Los Angeles-based MGO, a top 100 accounting firm in the U.S. based on revenue, announced earlier this month that it has merged in Nussbaum, Berg, Klein & Wolpow, a CPA firm in Long Island, NY.
As part of the deal, Nussbaum’s 73 team members, including all 11 partners, will join MGO.
“Nussbaum has a rich history in New York and is known for its deep commitment to client service. We’re thrilled to bring their team into the MGO fold,” Kevin O’Connell, CEO and managing partner at MGO, said in a written statement. “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.”
Founded in 1990, Nussbaum serves middle-market businesses and high-net-worth individuals on the East Coast, offering a range of accounting, auditing, tax, and business advisory services for closely held entrepreneurial businesses and public companies.
“This is a unique opportunity to enhance the services and client experience Nussbaum is known for by leveraging MGO’s size and international footprint,” Steve Wolpow, managing partner of Nussbaum who joins MGO as the office managing partner of the Long Island office, said in a written statement. “This is a momentous step for both our clients and our professionals, and we are excited about the future as part of MGO.”
The new MGO staff and partners will continue to work out of Nussbaum’s headquarters in Melville, NY.
MGO now has 14 U.S. offices in four states. The firm was No. 57 in INSIDE Public Accounting’s 2022 top 100 firms ranking, bringing in nearly $98.1 million in revenue during its most recent fiscal year.
The Public Company Accounting Oversight Board (PCAOB) is seeking public comment on the draft of its five-year strategic plan, which the U.S. audit regulator released on Aug. 16.
The document explains four goals the PCAOB has set to accomplish from 2022 to 2026 as part of its mission of protecting investors. The four goals are:
- Modernizing standards
- Enhancing inspections
- Strengthening enforcement
- Improving organizational effectiveness
“The people we serve are top of mind in everything we do at the PCAOB, and we look forward to hearing from the public as we move forward with our ambitious plan to protect investors,” PCAOB Chair Erica Williams said in a written statement.
During a webinar last month commemorating the 20th anniversary of the Sarbanes-Oxley Act, Securities and Exchange Commission (SEC) Chair Gary Gensler called out the PCAOB for being “too slow to update auditing standards” that existed pre-SOX. A day later during another virtual event celebrating 20 years of SOX, Williams responded to Gensler’s criticism by saying, “Just six months into my term, we are already actively working to update more than 25 standards within eight standard-setting projects. And we are just getting started.”
Williams also addressed tougher enforcement during that event saying the PCAOB “will not hesitate to hold wrongdoers accountable for breaking the rules.”
She added: “We are just halfway through the first year of this new board. Already we’ve more than doubled our average penalties against individuals compared to the last five years. This includes the largest money penalty ever imposed on an individual in a settled case. At the same time, we’ve increased our average penalties against firms by more than 65 percent. In the past five years, the PCAOB assessed penalties against individuals less than half of the time and firms only about 86 percent of the time. This year it’s 100 percent.”
Comments on the draft plan must be received by Sept. 15 and can be submitted by email to firstname.lastname@example.org; or by postal mail to the Office of the Secretary, PCAOB, 1666 K Street, NW, Washington, DC 20006-2803.
All comments are made public and posted on the PCAOB website. Commenters are encouraged, but not required, to provide their name and professional affiliation.
Diversification is a fundamental principle of investing that ultimately helps you optimize your return while mitigating risk. Many investors focus heavily on Wall Street investments, such as stocks, ETFs, and mutual funds. While it is essential to diversify your investments across these assets, it is equally necessary to look broader. Read the whitepaper about how you can add other offerings to your portfolio.
By Jeannie Ruesch.
Congratulations! After a diligent search process, you found the technology solution that will meet many or most of your accounting firm’s needs; however, this is only the first part of the process. Now that you’ve identified the right solution, it’s time to implement it. Adopting new technologies comes with its own challenges—but with the right strategy, you can make this part of the process a bit smoother.
A Common Challenge
At a recent webinar for accountants on kickstarting a CAS practice with bill pay automation, participants were asked about the biggest barriers to introducing new technology at their firms. There was consensus that the biggest barrier was getting all parties on board, and this encompassed firm leadership and staff as well as clients. This mirrors what we’ve seen in recent Bill.com research, showing that the challenge is fairly common across the board. This should provide relief to any firm worried that this was unique to them—because a shared, common challenge means a shared interest in a solution.
Leadership Alignment at Your Firm
Getting leadership buy-in is a crucial step to any tech implementation. You need an executive sponsor to help shepard this change through – and the larger your company, the more important that sponsor is. However, it’s likely your leadership team won’t be the day-to-day users of this tech, so the key here will be to show how adopting new technology will enhance your firm’s bottom line. Be prepared to demonstrate which processes will be enhanced and how this ties back to benefit the firm. This could include:
- Time and resources saved due to increased efficiency
- Reduction of errors once manual processes are automated
- More accurate and/or timely reporting
Additionally, be sure to highlight any new lines of revenue that could result from implementing new technology. For example, if employees are able to focus on higher-value work or have more time for upskilling, does this allow the firm to offer new services? It is also worthwhile to recognize how a shift away from more menial tasks to a more fulfilling workload could positively impact your firm’s talent retention and recruitment efforts.
Leadership alignment isn’t just a hurdle for accounting firms — it’s also a pain point for your clients. In a survey that Bill.com recently conducted with Wakefield, 34% of respondents — in this case CFOs, finance VPs and Controllers — listed leadership not making the necessary investment as a technology pain point.
Securing Staff Understanding and Support
The best way to get your staff onboard with a planned tech adoption is to incorporate the principles of a strong change management approach. Start by creating a detailed plan for introducing this new technology and rolling it out at your firm. This should include the following:
Craft the right announcement.
If you have the right approach when announcing this change, new technology is something that could be exciting! Rather than immediately getting into the weeds, focus first on how this will benefit the members of your team. Keep in mind that the benefits may be different based on the role of each team member: while manager-level staff may be more interested in how this technology will impact client relationships, junior staff may just want to know how this implementation will make their job easier.
We’ve heard anecdotally from many accounting firms that once their staff understood how new technology was going to reduce the amount of manual and/or repetitive work they were responsible for, the changes were immediately relatable and team members were much more receptive.
Find your champions.
Identifying key team members who can act as cheerleaders for your new tech will help maintain morale throughout the adoption process. Being a true champion, however, goes a step farther than just having a positive attitude. Empower your staff to become familiar with how the technology works and how it can be best utilized to meet your firm’s needs.
It is essential to have your team aligned and up-to-speed before new technology is introduced to clients, especially team members who are on the front lines of client engagement. Client perception of the changes you are implementing will be influenced by how your staff feels, so you’ll want to be conveying a tone of confidence and positivity.
Many technology solutions offer advanced training and/or certifications for their products. This is an opportunity for team members to carve out new roles for themselves as official or unofficial tech “experts”—which not only provides a resource for individuals who need more guidance, but also gives these champions a sense of ownership and a stake in the process, which can help with talent retention.
