MGO Merges in New York Firm

Los Angeles-based MGO (FY21 net revenue of $98.1 million), an IPA 100 firm, has announced that it has merged in Nussbaum Berg Klein & Wolpow CPAs (NUSSBAUM), with offices in Melville, N.Y., and Manhattan. MGO will add the firm’s 73 team members, including all 11 partners.

Founded in 1990, NUSSBAUM serves middle market businesses and high-net-worth individuals on the East Coast, offering a full spectrum of accounting, auditing, tax and business advisory services for closely held entrepreneurial businesses and public companies.

“The East Coast’s concentration of wealth and emerging cannabis markets give us an opportunity to continue building value and establishing best practices through our private client services group, cannabis practice and other industry initiatives,” says Kevin O’Connell, CEO and MP of MGO.

Steve Wolpow, who joins MGO as the OMP in Melville, says, “This is a unique opportunity to enhance the services and client experience NUSSBAUM is known for by leveraging MGO’s size and international footprint. This is a momentous step for both our clients and our professionals, and we are excited about the future as part of MGO.” Former NUSSBAUM partners and team members will continue to operate from the Melville office.

Joe Tarasco, CEO of Accountants Advisory Group, who advised both firms on the transaction said, “This deal makes MGO a major player in Long Island, New York, with its second combination in the area. MGO is one of the fastest-growing CPA and advisory firms in the U.S., and the firm continues to expand on the East Coast to offer its deep industry expertise that has made MGO so successful.”

Turbulent Times Survival – Developing Your Staff for the Future


As the heavy work load of tax season fades into the distance, CPA firms are wondering just how deeply the current economic downturn is going to affect them. Many of the services provided in the next few months center around business consulting, planning, and transactional activities, such as acquisitions, sales of businesses and expansions. Companies, much like individual consumers, are evaluating their spending and cash flow options and will likely decide to defer discretionary spending into the future when they feel more comfortable with the economy. Therefore, it is likely that many CPA firms will be looking to pare back their staffing and reduce or eliminate hiring. But where will this leave them in the future when the economy improves?


The Long-Term View


CPA firms may want to keep a long-term view when determining their staffing needs. Firms invest a lot of time, energy and money in their recruiting efforts. Once hired, additional significant investment is incurred in developing and training staff. Firms are willing to make these investments because they know a talented staff is imperative in growing a profitable practice. Therefore, it is worth sacrificing current profits to retain good people that will help the firm grow well into the future.


An Opportunity To Upgrade


This economic downturn offers firms the opportunity to upgrade their overall staff. It is likely that many good, seasoned candidates will become available as companies pare back on their workforce. Firms should actively seek to fill “holes” in their staffing caused by turnover or lack of hiring in the past. In addition, firms may be able to strengthen their expertise in certain service areas or industry segments.


Managing Risk


Times have been good for the CPA industry in recent years. Firms have had plenty of work. However, this led to a difficult and competitive labor market. Consequently, firms have retained staff that they may not have otherwise kept and justified it by saying that they were being kept busy, even though they were not advancing as they should. Of course, these are the people that will be first to go when firms reduce their staffing levels.

Firms need to handle workforce reductions with care and sensitivity. It may be advisable to involve legal council to ensure the proper process and procedures are followed, in accordance with all applicable laws. Appropriate documentation should be maintained and firms need to be aware of laws protecting certain employees under age discrimination and employment acts. There are several outplacement services that will help the displaced employee work through the transition to another employer. Many companies offer this as part of a severance package.


Alternatives to Layoffs


To keep a solid, well-performing workforce intact, firms do have some alternatives to layoffs. These include hiring freezes, foregoing pay raises, and reducing all pay rates by a certain percentage across the board. Employees are in tune with what is happening with the economy and will generally agree to trade a slight reduction in pay for job security.


Looking to the Future


Successful firms spend considerable time in developing a culture that attracts and retains good employees. They know that this is a service business which requires them to have the best and the brightest people. They also know that good employees have choices of where to work and therefore have taken the time to understand that today’s workforce values:


§ Challenging work that allows them to grow


§ Being involved in decision making


§ Responsibility and making a difference


§ Job titles and an understanding of what it takes to advance


§ Work-life balance


§ Flexibility


§ An understanding of what it takes to be a partner


§ Involvement in firm and client issues


§ Keeping busy


§ Performance feedback


§ Training, coaching and mentoring


§ Knowing what is going on in the firm


§ Recognition and reward


§ Having fun


Successful firms have responded by providing:


§ Orientation programs that help the new hire acclimate quickly


§ Buddy systems to provide new employee support


§ Timely and comprehensive performance feedback


§ Mentoring for career guidance and success


§ Training – technical, soft skills and leadership


§ Coaching


§ A culture that is employee friendly


§ Constant communication of firm vision


What Can Be Done Today


Keeping the team informed: Especially in these uncertain times, it is imperative that firm leadership communicate honestly and often with the team. People are on edge and will appreciate knowing what the state of the firm is and how “we” are going to get through this together. The staff wants to be a part of the solution. Fear is a powerful motivator and now is a perfect opportunity for management to get the entire organization engaged in seeking opportunities to better serve clients and bring in new ones. No one has closer contact with clients than the staff. Therefore, it only makes sense that the staff understands what questions to ask and what signs to look for in dealing with the client base. This requires a lot of communication and guidance from firm leaders, both in group settings and one-on-one.


