Grassi Admits Rozleen Giwani as Partner

Rozleen Giwani

New York-based Grassi & Co. (FY18 net revenue of $63.6 million) announces that Rozleen Giwani has been admitted as a partner in its tax practice.

Drawing on her knowledge of grantor-retained annuity trusts, complex and simple trusts, gift tax compliance and estate tax law, Giwani will advise high-net-worth clients on tax savings vehicles, wealth preservation strategies, gifting and trusts.

Prior to joining Grassi, Giwani was a tax partner at a New York-based regional public accounting firm working largely in the financial services sector.

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Over 50% of Professional Service Firm Employees Criticize Employers’ Response to COVID-19

More than half the respondents to a recent survey say their firm had no plan to handle the COVID-19 pandemic, and 25% cited poor communication as part of their dissatisfaction.

“It took a while for the firm to comment on the situation internally,” one respondent says. “They were very slow to allow the work-from-home option until someone tested positive.”

The survey, by the Hinge Research Institute, drew responses from 217 employees from more than 200 professional services firms between March 20 and March 31.

Respondents rated their current employer’s response to COVID-19 on a scale of 1 to 10. Among respondents with positive sentiments toward their firm’s crisis response, 36% indicated their remote working capability prepared their firm for large-scale telework in response to stay-at-home orders; 23% lauded their firm’s proactive, decisive measures; and 15% said that their employers clearly communicated plans to team members.

“Our research over the last several years has consistently shown that a growing number of professional service firm employees want flextime and telework options to achieve better work-life balance,” says Hinge MP Lee Frederiksen. “The professional services are built on people marshalling their expertise wherever their clients are. Firms that offered telework perks before the pandemic have been quicker to scale up remote working in response to shutdowns. However, firms that haven’t prepared a crisis response plan are going to be slower to adapt to emergencies like this one, even if they already offer a telework option.”

The report, How Professional Services Firms are Responding to the COVID-19 Disruption, is available for download.

RSM Faces Shareholder Coup in UK

Following months of internal disarray and the revelation of a major accounting error, a group of shareholders of RSM UK is attempting to oust the firm’s board and block the appointment of new CEO Jill Jones, the Financial Times reported.

The group, led by two former RSM UK executives, claimed in a letter that it has power of attorney to vote on behalf of 64% of shareholders in response to the accounting blunder and a CEO selection process that it believes was rigged – a charge RSM UK has denied. One source close to the situation told the Financial Times that anger against the board was so severe that the group decided to move forward with its grievances despite the impact of the ongoing COVID-19 pandemic.

The accounts misstatement related to an error in reported sums set aside for professional liability claims, such as legal action or regulatory fines. The subsequent restatement had a net impact on profits of £2.2 million. RSM UK reported a £5.8 million pre-tax profit in the year to April 2018, which was restated in the 2019 accounts to a loss of £113,000.

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Looking Beyond the Pandemic for Accounting Firm Success

The COVID-19 crisis is illuminating the benefits of sharing knowledge, helping others and staying connected, say executives of global accounting associations.

Member firms are busier than ever answering client questions and concerns related to the global pandemic, including extended tax deadlines, aid packages and the like, but it is also a good time for firm leaders to reexamine how they are positioning themselves in the market and the role their firms play in their clients’ lives.

Association executives from Scotland to Atlanta gathered in a live video conversation on March 25 hosted by futurist Ian Khan to discuss the issues. He was joined by economist Sandra Saghir and the CEOs of Allinial Global, PKF International, Morison KSI and PrimeGlobal.

Some of the changes firms were forced to make, including moving to the cloud and enabling remote work, have been embraced for years, but not by every firm. The pros and cons will be worked out in real time during the pandemic for those firms. PrimeGlobal’s Stephen Heathcote notes that some MPs are already changing their mindsets about how they run their firms – viewing multiple offices as a costly hindrance rather than a must-have.

As for client service, James Hickey, of PKF International, suggests that firms will need a new go-to-market strategy because the profession as a whole is good at proscribing what clients need but bad at asking clients what they want. At a three-day conference last year, the word ‘client’ was mentioned only five times, he says. In light of the economic downturn, some businesses may forgo advisory services after tax season, “so we’ll have to find out what they need after that and use two ears, not one.”