Plan, plan and plan again.
Review and refine day-to-day processes to account for where new technologies will play a role. Empower team members to weigh in on the process, and consider how you can align employee interests with the needs of the firm. Once a proposed process has been determined, consider a slow rollout that leaves time to tweak the process before the switch is 100% flipped.
One way to do this is to beta test the new process with a small number of trusted clients. This provides staff with a chance to increase their familiarity with the technology before it is implemented more widely, including identifying initial pain points and developing some early best practices.
Also be prepared for the inevitable momentary loss of production as your staff gets ramped up – this is normal. If you prepare for it and help them understand it’s coming and expected, you’ll be able to work through it together as they learn new workflows and new ways of thinking about and doing their jobs.
Getting Clients to Use New Technology
Similar to how important approach is with your internal team, careful consideration when you announce new technology to your clients can create excitement and acceptance when done properly. Your firm is a trusted partner for your clients, and this change is just one way you are showcasing your ongoing commitment to efficiently meeting your clients’ needs. Keep the following components of a strong announcement in mind.
- Messaging: Create aligned messaging regarding new technology, including an understanding of what it is, the value it brings to clients, and why your firm is making the switch. Clients should have a clear understanding of how this technology will enhance and simplify the services you provide.
- Open Dialogue: This is an opportunity to reinforce your clients’ trust in your firm – show that you know them, and their pain points, and that you’re committed to alleviating them in the most efficient way possible.
- Provide Support: Clients should feel supported throughout the implementation process, so make it very clear if your firm plans to provide training or resources. Training clients on new software is a win-win: you can showcase tech expertise and build stronger client relationships and at the same time ensure clients are getting onboarded faster and (hopefully) easier.
- Timing: Just like staff will need time to adjust, allow time for customers to digest this information and ask questions before the technology is rolled out. The goal here is to be as flexible and accommodating as possible. The last thing you want is for clients to feel like this change was sprung on them.
In the same Bill.com survey mentioned above, 40% of the finance leaders we surveyed stated that they are planning to automate financial processes in 2022. This provides an opportunity for accounting firms to act as a guiding hand for their clients during the decision-making and implementation process.
A Steady Hand for a Steady Adoption
There’s no silver bullet solution that is going to solve all of your needs—yet. In the meantime, it is important to keep innovating and to ensure that all stakeholders impacted by the solutions you choose to implement remain informed and reassured that your firm has their best interests in mind when it comes to new technology.
Jeannie Ruesch is the senior director of marketing at Bill.com and has been in the accounting industry for more than seven years. She previously worked at Xero and The Sleeter Group. She has more than 20 years’ experience in brand creation and strategy, design, social media development, demand gen, and customer marketing. She’s a tech geek at heart, an author, an award-winning graphic designer, and loves finding ways to help customers solve problems.
Throughout the COVID-19 pandemic, the American Institute of CPAs (AICPA) continuously urged actions by the Internal Revenue Service (IRS) to address taxpayer service challenges worsened by the pandemic. As it stands, the backlog of unprocessed mail, returns and adjustments at the IRS has reached a critical stage that is adversely impacting taxpayers and tax practitioners.
On July 11, 2022, the AICPA submitted a letter to the Department of the Treasury and the IRS calling on them to do more to ensure that taxpayers and practitioners are not subjected to another tax filing season in 2023 with unprecedented inventory levels, which would lead to delays in processing and incorrect notices and penalties. The letter provided proactive steps the IRS could take to reduce the potential for another disruptive and chaotic filing season.
This week, 93 Members of Congress – led by Senators Bob Menendez (D-NJ) and Bill Cassidy (R-LA), and Representatives Abigail Spanberger (D-VA) and Brian Fitzpatrick (R-PA) – signed a bipartisan, bicameral letter to IRS Commissioner Charles Rettig, endorsed by the AICPA, stating,
“…we believe that the IRS must take additional steps to improve customer service issues, decrease processing delays, and work-down the backlog of paper returns and correspondence by continuing the maximum use of overtime and surge teams, as well as the continued suspension of automated notices and collections—which have been critical in reducing pandemic-related tax return and correspondence backlogs. Additionally, the IRS must improve its recruitment and retention efforts to adequately address the backlog and increase levels of taxpayer service.”
The letter from Congress cited a report by the National Taxpayer Advocate stating that the paper return backlog increased by 1.3 million from the same point as last year and that the IRS was only able to meet 12 percent of its hiring goals for customer service representatives.
The two letters deliver similar messages to the IRS: Take steps now to reduce the backlog and improve service to taxpayers and practitioners ahead of the 2023 tax season. “It’s important for the IRS to take immediate steps to prevent another stressful and confusing tax season for taxpayers, practitioners and the IRS,” said AICPA Vice President of Tax Policy and Advocacy, Edward Karl. “Until the backlog is truly at a healthy level and the IRS’ service deficiencies are corrected, taxpayers and practitioners will continue to be unfairly and unnecessarily burdened. The common-sense steps that AICPA and Congress have urged the IRS to take now would give the Service some much-needed breathing room ahead of the next filing season.”
As key enablers of successful organizations, the career paths open to professional accountants span business and the public sector in a variety of finance and commercial-facing roles. As digital and sustainability transformations progress internationally, professional accountants have an opportunity to elevate their strategic contributions as leaders and value partners.
The International Federation of Accountants’ new collection of resources, Professional Accountants as Business Leaders and Value Partners, explores how professional accountants can be future-ready, data-savvy leaders who drive sustainability. These materials aim to help in understanding and navigating challenges and opportunities across various roles as finance and business leaders, risk managers and analysts, and in broader commercial roles including in procurement and supply chain management.
Components of the new resource center include:
- Mainstreaming Sustainability in Business
- Future-Ready CFO and Finance Function
- Data and Digitalization
- Case studies from a variety of entities around the world including Olam Agri, Reliance Industries, Standard Chartered Bank, Sime Darby Berhad, OMRON, Prudential Financial, Pakistan International Airlines, and more
Explore Professional Accountants as Business Leaders and Value Partners
By Dr. Kristy Short.
Quick question right out of the gate: Just how important is client data in running an uber-efficient and highly lucrative firm. Quick answer: Massively!
No doubt you’ve heard this message many times over the past few years: Your client data represents a (potential) goldmine. The simple fact is that your data, and what you do with it, is central to running a successful, sustainable and step-above-the-rest firm. It’s the difference between a potential goldmine and a real one.
Firm leaders that understand this are reaping the benefits. Massive benefits, in fact… such as aggregating an ideal client roster, maximizing recurring revenue to create year-round income streams, and achieving workload balance that leads to happier staff and a sustainable business model.
Marcus Dillon, CPA and owner of Dillon CPAs, is a prime example of a leader who has figured this out. Someone who is leaning into Smart Client Management to maximize client data to grow and thrive. And, by the way, he’s also someone who is willing to share his secret sauce.