Advancement opportunities: Leadership should also communicate what it takes to advance in the firm. Strangely, it is often one of the best kept secrets. At my former firm, we developed a list of 16 Core Competencies that staff needed to master to advance in the organization. New hires were made aware of them early on and the competencies became the basis for our performance feedback tool. Firms should also develop various career paths so employees see they have alternatives. Of special interest is what it takes to become a partner and what life is like being a partner.


Get the Partners involved: Firms should tell their up-and-comers what is expected of a partner and what the rewards are. There are too many misconceptions by staff to let this go to chance. A healthy open discussion between firm leadership and partner candidates can go a long way in promoting life-long commitments to the firm. In the meantime, partners must lead by example by living the firm’s values and following firm policies and procedures. Further, they need to take time to nurture and develop staff. Interestingly, staff can help the partners become better at managing and coaching. We conducted upward evaluations several times at my firm and the results were sometimes astonishing. Partners don’t realize the impact they have on staff and I saw several partners make tremendous changes as a result of what they learned through the upward evaluation. The time spent by partners coaching and training staff will pay off well in developing the firms future leaders which is so important in resolving the firm’s succession issues.


Challenge your staff: Keeping the staff motivated and engaged requires a conscious effort by the partner group. The tendency is to feed them raw material and expect them to crank out widgets. But partners should put themselves in the staff’s place and remember what it was like in earlier days. Employees want to know that what they are doing is important. They like to know how it relates to the big picture. They want to learn new things. Constantly giving your staff new and challenging work stretches their minds and keeps their interest. Taking into consideration workloads and deadlines, every member of the team, especially partners, should delegate work to the level where it can be handled competently, but is also challenging. This not only forces the staff to learn and grow, but requires the delegator to seek more challenging work or develop new work for the firm. Partners who follow this rule will find they have adequate time to be doing partner activities, such as business development, coaching and training staff, building relationships, or creating new services.


Step up the training program: Make use of these slower months to train your team. One area that firms should not cut back on is training. This goes beyond technical subject matter. Good firms realize that to have tomorrow’s leaders in place for growth and succession, they need to provide leadership development and training in the soft skills. Firms are helping their people be better at speaking, listening and writing, delegating, supervising, dealing with difficult people, business development, managing projects and many other leadership skills.


Be flexible: Each generation has its own unique peculiarities and this often causes issues within an organization. Although they may be different, they all want the firm to succeed. Firm leaders would be wise to attend seminars and read books on generational trends so they better understand their workforce. Work-life balance ranks highly with today’s staff. Therefore, firms need to find a way to provide flexibility in how people work. My firm had numerous part-time arrangements with employees at all levels, with each one being unique. Firms might also involve their staff in discussions on how work is to be completed, the look and feel of the office environment and other firm issues so as to provide an employee friendly experience. As a side benefit, this will serve as a differentiator in your recruiting efforts.


“Have fun, enjoy the journey”: This is one of the value statements at my prior firm. CPAs put in some grueling days. They spend more waking hours at work with their colleagues than they do with their families. Successful firms have found a way to bring fun and laughter into the workplace. It is part of their culture. Firm leadership should assess how much fun their team is having and what affect it has on team morale, recruiting and retention, and client relationships. At my former firm, we developed our own version of “Deal Or No Deal” during tax season that served as a diversion to the task at hand and kept people engaged. In addition, many of our offices had their own ways of keeping it fun which also served to bring the team members together, often in a more social setting. During the summer months we held various team retreats that served to combine continuing education with social activities. These served as evidence that the firm intended to live by its value statements.


In Conclusion


Yes, the economy is down and firms are looking for ways to survive it. But it will improve and those firms that treat their people right in hard times stand to have a better chance of seeing their employees return the loyalty in good times. Partners may need to sacrifice some current income in order to keep a quality staff, but it will pay off in multiples in the future. Those firms that have a knowledgeable and talented staff will continue to grow and prosper in any economic environment.


Copyright ©2009 by Michel Consulting Group, LLC


About the author: Timothy I. Michel, CPA is a consultant to CPA firms and a former managing partner of a Top 100 CPA firm. He helps CPA firm owners create value in their practice by drawing on his own experiences to assist them in identifying and overcoming obstacles and focusing on opportunities to increase growth and profitability. For more information, visit the website at or contact Tim directly at




Vital Keys To Getting The Right Soft Skills Training For All Your Management Needs


The “Information Age” of the past half-century or so has changed the way we all live, and changed how most of us work, too. To keep all the other industries up and running with the new technologies of communications, media and computing, another industry was born, called Information Technology (IT). For a time, it seemed that the only requirement for success in IT was having technical knowledge to keep the computers virus-free and the databases operating for accounting, customer service and management. This is, of course, no longer the case, if it every really was.The five vital keys

Today, employers in every industry seek IT professionals who do more than simply repeat a set of maintenance tasks or man the soldering irons. College degrees and technical certifications are important, it is true, but there is a whole set of what are called “soft skills” that are part of a winning formula, for the employee as well as the company. Sometimes called “interpersonal” or “communications” skills, they are often hard to assess on paper alone. Today, however, new hires are being rated in terms of these skills, and continuing education and “soft skills development” for existing employees are a key focus for enlightened management.


