CPA Leadership Report

Expanding Your Knowledge While Conserving Your Time

Vol. 10 No. 3, March 2012

CPA Leadership Report is the monthly review of the most important management and leadership

articles in the accounting press. It includes electronic links to publishers’ websites, where you

can find the original complete articles. Our editors review more than 35 publications every

month.

Members of CPA Leadership Institute can access the reviews below. Nonmembers can become

familiar with CPA Leadership Report by reading the articles marked with an *.

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Practice Management

Being Accountable for Accountability . . . Continued

What does accountability look like? Bill Reeb provides some answers.

Public Practice

*Leading Outside the Box

Consider the differences between conventional and unconventional leaders and thinkers.

Partner Insights

Meet the Challenges of the Year Ahead

What are your critical challenges for 2012, and what can do you about them?

CPA Trendlines

Six Steps Toward a Clear Vision for Your Firm

When firm leaders are unable to formulate and articulate a clear vision, their ability to make

decisions and drive change becomes hampered.

AICPA CPA Insider

Today’s Partners Must Be Accountable

Tips for clarifying partner expectations and measuring partner performance.

CPA Practice Management Forum

The Administrator’s Key Role

How administrators can play a critical part in your firm’s success.

Accounting Today

Is Your Firm a Good Place to Work?

A look at trends among firms ranked at the top of 2011’s “Best Firms to Work For” list.

The Marc Rosenberg Blog

How to Build a Strong Partnership

August Aquila discusses seven characteristics of a great partnership.

CPA Trendlines

Engagement Letters: Are You and Your Clients on the Same Page?

Steve Erickson offers tips for improving the engagement letter process.

CPA Trendlines

Are Poor Pricing, Billing, and Collection Practices Hurting Your Business? The author offers several suggestions for improving these practices.

Journal of Accountancy

Take the Lead

Rita Keller challenges firms to do less comparing with other firms and more innovating.

Solutions for CPA Firm Leaders

Succession Planning and M&A

Designing a Successful Partner Retirement Plan

Without proper planning, a firm is left directionless.

Partner Insights

When Should Your Partners Retire?

Try a retirement timeline exercise.

Solutions for CPA Firm Leaders

Marketing

Is Paid Search a Mistake in the Consulting Profession?

Ed Kless thinks it leads to poor customer acquisition.

VeraSage Institute

*Getting Everyone Involved in Business Development

It’s hard to make it “rain,” but anyone can make it drizzle with the proper professional support.

RedZone, Play of the Month

Client Services

Tone at the Top: Management’s Role in Accounting Fraud

Recent studies show how focusing on the CEO and CFO can help clients prevent and detect

fraud.

The CPA Journal

Identifying a Successor Who Has What it Takes

What qualities should your client’s successor possess?

AICPA CPA Insider

Find the Right Buyer for Your Client’s Business

Pros and cons of selling a business to a key employee.

AICPA CPA Insider

Advising Clients on Retirement

Are you clients prepared to retire?

AICPA CPA Insider

Surveys

*CPA Firm Revenues: Has the Bleeding Stopped?

Highlights from the Rosenberg MAP Survey and tips for putting the results to work in your firm.

Public Practice

Resources

Ron Baker’s Best Business Books of 2011

Ron Baker reviews the best business books he read last year.

VeraSage Institute

Ron Baker’s Best . . . Books of 2011

For those of you who are “over reading business books,” Ron Baker reviews his 10 favorite

books from 2011.

VeraSage Institute

Practice Management

Being Accountable for Accountability . . . Continued

Source: Public Practice

In his previous column [http://goo.gl/BwdqX], Bill Reeb commented that accountability is one of

the top issues for CPA firms today, but few firms do it well. In this column, Reeb examines

“what accountability might look like.”

For partners, Reeb explains, accountability means “having a system in place that rewards

partners for following processes and procedures, living up to their roles and responsibilities, and

implementing the firm’s strategy.” Ideally, positive reinforcement is the primary motivator, but

there should also be penalties for poor performance.

Partners should know precisely what they are accountable for, there should be an objective

component to help measure performance, and the firm’s expectations should be consistent over

time (rather than changing to match a partner’s performance). Partners should be empowered to

control how much they earn by deciding whether they wish to meet the firm’s minimum

standards or exceed them.