The bottom line is that client data is at the center of everything. It’s your ticket to long-term success—if you’re willing to put in the time to work it. And if you are, this is a great place to begin…a starter guide on how to dig deeper into data and strike gold!
Identify your ideal client profile (ICP)
Before you can go after clients who are the best fit for your firm, you first have to know who you’re looking for. Who do you want to serve? Who are you good at serving (think vertical markets)? What is your ideal client profile?
For starters, it’s important to understand that dollars don’t matter.
Okay, well, maybe this is a bit of an overstatement, but the sentiment is dead on. The point here is that looking solely at the revenue a client brings in doesn’t always make them an ideal match for your firm. You must also factor in key non-financial data.
For example: Do you have families of businesses you enjoy serving? Are you skilled at serving specific verticals? Do you actually like the client? Does the client respect your team’s time and efforts?
“Just because, historically, a client has spent a lot of money with you, doesn’t mean they’re a good fit for where you want to take your business,” explained Dillon. “At one point, we decided that we no longer wanted to offer audit and attest services. While they represented some large engagements, it just wasn’t the type of work we wanted to do.”
Relationships are also core to Dillon’s business model, which means one-time engagements don’t make the ideal-client-profile cut.
“We’re in the business of building relationships, not just processing transactions. We want clients to have multiple touch points with staff throughout the year and get really close to them. This is one of the things our staff love about their jobs.”
Looking at the non-financial side of what makes an ideal client is a big part of the puzzle. For long-term success, you have to enjoy the clients you serve and have the skills to deliver services efficiently, effectively and in a standardized manner.
Review the revenue
While this feels like a backslide on advice, it’s really not. (Bear with me.)
While not the sole factor in identifying your ICP, revenue is still an important factor in the data-mining process. Smart management of client data includes looking at the financial side as well. This provides insight into client longevity and adaptability to a fixed-fee, recurring-revenue model.
For Dillon CPAs, reviewing revenue has been central to the firm’s thrive factor. And, according to Marcus Dillon, it’s easy to do.
“We had this data readily available because we bill out of QuickBooks,” said Dillon. “It made it easy to look at the lifetime value of the client, how long they’ve spent money with us and what their average price point is. This really helps to determine if they are a good fit for us.”
A clear view into client revenue aids in understanding which clients to focus on in terms of transitioning them to the recurring revenue model—and/or those where there’s an opportunity to upsell additional value-added services.
Bring your staff into the convo
Dillon was quick to remind that staff input is another critical element of the process. Because staff are on the front line—working with clients every day—they have valuable information to share. So be sure to mine that data as well.
Look to staff to answer such questions as: What clients are the easiest to work with? Do they have needs beyond existing services provided? Do they advance your firm’s vision and support your business model (e.g., recurring revenue vs. one-time engagements)? Are they in an industry that aligns with your firm’s expertise?
“We like to bring our team into this process because they are so close to our clients,” Dillon explained. “At the partner level, I have to be dedicated to consistently reviewing data and refining our client base, and that means I need input from my team. I’ll give them a list and ask which clients are worth fighting to keep and improve as a client, if there are ideal clients I’ve overlooked completely, or if there are clients that need to go.”
While aggregating intelligence on clients is key, it’s also an exercise in getting buy-in from staff. When employees are part of the data-mining process, it fosters a deeper understanding of the firm’s bigger vision and goals. It also provides direct visibility into partner actions—like off-loading non-ideal clients that don’t support workload balance and a sustainable business model.
“Last year we got rid of about $80,000 of revenue by exiting several non-ideal clients,” Dillon said. “This gave our team a lot of motivation because we [the partners] followed through…because we put our money where our mouth is…in creating a better work environment and opening up capacity for staff to focus on clients we actually like serving.”
Getting to the gold
Data is everything if used properly. Regular, dedicated review and management of client data provides full visibility into all vital areas of running a successful and highly profitable firm, including:
- Identifying ideal clients (as well as those who need to go).
- Balancing staff workload and opening the door to preferred, relationship-based engagements (by reducing the number of non-ideal clients).
- Creating a positive work culture and happier staff (a balanced, focused workload will do that).
- Fostering buy-in from staff by making them part of the ongoing data-mining process.
- Uncovering new opportunities for recurring revenue.
- Cultivating client relationships by proactively offering much-needed services (before they have to ask) and a year-round connection to your team.
- And the list goes on…
There is power in your data. And smart management of it can lead to stellar results. Discover the goldmine, right there inside your business, to build the firm of your dreams.
Kristy Short, Ed.D, has been serving the accounting profession for more than 25 years—bringing a deep knowledge of branding, marketing communications, and content strategy and development to the table. She’s worked with hundreds of partners and staff to help them advance their firms for the modern era. Kristy’s been named one of CPA Practice Advisor’s “Most Powerful Women in Accounting” three times; has assisted noted thought leader, Darren Root, create multiple books; and published hundreds of education-based, accounting-focused articles over her career.
AuditClub, the Audit Service Center for CPA Firms, announced today the launch of its new auditors-as-a-service model, designed to provide top 10, regional and local CPA firms with instant talent and fractional flexibility.
AuditClub and its team of chief auditors bring extensive credentials to offer strategic insights and deliver solutions in key areas that matter to accounting firms, enabling them to satisfy client demand without the typical investment required to hire and train an expensive partner, director or manager.
Founded and led by former audit partners with a unique and valuable mix of Big 4, regional and local firm experience, AuditClub is a licensed accountancy corporation based in the United States and registered with the Public Company Accounting Oversight Board (PCAOB). On a mission to make public accounting better, AuditClub provides flexible access to a seasoned team of Chief Auditors with broad and deep professional experience that benefits AuditClub members.
“Our goal is to provide responsive, high-quality audit and assurance services for CPA firms that may not have the in-house talent or expertise to deliver these services efficiently and effectively,” said Chris Vanover, CEO and Chief Auditor of AuditClub. “Many firms are experiencing a critical shortage of qualified human capital, or their partners and managers are well beyond capacity, and even turning down new opportunities. Rather than reaching out to a recruiter or an independent contractor, now they have AuditClub to bring them peace of mind with immediate access to an entire team of experienced CPAs and specialists on demand.”
“As we continue to expand our audit practice, we seek creative ways to grow our resources and enhance the quality of our audits,” said Bob Armstrong, Audit Partner with McConnell Jones. “We’re excited to continue partnering with AuditClub. In addition to AuditClub conducting multiple trainings, our recent collaborations with their Chief Auditors provided the precise level of support our team needed in the form of consultation on engagement quality and PCAOB matters.”
AuditClub services are delivered through a unique membership model. In addition to unlimited email access via AuditClub Care, members also benefit from exclusive access to a team of Chief Auditors through technology-enabled and flexible month-to-month passes. With three levels of passes, AuditClub is tailored to meet firm service needs and scalable for varying budgets.
