How have you added value to your clients’ business in this down and then slowly-recovering economy? Are there any additional services that you offer now that perhaps were not offered in the past?

Chris Allen, Deloitte & Touche LLP

Over the past few years, our clients have been looking primarily to streamline their operations through head count reduction and increased automation. Our consulting professionals are active in helping clients identify and realize operational cost savings through streamlining of processes including efficiencies through IT automation. Clients are also looking for counsel regarding new and increased regulations while positioning themselves for future growth as the economy recovers. For example, we’ve helped clients understand the implications of new regulations including health care reform and Dodd-Frank. Companies are also looking for ways to be more innovative with their offerings to differentiate in a competitive marketplace. We’ve worked with our clients to implement our thought leadership in evolving industries including new structures for alliances, and arrangements to develop new applications and access new markets for life sciences companies. We’ve also been at the forefront in helping our federal government customers in optimizing mission critical operations while reducing costs in the constrained budget environment.

Don Williams, Grant Thornton LLP

The first and foremost action step on our part in adding value to our clients is that we are listening. Often times, when the financial markets become difficult, you will find many professional service providers will begin selling the magic bean of the day. It is not always the right fit for every client or every situation, but it becomes more of a campaign on the accounting firm’s part. We have found that it is far more meaningful and creates more value for our clients if we step back and listen to what they are faced with and the various pressures that impact the business decisions that must be made today. We try to make sure that we do not become victims of the internet age and rely on technology for communicating with our clients. It is far more important to us if we can establish a face-to-face meeting to gain an update from management. Often times, these interactions will alert us to action steps which management can take in order to improve their operations and operating results. While I would not characterize our services as “new”, we are certainly aware of the impact of new accounting literature on our clients and new developments in both federal and state taxes that create planning opportunities for our clients.

Elsa Romero, AKT LLP

Our mission at AKT is to help our clients achieve their goals and is our fundamental driver for serving our clients. In working with our clients we continually provide additional value-added services in addition to the traditional compliance services. The value-added services vary as they are a function of the niche or industry of our clients. We can give you several examples: Our Construction Niche advisors have worked with their clients to help them with claiming credits specific to their operating structure which have in turn provided the clients with tax savings and increased operating cash flows. In the Nonprofit Services area, we have worked with several of our organizations to help them create internal practices that have allowed them to work with reduced staff. We have consulted with many of our family owned and/or small business clients to help them structure their financing needs and other strategic cash flow planning ideas.

Harvey J. Schroeder, White Nelson Diehl Evans LLP

In this slowing economy our clients are looking to reduce costs where they can and one way is by outsourcing some of their accounting needs. We have worked with our clients and provided services ranging from accounting to controllership duties. This allows our clients to reduce staffing levels that are not needed because of the economic slowdown but at the same time continue to receive the timely advice and accounting information needed to make decisions. We have also been engaged by our clients to assist with expense analysis, budgeting and projections, and to review their internal controls, information technology systems and other processes and methodologies. This has enabled us to recommend cost-saving options while improving efficiencies and their processes at the same time.

Wade McKnight, J.H. Cohn LLP

J.H. Cohn continues to add value to clients’ businesses by understanding their industries and their operations. We stay vigilant to bring ideas to the table that, in turn, bring improvement. Looking beyond traditional accounting services, we have focused on ancillary services that can help clients manage costs, such as insurance risk management and benefits consulting. Unique among accounting firms in the U.S., we have a director of economic research, Patrick O’Keefe, who helps clients understand the economic data that help shape their business plans.

We have emphasized a measured, “back to basics” approach to business and work with our clients to help them leverage capital from traditional third parties, such as banks, which are a middle market companies’ lifeblood. We have also, through our Private Equity and Venture Capital Services Group, worked diligently to assist our clients in accessing alternative sources of capital for a variety of strategic needs. Because it’s an area we’re actively engaged in, we are able to make recommendations and introductions with very positive outcomes.

Have you seen a change in the way your clients monitor cash flow and what are some examples you can share?

Chris Allen, Deloitte & Touche LLP

Over the past few years when credit has been very tight, monitoring and forecasting of cash flows has been an enhanced focus and investors have paid more attention to cash burn rates. In response to this, we’ve helped clients improve the sophistication of their cash flow modeling techniques. We’ve also assisted financially – distressed companies with tax and other planning to address debt forgiveness issues and effective use of losses to achieve tax refunds or reduce future tax liabilities, as well as restructuring to streamline operations and improve cash flow.

Don Williams, Grant Thornton LLP

Monitoring and managing cash flow is a critical task of any company, especially a growing one. Delaying payment to vendors is one way we have seen companies improve the cash position in the recent terms; however, such practice could have detrimental results in the long term. Negotiating new payment terms with vendors has proven to be a more effective method as well as providing customers improved incentives to pay within a shorter period of time. Those companies with debt financing have considered refinancing to improve the payment structures and timing of their principal and interest. Finally, a significant number of companies have managed their capital expenditures and discretionary spending to the extent that such deferrals of cost would not impact their operations. As many companies have learned in this tough economy, cash is king and managing your business’s cash flow can significantly impact growth and sustainability. Ryan Selhorn, Senior Manager, contributed to this response.