If you are an owner, manager or executive, in any industry, there are more skills required for success that simple mastery of technology, a knack for selling, inventive ability or organizational powers. The soft skills are key because they involve communication, morale, corporate culture, customer service provision and all the other “human” components. There may be many vital keys to getting the right soft skills training for all your management needs, but the following five are a good group to start with.

Key #1, Know Thyself (and Thy Interpersonal Skills, Too): Interpersonal skills are crucial in good management, and include the ability to speak clearly, motivate people, lead with confidence and delegate when appropriate. Regardless of the company’s product or service, or your own areas of expertise, if you don’t take an “inventory” of these skills, and ask for others’ honest input, you won’t know where you need to focus or what training you should even seek.

Key #2, Consider Your Teams: In your workplace there may be one team (small firms, for example), one in every department or even different ones across departments. Modern project management is less centralized than before, and ad hoc, temporary teams are even brought together on a case-by-case basis when appropriate. For you to know what skills training you should concentrate on, you must consider how, when, why, where and with whom you will deploy those new skills. You may also need some additional training in teamwork strategies, and mapping out your approach will help you to discover this.

Key #3, Negotiate the Need: If you are middle management or in the junior executive ranks, you may need to negotiate to get the training you need for your position. If you can make a case for soft skills training and demonstrate how it will positively affect productivity and profitability, chances are you will get the Powers That Be to invest in you.The sooner you start, the farther you’ll go

Key #4, Learn to Listen: The ability to communicate effectively is absolutely essential today, particularly when technical and non-technical employees work from a base of shared, but differently interpreted, knowledge. If communication in your department or your company seems ineffective, it may be a good time to cultivate the talent of “creative listening.” Listen closely enough, allow people the freedom to speak candidly, and you will learn a lot about what they need, as well as what other soft skills you may be lacking.

Key #5, Choose Wisely: When it comes time to actually take a course or workshop, or send your managers and supervisors for soft skills training, do not forget to take the time to properly assess the training firm. It is easy to throw up a website and write some copy on “building consensus” and “communicating effectively,” but quite a bit more difficult to teach people entirely new ways to use their heads, hearts and, perhaps especially, their tongues. Make sure that the training firm and the individual instructors have the expertise that is appropriate to the courses they are leading. Check references and speak to others who have gone through the training. Don’t be afraid to check with the Better Business Bureau and the local consumer affairs agencies, public and private, when you are assembling your list of possible training firms.


As we become adults and get set in our ways, it is often difficult to overcome that lifetime of conditioning to learn new ways of speaking, listening and cooperating with others. Whether you know it or not, you never stop learning until you die. It is much better for you and those around you if you decide to participate in that learning process. This requires honesty and open-mindedness. If you cannot admit to needing help, and you have locked your mind shut, there are no keys in this article or anywhere else that are going to open it. You have to do that yourself. Just remember: The sooner you start, the farther you’ll go.

About the Author

K Alliance offers an e-learning solution in the form of cd, intranet or online training video courseware. No matter which method you prefer, K Alliance has online courses to help you achieve your elearning goals. Visit online at for more information.

Making the Most of Your Career, By Former Rea & Assoc. MP Tim Michel


In 1973, Richard Rea did something that was very innovative at the time in the public accounting profession.  He decided to take the firm’s current and soon-to-be CPAs on a multi-day retreat to discuss the firm’s policies, procedures, and most importantly, its future.  There were 12 people in attendance at that 1st retreat held at Sawmill Creek Resort.  This year marks the 36th annual retreat.  We are still focused on the future.


Let me ask you, do you believe in fate?  We make decisions every day, but rarely do we think of the long-term effects of those decisions.  What if you would have attended a different school?  Think of the relationships that would never have formed.  What if you had not come with Rea?  Where would that road have taken you and your career?


Now that you have taken this road, where will it lead you?  Do you believe fate alone will decide your success?  Or will you have a major hand in it?  We often talk about the concept, “Begin with the end in mind.”  Are you prepared to take advantage of the opportunities this firm and profession present you?


Sometimes it is interesting to look at the path you chose from the viewpoint of the end of the road or, in my case, my career with Rea.  This letter is about you and what decisions you make in your career, but I would like to share a few observations I have about what this firm has done for me.


First, let me share a little of my background. 


Like many of you, I suspect, I grew up in a blue-collar family in a small town in Ohio.  My father and mother had a strong work ethic.  Mom gave up her career to raise four children.  My father, a carpenter by trade, was the superintendent for a construction company.  I remember dad doing whatever was necessary to see the job was done right.  He was in-charge of laying out the building site, ordering materials, scheduling the sub-contractors, and everything else needed to make the project successful.  I remember he would often spend several hours at night doing paperwork and making needed phone calls.  I especially remember one very cold and snowy Sunday evening when I accompanied him to a job site.  He needed to refuel the kerosene heaters to keep the gravel and dirt floor inside the building from freezing so they could pour concrete early Monday morning.  Interestingly, I don’t recall that he ever complained about having to do these things. 


Our family was very active at Our Lady of Peace church and school.  I attended grade school at OLOP and it reinforced the solid values I was taught at home.  However, my parents never expected the school to take the lead in setting values.  I was a B+ to A- student, nothing special.  My dad “saw to it” that I had my first job at age 14.  Upon graduating from high school in 1970, my college search consisted of my dad strongly suggesting I attend the Stark County branch of Kent State University.  His deal was, “you buy your car and earn your spending money, and I will pay your tuition and you can live at home.”  I thought it was a good deal.