“The innovative offering from AuditClub breaks new ground in the pricing for professional firms,” said Ed Kless, co-host of “The Soul of Enterprise” podcast. “It allows for periodic recurring payments for ever-increasing value and serial customer transformations.”
To become a member or learn more about AuditClub, visit https://auditclub.cpa/.
AuditClub is transforming how public accounting firms deliver audit and assurance services by turning their traditional staffing model upside down. A licensed accountancy corporation based in the United States and registered with the PCAOB, AuditClub provides on-demand AICPA and PCAOB audit and assurance support to top 10, regional and local CPA firms throughout the United States via its membership access model. AuditClub services include support for audit and assurance, quality control, regulatory matters, training and transformation. Learn more at AuditClub.cpa.
By Ibi Ojo, EA.
The rapid evolution of accounting technology has automated traditional compliance work. Small businesses and accounting professionals, alike, are beneficiaries of artificial intelligence built into accounting software and apps.
As lower-level compliance work continues to be automated, tax and accounting professionals have to find meaningful ways their services can remain valuable to their clients—hence, the evolution of client advisory services.
We need to show, and help, clients understand that the automation of compliance tasks is just a tool to getting to the heart of the matter. Automation helps capture the data efficiently, which frees us up to perform tasks that will add value to our clients’ businesses. The data becomes a report, with the ability to read, understand, analyze, interpret, and communicate the information.
Reports provide valuable insights
The message of the report is the main objective of capturing the data in the first place, and this is where the real value of the professional lies. We have the ability to turn the report into a powerful tool to help a business achieve its goals, including more efficiency in operations and cash flow management. This is done by identifying shortages ahead of time, and making adequate provision for capital profitability, expansion, growth, and other areas.
Advisory work is future oriented, while compliance work is historical. Advisory work entails how to use the results of the compliance work to achieve a better future for the client. This is what is valuable to the client: “wanting a better tomorrow”—an assurance that their business can survive in the future and has the potential to withstand an adverse climate.
With these types of services, clients see their accountant/advisor as a partner in their businesses. Clients enjoy better service and have a more personal relationship with their advisors when the advisors are proactive in recommending strategies that lead to growth, profitability, and success.
The result? Increased client loyalty leads to long-term retainerships.
The reason? You can help your clients make more money through advisory services.
Efficiency for a florist
What’s right before our eyes can be somewhat invisible for a business owner. For example, an in-depth analysis of the financial statement might indicate a waste of materials, as in the case of a client of mine—a flower shop running at a loss. A thorough investigation into the high cost of goods sold, without a correlating increase in sales, indicated that the flower designer was ordering more materials than needed. Because the materials were perishable, they ended up in the trash.
This situation was quickly addressed: A system was put in place to order the right quantity of materials, eliminate waste, reduce cost of goods sold, and increase gross profit.
A comparison of the monthly income statement may even reveal more issues; for example, if the rent or a mortgage payment is not made. Timely payments of bills save late charges, interest, and penalties that could add up to a significant amount.
Using the appropriate ratios, inefficiencies in capacity would be revealed. Addressing this, and putting a system in place, would result in making more money with current capacity.
A cash flow analysis is also very important in making sure that funds are available through every stage of operation. When identified ahead of time, shortages can be remedied and also puts the client in a position to shop for the cheapest cost of capital.
Automate your processes
Any tasks you continue to do by hand that software can do more efficiently are costing you time, resources, and money. Cloud solutions enables us (the client and advisor) to optimize our processes. Assisting our clients to build a tech stack for their businesses allows them to operate more efficiently, profitably, and competitively. When clients automate some of their processes, it frees up their employees to apply their time and talents to income-generating activities.
When clients use a comprehensive suite of business applications, they can expect these five benefits:
- New operational efficiencies.
- Enhanced productivity.
- Increased profitability.
- Improved ability to scale operations.
- A greater potential for revenue growth.
While there are sophisticated reporting tools to capture every aspect of the business, insights from the reports enable our clients to make more informed business planning decisions that increase efficiency and profits. The reports need to be interpreted by an advisor. The ability to interpret these reports and effectively communicate what they reveal about the business includes the business’ performance, the client’s position in the industry, the opportunities and challenges in the future, and how to adequately and timely address them.
Providing this information is an invaluable service to the client. Our firms are successful and of greater value when clients can connect our services to an increase in their revenues and profitability.
Ibi Ojo, EA, is the owner of Fortune Accounting and Business Solutions, a full-service accounting, consulting, and training firm. An Advanced Certified QuickBooks ProAdvisor, the favorite part of work is when she gets to engage with clients and recommend strategies to help them attain their objectives. Ibi has been working with QuickBooks for more than two decades, loves all things QuickBooks Online, and uses Intuit ProConnect Tax. Her QuickBooks Training classes were born out of her passion to help small businesses keep better books and obtain reliable reports that can be used in making decisions that will enable them to grow and be profitable. In 2020, Ibi was nominated for ‘Top 50 Women in Accounting’ and recently became a member of the Intuit Trainer Writer Network.
By Mairtini Ni Dhomhnaill.
Whether or not you like numbers more than people, client relations are a necessary evil in the accounting world. In my experience, the number one reason new clients cite for leaving their previous accounting firm is a lack of responsiveness — especially over email. Now, as economic headwinds drive fears that a recession is imminent, forging and maintaining strong client relationships is one of the best ways accounting firms can mitigate potential economic fallout as enterprise customers look to cut back on spending.
Amid an uncertain economy, dependable client relationships are more important to accounting than ever before. In fact, 46 percent of accountants believe that relationship building is the most critical skill for future accountants, according to Sage’s Practice of Now. Meanwhile, the same report reveals that 82 percent of accountants say clients are more demanding these days, expecting better and faster service without paying higher rates.
Let’s dive into why client relations are so essential to meeting the current moment and how to navigate these changing tides.
The changing face of accounting as the landscape moves digital
The state of accounting has significantly shifted in recent years. In the past, primary communication with clients occurred monthly, quarterly, or even annually. Today, clients expect their accounting firms to be much more involved in day-to-day activities.
This evolution has largely coincided with the pandemic-induced digital transformation, as automation and artificial intelligence (AI) have shaken up the accounting space. As the new tech proliferates across the industry, the market for AI in accounting is estimated to reach $16.07 billion by 2028 from $1.7 billion in 2021. AI and automation offer significant value to back-office roles, taking over tasks machines can do while providing greater accuracy and efficiency. That said, AI cannot deliver a financial report at your next board meeting.
AI is coming at the perfect time to help firms handle the deluge of day-to-day customer communication. But without investing in automated workflows and the proper technology tools, firms can quickly fall out of pace with customer demands and fail to meet the ever-mounting expectations around responsiveness.
