Braddon Group

As we near the end of October, tax practitioners across the profession collectively breathe a sigh of relief. Another tax season is in the books, and CPAs find themselves ready for a vacation or a change to their tax-centric practices.

We’ve been there, craving balance as another tax deadline passes. In our search for an alternative, we discovered a complement to our tax skills that has reenergized our careers and opened new opportunities for our clients and practice.

If you find yourself in need of more than just a vacation after October 15, here are a few things we’ve learned as we’ve recently transitioned our careers from tax compliance to advising clients on all aspects of their financial lives, including estate planning, retirement planning and beyond.

The benefits to your practice and clients are vast.

If you’ve been in practice for a while, you probably have a roster that includes many long-time clients. Over the years, clients may have approached you for your thoughts on their plans for retirement or the best way to plan their child’s education. If you’ve had these kinds of conversations, you’ve been doing personal financial planning (PFP) without even realizing it. By formalizing your PFP services, clients will benefit from your holistic understanding of their full financial picture, and you’ll improve both your practice and lifestyle by:

• Diversifying your practice to reduce dependence on tax season
• Improving work/life balance by spreading out your workload
• Providing holistic advice in the best interest of the client
• Finding fulfillment in helping clients set and reach financial goals
• Improving staff retention, development and utilization

Personal financial planning is a natural extension of tax.

Adding PFP services isn’t as daunting as you may imagine. Our clients’ financial needs are diverse, and the knowledge base and trustworthiness of the CPA profession has put us in a strong position to advise them on questions that go beyond taxes.

In fact, as you prepare and review your clients’ tax returns, you have a unique window into their financial situation, which can provide opportunities to identify and discuss planning opportunities. The AICPA PFP Section has even developed a free checklist to help analyze a tax return for planning ideas. Further, clients undoubtedly look to you as a trusted adviser and already come to you with questions that go beyond taxes.

There are multiple models and it’s possible to start small.

Many CPAs hear the term “financial planning” and immediately tune out, equating PFP with product sales or investment-centric advice, and assume it will turn life into a compliance nightmare. The reality is that financial planning is much broader than investments, and you can tap into your knowledge base to serve your clients without having to overhaul your practice.

A logical place to start is engaging in conversations with clients about the questions that keep them up at night, such as saving for retirement or funding a child’s education. These natural conversations can lead to planning engagements as straightforward as assisting clients with retirement projections or cash flow management.

If you charge your tax clients on an hourly basis, you can continue to use the same billing structure without disrupting your current business model. As you progress and broaden the advice you provide, there are many different compensation models, including retainer arrangements, assets under management or some combination thereof. For an overview of the steps to develop and manage your CPA personal financial planning practice, use a free roadmap from the PFP Section.

Support, collaboration and guidance are available.

We wouldn’t be where we are today without learning from and sharing knowledge with other CPA financial planners. An online search for a local CPA/PFS using this directory and a chat over coffee is often all that is required to make a connection.

We’ve also found valuable technical and practice management tools through membership in the AICPA’s Personal Financial Planning Section. The PFP Section, at the guidance of leading CPA financial planners, has developed a wealth of resources for CPAs ready to transition from tax preparer to financial planner, as well as an educational pathway and credential to deepen and demonstrate your knowledge in the PFP disciplines.

Personal financial planning is a rewarding career, and we’ve personally tasted and seen the rewards for our futures and the future of our clients.

Ryan Genor, CPA/PFS, and Sarah Lane, CPA, provide integrated tax and financial planning at CLS Financial Advisors, Inc., a registered investment advisory firm in Portland, Oregon. After many years of providing tax services as a partner in its affiliated CPA firm, Ryan joined CLS in 2012 to assist with retirement and income tax planning in addition to client management. Sarah worked in public accounting and higher education before joining CLS in 2016, where she combines her love for financial education with her background in tax.

Financial planning courtesy of Shutterstock.