After two years at the branch, I commuted to the main campus of KSU my junior and senior year, so I could continue to work in the afternoons.  Although I knew my future wife, Karen, in high school, we didn’t start dating until January 1972.  We became engaged five months later.  I guess I made decisions quickly even back then.  We married after my junior year.  I remember Karen and I made just $7,000 our first year, but we were happy.


Rea formative years – “Fate”


I interviewed with a few Big 8 firms and a few large companies in industry before graduation.  However, one spring afternoon in March 1974, I decided to take a handful of resumes and visit public accounting firms in Canton.  I guess this was my first experience at cold calling, and the rejection that often comes with it.  However, a young partner by the name of Ed Harter ran the Canton office of a firm I never heard of, Rea & Associates, Inc.  Ed not only took the time to talk with me, he also took me to a restaurant for coffee.  Ed arranged for an interview with Richard Rea and Chet Stocker in the home office in New Philadelphia.  I liked what I heard from Ed, Mr. Rea and Chet.  They told me that Rea was about helping clients be successful.  They told me how the firm’s people were active in the communities they served and believed in giving back to them.  I noticed a feeling of family and knew it was important to them.  They also talked about working together to build a firm, sharing in the rewards and making a place for myself.  Most importantly, they offered me a job.  I started the day after graduation at $10,200 a year.


When I joined Rea, I really didn’t know that much about what I would be doing in public accounting.  I knew some things about accounting and auditing and tax, but I didn’t have a clue about the rest, such as consulting, building relationships, being a trusted advisor.  Rea has taught me all of this.


My first job was Bates Metal Products, a client we still have.  I hand-posted their journals, took the totals to a hand-posted general ledger, took off a trial balance, prepared adjusting entrees, closing entrees, financials and the tax returns.  This allowed me to see how the pieces fit together. 


I got to work closely with a local quality home builder, Hostetler Construction.  Because of my father’s work, I felt comfortable with this client and it was my first close client relationship.  One Saturday, the owner and his wife were tragically killed in a motorcycle accident on Route 39.  This was my first exposure to the double tragedy that hits a closely-held business when they lose their leader.  Not only is there the personal family issue, but there are the business issues to deal with. Wow, they didn’t teach me anything about this in college.  Somehow the children, the oldest in her early twenties, continued the business successfully for many years.


 I got to work on many audits including three savings and loan companies, several manufacturers, and a major coal client.  I really enjoyed the manufacturing clients and learning how things were made.  There was a company in Newcomerstown that patented a method of cutting a groove in vinyl covered particle board without cutting the vinyl.  This allowed them to fold the board into audio speaker boxes, TV cabinets, tables and other furniture.


Early on, I was in-charge of the audit of a door company in Medina.  This allowed me to work with Frank Festi who had just started with Rea in Medina.  It was interesting to see the components of and variety of doors made in the plant.  The owner of the door company, Bob Warn, was a really good businessman.  I learned a lot from him about business.  He taught me that you can be technically very strong in what you do, but without business knowledge and skills, you are not going to be successful.


Rea had a large group of coal companies in Ohio and Kentucky.  We did annual audits on these companies as well as consult and prepare tax returns.  This required some of us to spend 3 to 4 weeks out of town in January and February each year.  I remember flying out of Harry Clever Field in New Philadelphia in a single engine plane on cold winter mornings to go to Whitesburg, Ky. where the coal mines were located.  The landing strip in Whitesburg was on top of a mountain and looked like a gum strip from the air.  The pilot always turned the plane on its side to buzz the runway before we landed, looking for ice.  And there was a bump about one-third way down the strip, so he landed just past it, which meant we had a shorter landing strip to work with.  It was scary, yet exciting.  On one trip, Mike Noretto’s bottle of mouthwash froze and burst inside his suitcase.  Pretty funny stuff.


Whitesburg was a small coal mining town with sulfur-smelling water in its drafty hotel.  We used to say that if God were to give the earth an enema, he would stick the tube in Whitesburg.  However, the truth is that it was a beautiful area in the mountains and the people were good, hard-working and caring.  One of our jobs was to account for the expensive equipment in the mines that was collateral for the bank loans.  This required us to climb into a mine car with our miner’s hat and light strapped to our head, and travel two miles down into the mountain through a tunnel with a 36 inch ceiling.  You could watch the timbers flying by overhead.  What an experience.


After being with Rea a short time, I ran into a high school classmate who was with a Big 8 firm.  I asked what he had been doing.  He told me he had been working on test of transactions work on an audit of a major company.  In that same time, I had completed accounting, tax and audit work on various clients in different industries.  I knew I had made a good choice in coming to Rea.


There were several opportunities for me to get out of my comfort zone in those early years.  My first objective was to pass the CPA exam.  I had passed one part in the spring of my senior year at Kent, but still had work to do.  I remember Ed Harter and Mike Taylor coming up to me at the team retreat in 1975 encouraging me to get it passed.  We had an unpopular senior manager in-charge of audits, and they wanted me to get up to speed so we didn’t have to rely on him.  I passed the exam in November 1975.  I was in Columbus on the Coal Co. audits and had dinner with Richard Rea.  He was on the Accountancy Board and I am proud to say I have his signature on my certificate.  Meanwhile, back at the home office, the troops went out to the local bar, as was tradition when the grades came out, and celebrated.  They were kind enough to call Karen to join in the fun.  That is what family does.


