AICPA/PCPS Update: Top Issues for Firms Jason Deshayes, CPA Robert F. Butler CPA, P.C.

Private Companies Practice Section  What issues keep practitioners up at night?  What issues are shaping the future of the profession?  What are the priorities?  What are the opportunities?  What are the solutions to the challenges? Practical solutions to help your practice RUN SMOOTHER. PCPS: Understanding the Issues

Private Companies Practice Section 2009 PCPS CPA Firm Top Issues

Private Companies Practice Section 2011 PCPS CPA Firm Top Issues

Private Companies Practice Section  Keeping up with tax laws and accounting standards, retention & growth, fee pressure and seasonality top the 2011 lists  Slight shift in focus from client retention to client acquisition between 2009 and 2011  Human capital no longer the top issue — but still an issue — which is a temporary shift  Firms with five professionals or fewer are less focused on succession, yet the most vulnerable PCPS CPA Firm Top Issues Bottom Line

Private Companies Practice Section Keeping Up With A&A Standards

Private Companies Practice Section  PCPS Technical Issues Committee (TIC) Alert  The TIC monitors technical developments that could significantly affect private companies and the firms that serve them  When standards are written, the TIC submits informed comments and recommendations in support of small-to-medium-size firms  Stay abreast of TIC activities Keeping Up With A&A Standards — TIC Alert

Private Companies Practice Section Keeping Up With A&A Standards  Technical Toolkits  Clarified Auditing Standards (effective December 15, 2012!)  SSARS 19 Toolkit

Private Companies Practice Section Keeping Up With A&A Standards — Clarified Auditing Standards Toolkit  Available at aicpa.org/pcps/castoolkit

Private Companies Practice Section Keeping Up With A&A Standards — PEEC/ARSC Changes to Compilation Standards  Changes definition of a compilation to “read and report”  Changes preparation of financial statements to a non-attest service

Private Companies Practice Section Keeping Up With A&A Standards — Changes to PEEC/ARSC Compilation Standards  Resources available at: Interest Areas - Financial Reporting Center - Compilation Services

Private Companies Practice Section Keeping Up With A&A Standards — New Mandatory Firm Rotation Resources  Talking points developed for practitioners to use in discussing mandatory firm rotation concerns  aicpa.org/pcps/mfr

Private Companies Practice Section Keeping Up With A&A Standards — Private Company Financial Reporting  Private Company Council  Financial Reporting Framework for SMEs  Privately held small and medium enterprises  Less complicated, less costly  U.S. GAAP financial statements not needed  FAF supports as “important and complementary”  Exposure Draft — October 2012 aicpa.org/FRF-SMEs

Private Companies Practice Section Keeping Up With Changes and Complexity of Tax Laws

Private Companies Practice Section Keeping Up With Changes and Complexity of Tax Laws  PCPS Health Care Reform Toolkit  Strategy Checklist  Client brochures (Business and Individual)  Client PowerPoint template  All customizable

Private Companies Practice Section Keeping Up With Changes and Complexity of Tax Laws  Fiscal Cliff — uncertainty in unresolved tax issues aicpa.org/fiscalcliff  AICPA’s Tax Section  Total Tax Insights totaltaxinsights.org

Private Companies Practice Section Client Acquisition and Retention

Private Companies Practice Section Client Acquisition and Retention Changing Landscape Before Transactional Today Advisory $ $$

Private Companies Practice Section Client Acquisition and Retention  Move Up the Client Value Pyramid Client Value Pyramid Controllership Services Monthly close, financial statements, cash flow analysis Virtual CFO Budget, business planning, business modeling, etc.. Transactional Services Tax, write up, bookkeeping, A/P, payroll, etc.. More CPAs are becoming outsourced CFOs for their business clients

Private Companies Practice Section Client Acquisition and Retention New Service Opportunities  Attestation engagements — Statements of Control (SOC) reports  Consulting & advisory — Trusted Business Advisor SM  State and local tax (SALT) compliance  Business process outsourcing — cloud computing  Forensic Services  Financial Services

Private Companies Practice Section Client Acquisition and Retention Trusted Business Advisor (TBA) 2.0 Workshop and PCPS TBA Consulting Tool box  Make knowledgeable and confident presentations to clients  Demonstrate and price unique value  Ask the right questions to understand client concerns and priorities  Use core skills and evolve as clients’ strategic partner  Build strong relationships and earn clients’ trust

Private Companies Practice Section Client Acquisition and Retention YOU are the Value Online Video Workshop  Differentiate yourself from other CPAs so you can confidently present yourself to clients in a unique way.