     

Related Stories

• The road to retirement starts here
• Money, Money, Money: CPAs’ Salaries Revealed
• AICPA Finds Accounting Enrollments Remain High

 

Equifax. The Securities and Exchange Commission. Whole Foods. These are just a few of the hacking incidents that have made the news in recent weeks. Although organizations are becoming increasingly concerned about their cybersecurity in the wake of current reports, Hollywood has been warning us for years about the importance of keeping our data safe. The following five movies are not only entertaining, they also acted as a crystal ball of sorts by giving us a glimpse into the possibility of today’s cyber events.

Movie: “The Net” (1995)

Lesson: Your personal data is your most important possession.

“The Net” warns of what can happen when your data falls into the wrong hands. When systems analyst Angela Bennett receives a disk from a colleague, she inadvertently sets off a chain of events that leads to her social security number being reassigned to another name, her home being sold out from under her and an arrest for a litany of crimes she didn’t commit—not to mention the mysterious deaths of people around her who know about the disk.

Although most people will not suffer such dramatic consequences from a breach to their information, character Jeff Gregg, the owner of software company Gregg Microsystems, sums up the importance of data in this way: “You need to remember in this day and age, information is sacred.”

This proclamation is especially true for CPAs, because you not only handle your own data, you are the keeper of your clients’ most sensitive information—so make sure you stay up-to-date on the latest tools and techniques to ward off cyberattacks. You can learn more about cybersecurity trends and best practices during a free, live, one-hour webcast with global cybersecurity expert and Shark Tank star Robert Herjavec.

Movie: “Sneakers” (1992)

Lesson: Always encrypt your data.

In “Sneakers,” security specialist and hacker Martin Bishop is hired to find a black box that holds an encryption key people are willing to lie, steal and even kill for. Martin later finds out that it’s really his old hacker buddy, Cosmo, who wants the box because “the world isn’t run by weapons anymore or energy or money. It’s run by little ones and zeros, little bits of data.”

To keep the little bits of data that run your professional world safe, it’s important to get it encrypted, which is the process of scrambling information in such a way that it is rendered unreadable without a key. By encrypting your company’s data, you can help protect it on all your devices, whether they are desktop computers or mobile phones. Encryption also allows you to transmit data safely, store information in the cloud and remain compliant with relevant data protection regulations.

Movie: “Independence Day” (1996)

Lesson: One virus can bring down an entire system.

In “Independence Day,” the world is faced with a high-tech alien invasion that only a skillfully-planted computer virus can thwart. Although you don’t have to worry about the destruction of the Earth by a fleet of spaceships filled with aliens intent on taking over the world, a cyberattack can still have catastrophic effects on your business in terms of lost data and productivity. The cost to rectify the problem can be substantial. In fact, according to the 2017 Cost of Data Breach Study from IBM and the Ponemon Institute, data breaches cost U.S. organizations an average of $7.35 million per incident.

Movie: “Hackers” (1995)

Lesson: Companies can protect themselves from hackers by learning from them.

To protect itself from cyberattacks, the Ellingson Mineral Company hires a former hacker, Eugene “The Plague” Belford, to help protect its data. This is not as outlandish as it may sound: More and more companies are hiring white-hat hackers, also known as ethical hackers, to use their skills to find vulnerabilities in their systems. But organizations should be careful who they choose because, as Ellingson Mineral Company learned the hard way in “Hackers,” these employees may turn their technical abilities against the companies they work for.

Another option is to work with a fellow CPA skilled in information management and technology to help you design your firm’s cybersecurity system – or even use the AICPA’s cybersecurity risk management framework and related tools as a basis for doing so yourself.

Movie: “Six Degrees of Separation” (1993)

Lesson: Identity theft can cause chaos in your life.

When Paul interjects himself into Flan and Ouisa Kittredge’s life by pretending to be a friend of their children (and claiming to be the son of actor Sidney Poitier), he causes the couple to spend hours trying to figure out his real identity—and determine how deep his deception goes. Much like the Kittredges, people who are the victims of identity theft spend dozens of hours resolving the problem. In addition, identity theft can be costly. Although Paul was only able to get $50 from the couple, in real life, identity theft cost consumers $16 billion in 2016 alone.