While understanding around appropriate response times can differ depending on the client, the reality is that — when prioritized by company leadership — there are tools available to drive efficient customer support. For instance, my company, Countsy, uses Front to organize our communication and streamline collaboration by swiftly looping in the people needed to best deliver on a request. With a finger on the pulse of emerging enterprise tech, you can ensure that your accounting workforce is set up for success and able to scale as your business grows.
Using the human touch to drive client retention + expansion
Multi-year client relationships are the bread and butter of any accounting business. A client relationship that goes beyond the strictly transactional and offers human touch points across interactions can make a difference when it comes time to renew your contract. People like working with people they like, which is why Deloitte found that B2B customers are on average 32 percent more likely to renew a contract with B2B companies that have mastered customer experience.
Investing in client relations and providing a robust communications protocol will better equip you to build these human relationships using digital tools. With less time spent on one-off requests, teams can instead focus on the higher-value conversations that truly showcase the depth of their service. When the pandemic began and Countsy moved remote, our clients did not experience a change in service quality since we were already using Front for our customer communications. Without having to spin wheels on relevant players to loop in on client responses, we can deliver faster while digging deeper on the analysis that really drives our value as accountants.
Instead of getting overwhelmed by email aliases and playing hot potato with your team as you wait for someone to spearhead a response, customer communication tools can help you divide and conquer. Above all, people want to be heard, and focusing on that personalized human touch will build trust — making your clients feel seen and understood.
Workforces should evolve with the times, but don’t ditch company culture
While the U.S. saw the Great Resignation peak in March, nearly two job openings remain for every unemployed person. The accounting profession was hit hard by this attrition, compounding upon an already short supply of accountants as the number of accounting graduates dropped nearly seven percent in 2019 since peaking in 2012.
Following the recent surge in turnover and subsequent job openings, firms must prioritize comprehensive onboarding and maintenance of company culture to ensure sustainable growth and strong customer relations. Replacing an individual employee is not cheap — costing between half to two times the original employee’s salary. Inadequate knowledge sharing comes with an even heftier price tag. According to Panopto’s Workplace Knowledge and Productivity Report, the average large U.S. business loses $47 million in productivity each year due to inefficient knowledge sharing.
Maintaining a thorough understanding of your history with a client is essential to strong customer relations in accounting. Communication tools that allow new employees to access their company’s entire email history with a client greatly simplify onboarding. Such tools that streamline efficiency around client relations and knowledge sharing will help maintain a company’s identity while leaving more time to build a strong company culture.
Hybrid workplaces have demonstrated their staying power and firms must leverage technology to simplify collaboration as they settle into this enduring norm. When tools streamline such vast knowledge sharing, more time is left to build stronger internal relationships and create a place where people want to continue growing their careers.
However tangential to the actual service accountants provide, accurate numbers and detailed analysis mean nothing without strong client relations. As technology changes the landscape and helps accountants meet escalating client demands, a robust communication framework will help accounting businesses retain clients while maintaining their company culture and expanding their workforce. The industry will continue to navigate major technological and societal shifts, but high-touch client relations will remain the linchpin to long term success.
Mairtini Ni Dhomhnaill is the founder of Countsy.
By Jordan Fabian, Bloomberg News (TNS)
President Joe Biden signed a sweeping tax, climate and health-care measure into law on Tuesday, sealing a major legislative victory ahead of the November midterm elections.
“With this law, the American people won and the special interests lost,” Biden said at the White House. “It’s about delivering progress and prosperity to American families.”
The measure, known as the Inflation Reduction Act, contains key parts of Biden’s policy agenda that just weeks ago appeared to have virtually no chance of becoming law. The House passed the bill Aug. 12 on a party line 220-207 vote after the Senate voted on Aug. 7 to approve it. No Republican in either chamber voted for it.
“Let’s be clear. This historic moment, Democrats sided with the American people and every single Republican in Congress sided with the special interests,” said Biden. “Every single Republican, every single one, voted against tackling the climate crisis, against lowering our energy costs, against creating good paying jobs for Americans. That’s the choice we face.”
Biden and Democrats desperately need the law, and a spate of other legislative wins, to help boost their poll numbers and improve their chances of protecting congressional majorities they are in danger of losing to Republicans in the fall. Biden’s approval rating stands at just 40%, while 55% of Americans disapprove of the job he is doing, according to FiveThirtyEight’s polling analysis.
The president and Cabinet officials are planning more than three dozen events in 23 states during the coming weeks to highlight the new law, according to a memo from the White House. Biden also plans to hold a celebration in Washington on Sept. 6 once lawmakers return from August recess.
Biden’s signature caps off a tumultuous effort that began last year when Democrats took control of Congress and the White House to approve new social and economic programs that the president promised during his 2020 campaign.
The push was derailed in December when centrist Democratic Senator Joe Manchin of West Virginia pulled out of negotiations over a broader proposal called “Build Back Better” that contained more elements of Biden’s agenda. It was later revived after Manchin negotiated a breakthrough deal in late July on a smaller package with Senate Majority Leader Chuck Schumer. They overcame a last-minute snag from moderate Democratic Senator Kyrsten Sinema of Arizona on tax provisions.
The roughly $437 billion bill would cap and lower the price of medicines for seniors in part by letting Medicare negotiate drug prices for the first time, a long-sought goal for Democrats. It contains $374 billion in energy and climate provisions, including tax credits for electric vehicles and incentives for clean-energy projects, in what the White House says is the largest-ever single investment to address climate change.
“This bill is the biggest step forward on climate, ever,” said Biden, “and is going to allow us to boldly take additional steps toward all my climate goals.”
It would also extend subsidies for Obamacare premiums for three years, inject $80 billion into the Internal Revenue Services’ budget, impose a 15% minimum tax on large corporations and a 1% excise tax on stock buybacks.
But to win over Manchin, Democratic leaders had to give up on some of the party’s more ambitious goals, such as paid family and medical leave for workers nationwide, free pre-K, and an extension of the child tax credit. They also included new support for fossil-fuel projects in the law. Democrats dropped a tax provision that would have targeted wealthy fund managers after Sinema objected.
©2022 Bloomberg L.P. Visit bloomberg.com. Distributed by Tribune Content Agency, LLC.
KCoe Isom has a new name and a new look.
The top 100 accounting and consulting firm based in Salina, KS, announced last week that it has rebranded as Pinion. Why the name Pinion? The firm says:
Under Pinion, we serve as a specialized consulting firm with an unprecedented level of resources, innovations, and solutions on a global scale.
Just as a pinion gear system drives motion, we deliver powerful strategies and thought leadership that drives your business and legacy forward.
The firm, which was founded in 1932, specializes in serving clients in the food and agriculture industry. Pinion said through its advisory services, farmers, ranchers, and landowners can gain expert knowledge and assistance with their financial operations and data management, which helps them to mitigate risk and alleviate some of the many demands they have as farm business owners.
