The Connected Accountant

Seismic Change - Or Moving The Goalposts?

In the four years since the Parmalat Fraud case hit, regulators have been attempting to define groupings of accounting firms.

Broadly, they wanted to prevent looser affiliations of accounting firms marketing themselves as a 'joined up global solution' and then denying responsibility when one of the affiliates made an error.

This meant that regulations were designed (based on an IFAC model) that defined networks and associations of accounting firms.  Networks could brand under a single name, rely upon work performed in another network office, and gain traction in the marketplace hungry for alternatives to the Final 4.  Associations would not have to do system-wide independence checks, might gain some liability protection for members, but were also enjoined from developing a 'market identity'.  And then it all went pretty quiet. Until now.

The Swiss-based grouping of Horwath now has a 'standard bearer' firm in the US, the old Crowe Chizek firm, now known as Crowe Horwath, and heavily branded as such. Where this leaves the members of Horwath in the US other than Crowe is a good question.  A similar occurrence has taken place at Baker Tilly, where WI based Virchow Krause are, "pursuing a name change that will make us the exclusive U.S. branded firm in the Baker Tilly Globally Branded Network."

It is very possible that we will see further changes among firms and their network/association affiliations as firms map their strategic and tactical needs to the direction that their grouping of firms has selected.

Associations & Networks - Supporting SMEs

The accounting industry/profession isn't the only one to benefit from having associations/networks that can:

• Increase the reach of member firms
• Provide support for clients 'going global'
• Develop benchmarks for best practices among members

Many of the professional services that SMEs (Small to Medium Enterprises) can be accessed through using a local member that is a part of a global association or network.

Examples of this would be:

• Legal Services (www.interlaw.org)

• Insurance Broker Services (http://www.wbnglobal.com/)

So, when dealing with a local/regional provider of any given service, ask how they will handle your business as you expand across the country or around the world.  The more sophisticated providers will be able to direct you to their association and talk about their experiences and those of peer clients.

Financial Crisis - Accountants and Associations

Just three short months ago, IGAF Worldwide had Bill Freund, the former Chief Economist of the NYSE as a speaker.  He was one of our best rated speakers  - ever.  But, just 90 days ago, the current financial meltdown was not a predicted outcome for even this recognized expert.

So what does all of this mean for accountants and associations?

Firstly, members are going to demand that association events provide insight on the new environment for business as a result of the credit meltdown.

Secondly, as issues of governance, risk and control trickle down from the Fortune 500 to SMEs, (small and medium sized enterprises) associations need to be educating members on how to deliver services to clients in these areas.

Thirdly, associations will need to be assisting their members in working with clients on the financing of business expansion now that typical credit streams have dried up to a trickle.

The AICPA is urging congress to ' keep working until a viable solution is found,' while providing little input on what might consitute a 'viable solution.'  The AICPA-affiliated Center for Audit Quality is however lobbying against the suspension of 'mark to market'  accounting rules.

Associations of independernt accounting firms, which have little or no lobbying capability, are (like much of America) sitting on the sidelines watching the process unfold.  As the rule changes (if any) and changed focus within the coporate world occur, these associations may have to alter their service offerings to members in order to remain relevent.

Value Billing - The background noise grows

No lesser an authority than 'The Economist' is now addressing the issue of hourly billing and potential replacements.  Although their article was focused on the situation present within law firms, the questions that it poses for accounting firms are almost the same.

Within IGAF Worldwide, we have seen a number of presentations from the gurus in this area such as Ron Baker, but it would be fair to say that the take-up among member firms has been minimal.  A couple of our members have adopted a 'blended system', with perhaps two firms going for almost total value billing and no longer selling blocks of time.

What selling blocks of time does is create a 'shift in uncertainty.'  The firm (assuming it can make its employees billable to targets) knows its likely income for any given period - It is the clients (collectively and individually) that have the uncertainty of the magnitude of their total bill.  A shift to value billing (or a hybrid) is a way of equalizing this uncertainty between the firm and client, and could be viewed as another way that the firm builds true cooperation with the client base.

With the apparent shift in the fortunes of the global economy, clients might be looking for that greater degree of certainty when it comes to the bills from their professional advisors - So is this a good time to again look at the concept of value billing?

Are You Connected?

Jimi Hendrix asked, 'are you experienced?'  I ask, 'are you connected?'

The goal of this new blog is to explore ways in which accountants 'connect' with their peers around the corner and around the World.  Revealing my bias, associations are a huge way in which you can do that, but there are many other methodologies and opportunities too.

As an example of how accountants are connecting using what is commonly called 'Web 2.0' take a look at what the Maryland Society of CPAs has done in Second Life.  Tom Hood, their CEO is quoted as saying 'It's all about social networking - which is what associations are about.'

I know that those of you that have heard of Second Life are probably worried.  You think you will loose control, that communication will happen without running through a centralized 'system' and that your employees will use it in work hours.  All of your fears are not only justified, but possibly correct!  However, being a facilitator (or better yet, a champion) of this type of interaction within and across firms means that professionals in the firm and those looking at an accounting career will set you and your firm apart from many others.

So, are you connected?  Let us know how.