While the events of these films are highly dramatized and, in many cases, tinted with a Hollywood view of technology at the time, cybercrime and cybersecurity are anything but entertaining. By availing yourself of the many cybersecurity resources available through the AICPA, you can begin to design a more secure data system for yourself and your clients.

The popcorn is optional.

Lindsay N. Patterson, CAE, Senior Manager, Communications and Public Relations, Association of International Certified Professional Accountants

Hackers courtesy of Shutterstock.

     

Related Stories

• Most Passwords Are Easy to Guess. Do This Instead.
• CPA life hacks for getting hacked
• Surviving the Equifax Data Breach

 

Dr. Alia Crum famously says in her Ted Talks, “Change your mindset, change the game.” This philosophy is especially true in how we relate to one another. In today’s evolving marketplace, being a successful businessperson requires the ability to work and engage with people from all over the world and from many different cultures.

Understanding the global mindset

The global mindset is “the ability to relate to and influence individuals and groups whose culture and way of doing business are different from your own.” It’s necessary for anyone who wants to “change their game” and thrive in today’s business environment.

But incorporating this perspective means more than just changing the way you think. It means filling your mind with information that will help you behave in a more culturally sensitive way, making you more effective in both business and community. The global mindset’s three capitals were developed by Thunderbird University, and include:

1) Intellectual capital (what you know): Having global business savvy, a cosmopolitan outlook, and cognitive complexity – including strong analytical and problem-solving skills.

2) Psychological capital (what you feel): Possessing a passion for diversity, a desire to challenge yourself, and self-assurance.

3) Social capital (what you do): Demonstrating intercultural empathy, interpersonal impact, and diplomacy.

 Why a global mindset matters

A person who embraces these three capitals can interact with a wide variety of people successfully. And positive personal interaction helps set the foundation of any good business relationship.

• A global mindset provides you with greater market insight. A culturally diverse team is more likely to have superior knowledge about the political and social idiosyncrasies of different foreign markets.

• You will improve morale among employees. People want to feel comfortable and respected in their workplace. When a leader embodies a global mindset, employees are happier. Plus, companies with a reputation for encouraging a global mindset will draw more talent from all over the world.

Change comes from within

Two other keys help you achieve a global mindset: possessing self-assurance and practicing mindfulness.

• Self-assurance means you have the confidence it takes to power through an uncomfortable or unfamiliar situation (for instance, when you’re in a different cultural setting).
• Mindfulness is a state of being that involves increased awareness of emotions, thoughts, and surroundings. Practicing mindfulness decreases negative bias that helps us better understand the context of people’s actions.

Want to learn more? Attend this free webcast, and I’ll lead you through valuable insights and help you hone this critical skill. Register now for “Developing your Global Mindset,” Oct. 19, 2017, from 1-2pm EST and earn 1 CPE credit.

For a sneak peek at what I’ll discuss, get started with this Facebook Live event.

Kim Drumgo, Director — Diversity and Inclusion, Association of International Certified Professional Accountants

Global mindset courtesy of Shutterstock.

     

Related Stories

• The One Personality Trait All CPAs Share
• 9 Facts That Can Make or Break Your Firm’s Future
• 11 Things to Know About Gen Z Workers

 

I love that my bank, credit cards and insurance companies all have intuitive websites and mobile apps where I can easily pay bills and check my balances. But between Whole Foods, Equifax and Yahoo, I – like many other consumers – am becoming increasingly concerned with what organizations are doing to protect sensitive information.

Even as we become more dependent on IT systems for everything from ordering our groceries to tracking our fitness, cyberattacks are becoming more organized, profitable and persistent. For CPAs, this means growing concerns about both protecting client data and helping clients protect sensitive information.

In honor of Cybersecurity Awareness Month, here are three ways CPAs can remain proactive when it comes to cybersecurity.

• Think entity-wide, not just system-wide

Organizations, including CPA firms, can no longer think about each of their IT systems independently. They must think about how sensitive information is stored at an entity level across all systems. For example, you might ensure secure access to sensitive client information from computers in the office, but are your staff members also accessing the same information on their phones or tablets?

