Sam Allred, Shareholder Anderson ZurMuehlen

• The best firms will move away from compensation parity as they develop the courage to recognize and reward their best and brightest employees. Firms are waking up to the fact that treating everyone equally is a recipe to lose your best people.  So to keep their best people, firms will recognize that treating them special is the best for the firm.
• Getting serious about leadership.  Firms will stop kidding themselves regarding weak leadership.  There will be a revolt in those firms that are stagnant or have a poor track record regarding results. There will be a new wave of managing partners that will bring energy, vision and leadership to challenged firms.
• Many firms will embrace the concept of part-time partners.  While this was not popular in the past, it will take off as firms want to keep their star personnel.  Today’s entrepreneurial employees and owners may not want to work the 2,400 to 2,700 hours that the firm may see as being standard.    (RK: Steve Erickson added that firms will find a way to take two Half time partners and produce results that are greater than the one FTE.)

 Steve Erickson, CPA Consultant

• Some well managed firms will WIN the people battle.  Those firms will address the nagging issues of career couching, promotions and money accountability.  Bad behavior will not be tolerated.
• Accounting firms at the crossroads.  With the continuing staffing crisis, we will have to use non-CPAs to do the work that can be done by non-CPAs and leave the higher level work to those with higher billing rates.
• Associations become strategic alliances: 45% of all our efforts are non-revenue generating so firms have to look at ways to reduce CPA time spent on non-essential items.  What will happen is that the CPA Associations will have to provide more support for administrative needs to remain viable in the future.

Robert J. Gallagher, CPA President

• The tax shelter issue raises its ugly face again.  Sometime in May or June you will see another round of law suits hit the large, and even some of the regional firms.  This will cause adverse publicity for CPA firms.  Also with all these mid-size firms doing SEC work, there will be more litigation as some of the firms drop issues through the cracks.
• Retirement formulas and ages will need to be revisited: More partners will be retiring in next ten years than the last thirty.  Many of upcoming managers and seniors have not made business development a priority and are lacking the entrepreneurial skills needed to thrive today so firms will have to revisit their owner agreements.  Succession planning will become an important component of the owner review process.  Multiples will transition to different levels such as multiple one, two and three instead of all multiples being three times.  In today’s knowledge environment, people will be able to work longer and 68 will be the new standard.
• More international professionals will be recruited by medium size firms to help the staffing problem.  Shortage of employees will only continue so you can expect to see us bring in more international accountants to work within our firms here in the USA.
• Medium size firms will make a concerted effort to focus efforts on transferring firm knowledge and experiences to the next generation of personnel and capturing it for reuse.  ITPNA agrees wholeheartedly with Bob in believing that knowledge management and reuse will be a key differentiator in firms in the future.

James C. Metzler, CPA

• Segmentation of private company practice in the profession will dramatically heighten.  Should there be a second set of GAAP for private companies? The AICPA has set up committees to evaluate this along with FASB.  As we look at independence, it will become more important and the core of the profession that will be challenged.  IFAC exposure draft could have an impact as members have vowed to have independence standards that are at a minimum, as strong as IFAC.  All audits would require partner rotation which would put the 30K of smaller firms out of audit business if they only have one partner.    Mark Taylor, PHD Creighton University calls for integrity and reliability, rather than independence, be the cornerstone of the profession.
• Complexity will rise as a major issue in the profession and the market place. It is in the mind of the President according to a dinner between President Bush and Barry Melancon.  All our financial rulings have created financial statements that are harder to understand and read properly.  Jim feels this has an impact on firms as well, as it is difficult to train our personnel as well and keep them up to speed on all the statements and standards.
• XBRL will be adopted as the official language of accounting and permeate the entire financial reporting spectrum.  All chart of accounts would be standardized and transactions tagged consistently such that everyone would rely on the same formats and to transfer data seamlessly in an electronic format rather than re-keying.  Derivative applications will emerge to bring back computer aided auditing and modules.

 Jeffrey S. Pawlow, CEO

• Adopting professional firm management to overcome SAG (Skill and Availability Gap).  Accountants are moving away from being a profession to becoming an industry.  Firms have had very little dedicated formal education in strategic management, succession, business development and other managerial skills.  As individuals become more successful they tend to work more “in” the business than “on" the business, so the charge hours take over and we spend more time doing work instead of delegating it.  This will drive firms to bring in outside professionals to run parts of their practice.
• Segmentation of profession in “knowledge” and “compliance” industries.  The knowledge portion of the business requires your skills, which can not be easily outsourced and would actually be very difficult to have someone else do.  The compliance portion of the work that does not require your skills, will become more of a commodity and will be challenged by the outsourcing companies, moving work overseas at a much lower cost.  Margins will be very narrow so firms that want to do this type of work will need to have a huge pipeline to be profitable.
• Firm value will be based on the ability to attract and retain knowledge economy employees; culture becomes the primary differentiator within firms.   Employees will become more free agents and be able to negotiate their work environment.  If you can’t present a compelling package to keep them and the combined forces don’t add up to more than the two parties, both the owner and employee will question why they are in this environment.

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