“This is a deliberate and proactive move to accelerate our mission, which is to continue to make a difference in the world we live in by using robust resources to help guide, strengthen, and secure the future of agriculture operations and production,” Pinion CEO Jeff Wald said in a written statement. “We know, in today’s challenging food and agriculture environment, knowledge is power. Pinion is enriching global resources for our farmer, rancher, and landowner customers by revolutionizing information and insights.”
Pinion also provides services to manufacturing, distribution, and community organizations of all sizes, including specialized tax, auditing, and accounting services; consulting on legislative policies and public affairs; leadership development; strategic planning; and ag marketing and sustainability.
The firm was No. 67 in INSIDE Public Accounting’s top 100 firms ranking for 2022, bringing in $80.6 million in revenue during its most recent fiscal year. It has 22 offices in 10 states and the District of Columbia.
Professionals on the Move is a round-up of recent promotions and hiring announcements in and around the accounting profession.
Green Joins CohnReznick as Commercial Real Estate Tax Partner
CohnReznick LLP, one of the leading advisory, assurance, and tax firms in the United States, recently announced that Arkadiy (Eric) Green, CPA,has joined the firm as a tax partner in its Commercial Real Estate practice. Based in Miami, Green has deep expertise in complex transaction structuring and planning involving taxation of real estate partnerships and investment funds, real estate investment trusts, corporate and international entities, and high-net-worth individuals.
Green’s tax experience includes partnership and LLC taxation; real estate investment trusts; acquisition and disposition due diligence; real estate deal structuring and joint ventures; corporate taxation; and inbound and outbound international taxation.
Before joining CohnReznick, Green was a Director of Tax Services for a major public accounting firm in Florida. In this role, he advised a variety of real estate clients and served as a firm-wide subject matter expert in the areas of REIT, real estate, and partnership taxation.
Green earned a BBA in Accounting and an MS in Taxation from the University of Washington – Seattle. He is fluent in Russian.
Wissink Joins CohnReznick as Technology+ Principal
CohnReznick LLP, one of the leading advisory, assurance, and tax firms in the United States, recently announced that Jeffrey (Jeff) Wissink has joined the firm as a principal in its Technology+ practice and will serve as the firm’s Cannabis and Consumer Products Advisory Leader. Based in Chicago, Wissink is a highly knowledgeable strategy, operations, and technology professional with more than two decades of experience as a founder, C-suite executive, and management consultant.
Wissink’s advisory experience spans multiple industry sectors with a heavy concentration in retail, consumer products, media and entertainment, SaaS, education technology, and recurring revenue/subscription businesses.
Before joining CohnReznick, Wissink was the chief operating officer for an early-stage, vertically integrated cannabis company. In this role, he was responsible for new product development/launch, wholesale and retail sales, human resources, FP&A, and information technology, including designing and implementing a scalable system stack, upgrading existing systems, integrations, and internal service levels. Prior to that, Wissink was a 25-year management consulting veteran, having founded, grown, and exited two such organizations.
Wissink earned a BA in Economics from Northwestern University and an MBA in Marketing, Management & Strategy, and Entrepreneurship from Northwestern’s Kellogg School of Management.
KPMG Names Diane Swonk Chief Economist
KPMG LLP, the U.S. audit, tax and advisory firm, has named Diane Swonk – a prominent economist, recognized industry voice and sought-after business advisor – as Chief Economist. Swonk, based in Chicago, will lead the firm’s Office of the Chief Economist, which provides deep insights to clients on the economy and how it impacts strategy, growth and operations.
Swonk joins KPMG from Grant Thornton LLP, where she served as chief economist. She has more than three decades of experience in financial services and consulting and serves as an advisor to the Federal Reserve and its regional banks. Swonk also serves on the U.S. Chamber of Commerce economic advisory board and is a member of the Council on Foreign Relations.
Diane is deeply committed to educational attainment and diversifying the ranks of leadership. She serves on the board of the Posse Foundation in Chicago, an education and leadership program and has worked extensively with the Yale Dyslexia and Creative Institute. She just joined the Harris Policy School Council at the University of Chicago after serving for 15 years on the Council for Booth School of Business, and also serves on the board of the Foundation for the National Association for Business Economics (NABE).
She advises the University of Michigan Economics Department, where she earned her B.A. and M.A. in economics with top honors. She earned an MBA in finance and strategic planning with top honors from the University of Chicago’s Booth School of Business.
FORVIS Welcomes Rob Hartnett as New Partner in Washington, D.C.
FORVIS recently announced Rob Hartnett has joined the firm’s tax practice, focused on serving private equity funds. Based in the metropolitan Washington, D.C. area, Hartnett has more than 25 years of experience providing tax consulting services in the asset management industry specializing in the taxation and structuring of investment partnerships, including private equity funds, venture capital funds and hedge funds.
In his new role at FORVIS, he will work closely with both the national private equity practice and the asset management team to help clients with the strategy, compliance, formation & structuring through to liquidation of funds, state taxes and tax law, U.S. tax withholding, taxation of financial products and fund transactions.
Prior to joining the firm, Hartnett worked in the asset management practice at an international firm in metro D.C. and Denver. He is a member of the American Institute of CPAs, Virginia Society of CPAs and the New York State Society of CPAs. In the D.C. community, he is very involved with the National Multiple Sclerosis Society. Hartnett received a bachelor of science degree in accounting from the University of Delaware and is a licensed CPA in New Jersey, New York, Delaware and Virginia.
AICPA News is a round-up of recent announcements by the American Institute of CPAs and the Association of International Certified Professional Accountants.
AICPA & CIMA wins Professional Body of the Year award at The International Accounting Forum & Awards
The Association of International Certified Professional Accountants was presented with the “Professional Body of the Year” award at the International Accounting Forum & Awards ceremony in London.
Winners of the “Professional Body of the Year” are chosen based on their profound influence within the accountancy industry and beyond. Throughout the past year, the Association supported and protected the global profession, business and economies during the pandemic.
“This award is especially meaningful as it reflects the collaboration, drive and tireless efforts of the entire Association volunteers, members and staff,” said Lisa Jeffries, VP, Global Business Development. “Our goal is to serve as a leader for the accounting profession and to be recognized as such is an honor.”
AICPA Solicits Feedback on CPA Exam Exposure Draft
The AICPA is soliciting feedback on the Exposure Draft of the new design of the Uniform CPA Examination (CPA Exam). Developed through research and input from the profession, the Exposure Draft informs the content and scope of the CPA Exam expected to launch in January 2024. Stakeholders are asked to provide feedback through September 30, 2022.
The Exposure Draft is the result of two years of research conducted through a Practice Analysis to align the CPA Exam to the CPA Evolution initiative. The Exposure Draft includes the draft Uniform CPA Examination® Blueprints, which is the official document that presents content eligible for assessment on the Exam, based on the knowledge and skills required of a newly licensed CPA.
