What Keeps CPAs Awake at Night?

Here are the results from my recent survey

In preparing for my 2016 blogging calendar, I sent a survey to my subscribers.

Picture is courtesy of DollarPhotoClub.com.

Picture is courtesy of DollarPhotoClub.com.

The last survey question was opened-ended: What one thing keeps you awake at night? Here are a few responses:

  • Is it possible to narrow it down to just one? Malpractice issues primarily?
  • Getting work done in a more efficient and timely manner.
  • Litigation/being sued.
  • The magnitude of what we need to know to operate as a sole practitioner.
  • Ever changing standards and requirements, possibility of mistakes due to standards overload.
  • Being able to maintain a thriving practice that I can receive a good return on in my retirement.
  • Increasing burden put on our profession to be the “police” for tax agencies [e.g. Obamacare compliance, state use tax.]
  • If I don’t wake up one morning, what happens to my clients?
  • Delivering what we promised on time.
  • Keeping up with the standards.
  • Plan to retire in 8 to 10 years and need to create an exit path.
  • Not having enough time to finish my work.
  • Liability…the kind that arises from something that I did not anticipate.
  • Ever changing regulatory environment and taking on too much work and not being able to deliver timely service.
  • Have I forgotten to do something for a client that I should have done?
  • Afraid of not meeting deadlines.
  • Often feel that state board and AICPA are trying to run sole props out of business. Every time I turn around they want another big fee to access the basic tools and information I need to stay in business.
  • Partners wanting to keep things the same. No growth.
  • Always feeling “behind” (not having enough competent help).
  • Not knowing what I don’t know.
  • I worry that I will be physically or mentally unable to complete the work I have taken on.
  • Staff retention.

Top Concerns

The survey revealed the following top concerns:

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The top concerns include:

  • Getting all my work done
  • Findings answers to difficult questions
  • Picking up new clients

It’s interesting to me that a top concern is getting work done and picking up new clients — are we saying, “We can’t get everything done, but we want more”?

Answering Difficult Questions

The survey respondents said they answer difficult questions in the following ways:

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Survey says: CPAs often perform their own research using published sources (45%) and others call an outside CPA (24%).

Change One Thing

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These CPAs said the top thing they would change is getting work done efficientlyinterestingly, this ranked higher than making more money (almost twice as high).

Survey Participation

First, let me thank those of you who participated in the survey (which I sent to all my subscribers with an email).

You can still participate in the survey here.

Your participation will enable me to provide more relevant content to you during 2016. Thanks and happy new year.

 

What I Wish I Had Known About Public Accounting

Things I wish I had known 30 years ago

I thought I knew a lot when I graduated from college, but my education was just beginning.

Picture is courtesy of DollarPhotoClub.com

Picture is courtesy of DollarPhotoClub.com

Job #1 – The Lesson of Firm Culture

In my first job, I went to work with a “big eight” public accounting firm in Tampa, Florida. As soon as I moved to my new digs on Tampa Bay, they shipped me out to Jackson, Mississippi where I remained for months (seeing my Tampa apartment twice in three months). Most days I did the expert work of pro-forming work papers—the thing they gave to newbies. Boredom defined. So I had this sexy job with a big firm, but I spent most days dawdling with routine duties. I kept thinking, “I went to college for this?” Surely accounting had to be more interesting.

I felt uncomfortable. This international firm was cold (even if this office was in Florida). I grew up in a small town where you spoke to everyone and respected all. So I soon left Tampa and headed back home to Georgia.

What I learned: Work in a place that allows you to grow and one where you fit in. Firms have cultures; I needed one that aligned with my personality and values.

Job #2 – The Lesson of a Niche Practice

Back in Georgia, I landed work with a regional firm. I felt more at home. The work was more challenging than my former job, and my knowledge began to expand rapidly. This particular business had a strong niche practice and was very profitable. The firm used a pooled staffing approach, so I worked for one partner one week, another the next week, and another the next. I did not get a chance to start and finish audit engagements. It stressed me that so many different partners wanted me to complete their work. And each partner felt their work was the priority. After three years, I moved on.

What I learned: Firms that focus on niches perform better than those that don’t. As an employee, it’s better to work with one partner. You get to see engagements from start to finish, and the stress decreases as you know what your (one) boss wants.

Job #3 – The Lesson of Working for One Boss

My new firm was even smaller than the last, having about thirty people. Here I worked for one partner which was nice, and he worked in one industry which was also pleasant. When I interviewed with the firm, I was told my assigned partner would retire in three or four years, and I would have the opportunity to take his place. Since I was the audit manager, I learned a great deal, but over time it became apparent to me I was doing most of the work and the partner was receiving most of the benefits.