I was pretty shy and lacked confidence when I came out of college.  I knew I needed to work on this.  So, I joined the Jaycees and several local NFP boards.  I became an officer in these organizations to take an active role.  Also, Chet Stocker was approached by a person at Kent State – Tuscarawas campus in need of an instructor for a beginning tax course.  I jumped on the opportunity because I knew I needed to get comfortable in front of an audience.  It was a first step.


One summer I was asked to help in another office.  It seemed there was a young smart-alec partner in Millersburg who was good at bringing in business and needed help.  Mike Taylor had a lot of interesting clients dealing in lumber, furniture and cheese, to name a few industries.  I remember Mike walking past my office on his way to the restroom and zapping me with a rubber band from about 20 feet.  I waited patiently for his return trip and let it fly when he was just getting to my doorway.  Interestingly it was not Mike but one of the local business people.  Luckily he had a sense of humor.  One of the neat things about Millersburg was that all of the local business people would meet daily at the same time at one of the local restaurants for lunch.  What a great way to meet people and build relationships.


After several years in the firm, I was approached by an “A” level client on two occasions interested in hiring me for their controller.  I was honored and they were great opportunities, but I knew it meant I would always be working for their family.  I wanted more and really liked what Rea was about.  I bought what the firm was selling.


During those first 11 years with the firm while I was in New Philly, I received a lot of advice and coaching from Richard Rea and Chet Stocker.  They very actively shared what was to become The Rea Way. 


Our work allowed me to travel to places I had not been before and experience many new things.  Richard Rea took the partner group to New York City for retreat one year.  He took us to the AICPA, the NYSE, some shows and great restaurants.  Karen was very pregnant during this trip and it showed.  After dinner one night, Mr. Rea and Karen walked backed to the St. Moritz Hotel while the rest of us continued to see NY.  In the elevator, Mr. Rea (about age 72) saw an opportunity and told Karen (in her mid-20s) to hold his hand.  They departed the elevator together to the amazement of the others in the elevator.  


My Trusted Advisor Years (My second career with Rea)


In 1984, Rea purchased a practice in Lima.  Bill Mills moved from Cambridge and joined a partner from the firm we purchased.  For a year, Chet ran back and forth trying to manage the practice while performing the managing partner duties for the firm.  It was clearly wearing on him.  In the spring of 1985, I was serving as the New Philly office manager.  Although I had only been to Lima once, and knew next to nothing about the community, I volunteered to go to Lima to ease the burden on Chet.  Plus, I saw it as a challenge and opportunity to grow a smaller office with a team of people.  I talked with Karen about it and she encouraged me immediately.  She told the kids it was going to be an adventure.  They bought in right away.


What I found most interesting about this experience was that I was accepted immediately by the business community in Lima.  I came to the community as a partner in a CPA firm and that carried weight and opened doors.  I quickly was placed on church, school, civic and community boards and committees.


While in New Philly, I used to harass Mike Noretto by doing things like taping the buttons on his phone down so it would continue to ring when he answered it.  We were always going back and forth.  Shortly after arriving in Lima, I received an envelope from the New Philly office.  In NP, they had a large wall board they used to schedule audits.  Our names were down the side and the jobs were across the top.  In the envelop was my name plate from this board and a small card stating, “Tim – This is to notify you that your last tie to the NP Office (other than the skeletons in the office) has now been severed,  signed – The Executioner”.  My good friend Mike Noretto had the last laugh.  After 24 years, I still have his note with my name plate.


The first year in Lima was tough.  In many cases we had the wrong clients.  What we did have, however, were the right people.  They just wanted someone to lead them.  Bill and I, working with the team, had to tear things down and rebuild.  We went from some significant loss years to being one of the most consistently profitable offices in the firm.  It is amazing what you will do when your back is up to the wall.  I remember one summer spent cold calling businesses in the greater Lima area.  And it worked! 


I felt a lot of pressure and stress at times.  Mike Taylor recognized this and was concerned.  He talked with me about it and helped me through this rough period.  I have counted on his counsel often over the years.


While in Lima, I learned what it meant to be a trusted advisor.  I learned how important we are to our clients.  I had one client tell me how important their doctor, lawyer and CPA were to them.  One of the most rewarding experiences for me was helping a good friend and client do effective financial planning.  I earned my CFP designation while in Lima and set up a plan for this client that covered college funding for his four children and retirement planning for him and his wife.  When I returned to New Philly 13 years later, enough time had passed that we could see that the college planning had worked.  He thanked me for helping him make it happen.  This is what this business is all about.


Karen and I took a chance on Lima.  We moved away from our roots and found a great community to raise a family; a community with a good business ethic and caring people.  While in Lima, I was able to build meaningful relationships with clients, attorneys and bankers.  I still value them.  During those 13 years, I had four good clients (and close friends) suffer and die from cancer, heart disease or Parkinson’s.  It reminded me of the early days when Syl and Barb Hostetler died unexpectedly.  You find out what it means to be a trusted advisor at times like these.  I also spent many years on the firm’s management committee where I learned more about our business.  I spent a lot of time with Gene Flowers and others on peer reviews.  From Gene I learned that the firm always comes first.  From peer reviews I learned how other firms did things, some good and some not so good.