Under the CPA Evolution licensure model, all candidates will be required to take three Core sections: Financial Accounting and Reporting, Auditing and Attestation and Taxation and Regulation. Then, each candidate will choose a Discipline in which to demonstrate additional skills and knowledge: Business Analysis and Reporting, Information Systems and Controls and Tax Compliance and Planning. Regardless of a candidate’s chosen discipline, this model leads to a full CPA license.
Stakeholders are invited to share their thoughts on the Exposure Draft via email to email@example.com by September 30, 2022. All feedback will be considered when finalizing the design of the 2024 Exam.
A final report, including the final CPA Exam Blueprints, will be published in early 2023, well in advance of the expected launch of the CPA Evolution-aligned CPA Exam in January 2024.
More information on the CPA Exam is available online and updated regularly.
AICPA, NC State release U.S. ERM report
A new report issued today by the AICPA and North Carolina State University’s Enterprise Risk Management (ERM) Initiative found that 65 percent of senior finance leaders agree that the volume and complexity of corporate risks have changed “mostly” or “extensively” over the last five years. Rapidly changing events, including the war in Ukraine, ongoing talent crisis, soaring inflation, lingering supply-chain disruptions, ransomware threats and a host of other risk triggers are leading to significant disruptions impacting an organization’s business model. Despite these complexities of risks, only a third (33 percent) say their organizations have complete ERM processes in place, and just over a quarter (29 percent) rate their organization’s overall risk management oversight as “mature” or “robust.”
The 2022 State of Risk Oversight: An Overview of Enterprise Risk Management Practices includes insights from a survey of 560 U.S. CFOs and senior finance leaders conducted in winter 2022. The survey measured finance-related executives’ assessments of the level of maturity in their organization’s proactive management of these risks through adoption of enterprise risk management (ERM) processes. “
The report found indication that adoption of ERM processes in the U.S. is on the rise. Over the last 13 years, the percentage of organizations that claim to have complete ERM processes in place has increased 24 points, from 9 percent to 33 percent, but that still suggests a majority of entities do not.
Additional key findings from the report include:
- Most executives do not believe their organization’s risk management processes provide strategic advantage (63 percent state no or minimal advantage), with less than half (45 percent) positioning risk management to pinpoint emerging strategic risks.
- A majority of boards of directors are calling for more senior executive involvement in risk oversight, with three-fourths (74 percent) signaling there will be significant changes to their existing continuity and crisis management planning.
While providing extensive data points about the state of risk oversight practices that organizations can use to benchmark their efforts, the report also offers a list of questions that executives and boards can use to assess their organization’s risk readiness and to help pinpoint tactical next steps for strengthening risk management processes. The questions cover nine areas including:
- Drivers for enhanced risk management
- Overall state of risk management maturity
- Strategic value of risk management
- Impact of culture on risk management
- Assignment of risk management leadership
- Risk identification and risk assessment processes
- Risk monitoring processes
- Board risk oversight structure
- Board reporting and monitoring
The report also includes a number of calls for action to help executives and boards identify actions they can take to enhance the strategic value of their risk oversight. The full report can be found on both the AICPA and NC State websites at: https://www.aicpa.org/topic/management-accounting-and-finance/enterprise-risk-management or https://erm.ncsu.edu/library/article/2022-risk-oversight-report-erm-ncstate-lp
AICPA Recognizes Six Individuals with 2022 Outstanding Young CPA Award
The AICPA has recognized six practicing CPAs with the 2022 AICPA Outstanding Young CPA Award in Honor of Maximo Mukelabai. The announcement will be made on the Young CPA Network Facebook page.
The annual award, now in its eleventh year, recognizes CPAs under age 40 who personify a commitment to the profession, as demonstrated through successful practices and involvement in and contributions to the interest of the accounting profession. This is the second year in which more than one person was selected for the honor.
Recipients of the 2022 Outstanding Young CPA Awards are:
David Almonte, CPA, CGMA, Financial Reporting & Analysis Senior Manager, Amica Mutual Insurance Company, Lincoln, R.I.
David is a 2013 graduate of the AICPA Leadership Academy. He has since served on several national and local committees and boards, in addition to creating a nonprofit in 2017. His passion for creating a more inclusive, dynamic and better prepared professional environment is evident throughout his life.
Favor Lee, CPA, Director of Business Development at EisnerAmper, Dallas, Texas
Favor has been an active member of the Texas Society of Certified Public Accountants TXCPA and TXCPA Dallas for the last several years. As the current business & industry (B&I) committee chair for TXCPA Dallas she has demonstrated resourcefulness and agility during the COVID pandemic, being able to pivot from larger, less frequent CPE events to more frequent
Dr. Adrian L. Mayse, CPA, Department Chair and Associate Professor of Accounting at Howard University, Washington, D.C.
Dr. Mayse has shown his dedication and passion for growing the accounting profession throughout his career. He is devoted to bringing the accounting profession to the forefront for children and young adults and has even published his own children’s book “When I Grow Up, I Want To Be… An Accountant.”
Kenneth Omoruyi, M.Tax, EA, CPA, Managing Partner at CKO CPAs & Advisors, Houston, Texas
Kenneth has demonstrated passion and leadership throughout his career. His passion and mission are to help others achieve financial literacy as well as helping marginalized communities achieve financial freedom. He uses education to help empower people by informing them about areas of tax planning that can help them achieve their financial goals.
Alexandria Romero, CPA, MPAcc, Chief Financial Officer Pueblo City-County Library District, Pueblo, Colo.
Alexandria is a 2019 graduate of the AICPA Leadership Academy. Throughout her career she has served in many roles in which she has shown leadership, accountability and agility. She has served as Vice Chair of the Young Member Leadership Committee and received numerous awards and recognitions for her work and volunteer efforts.
Dr. Sean Stein Smith, CPA, CMA, Professor at City University of New York – Lehman College, New York, N.Y.
Dr. Smith has received many awards and recognitions for his volunteer efforts. He has used his professional abilities to help motivate and educate the future leaders of the profession. He believes that through volunteering and speaking about the profession in an open a collaborative environment we can enrich ourselves and others.
The AICPA created this award to honor the legacy of Maximo Mukelabai, a member of the inaugural class of the AICPA Leadership Academy and the youngest chair of the North Carolina Association of CPAs Board of Directors. Tragically, his life was cut short at age 36.
The eligibility criteria to apply for the Maximo Mukelabai award are:
- Holding the CPA license and being between the ages of 22 and 40
- Being a regular voting member of the AICPA
- Promoting the CPA profession
- Volunteering in activities that advance the accounting profession
- Participating in community-based organizations that improve people’s lives
To be considered for the award, candidates submitted applications and details on their volunteer history, along with professional reference forms from peers, employers, and state CPA societies. A task force of young CPAs then reviewed all qualified nominations to determine the winners.