The article lists common examples of objective criteria (both financial and nonfinancial) used to

define partner performance expectations. It also discusses subjective criteria and the need for

“objective support tools” to gauge success in these areas.

For the complete article, read “Accountability for Performance Management (Column 2).”

[http://goo.gl/BnOyN]

From Public Practice, Texas Society of CPAs, February 2012, www.tscpa.org.

Leading Outside the Box

Source: Partner Insights

The following includes excerpts, reproduced with permission, from an article by Eric J. Romero.

Unconventional leaders are fanatical about their products and services, rather than about their

profits, yet they tend to lead the most profitable firms in their industries. Unconventional leaders

are unconventional thinkers, but what does that mean? Below is a comparison of conventional

and unconventional thinkers.

Conventional thinkers:

Avoid risk

Say things like “This is just the way we do things”

Accept things as they are

Avoid expressing their ideas unless agreement is likely

Follow trends

Continue doing things the same way

Value agreement, as well as consistency

Have a negative perception of differences

Do not question why things are the way they are

Value established knowledge

Unconventional thinkers:

Strive for improvements or even perfection

Think and act differently from most people

Re-evaluate everything

Integrate disparate ideas and knowledge into new ideas

Are not restricted by other people

Like change

Are willing to try new things

Believe that constructive conflict leads to a better understanding of issues

Openly express what is on their mind

Value thinking and creating knowledge

To become a more unconventional thinker:

Try new things: music, food, activities, travel

Question everything

Tell people what you think

Debate with people who disagree with you

Talk to people who are totally different from you

Try new ideas

View failure as part of the learning required to try new things

Don’t take yourself too seriously

For the complete article, read “Lead Unconventionally and Beat the Competition.”

[http://goo.gl/jq5fC]

From Partner Insights, Aquila Global Advisors, LLC, February 2012, www.aquilaadvisors.com.

Meet the Challenges of the Year Ahead

Source: CPA Trendlines

The following is adapted, with permission, from an article in CPA Trendlines.

What are your critical challenges for 2012, and what can do you about them? A number of the

profession’s leading lights have been sharing their thoughts with Accounting Today. Here’s one:

Dave Sibits, CBIZ Financial Services

Accounting firms are facing:

1. An aging of leadership at the partner level.

2. A continued erosion of pricing in service areas, due primarily to a challenging business

and economic climate.

3. Competition for the best and brightest talent, especially among top firms seeking to add

specialty expertise or employees to groom for the future.

Some steps we have taken to meet these issues include 1) development of a robust training

curriculum for our managers and 2) continued expansion of our Emerging Managing Director

Academy – a multifaceted training program that readies our most talented people for the move to

the managing director role, and for the changes and responsibilities associated with it. In

addition, we continue to improve our process for the transition of client relationships as

managing directors reach the end of their professional careers.

Also, our firm has moved toward greater specialization. This led us to the formation of five

national niche practices – construction and real estate, not-for-profit, ERISA, forensic and

financial services, and specialty tax consulting.

For the complete article, and links to other 2012 strategies, read “Strategy 2012: Leadership,

Pricing, Competition.” [http://goo.gl/IZ60L]

From CPA Trendlines, December 22, 2011, http://cpatrendlines.com.

Six Steps Toward a Clear Vision for Your Firm

Source: AICPA CPA Insider

The following includes excerpts, reproduced with permission, from an article by Jennifer Wilson.

When firm leaders are unable to formulate and articulate a clear vision, their ability to make

decisions and drive change becomes hampered. When you develop a vision for your firm, you’ll

benefit from increased inspiration and engagement, clarity of direction, definition of scope, and

enhanced unity. Consider taking these steps:

1. Designate a vision committee. Include partners, younger up-and-comers, and key

administrative managers.

2. Establish ground rules. No subject is off limits.

3. Establish scope for the vision. Develop a vision of where your firm will be in five years

in terms of differentiation, industry and service specialties, size, leadership and

management, M&A activity, and so on.

4. Do your homework prior to formulating your vision. Conduct competitive analysis in

each of your key markets and undertake an honest SWOT (strengths, weaknesses,

opportunities and threats) analysis.

5. Think big, take risks and make tough decisions. Developing a vision requires a

willingness to dream about the future and identifying a stretch outcome through which

your team can get very energized.

