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Tuesday, Mar 19, 2024
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More Than a Numbers Game, Accounting Firms Diversify Services

While finances are squeezing businesses into paring down and streamlining, the need for sound financial advice has not gone away. Local accounting firms say they are finding a greater market for financial services beyond their standard tax and audit offerings — a need that’s being met by consulting firms spun off from traditional practices.

Many medium and large accounting firms have consulting businesses that help with employee benefits programs, with funding and lines of credit, groups that analyze and advise on questions of risk management and even hiring, and advise businesses on how to streamline their operations.

“What we are seeing and will see more is that services that can create tangible savings for our clients will be in demand in the coming year,” said Gregg Landers, managing director of consulting at CBIZ-MHM LLC. “Businesses need our expertise to make sure their strategies will help them remain profitable and be prepared for growth.”

After layoffs and a year or two of struggling in a difficult business environment, many businesses more concerned about day-to-day survival have found themselves without the staff or skills to plan.

“With the downturn in the economy, we’ve taken a proactive approach in helping clients be increasingly more efficient with our services,” said Theresa Drew, managing partner of the San Diego office of Deloitte. “Companies look to us for ways we can bring best practices to them based on our range of knowledge — we work with so many companies that we are kept very current on best practices.”

Independent Checks And Balances

Drew emphasizes that accounting firms cannot offer their menu of services to businesses that retain them to perform independent audits — a dual-role practice widely reviled after the Enron Corp. scandal revealed that former Big Five accounting firm Arthur Andersen LLP was providing millions of dollars in advice to the Houston company while it was declaring its audits to be objective and independent.

“We are a strictly regulated business and the relationship between Deloitte and our clients is governed by audit,” she explains. “If we were to audit their financial statements, for example, after we’d installed their accounting system, we would be auditing our own work. We can’t do both internal and external audits.”

Within the ethical strictures of the accounting business, though, the firms and their consulting offshoots are increasingly called on to help their local businesses survive and thrive in a tricky and difficult economy.

Accounting firms say they’re also working harder to hold onto clients by emphasizing the added value that paying for a specialized service can bring. Tax studies — pre-emptive reviews of growth and spending plans well before they become actual tax matters — are part of this new demand. CBIZ, for example, is seeing demand for tax studies — more than preparation, accountants study how businesses work and advise on research and development costs, foreign tax, and sales and use taxes, for example.

“Because of our specialized groups, we can often deliver tangible savings with our tax studies,” Landers said. “We’re hearing that we’re saving clients money in the first year.”

At J.H. Cohn LLP, Regional Managing Partner Scott Sachs says the Businesses Investigation Service team is very busy.

“We’re helping clients with bankruptcy and restructuring issues, with litigation support and merger and acquisitions; with business appraisals and fraud investigations, and with transactional advisory services,” Sachs said. “Companies need deep technical assistance to succeed in these complex areas and they rely on our expertise.”

Starting Off In Right Direction

Mergers and acquisitions are increasing after a flat year, Drew says, and businesses are counting on financial advisers to help them shape their futures. And startups, particularly in the technology and life sciences sectors, rely on consulting services from the start.

“Most of our San Diego clients are privately held companies, emerging businesses in the growth stage,” that will be seeking investment capital down the road, Drew said. “We encourage those companies to utilize our firm so their books and records are appropriate from the beginning.”

Firms are also staying in closer contact with existing clients, Sachs says.

“We’ve developed a highly proactive communication process with our clients so there is no communication breakdown and we have team meetings during the year to be sure we understand their business,” he said. “It drills down to understanding your clients’ business — not just numbers and sheets — a springboard for being able to provide solutions and advice and wisdom on a real-time basis.”

Marty Graham is a freelance writer for the Business Journal.

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