The partner was a wonderful guy, but after eight years (not three or four), the partner was still in plain sight (and had not retired). So one day I screwed up my courage and asked, “When are you retiring?” The conversation was difficult (an understatement, he yelled at me). He would not answer my question. It was clear he had no intention of retiring (even though he was 68). I was angry. I had been duped (at least, I felt that way). So I left.

What I learned: I liked working for one boss. I knew what he wanted, and I delivered it. When someone makes you a partnership offer, get it in writing (clarify the timetable and how the transition will occur). Don’t allow years to go by without communicating.

Job #4 – The Lesson of a Solo Practice

The next step in my journey was to start a new firm. I bought a small company that was only yielding $200 per month (yes, you read that right—$200 a month). My wife was at home with our kids, so we had no other income. About this same time, my two-year-old son was diagnosed with cystic fibrosis. I wondered how we would make it. Never been so low in my life. We had an excellent opportunity to exercise faith, so we did, praying often. All I can say is God took care of us. At the end of the first year, my income was equal to my prior year of employment. The following five years were successful. But after six years of being a sole proprietor (and then as a partner), my father’s health began to fail, and I was called to attend to his needs and…yes, you guessed it, another job.

What I learned: Going solo is one of the hardest things you will ever do. I quickly realized how important it is to have other professionals around me so I can bounce thoughts off them and seek their guidance. Being alone is well…lonely. (I brought in a partner in my third year. Having her there was quite helpful.) Without the economies of scale afforded to those in larger firms, my overhead ate most of my cash flow. I found it hard to get potential audit clients to take me seriously. They saw me as “small” though my skill level was no different than it was in my previous jobs. When it comes to marketing, perception is everything.

Job #5 – The Lesson of Learning to Speak and Write

I returned to my first Georgia employer (job #2 above) as their quality control director. I was 42 years old and had never been a quality control guy, so this was all new to me. But I enjoyed the challenge. While the firm had a niche practice, it still afforded me the opportunity to see a wide variety of audits, reviews, and compilations. I also began teaching more continuing education classes and loved doing so. When I taught, I felt “in my element.” The firm did (and still does) an excellent job of marketing. After six years in this position, my father passed away, and my wife wanted to move back to middle Georgia to be near her mother. So we did.

What I learned: Exposure to a broad range of work expands your professional abilities. It is easier for niche firms to market themselves as go-to experts. A niche practice generates higher profits since a common client base allows a firm to build repeatable processes and train staff. Also, I was beginning to realize the importance of speaking and writing. (On a personal note, being there for my Dad was awesome. The conversations we had are some of my most treasured memories.)

Job #6 – The Lesson of Staying with a Firm

For the last seven years, I have worked as the quality control director and now as the quality control partner for our business. We are well diversified, but we have specialized niches within the company, so no one industry defines us. The diversity of work keeps me on my toes. I deal with accounting and auditing issues for banks, telecommunication companies, nonprofits, governments, small businesses and more. I continue to speak at professional conferences and to our staff, and, as you can see, I write. Interestingly, social media and writing books have allowed me to make contacts throughout the country.

One thing I have thought about as I look back over my career: I changed jobs too often. If I had my career to do over again, I would find a good firm, and I would stay. Changing jobs provides you with a greater diversity of experience, but it lessens your opportunities.

What I learned: Finding and staying with a good firm will provide you with your most significant opportunities. Speak to groups and write professional articles and blog posts. Doing so will allow you to make new friends and great contacts.

Reflections on the Journey

Finally, let me say this: Finding balance and taking care of ourselves physically and spiritually are keys to success. Sitting at a desk for ten to twelve hours a day—without breaks—will only make us less productive and less healthy. Praying and running have been my two biggest allies. At 6:00 every morning, I spend about 30 minutes reading my Bible and praying. I also run about three times a week. These practices give me energy and stamina.

What Lessons Have You Learned?

These are some of the things I have learned, often the hard way. I’d love to hear about lessons you learned. Please share one or two career experiences that have taught you the most.

Where did this opinion come from?

Does your peer reviewer ever ask, “where did the wording in this opinion come from?” And you can’t remember.

It’s a good practice to keep a copy of sample reports (e.g, PPC, McGladrey, CCH) in your audit, review, or compilation files. That way, when the peer review question arises, you can point to the support in the file. This is especially true when you use wording that is not common (e.g., going concern, emphasis of a matter, disclaimers).

Reminder Concerning Single Audits and SSARS 21Engagements

Here’s a reminder concerning Single Audits and SSARS 21 engagements.

Auditors will begin using the Uniform Guidance (rather than A-133) for audits of clients with December 31, 2015 year-ends.

The effective date of SSARS 21 is for years ending on or after December 15, 2015. SSARS 21 encompasses the following:

  • Preparation of Financial Statements Engagements (AR-C 70)
  • Compilation Engagements (AR-C 80)
  • Review Engagements (AR-C 90)

Update your engagement letters, forms, and reports for these types of engagement.