Private Companies Practice Section Client Acquisition and Retention Client Advisory Board Toolkit Gain perspective and hear directly from clients about:  Client expectations  How the firm can improve  How the firm can cross-sell and add to its service offerings

Private Companies Practice Section Client Acquisition and Retention How CPAs Grow Their Practice  Relationship — stronger bond with clients  Know your value and how to articulate it  Manage seasonal lows and revenue generation  Identify new services mix  Plan to make money

Private Companies Practice Section Client Acquisition and Retention PCPS Social Media Toolkit Toolkit includes:  Action Plan  Guidance — what, why and how  Sample policy, with policy writing tips  Guides for LinkedIn, Twitter and Facebook  Guide for blogging

Private Companies Practice Section Client Acquisition and Retention AICPA Tax Practitioner’s Toolkit – Communicate Your Value  Preparing Your Firm to Understand and Articulate the Value of Your Tax Services  Implementation checklist  CPAs vs. unlicensed tax preparers PowerPoint template  Engaging With Clients to Stay Top of Mind  Customizable client-facing brochures and PowerPoints  Tax blurbs for websites or newsletters  Promoting Your Firm to Attract New Clients  Print ads, Google AdWords

Private Companies Practice Section Fee Pressure & Pricing of Services

Private Companies Practice Section  Demonstrate and communicate value  Reinvent the engagement  Step down service  Push work back to client  Use retainers  More and more firms are successful with retainers  Straight talk from the start  Consider specific fee language in your engagement letter  “The fee will not exceed $XXX”  “This service will cost $XXX at a minimum”  Evaluate your clients … fire “D” clients  Utilize the Client Evaluation Tool  Bill timely and demonstrate the value delivered Fee Pressure & Pricing of Services

Private Companies Practice Section Fee Pressure & Pricing of Services

Private Companies Practice Section Human Capital

Private Companies Practice Section Partner Accountability and Unity Partner Accountability and Unity Guide Leadership Attributes Assessment Governance grid sample Finding Qualified Staff Team Recruitment Action Plan Sample Recruitment Advertisement Firm Needs Assessment Interview questions Value proposition for joining firm Retaining Qualified Staff Firm Competency Model Exit interview template New hire checklists and agendas Mentoring guide Performance management templates Tools for Human Capital Concerns: Human Capital PCPS Human Capital Resource Center

Private Companies Practice Section  Highlighted tool – CPA Firm Competency Model Human Capital PCPS Human Capital Resource Center

Private Companies Practice Section  Highlighted resource – PCPS Human Capital Center Toolbox Series Human Capital PCPS Human Capital Resource Center

Private Companies Practice Section Succession Planning

Private Companies Practice Section 2012 PCPS Succession Survey 54% without written plan Leadership development tops challenges 44% of firms in M&A talks Few managing partners have ability to hold partners accountable Multi- Owner Firms 94% without Practice Cont. Agreement 39% intend to merge or sell Half expect to sell $1 for $1 of billings, actual is likely much less Sole Owners

Private Companies Practice Section 2012 PCPS Succession Survey (Multi-Owner Firms) PCPS Succession Survey

Private Companies Practice Section 2012 PCPS Succession Survey (Sole Owners) PCPS Succession Survey

Private Companies Practice Section Recently Updated! PCPS Succession Survey

Private Companies Practice Section 3-year written plan Identify exit strategies Practice continuation agreement Evaluate rates/clients Leverage technology Sole Owners 3-year written plan Improve operating policies and procedures Develop people Strong governance with robust compensation framework Define rules for retiring partners Multi-owner Firms Succession Planning — Best Practices

Private Companies Practice Section Firms Today

Private Companies Practice Section  Covers key practice management issues and enables firms to:  Benchmark management policies and financial results  Gain strategic insights and guidance The National MAP Survey’s rich history makes it the leading benchmarking survey for CPA firms. See how your firm measures up using targeted and relevant practice management benchmarks including billing rates, chargeability ratios, compensation and other key performance indicators. aicpa.org/pcps/MAP2012 Firms Today 2012 PCPS/TSCPA National MAP Survey

Private Companies Practice Section  Firms are recovering  Not quite back to 2008 levels, but better than 2010  A majority of firms experienced year-over-year revenue growth in 2012  Partner compensation is on the rise after the belt-tightening of the downturn  Indications that larger firms are adding new partners for retention and in anticipation of retirements Firms Today 2012 PCPS/TSCPA National MAP Survey

Private Companies Practice Section Firms Today 2012 PCPS/TSCPA National MAP Survey

Private Companies Practice Section Firms Today 2012 PCPS/TSCPA National MAP Survey

Private Companies Practice Section What’s Next?  Download the results at aicpa.org/pcps/maps2012  Use the comparative data to pinpoint differences that are of greatest concern to your practice  Compare your firm’s figures  What stands out?  What areas need focus for improvement?  Implement changes  Align with strategic plan Firms Today 2012 PCPS/TSCPA National MAP Survey

Private Companies Practice Section Firms Today What We are Seeing  Fee pressure  Clients uncertain — sitting on cash — stuck in neutral  Staff turnover has returned — primarily to industry  Profitability — flat or up a little  Merger activity increasing — horizontal

Private Companies Practice Section Firms Today What We are Seeing  Signs of recovery in certain areas and growth in some industries  Firm rotation — issue with NFPs and government entities  Identify theft for IRS refunds is epidemic  Technology — cloud, security, privacy What are you experiencing?

Private Companies Practice Section Large Firm Networking Group Large Firm Networking Group Emerging Partner Forum Emerging Partner Forum Human Capital Networking Group Human Capital Networking Group TBA Alumni PCPS Communities Medium Firm Networking Group Medium Firm Networking Group Small Firm Networking Group Small Firm Networking Group Sole Practitioner’s Virtual Network Sole Practitioner’s Virtual Network Women in the Profession Women in the Profession

Private Companies Practice Section aicpa.org/PCPS 800.CPA.FIRM Thank You! Please Contact Us!

Private Companies Practice Section Questions?