CPA Roundtable: What do you expect will be your biggest headache in 2016?
CPA Roundtable:
What do you expect will be your biggest headache in 2016?
Mark G. Leeds | CFO, Westchester
Like most people in industry, the main headache will be controlling the uncontrollable. I can’t control what’s happening in China, or the price of oil, or interest rates, but they all affect me and how I do business, specifically, how I attract and maintain tenancies. What you need to do is take these macro issues out of your control and try to dilute them to micro issues if you can. So, for example, I might take advantage of low oil prices by locking in a contract now—of course, though, if I wait, the price might go down even more. Or, similarly, with the possibility of rising interest rates, I might think it’s a good idea to refinance some things before it goes up even higher. So, these are the kinds of considerations we’re going to have to face in response to these far-off global events. You mitigate risk as much as you can, which is a lot of what I do as a CFO. mleeds@winprop.com
Michael F. Rosenblatt | Managing Partner, Manhattan
Here’s what I think will be one of the big problems of 2016 for everyone: human capital. Hiring and maintaining the best people will be a challenge over the next year. For many years since the recession, it had been an employer’s market, but due to a stronger economy, more regulation and the creation of new jobs, we now have a shortage of highly qualified people—note the words “highly qualified.” There are plenty of people looking for job opportunities, but those being sought by companies are CPAs coming out of the large firms, well trained, with particular industry expertise. There are just not enough of them to go around. It’s been difficult for CPA firms for sure, but even in industry, people are leaving to move to other companies offering a better work–life balance, compensation and better growth opportunities. To deal with this, we may have to step up and pay more, either through base pay or bonus incentive programs, and make efforts to better relate to their needs. We can’t just treat job candidates like commodities, which is really what’s happened over the years—if you try that today, you’ll lose them.
Mitchell A. Davis | Manager, New City
I think the biggest issue this year is going to be the implementation of SSARS 21—all the compilation and review reports are going to be changing and, in addition, you have to make certain your supplemental information reports are in accordance with the new pronouncement. So, that’s going to be something that, if you’re doing quality control, you’ll just have to keep on top of with everyone. I think dealing with it is going to, initially, be mainly a matter of education, but as you get further along and people go through this one or two times, we expect that people will catch up and make certain that everything is up to current standards.
From an accounting and review services perspective, it’s been SSARS 21, which became effective in December and opened up new levels of monetized client service through the preparation of financial statements. While I think this is a good thing overall, we have learned that it comes with additional complexities and nuances that you need to be aware of. Initially, I was very gung-ho because I thought it would generate savings in time and cost, which we could then pass on to the client. However, between the fact that it’s subject to peer review and requires nearly 30 procedures for accountants to perform, the time difference between a preparation service and a full compilation is minimal—and if there’s a full set of financial savings with notes, the cost savings are minimal too. We adopted early, and so we’ve been running into these issues for a while now. Looking ahead, I’d steer firms away from preparation services on a full set of financial statements because of these challenges.
joe.maffia@janoverllc.com
Kenneth J. Gralak | Principal, Manhattan
The biggest thing is just regulation. There’s a lot of it, and you get the feeling that, more and more, it’s getting harder to just go out there and do your job when you’re being second-guessed at every turn. The Department of Labor is hot on the trail of weeding out auditors they don’t think are doing a good job, the AICPA is looking to change how firms are peer reviewed, and the PCAOB and the SEC are tightening regulations of their own. It hasn’t made things impossible, but it has made them tougher, and you really need to keep your nose to the grindstone in order to stay focused. And there seem to be new regulations coming out all the time, which can be very difficult to keep up with—you feel like you don’t even have a chance to just catch your breath and really examine what’s just changed. One thing that’s helped a lot in this respect, though, is being involved in committees at the NYSSCPA. If all you do is go to work and go home, how can you become aware of everything that’s happening? You can’t.
kgralak@schulmanlobel.com
Michael J. Corkery | Partner, Melville
Honestly? Staffing, staffing, staffing. We’ve been trying to get people for a while now, and we’ve spoken to a lot of recruiters but there’s just no one out there, so I don’t know if it’s a matter of people leaving public accounting and going private, or if it’s just people not wanting to leave their current jobs. Part of it, I think, could be when the CPA exam went to a five-year program. It takes longer for new accounting students to enter the job market, and the switch over could have created a slight lag as the industry adjusts. Since then, we’ve tried hiring more interns and entry-level people and focusing on effectively training them, because the best training is really on-the-job training, but that’s a challenge for this time of the year since there’s so much volume that has to get out the door by April 30. We’re also talking to other staffing agencies we didn’t necessarily have a relationship with before. Still, I’ve had so many conversations with recruiters and headhunters who told me this is a year unlike any other. They haven’t seen such a shallow talent pool as this before.
Scott M. Adair | CFO, Rochester
For a government CPA, we’re dealing with some evolving standards in the government arena regarding pensions that will have an impact on our financial reporting—namely, that we’ll need to be reporting total pension obligations, vs. just that year’s payments. The challenge is in effectively communicating these changes so that not only the legislative branch but the constituents these folks represent understand that it’s not as bad as it looks. Right now, we’re working with our board to make sure they understand it completely so that when they see those numbers showing up, they’re not blindsided. It’s a slow education process from that perspective—a lot of meetings, a lot of calls, a lot of explaining—but we’ll continue to do that and, hopefully, have more discussion with folks who think it’s important.
Barry S. Kleiman | Principal, Florham Park
Identity theft has always been an issue, and it’s rising. The IRS is being more proactive about it, and some states are now requesting driver’s license numbers on returns, which is another data point for security. But the biggest tax issue is that it holds up refunds. It’s annoying but, unfortunately, that’s the way the world is now, and I understand why they have to do it—they don’t want to issue refunds to fraudsters. Another challenging issue is navigating the practitioner/taxpayer telephone service and the lengthy hold times. I don’t think it’s going to get any better this year—if you need to get someone on the phone at the IRS, it can be a frustrating process. Finally, there’s the continuation of the reporting provisions of the Affordable Care Act, such as applying the new 1095 tax forms for reporting health insurance.
bkleiman@untracht.com