6. Integrate your vision plan into the day-to-day business. Communicate your vision and

provide ample time for questions and feedback.

For the complete article, read “Does Your Firm Have a Vision for Its Future?”

[http://goo.gl/QDPKd]

From AICPA CPA Insider, January 30, 2012, http://www.CPA2biz.com.

Today’s Partners Must Be Accountable

Source: CPA Practice Management Forum

According to August Aquila, firms cannot afford to have underperforming partners in the current

economy. To improve partner accountability, firms should develop expectations or written

guidelines clarifying partner responsibilities. Whether or not partners are performing up to

standard, Aquila says, is an issue of firm survival.

Firms should create standards for partners in four areas:

1. Ability to develop business. Partners should be involved in marketing for the firm,

personal marketing, cross-selling, and bringing in new business.

2. Relationships with clients. Partners should adhere to the firm’s client acceptance policy;

be willing to transfer clients to members of the team who are best-suited to serve those

clients; and be committed to exceptional, proactive customer service.

3. Strength as a business manager. Partners should be able to meet standards of client

profitability, timely billing and collecting, leverage, and billable hours.

4. Ability to lead. Partners should take part in firm-wide social activities, be willing to

invest in the growth of individual team members, be able to trust and be trusted, and have

a greater concern for the firm as a whole than for themselves.

To ensure that partners meet their responsibilities, firms must 1) clarify partner expectations, 2)

measure whether those expectations are being met, and 3) create a direct connection between

work performance and compensation.

For the complete article, read “The Brave New World of Being a Partner.” [ http://bit.ly/zwI0dr ]

From CPA Practice Management Forum, CCH Incorporated, 800-449-8114, February 2012, p.

10.

The Administrator’s Key Role

Source: Accounting Today

In this article, Danielle Lee examines the value that high-level office administrators can bring to

a firm. Firms without an overall administrator may be allowing partners to be pulled away from

their critical roles to be overly involved in issues such as human resources, IT, marketing, and

other organizational matters.

Lee features an administrator/managing partner duo from the New Jersey firm Wilkin &

Guttenplan. Janine Zirrith, office administrator, has been with the firm for more than 25 years

and works closely with Ed Guttenplan, the firm’s managing partner. Zirrith and Guttenplan meet

every two weeks to ensure that the firm is operating at its best. Zirrith addresses issues such as

staff training and marketing that would otherwise draw Guttenplan away from focusing on firm

growth, strategic planning, etc. Zirrith has even overseen building renovations and disaster

recovery.

Deborah Sessions is chief operating officer for Porter, Keadle, Moore in Atlanta. Sessions, who

has been serving her firm for 25 years, is heavily involved in human resources and staff training,

making sure the right people are hired and that they’re trained and mentored to prepare them to

contribute to the firm long-term – including possibly being part of the firm’s succession plan.

Because of their high-level, but administrative, roles, team members like Sessions and Zirrith can

help with matters like succession planning, which must be dealt with but are also sensitive

subjects. Administrators at this level can offer feedback and insight from a knowledgeable, non-

partner perspective and, as a result, can play a critical role in partner discussions and planning for

the best interests of the firm.

For the complete article, read “Firm admins: A secret source of growth.” [http://goo.gl/ERpQm]

From Accounting Today, February 1, 2012, SourceMedia Inc., One State Street Plaza, 27th

Floor, New York, NY 10004, 800-221-1809.

Is Your Firm a Good Place to Work?

Source: The Marc Rosenberg Blog

The following includes excerpts, reproduced with permission, from a blog post by Marc

Rosenberg.

Accounting Today released the 2011 Best Firms to Work For list in the December 2011 issue

with some interesting findings.

Top-scoring firms offered a variety of features that contributed to high employee satisfaction,

while the lowest-scoring firms were so cited due to one particular item across the board:

dissatisfaction with pay and benefits.

Companies earning positive feedback in the financial reward categories were noted for:

Reversing salary freezes

Restoring raises

Reinstating 401k match

Celebrating employee anniversary with personal gifts

One firm took an unusual step to see both staff and clients through the challenging economic

times: To reduce the need to lay off employees during the recession, it offered its staff free-of-

charge to not-for-profit clients.