• Grow your knowledge

Organizations look to CPAs as trusted business advisors. While not every CPA needs to be an IT expert, it is important to familiarize yourself with current trends, technologies and techniques. Even if you aren’t providing cyber services yourself, grow your knowledge of IT audits so you can answer basic questions and know when to refer your clients to CPAs with more specialized knowledge in this area.

• Stay up to date on the AICPA cybersecurity resources

Visit our Cybersecurity Resource Center for tools and information on how you can help your clients protect sensitive information. Check out more information on how you can remain proactive on cybersecurity by watching the AICPA’s Amy Pawlicki and EY’s Chris Halterman discuss how CPAs can help organizations of all sizes report on their cybersecurity risk management programs. And save the date for a live webcast with Shark Tank’s Robert Herjavec and the Association of International Certified Professional Accountants’ CEO Barry Melancon on November 1 at 12pm EDT.

Julia Morriss, Manager – Advocacy Communications, Association of International Certified Professional Accountants

Hacker courtesy of Shutterstock. 

     

Related Stories

• Surviving the Equifax Data Breach
• Getting Ready for Assurance has its Benefits
• Most Passwords Are Easy to Guess. Do This Instead.

 

When it comes to saving for retirement, there is no one-size-fits-all plan. Each American has a unique and fluid situation, impacted by a variety of factors. Fortunately, CPA financial planners are well-versed in the different aspects that go into a tailoring a retirement plan that best fits their client’s needs.

I sat down with Leonard Wright, CPA/PFS and member of the AICPA Personal Financial Specialist Credential Committee, to learn some best practices for starting a retirement plan that helps maximize enjoyment during your golden years.

Jonathan Lynch: A recent survey found that less than half of non-retired Americans are confident they will reach their retirement goals. With all the uncertainty surrounding retirement — where should someone without a plan begin?

Leonard Wright: Before bringing numbers and calculations into retirement planning, simply think about where you want to be when you reach that stage of your life. Ask yourself how you envision enjoying your retirement years. Define exactly what your desired lifestyle will entail. Will you downsize your residence? Do you plan on travelling? Would you consider working part-time? And perhaps most importantly, what age would you like to retire?

Once you have a clear vision in mind, you can start building the plan to make it a reality.

JL: A survey of CPA financial planners found that running out of money and maintaining current lifestyle topped the list of clients’ financial concerns. How does a budget today play into retirement later?

LW: Creating and sticking to a specific, detailed budget can be the difference between a relaxed retirement and years of penny-pinching anxiety. It is never too early to create a budget. Start simple. Calculate how much money is coming in, how much debt you owe and how much money it will cost to reach your desired retirement lifestyle. To help with these calculations, visit the AICPA’s 360FinLit.com where you’ll find free retirement planning calculators, monthly debt payment calculators, a retirement budget building checklists and other free resources.

Once you have a budget you know you can stick to, put it into action!

JL: What are some often overlooked factors someone just setting out to create a retirement plan should take into consideration?

LW: People should learn to expect the unexpected. Accidents and illness happen. It is an unfortunate fact of life we must prepare for in advance. Take time now to consider how you’d pay for everything from minor issues like a car repair to a serious one like a grave illness. Are you protected in case of disaster? Do you have enough homeowner’s insurance and the proper riders to cover a major calamity? Is your health insurance / long-term care insurance sufficient?

People also forget to take into consideration how the transition into retirement changes opportunity. For instance, consider what impact that old life insurance policy may have. It may be able to serve as an asset to pay for your long-term care insurance tax free. Also, if you have the long-term care covered, you may be able to shift your life insurance policy to an annuity to pay you and your spouse income for the rest of your life. Or, if your pension ends when you pass away, it may pay to convert some of your term insurance to make sure your spouse has enough to live on for the rest of their life.