Chet took me to the AICPA 100th Anniversary in NY City where I met many of the national industry leaders.  Yes, Lima was great. But in 1998, Chet wanted to retire and I was on a short list for his position as President.  It was hard to leave Lima, but I was excited about the challenge and duty called.


My 3rd Career with Rea


Being the CEO of a regional CPA firm is both challenging and rewarding.  It is a scary responsibility to have 250+ families rely on your decision making.  Not that you go it alone.  Rea is blessed by a very talented and caring partner group.  The members who have served on Management Committee and now the Board and Operations Committee have been just plain fabulous.  They always do what they think is best for the firm and for the long-term.


When I first took the CEO position, I relied heavily on the experience of our then Firm Administrator and current COO, Debi Gellenbeck.  She was my go to person to know what we do and when we do it.  I found Debi to be very organized, extremely dedicated, very bright, tough and yet caring.  She can separate business from the personal.  But many times over the years she has discreetly helped employees in need by placing them with a partner who could counsel them through tough personal issues.  She does a great job for the firm and I doubt anyone is more dedicated to its people and its success.  I think we have made a great team.


Being the CEO of a CPA firm means you have one major client.  You have to be thinking about its people, services, growth, profitability and well-being at all times.  Probably of all things we have put together in the last ten years, The Rea Way stands out as the most important.  It is our guiding-light.  It is what Richard Rea, Chet Stocker, Gene Flowers and others left for us.  I am also happy we put the firm’s 16 Core Competencies together.  Master these competencies and you will do well.


Being the CEO has allowed me to know other CPAs, many of them who are CEOs of their firms, through my Management for Results group, MSNA where I served on the Board of Directors, and through national management conferences.  This profession has some great talent and very caring people.  I believe it to be a very honorable profession.


Like most of the partners, my goal has been to leave this firm better than what I found it. It has been an honor and a pleasure to work with the partners and members of the firm to grow from $10,000,000 to $30,000,000 in the last ten years.  We have a lot of good things in place that will help insure the firm continues to grow profitably.


When I walked into the Canton office of Rea & Associates, Inc. in the spring of 1974, I had no idea how it would affect the rest of my life.  But what I was told in that initial meeting and the interviews to follow has been consistent with my experiences for the last almost 35 years.  There are scores of stories I have left out in the interest of brevity, but it has been a fun and interesting ride.  Fate and stepping out of my comfort zone has given me a great career with Rea.


I ask you to think about the opportunities that this firm and the profession offer to you.  I challenge you to have an open mind, take a chance, and be willing to stretch yourself by moving outside your comfort zone.  You will like where it takes you.


Be open to the possibilities.  Opportunities abound.


I wish all of you the best in the future.


Tim Michel

The Role and Responsibilities of the Managing Partner

I became the managing partner (MP) in my prior firm after having spent 25 years serving clients as a practice partner.  During those earlier years, I was fortunate to have been involved in the management of both a large and small office as well as having served several terms on the firm’s management committee.  However, I do remember wondering at the time just what my new role as MP would encompass.  What were my responsibilities.

As firms continue to grow and develop, they begin to understand the importance of a proper governance structure and embrace the relevance of good management.  Often in practice, the determination of who will fill the MP role is not based upon qualities of leadership, but rather on who has the largest book of business, and therefore power, or who founded the firm.  Further, the role and responsibilities of the MP may vary from firm to firm.

The following are ten responsibilities each managing partner needs to address to ensure the success of the firm.  Depending on the size of the firm and the stage of the firm’s development, anyone of these responsibilities may be more crucial at any given time.  In addition, as the firm grows, there will be other members of the team to assist the managing partner in fulfilling these duties.

Provide leadership

The most important responsibility of the MP is to provide leadership.  The success of an organization starts at the top.  The MP must lead by example exhibiting integrity, energy, enthusiasm, dedication, and commitment.  Such behavior will become contagious throughout the firm.

Leadership requires frequent communication with the team to keep them informed of the firm’s vision and current events, especially during difficult times.  Such communication keeps morale high and the team motivated.

The MP should continually strive to improve on his or her leadership effectiveness through various forms of lifetime learning, such as attending conferences (both within and outside the CPA industry) and reading various types of books and publications. 

Build an effective management team

As a CPA firm grows, it becomes more important for the MP to build an effective management team.  Once a firm reaches around seven owners it becomes cumbersome to have all partners involved in decision making.  At this size, a firm should consider adding an executive or management committee to discuss the direction of the firm and make policy decisions.  

Another key position is the firm administrator or COO.  Too often partners are straddled with administrative responsibilities that keep them from performing at a high level within the firm.  In addition, they often don’t perform the administrative function well as they would rather be attending to the requirements of a practice partner.  A firm administrator can free up partner time, see that the firm is well administered and, perhaps most importantly, allow the MP to concentrate on improving the firm.

Other key positions that become important as the firm grows include an IT director, marketing director and HR director.

Keep your fingers on the finances

The degree to which a MP needs to be involved in the finances of the firm depends on the firm’s size and the quality and ability of the internal accounting team.  But in any case, I believe the MP needs to build and maintain solid banking relationships.  A CPA firm is no different than its clients in this respect.  I also found it important to monitor certain key performance indicators, some on a daily and some on a monthly basis.  I kept my eye on productivity, both the receivable and work-in-process aging and the firm’s cash position.

