Living Up to Expectations?

CPAs who've made the jump to industry explain what they need from their CPA firms.

  • CPAs WORKING IN INDUSTRY have a unique perspective on the client–CPA firm relationship and many ideas about what they need from their companies’ CPA firms. Many industry CPAs want their accounting firms to be a primary business resource—a strategic ally.

  • CPAs IN BUSINESS WANT VALUE-ADDED SERVICE from their CPA firms. They want the firms to help them look ahead to spot trends or keep them abreast of what other businesses are doing. They value strategic planning.

  • CPAs WORKING IN BUSINESS NEED THEIR accounting firms to develop a thorough understanding of their needs. They stress that the CPA firm must stay in sync with the company as it changes.

  • ANOTHER WAY A FIRM CAN MEET ITS business clients’ needs is by developing strategic alliances with specialists and professionals, so if the client needs extra resources the CPA firm can quickly marshal insurance agents, venture capitalists, infotech consultants or other experts.

  • BUSINESSES ALSO NEED THEIR CPA FIRMS to focus on providing a high level of service. No business likes to feel it’s getting short shrift from a firm that is overextended.

  • CPA FIRMS WILL LIKELY HAVE TO DEVELOP new skills to adapt to their business clients’ growing needs. These include a broader business perspective; the ability to think strategically and see the big picture; rigorous problem-solving abilities; strong infotech skills; and better communication.

CATHERINE L. CARLOZZI is a corporate communications consultant and freelance writer based in New Jersey. She served as associate director of publications for Laventhol & Horwath.

full-tilt market, strong economy and booming high-tech sector have made the grass look much greener on the other side of the business fence. Drawn by the plentiful jobs, generous compensation, entrepreneurial diversity and growth opportunities these conditions have created, CPAs have been crossing over from public accounting to private industry in droves. Business and industry CPAs have outnumbered their public accounting peers among the AICPA membership since 1995 (see exhibit).

This migration has created a unique vantage point from which crossover CPAs view the client-firm relationship, raising awareness of a gap between what businesses would like from their accounting firms and what those firms deliver. The JofA spoke with a dozen former public accountants who are now senior executives at companies in different industries to ask for a fresh perspective and insight into what business clients really want from their CPAs.

Making the Move

AICPA-member CPAs working in business and industry now outnumber those in public practice. (Source: AICPA.)


Industry CPAs want first and foremost to rely on their accounting firms as a business resource. They need an ally that can provide strategic solutions to most business problems as well as tailor services to their needs. Although they view the profession as ideally positioned to fill this role, few see their current or former public accounting firms doing this.

"Public accountants need to prove there's added value in the services they provide," says Ellen Polinsky, CFO of Harman International Industries' Oxford International division in Chicago. She can get audited financial statements for the bank or the SEC, but running a company involves more, she says. "CPAs need to use their expertise to help us improve our business. With some knowledge of our operations, they could provide valuable, unbiased suggestions."

Like several of the CPAs interviewed, Steve Williamson initially believed his public accounting background served him well for his private-sector position—CFO of Peripheral Enhancement, a computer-chip company in Ada, Oklahoma. When his responsibilities expanded beyond accounting and credit, that accounting background became less relevant and getting help assumed greater importance.

For Williamson, the most desirable service outside CPAs can provide is assistance with long-range planning. "They should be looking to see what's headed our way, pulling together all their knowledge of our business and industry, and coming up with some really thought-provoking questions," he says. "No client is going to balk at paying someone who is thinking strategically on its behalf."

"We want to hear what other companies are doing that we should consider," adds Scott Navins, controller of Call Technologies, Inc., in Reston, Virginia. His high-tech start-up is looking for specific ideas tailored to its needs, he says, "not technical or generic information and services that don't really help us."


Some of the executives interviewed feel well served by their current CPA firms, particularly in traditional services. Others say their current CPA firms are letting them down in the basics of tax and audit as well as in areas such as information technology.