Lastly, if you have disability income insurance, maybe it is time to consider scaling back your coverage if you have been a good saver over your lifetime. If you’re in your 60s, disability income policies may limit the number of years you are paid to only a couple of years. You must evaluate the terms and conditions of your policy in order to arrive at decisions that are in your best interest.

JL: How do retirement-saving strategies differ for someone in their 20s compared to someone in their 50s?

LW: As much as Americans want there to be a set-it-and-forget-it option – best practices say to check in regularly. The issues impacting retirement planning are constantly evolving, underscoring the need for a sophisticated financial plan that changes with your situation. For instance, as you get older, it is usually a good idea to diversify assets and switch your retirement savings to include a more conservative mix. Also, as personal income and tax policy change, tax planning strategies that are integrated into the best retirement plans evolve over time. To help with the retirement planning basics, the 360 Degrees of Financial Literacy website provides articles, calculators and Q&A’s.

For the more complicated issues, a CPA financial planner is the perfect advisor to help save you time, money and confusion.

Jonathan Lynch, Manager – Public Relations, Association of International Certified Professional Accountants

Retired couple riding a bike courtesy of Shutterstock.

     

Related Stories

• Money, Money, Money: CPAs’ Salaries Revealed
• AICPA Finds Accounting Enrollments Remain High
• One Easy Way to Enhance Your Strategic Planning

 

It’s good to be curious, no matter what your cat tells you. CPAs are known for seeking out high-quality information and always wanting to know more. However, when it comes to salaries, EVERYONE is curious. How do you measure up? If you choose one field over another, how will it impact your earning potential? Now, we’ve made that information available at your fingertips.

This week, the Association of International Certified Professional Accountants announced the results of its 2017 salary survey of U.S. CPAs. Nearly 5,600 people responded, answering questions about current salaries, salary expectations, skills and training. A couple key numbers:

• $119,000: National average annual CPA salary (without bonus)
• 81%: Percentage of CPAs expecting a raise in 2018

As these results show, public accounting is still a strong career choice. But it’s more than just dollars and cents. The survey revealed that half of CPAs are committed to continuing professional development and are actively learning new skills. As the world changes rapidly around us, these new skills will be what set CPAs apart in the job market.

Whether you’ve been a CPA for 20 years, are starting the process to sit for the CPA Exam or are a student deciding on an accounting major, knowing what you can expect to earn is an important piece of the puzzle for your career planning. And sometimes it’s just fun to know: What does an average CPA make in New Jersey? Louisiana? Oregon?

Knowing how CPAs’ salaries differ from state to state provides insight into the work you do and the work you might want to do. It will help you make informed decisions about your career.

If your curiosity has gotten the better of you, visit the Association’s new Salary Insights tool to see where you fall compared to fellow CPAs, or to find out what you might expect to make on a new career path as a CPA. Note: The numbers in the tool are divided by CPA and CPA with the CGMA designation, whereas the numbers in this blog reflect all CPAs who responded to the survey.

Julia Morriss, Manager–Advocacy Communications, Association of International Certified Professional Accountants

Salaries courtesy of Shutterstock

     

Related Stories

• AICPA Finds Accounting Enrollments Remain High
• One Easy Way to Enhance Your Strategic Planning
• 4 Steps to Create Exceptional Liquidity Disclosures

 

Every year on October 5, people come together to celebrate World Teachers’ Day and the powerful difference teachers make. There are many accountants across the globe that wouldn’t be in the positions they’re in now without the influence of a teacher.

To celebrate, we put out call for responses on social media asking how a teacher impacted a decision to pursue accounting. Here’s what we heard:

Lori Liddell, CPA, ABV, CFE

“To encourage us to stay motivated on our journey to becoming CPAs, Professor Virgil Carr would end his morning greeting by saying, ‘But once you pass that exam, you be sure to let me know and I will greet you as, ‘my fellow accountant’ and will even buy you lunch.’ Telling Professor Carr I had passed the exam and was officially an “accountant” is one of my fondest memories. Although he passed away in 2011 before I ever had the opportunity to take him up on that lunch he owed me, I work each day to make sure others also know the importance of becoming CPAs as well—just as he taught me. So today, on World Teachers’ Day, I salute you Professor Virgil Carr and all the other teachers who are encouraging would be CPAs to continue to the end goal of becoming CPAs.”