I also felt it was important to make time to “play” with the numbers and run “what ifs” to see that we were operating efficiently and managing our practice well.  It is the MP’s responsibility to make sure the partners work toward profitability.  

Recruiting and retention

I am a true believer in First who, than what, as is well written by Jim Collins in his book, Good to Great.  The MP needs to set a tone that the organization will hire and retain the best people available.  The success of any firm initiative will be enhanced or suppressed by the people assigned to it.

I have found that partners will often make decisions on hiring based upon current workloads or profitability.  The MP needs to keep the firm focused on the future so that trained personnel are available to meet growth goals.  In addition, the firm needs to stay appropriately overstaffed in order to handle growth.

Deal with partner issues

If one believes that the whole is equal to the sum of its parts, then having a talented, focused and motivated partner group should be a top priority of the MP.  Generally, CPA firms promote people to the partner level because they have brought in a certain amount of business or they have a strong technical talent.  This doesn’t necessarily mean they are good business people or don’t need continual counseling. 

MPs need to keep partners focused and effective through coaching and mentoring.  An effective partner evaluation system that holds partners accountable for their actions is an important tool as well.  In addition, the firm’s partner compensation plan should reward partners for the value they bring to the firm.  Done properly, the whole may even exceed the sum of its parts.

It is also the MP’s responsibility to see that the firm’s operating agreements and partner agreements are current and effective.  Too often the firm’s agreements do not properly protect it from partner issues.  These documents need to be carefully crafted.

Finally, the MP should be sure the firm is dealing with succession issues.  This is an area that is becoming more important as baby boomers move through their mid-to-late 50s and into their 60s.  Many firms are finding they have not properly provided for their future leadership needs and consequently their succession options are somewhat limited. 

Ensure the firm deals effectively with risk management

We have all seen how devastating one or two bad client situations can be to the continuance of a CPA firm.  MPs need to be sure that the firm has policies and procedures in place that will mitigate the risks facing the firm every day.  

Such policies and procedures should address:

Acceptance and continuance of clients
Going concern issues, especially in today’s economy
Quality control in all firm services
Personnel policies
Billing and collections

A part of effective risk management is frequent and effective communication to all members of the firm, but especially the partner group as they deal with so many decisions.  The firm should provide CPE in risk management on a relatively frequent basis.

Participate in the decision making on insurance and benefits

The size of the firm and the management team talent available to deal with insurance and benefits will determine how much involvement is requires by the MP.  However, the MP needs to make certain that the firm is adequately protected from possible liability and that the benefit plans are consistent with the firm’s culture and approach to recruiting and retaining people.  Areas requiring attention include:

Pension plans
Professional liability insurance
Health and related insurances
Business Liability, D&O, etc.
PTO plan

Take an active role in people development

Along with the HR Director, if the firm has one, the MP needs to make sure the firm is providing for the development of its people.  This starts with a good orientation and “buddy” program for new hires and continues throughout the employee’s career.  Firms seem to concentrate on the technical development of their people and ignore the soft skills, such as speaking, listening, people management and leadership.  The MP needs to ensure the firm is addressing these issues as well.

In addition, the MP should be sure the firm:   

Provides mentoring to partners and other future leaders
Coaches the firm’s stars to success
Maintains the “team” atmosphere
Deals promptly and effectively with conflict and performance issues

Provide strategic planning and vision

I find that very few firms give strategic planning the time and effort it deserves.  My personal experience has been that a well thought out strategic plan helped my firm stay focused on what we were trying to achieve and allowed us to quickly identify distractions and put them to bed.  The MP needs to lead this effort in the firm and communicate the vision often.  Partners and employees want to know where the firm is headed.

The Managing Partner should:

Make time to think about the future
Staying informed of what is going on in the profession through reading, attending conferences and participating in association activities.
Communicate the vision frequently and drive for results.

Be a catalyst for growth and expansion

Clients are looking for value-added solutions to their business issues.  But commonly, practice partners are too busy to take the lead in developing these solutions.  I believe the MP must continually push the firm forward and encourage the development of new service offerings.  The more services a firm provides to a client, the more revenue per client is generated and the less likely it is that the client will sever the relationship. 

The MP should also seek relationships with other service providers in areas the firm does not want to develop internally.  A firm does not need to have the solution to every client need as long as it knows where to find it.

Finally, the MP should consider whether the firm desires to grow and expand its service offerings and client base through the acquisition of other firms and/or service providers.  This can be a very effective method of growth and service expansion.


This list of ten items is not meant to be a complete list of MP duties.  Many spend significant time in public relations and other areas.  Being a managing partner is a big responsibility.  But it is also very rewarding.  The managing partner has an opportunity to guide the firm to meaningful growth and profitability.  In addition, he or she can play an important role in the development of the firm’s people, providing leadership well beyond their own career.  