Looking back on two recent Big Five audits, one CFO says, "They came in here completely unprepared and sent people who aren't even comfortable with the manufacturing environment." A controller comments on his experience. "The senior on our audit was in over his head. He didn't have the general business experience and missed the big picture," he says.

On the tax side, the head of a high-tech firm observes that tax people are too reluctant to become involved in complex areas such as employee benefit plans, compensation planning and stock options and purchase plans.

Information technology was often mentioned as an area of weakness. As one CFO observes, you have to be hands-on with technology to give good advice about it. For many of those who are veterans of public accounting, that means learning new skills. Many of the executives, harking back to their own accounting-firm days, say workload is an underlying problem. "People in public accounting are overextended," says one. "Clients want their CPA firms to provide answers and solutions, but they can't provide them if they're flying by the seat of their pants. I know I never had time to consider each client's needs and issues in detail. I barely had time to prepare for meetings!"

Impatient with slow response time and reluctance to meet needs that fall outside traditional spheres of CPA firm expertise, many of these executives have turned to consultants who are more responsive and on target in the way they market and provide services.


The consensus among those interviewed for this article is that to become the strategic ally of financial executives' dreams, the public accounting profession will have to take a new approach to client service. "CPA firms have to be willing to do whatever they can to support the client and point the business in the right direction," says Larry Weber, executive vice-president and CFO of Bauer Built, Inc., in Durand, Wisconsin.

Following are specific areas on which these industry CPAs/executives would like to see their public accounting peers focus.

Develop a thorough understanding of the client's business. Off-the-shelf answers and a one-size-fits-all approach to service aren't good enough. Looking to his CPA firm for advice on doing business in France, the controller of a software company was frustrated to receive a 190-page generic treatise.

Service and advice need to be tailored and on target. That requires understanding the organization as a functioning entity: its structure and workings, products and services, markets, industry, competition, issues, regulatory environment, strategic goals and objectives as well as its finances.

"CPA firms need to invest time to understand these things, knowing they won't recover that investment over the short term," says Weber. He and his colleagues agree that this investment must include frequent on-site visits—at least quarterly—and more hands-on involvement by partners and senior managers.

Get in sync with the client's needs. This is an ongoing process, because needs vary over time as organizations develop and change.

"Accountants need to align their goals and objectives with the client's," observes Ronald Diegelman, president and COO of Avatech Solutions in Owings Mills, Maryland. All too often, the CPA and business are not focused on the same objectives. As an example, the former Big Five partner says that although firm tax people tend to focus on how to use the losses that young companies such as Avatech experience, managers of new businesses focus first on how to become profitable and later on how to use losses.

Diegelman is one of several CPAs interviewed who jumped from public accounting to privately held technology start-ups. These entrepreneurial companies look to their CPA firms for specific assistance, including:

  • Options for getting capital, including advice on where to go for funding and help in building bridges to venture capitalists. Navins observes, "CPA firms offer a breadth of experience in these areas that a single corporate insider could never hope to match."
  • Assistance in preparing for an IPO. "The firm partners who have true business experience should be out here now, rather than later, to discuss the issues we'll have to face and what we should be doing," says one controller. "They were here when the business was pitched. Now we see too many juniors."
  • Help in structuring employee benefit and compensation plans. "Stock options and stock purchase plans have become very important in rewarding and motivating employees, especially at start-ups and in high-tech industries," says Diegelman.

Develop strategic alliances with specialists and professionals. Few CPA firms outside the top tier can satisfy a client's desire for one-stop shopping—nor is that necessary. The important thing, says Weber, is the ability to quickly marshal the appropriate resources on the client's behalf, whether she or he needs stockbrokers; insurance agents; bankers, venture capitalists and other funding sources; information technology consultants; or providers of other specialized business services.