In addition to emphasizing compensation, one of the top three companies emphasized physical

fitness, offering an on-site gym, sauna, and massage room; yoga classes; and an annual tax-

season weight-loss competition.

Firm communication is improving. Open communication is a top priority for high-scoring firms.

To this end:

Avoid surprises

Give staff as much say in the decision-making process as possible

Focus on the positive; give as thorough an explanation of the negative as possible

And more firms are moving from a closed-office to an open-door environment. With a focus on

teamwork, partners are becoming more hands-on, creating opportunities for more partner-staff

interaction and exchange. Top-ranked companies are finding that striking a better work/life

balance and fostering a friendly, pleasant workplace environment that keeps employees engaged

results in the highest degree of staff satisfaction.

For the complete article, read “Best CPA firms to work for: top trends.” [http://goo.gl/L57zj]

From The Marc Rosenberg Blog, January 31, 2012, http://blog.rosenbergassoc.com/.

How to Build a Strong Partnership Source: CPA Trendlines

The following includes excerpts, reproduced with permission, from an article by August Aquila.

Here are seven characteristics that form the foundation of a great partnership. If you are missing

any of them, or if you merely need to improve in some areas, now is the time to start

strengthening your firm’s foundation.

1. Trust. The foundation of any good relationship is trust. Without trust there can be no

productive conflict, commitment or accountability.

2. Common values. Some people may argue with me, but I believe that having common

values is the very foundation for the successful partnership. This does not mean that

partners are clones of one another, but partners need to agree upon the firm’s core values.

3. Chemistry. The key question is, “How do you feel about each of your fellow partners?”

Would you still make them partners today? If you are not comfortable with a current

partner, it’s best to take heed and address the issue.

4. Defined Expectations. I have found that the best partnerships set goals for each of the

partners at the beginning of the year. And they don’t try to make all the partners do the

same things. They look to leverage each partner’s strengths. Each partner knows his role

on the team and its corresponding value.

5. Mutual respect. When partners have defined expectations and understanding of each

other’s strengths, they develop a mutual respect for each other. As a partner meets or

exceeds his or her goals, the feelings of respect for that partner only increase.

6. Synergy. Great partnerships create more than the sum of the parts. They are able to

match one partner with another whose skills and experience are different.

7. Great two-way communication. The above elements of a good partnership won’t make

much difference if there is not good or great two-way communication in the firm.

For the complete article, read “Seven Steps to Building a Great Partnership.”

[http://goo.gl/pjg8c]

From CPA Trendlines, http://cpatrendlines.com, January 31, 2012.

Engagement Letters: Are You and Your Clients on the Same Page?

Source: CPA Trendlines

The following includes excerpts, reproduced with permission, from an article by Steve Erickson.

Tips for improving the engagement letter process:

1. Have face-to-face meetings with clients to discuss the terms of the engagement and go

through the engagement letter.

2. Have clients initial important clauses to make sure they understand their responsibilities.

3. Provide, in the letter, for change orders in the event the scope of work changes during the

engagement.

4. Include a “stop work” clause providing that work will cease if payment terms aren’t

followed.

5. Attach examples of work that are within and outside the scope of the engagement.

6. Attach a sample change order.

7. Attach a copy of your firm’s credit policy.

For the complete article, read “Seven Tweaks for Your Engagement Letters.”

[http://goo.gl/6sA7m]

From CPA Trendlines, http://cpatrendlines.com, January 28, 2012.

Are Poor Pricing, Billing, and Collection Practices Hurting Your Business? Source: Journal of Accountancy

In this article, the author offers suggestions for improving these practices, including:

Review each of your services to be sure you understand the value they provide and that

they are priced appropriately. Consider “value pricing” rather than billing based on time.

Don’t be afraid of high price quotes – reducing a quote is easier than increasing it.

Keep clients informed of changes that require extra work, and discuss additional fees

before you do the work.

Enhance cash flow by presenting bills together with the deliverables.

Improve the presentation of your bills by itemizing services and including greater detail.

Improve collections by communicating your value to clients, following up after bills are

delivered and accepting credit card payments.

For the complete article, read “Pricing, billing and collecting fees – What CPA firms can do to

run their businesses more efficiently and effectively.” [http://goo.gl/h5BLa]

From Journal of Accountancy, American Institute of Certified Public Accountants, November

2011, http://www.journalofaccountancy.com/Issues/2012/Feb.