Tatiana Tsoir, CPA, MBA

“I’ve always been fortunate with teachers I encountered and I can say with confidence that a real teacher doesn’t just teach, he/she inspires. I was inspired to be the accountant I am today at Hunter College, by Stephani Mason and Avi Liveson. And now I’m back at Hunter, teaching Tax and hoping to do the same for others.”

John Bratton Fennell, CPA, CGMA

“My professor John Herin at the University of South Carolina helped me have confidence that I had a real talent to be a CPA. That helped me have the confidence to take the CPA exam at 21 and pass most of it at that time without really studying specifically for the exam. Once I was eligible, I sat for it. I passed law and auditing upon my second sitting when I started graduate school. Confidence has so much to do with how well you do in life.”

Debbie Callaghan, CPA

“My very first class of my college career (Business major) was Introduction to Accounting. My professor, Alan Cohen, was the antithesis of a boring accountant. He was full of energy, bouncing around the room as he taught. He opened my eyes to a whole new world. I soon added accounting as a second major and graduated Summa Cum Laude from Ithaca College in 1986. Thanks in part to his tutelage senior year, I went on to pass “the exam” the same month I graduated!”

Marylee Evangelista, CPA

“I was only allowed one elective in High School and that was in my senior year. As luck would have it, there were only two choices that would fit into my academic schedule, Sewing or Accounting. I asked my father what accounting was and he told me they would teach me how to balance my check book. I didn’t care for sewing so I went with accounting. My teacher, Ernie Vajda, helped me see how interesting this field could be. I decided soon after starting his class to make this my major in college! As they say, “the rest is history”. I have been in Public Practice since graduating college and have been a partner in a CPA firm since I was 31.”

The AICPA Academic and Student Engagement team develops programs to help students and influencers understand the value of CPA licensure and explore the opportunities within the accounting profession. The team supports high school accounting teachers through the Start Here, Go Places. brand with engaging content, classroom activities, and professional development content. Learn more online here.

Liz Rock, Associate Manager – Enterprise Social Media, Association of International Certified Professional Accountants

Flowers courtesy of Shutterstock

     

Related Stories

• AICPA Finds Accounting Enrollments Remain High
• 8 Reasons to Get Excited About Fall
• 7 Reasons to Get Excited About Fall

 

The AICPA recently released the 2017 Trends in the Supply of Accounting Graduates and Demand for Public Accounting Recruits report (Trends report). The report found that the total number of accounting undergraduate and graduate enrollments remains at the record levels seen in the 2014-2015 academic year, totaling more than 250,000 enrollments.  This was driven primarily by an all-time high in undergraduate enrollments. On the demand side, hiring of new accounting graduates has slowed compared to previous years.

This year we saw a shift in the mix of bachelor’s versus master’s enrollments. Projected master’s enrollments have returned to pre-2014 levels, while undergraduate enrollments remained high. The last several Trends reports found a sharp rise in the number of master’s enrollments and graduates. The higher numbers previously reported may be attributed to a surge in both traditional students and those changing careers earning their master’s in accounting. The CPA profession is known to have significantly lower rates of unemployment than the broader economy, particularly during economic downturns.  In my experience as an educator, economic turmoil is a strong motivator for people to seek out the stability that a career in accounting provides.

The high number of undergraduate enrollments in accounting programs bodes well for the goal of continuing a strong pipeline of talent entering the profession. The AICPA remains highly focused on attracting bright, motivated accounting students into the profession. And with the strength of our new Association of International Certified Professional Accountants, we are even better positioned to ensure that the next generation of CPAs knows that the accounting profession is a great career choice with substantial flexibility and opportunities.

The decrease in master’s graduates, as found in this year’s report, is not unusual to those in academia. Today, there are many reasons students may not be pursuing master’s degrees at the same scale as previously reported. The rising cost of tuition may be driving students to seek lower-cost alternatives to reach their state’s hourly requirements for CPA licensure.