Terry Snyder, Allinial Global CEO agrees. Done correctly, clients will realize just how valuable CPAs are, because business owners tend to seek out their CPAs much sooner than other professionals in a crisis. It’s up to firm leaders to put themselves in front of clients to help them through this difficult time. Every now and then, he says, people rethink their roles and reinvent themselves. “Sometimes you have to be shaken really hard to get people to do that.”

Firms should go on overdrive to reach out to clients, even if it feels like too much communication, they say. A global economic slowdown has accompanied the health crisis, and as businesses are shuttered around the world, CPAs are a source of reassurance and answers on how to prepare for the aftermath.

Saghir says that accountants will be key actors in moving toward economic sustainability. Build your skills and develop trust with your clients so that when the economy starts moving again, “they’ll know that during hardships you were standing by them.”

Half of 50 Large U.S. Companies Get Failing Grade on Gender, Racial Pay Equity

Of 50 leading U.S. companies, 25 get an F grade for their efforts to disclose and act on gender and racial pay gaps, while three companies – Starbucks, Mastercard and Citigroup – received an A grade.

The information is contained in the Gender Pay Scorecard by investment manager Arjuna Capital and Proxy Impact.

Failing grades were awarded to Goldman Sachs, Oracle, McDonalds and Walmart. Ten companies earned a B – Nike, Bank of New York Mellon, Progressive Insurance, Pfizer, JP Morgan, Wells Fargo, Apple, Intel, American Express and Bank of America.

The world’s largest corporations have come under pressure to close their gender and racial pay gaps in response to investor pressure, the #MeToo movement, and increasing public policy and regulation. In the United States, women working full time earn 82% of that of their male peers, a $10,122 per year gap. This disparity can add up to nearly $500,000 over the course of a career. The weekly median earnings for African American and Latina women are 62% and 54% of that of their male peers, respectively.

Since 2016, Arjuna Capital has negotiated gender and racial pay gap disclosures from 22 companies, including leading U.S. tech, finance and consumer firms. In the 2020 proxy season, Arjuna Capital and Proxy Impact are asking companies to a meet a more stringent standard of disclosing unadjusted “median gender/racial pay gap” data like that mandated in the UK.

“As today’s report makes clear, half of U.S. companies still have a long way to go, and there is room for substantial improvement across the board,” says Arjuna Capital MP Natasha Lamb. “Pay equity is going to be a major issue in the 2020 shareholder season.”

Cherry Bekaert Acquires Tax Advantage Group

Richmond, Va.-based Cherry Bekaert (FY19 net revenue of $219.7 million) has announced the acquisition of the Tax Advantage Group (TAG) of Greenville, S.C. The consulting firm specializes in New Markets Tax Credit (NMTC) services.

TAG will now operate as Tax Advantage Group by Cherry Bekaert. Six professionals will join Cherry Bekaert’s credits and incentives practice.

TAG has secured over $1.7 billion in NMTC funding. TAG also offers compliance and asset management services through a series of proprietary processes. TAG professionals work with NMTC allocation applications, NMTC placement and deployment, and NMTC compliance and asset management services.

“The addition of TAG aligns with the firm’s strategic growth vision to enhance our value-added specialty tax offerings,” says CEO and MP Michelle Thompson. “TAG has a long track record of creating a substantial economic impact and making a difference for those that live and work in communities across the U.S.”

Tammy Propst, founder of TAG and now managing director with Tax Advantage Group by Cherry Bekaert, says, “This combination provides the opportunity to expand the economic impact we can have on the communities we care about.”

Cherry Bekaert says TAG has structured and facilitated NMTC investments that have created more than 14,500 direct jobs, served more than 489,000 clients, and helped create over 7.1 million square feet of new and improved commercial and industrial real estate.

Tax Advantage Group by Cherry Bekaert will operate from the firm’s Greenville office.

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Grant Thornton in UK Gives Staff Offer: 40% Pay Cut or Voluntary Sabbatical

One of Britain’s largest accounting firms is combatting the financial effects of the coronavirus pandemic by “inviting” thousands of staff to agree to a 40% pay cut or a sabbatical, The Financial Times reported.

Grant Thornton said that the move would help it to support staff and clients while navigating “clearly exceptional times,” the newspaper reported.