Take the Lead

Source: Solutions for CPA Firm Leaders

The following is a complete reprint, reproduced with permission, of a blog post by Rita Keller.

I have worked in the CPA profession for over 30 years. I have seen CPAs drag their feet with

embracing and implementing new ideas and trends. It’s always “let others do it first and then

we’ll see.”

A prime example is going paperless. CPA firms began moving into the paperless world in the

late ’90s, and there are still a huge number of firms who aren’t there yet. “It takes more time.”

“It’s too hard to review on screen.” “I can do it faster if I have a paper copy.” “My clients want a

paper copy.” “I have older clients who don’t have a computer.”

Right now the major topic is social media. There are all kinds of excuses aired by CPAs why it

won’t work for them and their firms.

Please, please read this recent blog post by Michelle Golden: “Listener Beware: Don’t Take

Everything You Hear From Experts as Gospel.” [http://goo.gl/EByYU]

CPAs, in my opinion, place too much weight on comparing themselves to other CPA firms. One

of the common questions I hear is, “What are other firms our size doing?” What I would like to

hear once in a while is: “Who cares what other firms are doing, let’s try our idea and do it our

way!”

Think for yourself – read and take to heart advice from successful business people outside the

CPA profession – be more creative and don’t always rely on other CPA firms to lead the way for

you. Why don’t you lead the way for them?

“Innovation distinguishes between a leader and a follower.” – Steve Jobs

For the original post, read “Are your firm’s leaders pooh-poohing social media?”

[http://goo.gl/4Idwp]

From Solutions for CPA Firm Leaders, February 2, 2012, http://ritakeller.com/blog/.

Succession Planning and M&A

Designing a Successful Partner Retirement Plan

Source: Partner Insights

The following includes excerpts, reproduced with permission, from an article by August Aquila.

Without proper retirement/succession planning, a firm is left directionless. While there is not just

one way to have a successful retirement plan, there are some basic elements that you need to

incorporate.

Retirement Age

The most important issue to determine is the retirement age. Some firms require partners to step

down at age 60. Others have a mandatory retirement at 65 or 66. The actual age is not as

important as actually having one in your agreement.

Retirement Notice

It used to be common to give a six- to 12-month notice. Today, I am seeing more agreements

requesting a one- to two-year notice.

Retirement and Deferred Compensation Agreements

If you ask retiring partners to transfer their client bases or cut back on hours, make sure you are

not asking them to do something that will hurt their retirement payments.

Early Retirement

I discourage smaller firms from letting partners retire at too early an age. It can be very

detrimental to lose the intellectual capital, the relationships, and the referral sources that a partner

has. In addition, early retirement can impose a financial burden on the firm.

Client Transition

Partner retirement and client transition should go hand-in-hand.

Compensating Retired Partners

Many times, retired partners will continue to do work for the firm. It should be up to the firm to

determine what the work will be and how the partner will be compensated.

Partner Retirement Calculations and Benefits

Many firms are moving from deferred compensation benefits based on equity to a multiple of

compensation. Review the retirement formula to make sure the firm can afford it.

For the complete article, read “Plan Ahead for Partner Retirement.” [http://goo.gl/aryfe]

From Partner Insights, Aquila Global Advisors, LLC, February 2012, www.aquilaadvisors.com.

When Should Your Partners Retire?

Source: Solutions for CPA Firm Leaders

The following includes excerpts, reproduced with permission, from a blog post by Rita Keller.

If your CPA firm, like so many others across the country, is facing the succession challenge, try

this simple Retirement Timeline Exercise and use it as a tool at your next management retreat.

Do you have too many clusters of partners reaching retirement age? How many younger partners

are also in clusters?

I suggest doing two timelines – one based on the year a partner reaches age 65 (in many firms

this is when you have to sell your stock) and one based on when the individual partner thinks

he/she will actually “retire.”

One of the major issues you will be facing is that many partners will reach retirement age, sell

their stock and then want to stay active in the firm for many years to come. You have to decide if

that’s a good thing or a bad thing. It’s often a downer for the young partners and future partners

in the firm in that they are looking forward to their chance to take over and do things their way.