FloQast, a provider of accounting workflow automation software created by accountants for accountants, recently released the results of its latest survey, Controller’s Guidebook: Burnout in Accounting – Understanding the Problem, Leveraging Solutions. Using the Maslach Burnout Inventory in an accounting setting for the first time, the survey revealed the extent that burnout has impacted accountants, as well as the impact that burnout has on accounting processes.
The survey was conducted online in March of 2022 and includes the responses of 204 accounting and finance professionals, with participants varied in both position and experience, with firm size varying as well.
For the survey, FloQast and UGA utilized the Maslach Burnout Inventory (MBI), the leading measure of burnout; validated by more than 35 years of research. For the first time, this measure has been used to evaluate accountants emerging from the closing process on a 100-point scale. The survey covered three major areas of burnout: Emotional Exhaustion (EE), Depersonalization (DP), and low sense of Personal Accomplishment (PA).
Here are a few of the key findings of the survey:
- Almost all (99%) of accountants experienced some level of burnout with an average score of 47 points.
- Of the accountants who experienced burnout, 53% were at or above the average score with 24% of them reporting medium-high or high levels of burnout (60+ points).
- Only 8% of participants scored in the low range (<20 points) and only 1% had a score below 10.
- The burnout scores are significantly correlated with the disruption of an accountant’s life during the financial Close as well as their confidence in its accuracy.
- 81% of accountants had at least one month in the past year where the Close disrupted their personal life.
- 85% of participants reported having to re-open the books in at least one month during the last year to fix errors.
- Almost half (49%) of respondents had to re-open the books in three or more months.
New Solutions to Overcome Burnout:
The FloQast study also uncovered three key components of modernizing the Close process that would provide the most benefit to accounting professionals:
- The introduction of an integrated solution
- Better training for existing tools and resources
- Reducing the number of tools used to a single solution
Here’s what Mike Whitmire, CEO of FloQast had to say about the survey and its findings.
“The survey results show that burnout in the accounting industry has become too great of an issue to ignore. With fluctuating economic forecasts, burnout will become even more prevalent unless we act now. Fortunately, solutions exist, including integrating automation with accounting processes, implementing better training for existing tools, and consolidating the overall number of tools used. We were eager to explore these concepts through our recent survey with the University of Georgia and hope the findings significantly help accountants reclaim their work/life balance by modernizing the stressful month-end Close and organizations’ overall operations.”
FloQast plans to continue research into the accounting industry throughout 2022, exploring current challenges within the accounting field as well as offering suggestions for best practices.
By Tim Roden.
Sales tax management – and the associated sales tax compliance responsibility – has never been easy. With technology continuing to quickly evolve, small- to medium-sized businesses are feeling increased pressure to stay on top of those requirements without overlooking other key company priorities.
When employees are tasked with maintaining sales tax compliance, but are neither trained tax professionals nor have sales tax as a core job responsibility, a toll will be taken on businesses and workers alike.
Sovos surveyed 250 individuals with sales tax management/administration responsibilities at their organization. Nearly 80% of respondents reported that they work at companies earning less than $10 million or between $10 million and $25 million in annual revenue. Respondents expressed concern and frustration in current processes, with some wondering if it may be time to seek other employment.
However, utilizing the right sales tax technology can help ease the compliance burden on employees in a few key ways.
Efficiently meet evolving sales tax requirements
As of December 31, 2021, there were 22,688 political subdivisions (states, counties, cities) in the United States. Of those political subdivisions, sales tax currently exists in 12,472 of those locations. This includes 44 states (along with Washington D.C. and Puerto Rico), 2,215 counties, 7,883 cities and 2,328 districts. That is a lot to keep track of – especially if SMBs are utilizing manual workflows.
Additionally, Sovos tracked 523 sales tax changes from July 2021 to April 2022. For July 2020 to June 2022, there were 640 sales tax changes. Rules and rates can change quickly, and when paired with greater oversight and enforcement, businesses selling across multiple jurisdictions will likely have a more difficult experience.
Less than one-third of respondents said their business was able to update sales tax in hours, which could be a long time in the sales tax world. Changing regulations and even sales tax holidays can all put extra pressure on organizations to keep pace.
Losing a sale/customer because transactions cannot be correctly processed and incorrectly processing a transaction with the wrong rates (and the potential fallout) were respondents’ top organizational fear when it comes to sales tax.
This can put companies in a tricky situation: do you risk losing a sale because you cannot account for the most current sales and use tax or do you process the sale anyway, even if you know the sales tax is wrong? If you do the latter, it could lead to hefty fines or audits. Nearly 80% said generating an audit or facing a financial penalty was their biggest fear if there is a mistake when remitting sales tax. And 18% reported that losing the confidence of their manager or getting fired was their number one worry.
Prioritize and streamline workflow
Our survey found that 83% of those surveyed said automating their organization’s tax management process would make them happier in their current role. The Great Resignation is very real, and the current job market could be an opportunity for employees to find jobs that let them leave their least favorite responsibilities behind.
Furthermore, 62% of respondents stated their organization adopted new technology or systems in the past two to three years to combat the growing complexity of sales and use tax. Organizations may be facing a lack of training on new systems or a lack of effectiveness the new systems have in managing the complexity of sales and use tax.
The 2018 South Dakota v. Wayfair, Inc. Supreme Court decision greatly expanded organizations’ nexus footprints. States are still scrambling to properly meet the new regulations to maximize income owed. Additionally, regulators want to close the tax gap and there is increased investment in digitization to do so. Now more than ever there are the technological capabilities to expedite notices, audits, penalties and fines. SMBs are not immune from that scrutiny and businesses need to ensure that their employees can meet the challenge without becoming overwhelmed.
This is when cloud-based sales tax solutions can benefit. Real-time updates help ensure compliance, giving businesses the peace of mind that regulation changes are always accounted for.
Lessen the reliance on IT
Utilizing the right sales tax technology can also help businesses be less reliant on their IT teams. Over half of those surveyed said they are seeing a strain on IT and other resources, with 13% reporting that sales tax obligations lead to a stressful workplace and employee churn. Additionally, 35% of respondents said that increasing sales tax complexities distract from core business priorities.
The majority of SMBs can benefit from a new approach to sales tax technology – approximately two-thirds of those surveyed said their current sales tax management approach requires some level of IT assistance. Businesses will run more efficiently when all departments can focus on their main goals, and not be spread too thin.
But is it really that bad? Our survey also asked what employees would rather be doing than tackling sales tax management:
- 63% would rather go grocery shopping
- 51% would rather do laundry
- 39% would rather go to the dentist
- 33% would rather sit in traffic
While running errands and doing household chores are likely not to disappear anytime soon, neither are sales tax compliance requirements. But there are ways to eliminate the latter. When internal teams can automate sales tax calculations, efficiently track sales tax rates and rules and properly manage exemption certificates, it will reduce internal pressures and improve overall business efficiency. Working with the right partner can shift the regulatory compliance burden off your employees, allowing them to refocus on your core business priorities.
Tim Roden is solutions principal, sales and use tax, at Sovos.