Despite the dip in master’s graduates there was a 13 percent increase in the number of new candidates for the Uniform CPA Examination from 2015 to 2016. The increase was driven by the launch of the new exam in 2017, as well as concerted efforts by the AICPA, state CPA societies and accounting firms to encourage individuals to take the CPA Exam.

From a demand perspective, public accounting firm hiring of new accounting graduates slowed in 2016 compared to previous years. As technology advances, we expect this trend to continue. When looked at holistically, projected firm demand is still in alignment with the supply of accounting graduates in the U.S. We also know there are many opportunities for accounting graduates to start their careers in business and industry.

Additionally, increased opportunities in business and industry have led to a more competitive recruiting landscape, which is good news for both skilled employees and accounting graduates. The most recent AICPA Economic Outlook Survey, which polls CEOs, CFOs, controllers and other CPAs in U.S. companies, reported “availability of skilled personnel” as a top challenge. Seventy-five percent of respondents said they were seeing at least some increased competition in recruitment efforts, with 21 percent reporting a significant increase.  

Overall, this year’s Trends report shows a positive outlook for the profession. Record-high undergraduate enrollment and the shrinking gap between accounting graduates and new CPA Exam candidates is all very good news.

Powered by the Association of International Certified Professional Accountants, the AICPA continues its laser focus on building the CPA pipeline. We are committed to profession-wide initiatives that attract, inspire and engage the next generation of CPAs.  If you are interested in getting involved by speaking to high school or college students about joining the accounting profession, visit AICPA.org/presentertoolkit for tips on how to get started. 

Yvonne Hinson, CPA, CGMA, Ph.D., Academic-in-Residence, Senior Director, Academic & Student Engagement, Association of International Certified Professional Accountants

 

     

Related Stories

• AICPA Trends Report finds Accounting Enrollments Reach an All-Time High
• One Easy Way to Enhance Your Strategic Planning
• 4 Steps to Create Exceptional Liquidity Disclosures

 

Few practitioners would be surprised that CPAs identified staffing as a chief concern in the 2017 PCPS CPA Firm Top Issues Survey. Unfortunately, many firms inadvertently make mistakes that prevent them from keeping their best people or making use of their talents. Outlined below are four mistakes many firms make. This list isn’t meant to be all encompassing, as there’s several other mistakes firms make to push people out the door. Need help? Don’t worry, there’s help in the end.

1. Keep your story to yourself. What’s so great about your firm? If you don’t speak about this with your employees, they may not be aware of the value your practice provides to clients, the firm’s standing in the community or the difference it makes through volunteer or charitable efforts. Instead, recruits and newer staff may only ever receive a fairly generic description of the firm and its offerings. Telling your firm’s story—in a formal program or in informal conversations at staff meetings or one-on-one—can better engage people and enhance their commitment to the practice.

Keep employees guessing about their future. When staff aren’t convinced there are advancement opportunities available to them at your firm, they’ll start looking elsewhere. You can prevent this by establishing a formal career path plan to demonstrate how promising professionals can advance in the firm. Many may not realize the financial and other advantages of becoming a firm owner. As a result, they may assume there’s little chance or incentive to move up. Do you have a sense of your employees’ aspirations? It’s also a good practice to survey and interview employees to gain a better understanding of their personal goals. Maintaining open communication can improve retention rates.

Keep your organization siloed. Do your employees have an understanding of how their work fits into the bigger picture at your firm? Including staff in client meetings, firm planning and networking opportunities helps them gain a larger perspective on the work you do and makes them feel more included and engaged. Another option is to encourage staff to get involved in the firm’s volunteer activities or ask them to help identify ways the firm can make a difference in your community.

Overlook great people. Have you assumed that a parent of young children has no interest in advancement because of family responsibilities? If a gifted staff member has never asked for a promotion, do you figure he or she is happy where they are? Instead of missing out on their possible contributions, consider the options for all your people, and help identify their career goals. Making the most of the people you have on staff minimizes turnover costs and disruptions, and also allows the firm to benefit from their experience and abilities.