In years gone by, firms have been able to keep the founder on the payroll and provide an office

and other support. However, now you might be facing many Baby Boomer partners wanting to

keep working. Does it make sense to have four or five over-65, former partners around the office

indefinitely? Be sure to examine, discuss and decide what is really best for the firm.

For the complete blog entry, read “CPA Firm Partner Retirement Timeline.”

[http://goo.gl/jMmHe]

From Solutions for CPA Firm Leaders, the blog of Rita Keller, president of Keller Advisors,

LLC, rkeller@ritakeller.com, January 31, 2012. Visit http://ritakeller.com/blog/.

Marketing

Is Paid Search a Mistake in the Consulting Profession?

Source: VeraSage Institute

The following blog post by Ed Kless is reproduced in its entirety with permission.

Fellow Sage team member Greg Tirico posted an interesting link [http://goo.gl/kEay0] to an

article which suggests that small and medium businesses are beginning to favor social media

spending over paid search.

I have always thought of paid search (and even SEO) as a mistake in the consulting profession

because it tends to lead to poor customer acquisition. In other words, it produces more D and F

customers than A or B customers.

By their very nature Web search prospects are in the gather information step in the buying

process. They tend to be tire kickers who are generally looking at buying more on (pun intended)

low price rather than a long-term relationship.

I think social media has the potential to change this because it turns search on its head. Instead of

looking for people who already have their hand in the air (an intercept lead), social media allows

the providers to look for people who have unrecognized need.

In my opinion, it is a much better place to spending marketing dollars.

For the original blog post, read “On Paid Search vs. Social Media Spending.”

[http://goo.gl/vwuoP]

From VeraSage Institute, http://www.verasage.com/index.php/community, January 11, 2012.

Getting Everyone Involved in Business Development

Source: RedZone, Play of the Month

The following includes excerpts, reproduced with permission, from an article contributed by

Accountants Advisory Group.

It’s hard to make it “rain,” but anyone can make it drizzle with the proper professional support, a

well-directed and managed marketing program, and practice development coaching and training.

Here’s a game plan that will allow most CPA professionals to become more successful in their

practice development efforts and spend less time in the process:

Use target marketing, which provides focus to all of your marketing activities and most

often produces better results than the “shotgun” approach.

Have a “relationship manager” who can assist partners with the prospect relationship

management process.

Provide partners with practice development training throughout their careers to help them

learn and refine practice development techniques and to motivate them to market

themselves and the firm.

Having a number of your partners making it “drizzle” versus relying on a few “rainmakers” will

increase the chances of a successful succession plan.

For the complete article, read “Anyone Can Make It Drizzle.” [http://bit.ly/yrKL7U]

From RedZone, Play of the Month, Accountants Advisory Group, February 2012,

www.AccountantsAdvisory.com.

Client Services

Tone at the Top: Management’s Role in Accounting Fraud

Source: The CPA Journal

This article reviews several recent research studies that provide insight into the role of CEOs and

CFOs in accounting fraud. Auditors and consultants can use the findings to help their clients

prevent and detect fraud. Highlights include:

One study showed that the CEO or CFO is implicated in 89 percent of financial statement

fraud cases (CEOs in 72 percent of the cases and CFOs in 65 percent), and a second study

also supports the conclusion that accounting fraud usually involves CEOs and CFOs.

A third study suggests that CEOs participate in accounting fraud for personal gain (by

maximizing equity incentives) and that CFOs typically get involved because they

succumb to pressure from CEOs. A fourth study, however, found no link between fraud

and equity incentives.

A fifth study suggests that CEO accounting fraud is often driven by narcissism – that is,

“an inflated view of himself and the company’s performance” – combined with a high

degree of power.

A sixth study concludes that despite the audit committee’s oversight role, CEOs and

CFOs continue to drive the audit selection process, which can compromise auditor

independence. But the Sarbanes-Oxley requirement that CEOs and CFOs certify the

financial statements (Section 302 certifications) has helped improve the integrity of

financial reporting.

In light of these studies, the authors recommend that fraud programs focus on the CEO and CFO.

They also recommend that audit committees and external auditors (1) develop an understanding

of the CEO’s personality and power, (2) assess the CFO’s ability to withstand pressure from the

CEO, (3) monitor management’s role in auditor selection, and (4) determine whether the CEO

and CFO take Section 302 certifications seriously or view them as “check the box” requirements.