The firm encouraged staff to consider the pay cut, with a similar reduction in hours, until the end of May, or a sabbatical until June while being paid 30% of their standard compensation.

The firm employs about 4,500 people in the UK.

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Research: AI Can Help Some Service Firms But May Not Work For Others

New research warns that AI may not be appropriate for businesses that rely on a substantial amount of human interaction or a variety of services. Alternatively, businesses with limited customer contact and choice will see more AI success.

A new study on replacing professionals with AI technologies says business owners should think strategically before succumbing to the temptation to use AI to lower labor costs and increase the bottom line. The research paper is titled “AI and Machine Learning in Service Management” and is published in the Journal of Service Management.

“AI has the potential to upend our ideas about what tasks are uniquely suited to humans, but poorly implemented or strategically inappropriate service automation can alienate customers, and that will hurt businesses in the long term,” says researcher Chris Meyer, a professor at the Lally School of Management at Rensselaer Polytechnic Institute in Troy, N.Y.

Meyer determined that in businesses where trust and reputation are critical to building and maintaining clients, people will be more likely to be effective than automated technologies. Conversely, in areas where human biases can harm offerings of services, AI will be a better tool for companies to employ.

Meyer also asserts that many businesses will ultimately be using a mix of people skills and automation to effectively compete. Even AI, which can handle very sophisticated tasks, works best alongside humans — and vice versa.

“Automation and human workers can and should be used together,” Meyer said. “But the extent of automation must fit with the business’s strategic approach to customers.”

Platt’s Perspective: The Genie Is Out Of The Bottle – For Remote Work And Many Other Activities

For years, a debate has raged within some firms on whether to allow remote work or insist that everyone be present in the office. Younger workers have been pushing for flexibility, and some older partners have been resisting it. How can we make it work? Who gets the privilege of working from home? How will we know they are working when they are not here? How do we manage the staff?

Well, my friends, the genie is out of the bottle. COVID-19 has quickly pushed everyone into the deep end of the pool, and those who planned for it just continued on, while those who were still debating remote work may be doing their best to figure it out on the fly.

Even as we all find ways to adapt to changing the way we work and interact with one another, a growing chorus of thought leaders from all disciplines is suggesting we will not be going back to “business as usual.” Unlike a passing storm when everyone seeks shelter until the skies clear, this time, when we come out of our bunkers, the landscape will have changed. New ways of doing business will emerge. New business models, pricing models, service models and delivery models will forever alter the way you will conduct business going forward. Client interactions, staff interactions and the focus on recovery by truly listening and helping those in need are all changing, and hopefully for the better.

Mike Platt

Mike Platt

I’m an optimist by nature. I believe most firms will adapt and change and be better once they are fully operational again. I believe that the shift to more advisory services, which has been growing slowly every year (for decades I may add!) will kick into high gear as many firms step in and help their clients recover from an economic downturn that no one predicted would come so quickly.

Consider three immediate changes emerging from the current environment:

  • Conversations are already different, both in tone as well as in the technology used to conduct them.
  • Social media, which for years psychologists have indicated has contributed to increased feelings of isolation, suddenly becomes a tool to truly help us be social again.
  • The focus on “we” instead of on “me” is a welcome change and something that will serve us all well in the future.

No doubt there will be difficult times ahead as we crawl out of this natural disaster. To the many who adapt and embrace the radical changes that lie ahead, we stand ready to bring you stories of success, adaptation and evolution that are sure to emerge. To the few who hope that we return to the status quo, we wish you luck in putting the genie back into the bottle.

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MNP Merges in White + Abbott, Winsor Coombs

Calgary, Alberta-based MNP has acquired White + Abbott and Winsor Coombs, both located in the area of St. John’s, Newfoundland and Labrador. The merger is effective June 1.

MNP, formerly known as Meyers Norris Penny, offers tax, accounting and advisory services from more than 80 locations in Canada, and is looking to add to its growing presence in the eastern part of the country. MNP is the largest accounting firm in Canada after the Big 4.

“We’ve been delighted to help MNP grow as a part of the Nova Scotia community over the last few years and are excited to do the same here in Newfoundland and Labrador by welcoming not just one, but two well-established accounting firms that share our values and client-centric approach,” says Kirk Higgins, MNP’s regional MP for Atlantic Canada.

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