About the author:  Timothy I. Michel, CPA is a consultant to CPA firms and a former managing partner of a Top 100 CPA firm.  He helps CPA firm owners create value in their practice by drawing on his own experiences to assist them in identifying and overcoming obstacles and focusing on opportunities to increase growth and profitability. For more information, visit the website at or contact Tim directly at

January 2009 Of Interest

Consultants Share Insights On How Firms And Their Clients Can Get Through This Tough Economy:   The January 2009 issue of INSIDE Public Accounting offered a concise overview by various consultants on what CPA firms should do to get through tough economic times. This document provides more insight and a full reporting of ideas offered by consultants. (INSIDE Public Accounting)

The Economy’s Effect On Small Firms:   Jim Metzler, AICPA Vice President for Small Firm Interests, shares a special letter highlighting the thoughts of the Small Firm Solutions Editorial Advisory Board as they discuss the current economic climate and how it is affecting their firms and their clients. (AICPA)

The Bernie Madoff Scandal:   Access INSIDE Public Accounting’s overview of the Bernie Madoff scandal and what it will mean to CPA firms in 2009. (INSIDE Public Accounting)

2007 AICPA/Moss Adams Personal Financial Planning Practice Study:   This 2007 survey is the first joint survey of CPA financial planning and investment advisory practices. The study addressed performance and other operational characteristics in the CPA/advisory industry and identifies industry trends and practices of the most successful firms. (AICPA/Moss Adams)

7 Ways To Block Employee Fraud:   David A. Gruber and Sheldon H. Eveloff, CPAs with Amper, Politziner & Mattia’s Nonprofit Services Group in Philadelphia, share a article they authored that helps non-profits avoid fraud. Thanks to Amper, Politziner & Mattia and The NonProfit Times for making this available to IPA. (The NonProfit Times)

Audits From Top Eight Accounting Firms Still Show Deficiencies:   Financial Week reports that the eight largest U.S. accounting firms continue to exhibit substantial deficiencies in their audits of publicly traded companies of all sizes — six years after the passage of the Sarbanes-Oxley Act. (Financial Week)

Report Your Financials, Big Four Audit Firms Urged:   Under one plan, a big audit firm could gain liability caps and tax deductions if it submits its own audited GAAP financial statements to the Public Company Accounting Oversight Board. (CFO Magazine)

How the New Obama Administration Might Impact Business Performance Management:   The 2008 election was a campaign of change for both the executive and legislative branches of the U.S. government; now it is up to performance management professionals to find a way support that change from a software and systems perspective. (BeyeNetwork)

Melancon Responds to Accountant Ranking Article:   WebCPA received a letter from American Institute of CPAs president and CEO Barry Melancon taking issue with a recent story on a Gallup Poll ranking of the honesty and ethics of various professions. (WebCPA)

President Elect Obama’s Tax Proposals – An Update:   CCH provides a Special Report outlining the details of President-Elect Obama’s tax proposals and how they will affect individuals and businesses. (CCH)

Accountants Tell Obama What They Think:   Rick Telberg’s blog, “CPA Trendlines,” offers a light hearted commentary to President-elect Obama on what accountants think he should – or should not – do to try to fix the financial system and the economy. (CPA Trendlines)

2008 In Review: Congressional Impact on CPA Profession :   AICPA details three legislative victories in Congress this year: equalizing IRS reporting standards for taxpayers and preparers, preventing the Farm Credit System from expanding its pool of borrowers, and maintaining financial and compliance audits for the government-backed Federal Housing Administration (FHA) loan program. (Journal of Accountancy)

New York Passes CPA Education Law:   According to WebCPA, the New York State Senate and Assembly has unanimously passed a groundbreaking bill that would amend the laws governing CPAs and provide greater public protections for their clients. The legislation, A.11696-A/S.7497-B, was sponsored by Assembly member Deborah Glick and Senators Kenneth LaValle and Toby Ann Stavisky. The bill was passed by the Senate in mid-December and returned to the Assembly to be submitted to Governor David Paterson for signature into law. (WebCPA)

Small Accounting Firms Feel The Urge To Merge:   Long Island Business News outlines the trend of smaller accounting firms looking to merge to shore up succession plans and ensure practice continuity. (Long Island Business News)

SFAS 157 Fair Value Measurements: Implementation Challenges for the Alternative Investment Industry:   Rothstein Kass shares their guide developed last year regarding the current implementation issues regarding Statement of Financial Accounting Standards No. 157, Fair Value Measurements. (Rothstein Kass)

FASB Will Launch New Standards Codification in July:   The Financial Accounting Standards Board plans to introduce a new official accounting standards codification on July 1 that will supersede other sources, including the AICPA. (WebCPA)

Managing Partner Elections? Why Not!

Michael PlattAs I was sitting watching a news story the other day about the presidential election, my mind wandered a bit and I began thinking:  What would the world of public accounting look like if partners in CPA firms had to campaign for their position and be re-elected every four years?

I know, I know – it is heresy to suggest. A partnership is not a democracy, and you’ve all worked hard to get where you are, and the thought of having to re-earn the position is ludicrous. Or is it?

Running on their record, being accountable to their constituents, maintaining a vision for the future, inspiring others to follow them – these are the traits of a successful candidate for president, and they are the same traits for a successful candidate for partner.

A system that requires re-election to partnership would ensure accountability and keep the best people in the partner positions in the firm at all times. It would provide greater opportunity for younger staff, and would ensure that partners continue reaching ever-higher to maintain their position of authority and status in the firm.

Alas, this idea is likely to be as fleeting as a town hall meeting and as probable as a Ron Paul presidency. But while it may not be something that partners would be able to easily digest, I offer this idea at least as food for thought as you look toward creating the successful firm of the future.