For the complete article, read “CEOs, CFOs, and Accounting Fraud.” [http://goo.gl/WmVE0]

From The CPA Journal, A Publication of the New York State Society of CPAs, January 2012,

www.cpajournal.com.

Identifying a Successor Who Has What it Takes

Source: AICPA CPA Insider

The following includes excerpts, reproduced with permission, from an article by Heidi Bolger.

Beyond all the financial wizardry that’s essential to effective succession of ownership,

succession of leadership in a client’s business is even more important to business transition.

Without well-chosen and well-prepared leaders, the business won’t thrive and the buy-out

payments to our clients may never materialize.

Who Should Choose the Successor Leader?

If your client’s business is closely held with a next generation family member or two, this may

seem like a no brainer. There may also be a longer-term employee or two who seem to be the

right fit. Your entrepreneurial client may be comfortable in making this choice on his or her own.

With smaller, less complex enterprises, a selection process can also be designed to draw on the

insight of a circle of trusted advisers.

For larger, more complex clients, I advocate the formation and use of a “Talent Management

Committee” in some form. This executive-level team is responsible for mapping the strategy for

attraction, development and retention of talent in your client’s business.

What Should Your Client Look for in a Successor?

Although there’s certainly not a one-size-fits-all list of leader characteristics, some important

aspects for consideration are below:

Core Level:

Trust

Shared Values and Vision

Embrace of Business Philosophy

Commitment and Loyalty

Technical Competencies:

Relevant Education and Experience

Required Critical Skills (Deep Understanding of Products/Services and Customer Needs)

Track Record of Profitable Management of Operations

Leadership Competencies:

Excellence in Communication

Well Connected and Excellent at Relationship Building

Strong Motivational, Mentoring, and Accountability Skills

Creativity to Take the Business to the Next Level

For the complete article, read “Making the Right Successor Choice.” [http://goo.gl/3fBrt]

From AICPA CPA Insider, February 6, 2012, www.CPA2biz.com.

Find the Right Buyer for Your Client’s Business

Source: AICPA CPA Insider

The following includes excerpts, reproduced with permission, from an article by Heidi Bolger.

Do you have clients who are thinking about closing their businesses and are looking for advice

on succession planning and how to find the right buyer? Your clients may have the perfect

buyer-candidate right under their noses.

Key employees are very knowledgeable about what it takes to operate certain aspects of the

business successfully and can be high-potential entrepreneurs-in-waiting. So why not consider

these key employees as potential buyers?

Pros and Cons of Selling to Key Employees

Reasons your client should consider selling to key employees:

Key employees’ abilities have been tested and proven.

Customers already know these individuals.

No outside search process or business broker is required.

Key employee ownership may provide the seller a greater opportunity to stay involved in

an acceptable role post-sale.

Clients gain the gratification and gratitude that comes from rewarding key employees the

privilege of ownership.

Some of the potentially bad reasons or outcomes from a sale to key employees:

Dealing with unsophisticated buyer(s) may require a lot of hand-holding.

Selling to key employees may or may not optimize your client’s selling price.

Outside buyers may be more seasoned in running and growing your client’s business.

Negotiating with people you know well and care deeply about can be very challenging.

It might offend other employees who don’t get offered the opportunity to purchase the

business.

Having a key employee step into an owner role can disrupt the chemistry of your client’s

team.

Key employees often lack personal resources required to purchase the business.

It can be challenging to sell to key employees in a tax-efficient manner.

For the complete article, read “Are Your Clients Closing Shop in 2012?” [http://goo.gl/D0k17]

From AICPA CPA Insider, January 9, 2012, www.CPA2biz.com.

Advising Clients on Retirement

Source: AICPA CPA Insider

The following includes excerpts, reproduced with permission, from an article by Kemberly

Washington.

Whether your clients are in their tender 20s or nifty 50s, it is never too early or late to begin

building a nest egg. Inquire about where they see themselves in retirement; understand where

they are now and, more importantly, what it will take to get them where they need to go.