Focus on providing a high level of service to existing clients. Reflecting on his outside accountants, one executive notes that the firm's drive for revenue has resulted in a too-large client base competing for the firm's time. "They're not giving us their full attention," he says. "They don't understand our workings. They just present numbers, not suggestions or ideas. They're great on the nuts and bolts but aren't giving us value. And the partners and managers aren't out here often enough."

Graziella Jacobs, director of finance and administration for the Business Products Industry Association, adds, "Firms shouldn't take on new clients unless they're providing a high level of service to those they already have."

Shopping for a Strategic Ally

F or a strategic alliance to work, the interests of the allies must be aligned, and each must be satisfied with the return on its investment in the relationship. The JofA asked CPAs who've crossed over to private business what advice they would give industry peers who are looking for a public accounting firm. Their advice—which was strikingly consistent—follows.

1. Define your needs and expectations before drawing up a list of candidates. Do you need, for example, assistance with tax filings for an employee benefit plan? Are you preparing for an IPO? An SEC filing? A bank filing? Be thorough and honest.

2. Do your due diligence. Ask for referrals and check Web sites. In selecting candidates, look for a good fit in terms of

  • Industry experience and expertise. You don't want to pay for a learning curve.
  • Size. Weigh the breadth of services a larger firm can offer against the higher level of attention and lower staff turnover you are likely to find at a smaller firm and decide which is more valuable to your company's needs.
  • Quality and level of service. Can the firm go beyond basic accounting, tax and audit to provide services that meet your particular needs?
  • Experience with clients of similar profile. If you're a high-tech start-up facing an IPO up the road, for example, you want a CPA firm that's traveled that highway and can help make the journey easier.

3. Communicate your needs and expectations clearly, and observe reactions and responses closely. Has the firm clearly communicated how it plans to deliver? Will there be an open line of communication, especially at the senior-management level, as you go forward?

4. Be honest about your budget and realistic about fees. As one executive observed, "You get what you pay for, and you pay for what you get."

5. Meet everyone likely to serve on your account team and make sure they have

  • An appropriate level of knowledge and experience.
  • Attitudes that inspire your confidence.
  • Compatibility with your culture.
  •  Strong leadership.

6. Talk to the firm's current and former clients.


Among those interviewed, there is consensus that moving the client relationship to a higher plane will require new skills and areas of expertise. According to their peers in business and industry, CPAs in public practice need to work on developing

 A broader business perspective and understanding.

The ability to think strategically and in big-picture terms.

  • Strong skills and knowledge in the area of information technology.
  • Communications and relationship-building skills aimed specifically at
  • Managing client expectations more effectively.
  • Improving communications with nonfinancial members of management.
  • Raising client awareness of what services, skills and areas of expertise CPAs offer and how those can meet clients' needs.

"It doesn't do much good to be an expert if you can't get your points across," Weber observes.

  • Diagnostic skills. CPAs need to overcome their historical reluctance to making projections and to focus less on getting numbers exactly right and more on interpreting what they mean and what they're trending toward—in other words, using historical information to predict future performance.

"What management and directors are really interested in is the auditor's opinion on the health of the company and where it's going," says Diegelman. "Is it positioned to sell all its inventory and collect all its receivables, or is it falling out of position?"

"The financial sector is more concerned about what will happen in the future than what happened in the past or even what's happening now," Williamson says. "It's looking for attestation of the business model itself."

In addition to ensuring that the profession fosters these generic skills, CPA firms need to focus on aligning staff skills and training with client-specific needs.


There is clearly room for improvement in how CPA firms serve their clients. Most of those interviewed, however, believe the profession is moving in the right direction to fulfill its potential.

"The accounting profession is advancing and doing a pretty good job of addressing these issues, which are not new ones," says Diegelman. "It's in tune with the changing needs of business and society. Our ranks include a high number of business experts who are capable of making a difference to business and society, and there's a greater focus on bringing the two sides—public accounting and business and industry—together than there was 10 years ago."


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