Where to find help

If you’re making any of these mistakes, there are simple ways to change course and avoid losing star players. The AICPA’s Private Companies Practice Section’s CPA Firm Top Issues Survey commentary includes not only more information on staffing and other key concerns, but also a checklist of tools and resources firms can use to address their most pressing challenges. The PCPS Human Capital Center and Firm inMotion e-Toolkit are among those critical resources. Whenever you need to tackle common practice problems, put these resources to work. Your firm’s team members will be glad you did.

Mark Koziel, CPA, Executive Vice President- Firm Services, Association of International Certified Professional Accountants

Job candidates courtesy of Shutterstock.

     

Related Stories

• One Easy Way to Enhance Your Strategic Planning
• 9 Facts That Can Make or Break Your Firm’s Future
• Small Firms Make a Difference in Unexpected Ways

 

Identifying and responding to risk is a challenging job, since new threats are constantly emerging and old ones can change or unexpectedly reappear. When the Committee of Sponsoring Organizations of the Treadway Commission (COSO) released its comprehensive Enterprise Risk Management: Integrated Framework in 2004, it provided a valuable tool for dealing with organizational threats. In the ensuing years, organizational approaches to risk have advanced and matured, and the nature of risk has steadily evolved.

In response, COSO has released an updated framework to better address the current environment. The new document, Enterprise Risk Management: Integrating with Strategy and Performance, is focused on ensuring that enterprise risk management (ERM) is not simply an agenda item, but something that’s embedded in an organization’s strategic decision making. The new framework is intended to drive changes in setting and implementing organizational strategy in several ways.

1. Positioning ERM as crucial to strategy setting. The framework, by its very name, emphasizes the importance of integrating risk with strategy to enhance performance. The framework notably describes the key aspects of this integration, starting with the importance of ensuring that a chosen strategy aligns with the organization’s mission, vision and core values. Organizations should then consider implications of the chosen strategy, as well as the risks related to whether or not the strategy delivers intended outcomes.
2. Focusing on identifying potential opportunities through ERM. Organizations use ERM to mitigate risk—and in doing so they may also uncover new markets, customers, processes, vendors or lines of business. The new COSO framework considers the importance of uncovering opportunities to improve organizational strategy and performance. For example, a company looking into the risks that might threaten its goal of sustainable revenue growth, might identify changes in customer preferences that lead to the identification of new types of services not currently offered in the market place.
3. Describing how ERM helps identify and manage entity-wide risks. Those working in one area of the organization may be unaware of a potential risk that originates in another part of the company. The framework’s entity-wide approach to risk identification and management is designed to address that problem. For example, client trading-related risks in one part of a financial services organization may be similar to a risk identified in the company’s own proprietary trading practices, thus creating a more significant risk to the organization.
4. Showcasing how ERM can reduce performance variability. If an organization can anticipate risk, it will be in a better position to create an effective response that prevents business disruption and mitigates related losses. These actions are critical to achieving performance goals. The framework also notes, however, that variability in performance such as performing ahead of schedule or forecasts, can create equally disruptive challenges if not well managed. ERM can help manage this risk.

Discover the Framework’s Value

An ERM process that’s fully integrated into an organization’s strategy setting and day-to-day decision making will greatly improve both its near term performance and achievement of its longer term goals. Use of the updated framework is not required, but I would urge organizations to review the changes it proposes and consider the value they can offer.

Suzanne Christensen, CPA, Treasurer, Head of Investor Relations & Risk, Invesco Ltd. Suzanne leads the firm’s enterprise risk management efforts and works to further identify, monitor and manage key risks within Invesco’s business.

Dominoes courtesy of Shutterstock.

Related articles

Educating Your Clients About End-of-Life Care Costs

     

Related Stories

• 9 Facts That Can Make or Break Your Firm’s Future
• 4 Steps to Create Exceptional Liquidity Disclosures
• Don’t Be a One-Hit Wonder