Listen to Your Clients

Where do your clients see themselves when they reach retirement age? Sitting on the

sandy beaches of Florida? Or working day to day until the good Lord calls them

home? Review your client’s financial picture to determine which expenses can be

eliminated in their retirement years to estimate the amount needed to fund a comfortable

lifestyle during retirement.

Where are your clients now? Are they active in their current employer’s plan? If they are

self-employed, have they considered establishing a retirement plan? Determine whether

they are taking advantage of tax advantage accounts and/or employer matching

contributions. These options can provide funding that would allow clients to reach their

retirement goals faster.

Are your clients able to sleep at night if their investment portfolios decrease sharply?

Analyze your clients’ current holdings to see whether their current holdings are in line

with their financial goals and risk tolerance. Careful planning can increase the probability

of your clients reaching their financial goals in a timely way.

Understand Your Clients

One size does not fit all. What may work for one of your clients may not necessarily work for the

other. As their trusted adviser, it is your responsibility to let your clients know when they set

lofty unrealistic goals. Stay positive and offer alternatives that would fit their lifestyle.

For the complete article, read “Are Your Clients Prepared for Retirement?” [http://goo.gl/gf7iW]

From AICPA CPA Insider, January 17, 2012, www.CPA2biz.com.

Surveys

CPA Firm Revenues: Has the Bleeding Stopped?

Source: Public Practice

In this article, Rick Telberg examines key results from the 2011 Rosenberg MAP Survey

[http://goo.gl/j9aF1]. Highlights include:

Nationwide, revenues increased by 1.7 percent, compared to 1.4 percent in the previous

year. The increase is modest but, the authors say, significant because it signals that “the

bleeding has stopped.”

Larger firms experienced a 4.6 percent growth rate.

Income per partner averaged $360,000, up from $354,000 the year before.

Projected growth for 2011 is 3.5 percent, the highest in three years.

Marketing expense as a percentage of fees was virtually unchanged.

The article also offers tips on how firms can use the survey results to improve their performance.

For the complete article, read “CPA Firms’ Financials on Rebound” [http://goo.gl/wk0jw]

From Public Practice, Texas Society of CPAs, February 2012, www.tscpa.org.

Resources

Ron Baker’s Best Business Books of 2011

Source: VeraSage Institute

Ron Baker reviews the best business books he read last year.

Top choices:

1. Stanley Marcus: The Relentless Reign of a Merchant Prince, by Thomas Alexander.

2. Healing Leadership, by Howard Hansen and Steven Geske (Kindle edition only).

3. Pricing Strategy, by Tim J. Smith.

Other recommendations:

4. Technology, Management and Society, by Peter Drucker.

5. Target Cost Management, by Jim Rains.

6. The One Best Way, by Robert Kanigel.

7. Car Guys vs. Bean Counters, by Bob Lutz.

8. Obliquity, by John Kay.

9. Practically Radical, by William Taylor.

10. No B.S. Price Strategy, by Dan S. Kennedy and Jason Marrs.

11. The Pope & The CEO, by Andreas Widmer.

12. Drucker’s Lost Art of Management, by Joseph Maciariello and Karen Linkletter.

13. Doing Both, by Inder Sidhu.

For Baker’s complete reviews, read “Book Review: Baker’s Dozen Best Business Books 2011.”

[http://goo.gl/D4rGG]

From VeraSage Institute, http://www.verasage.com/index.php/community, January 30, 2012.

Ron Baker’s Best . . . Books of 2011

Source: VeraSage Institute

For those of you who are “over reading business books,” here are Ron Baker’s 10 favorite books

from 2011:

Top choices:

1. The Politically Incorrect Guide to Socialism, by Kevin Williamson.

2. Economics Does Not Lie, by Guy Sorman.

3. The Thomas Sowell Reader, by Thomas Sowell.

Other recommendations:

4. Super Freakonomics, by Steven Levitt and Stephen Dubner.

5. The Birth of Plenty, by William J. Bernstein.

6. I am John Galt, by Donald Luskin and Andrew Greta.

7. Rush, by Todd Buchholz.

8. Humorists, by Paul Johnson.

9. After America, by Mark Steyn.

10. The Black Book of Communism, by Mark Kramer, et. al.

For Baker’s complete reviews, read “Best Books 2011.” [http://goo.gl/6m6PA]

From VeraSage Institute, http://www.verasage.com/index.php/community, February 1, 2012.