actual CEOs. We continue to see that boards select CEOs with leadership styles they perceive to be similar to their own, and the fact is that boards today are still highly non-diverse when it comes to gender and ethnic backgrounds.”