Elsa Romero, AKT LLP

Yes, our clients have transitioned into having a more direct hand in managing their cash flows as well as increasing the frequency of updating their projected cash flows for both the short and long term. Our goal is to not only be available to our clients in responding to their needs when they have questions that could impact their cash flows, but to proactively bring ideas to them.

Harvey J. Schroeder, White Nelson Diehl Evans LLP

Nearly all of our clients have been affected by the downturn of the economy in some fashion and trying to improve cash flow has been a prime directive. To mitigate the effects of decreasing cash flows, we have seen clients revisit their contractual obligations from restructuring capital and operating leases to delaying construction and other expansion projects. We have unfortunately seen clients forced to reduce staffing levels to accommodate their lower volume of business, while at the same time using creative uses of part-time and contract labor to continue to get the work completed. Many clients have a large amount of capital tied up in accounts receivable and inventory so we have worked with them to plan for reduced inventory levels and improve their accounts receivable turnover ratio based on the lower levels of business activity. The result is the client has budgeted for their cash flows and can plan for the cash flow highs and lows, instead of being surprised when there is a shortage of cash and wondering how it happened.

Wade McKnight, J.H. Cohn LLP

Yes, particularly in the areas of customer credit, inventory control, and the review and evaluation of overhead expenses. Depending on the industry, we have seen tightening of days outstanding, and many of our clients have placed more focus on their monthly budgets and cash flow projections. They are monitoring budget-to-actual results in a timelier manner and are adjusting their operations as needed. Among smaller companies, we also have noted that executive management and owners are more closely monitoring cash disbursements and have extended the disbursement timeline.

We are encouraging our clients to conserve cash to be better prepared as the economy rebounds and to seize strategic opportunities as they become available. We worked with one of our clients, for example, to improve operational efficiency and reduce their cost structure, which in turn led to the buildup of sufficient capital reserves and the financial bench strength to acquire a struggling competitor.

What federal/state regulations have the most significant impact on your clients’ business? Why?

Chris Allen, Deloitte & Touche LLP

Clients are spending a significant amount of time and resources dealing with the additional reporting and tax liabilities associated with the upcoming changes in health care coverage. Many clients also are considering and implementing additional estate and gift planning as a result of the temporary changes made to the gift and estate rules in December, 2010.

Don Williams, Grant Thornton LLP

Companies trying to turn the corner during the down economy have been burdened by limits on their ability to use net operating losses. Taxpayers losing money during a bad economy can normally use their net operating losses to either offset future income or carryback the losses against profitable years to generate tax refunds and reinvest in their businesses. But tax laws under Code Section 382 limit the ability of businesses to use these losses if the business is considered to have undergone an ownership change. Even worse, California has suspended the use of net operating losses since 2007 unless certain narrow criteria apply. With these restrictions and the tough economy, it is more important than ever for businesses to employ available tax planning strategies to ensure they can use as much of their losses as possible. Shane Orr, San Diego Tax Partner, provided this response.

Elsa Romero, AKT LLP

Certain industries have been more directly affected by current legislation than others, but it is safe to say that many of our clients have been impacted by recent legislation. To some they may have had positive results by receiving potential tax credits, but many have had negative effects. For example, the California Legislature has suspended net operating losses for most businesses. This has caused many clients to pay California state tax when they were not expecting to have this liability.

Harvey J. Schroeder, White Nelson Diehl Evans LLP

Small businesses are faced with regulations covering just about every aspect of their business and complying is a big burden. Unfortunately, many times they are not even aware they are out of compliance. Most recently, payroll and payroll tax regulations have impacted our clients’ businesses. The recent two month extension of the 2 percent payroll tax holiday has led to confusion over withholdings, particularly with highly-compensated employees. Regulations impacting our clients range from the many forms of taxes to labor standards to OSHA to EPA. California taxes and fees, such as the S-Corporation taxes and LLC Gross Receipts fees, continue to frustrate our clients. California non-compliance with taxpayer-friendly federal laws, such as higher Section 179 and bonus depreciation limits and net operating loss carrybacks add to their frustrations. Small businesses continue to struggle with classifying workers as independent contractors or employees and the various reporting requirements. We also provide auditing and consulting services to municipalities and the recent California Supreme Court rulings regarding redevelopment agencies has severely impacted our clients in those sectors.

Wade McKnight, J.H. Cohn LLP

All taxing jurisdictions are trying to find additional ways to raise revenue, so compliance is imperative. Given the prominence of multi-state issues, such as nexus and the tax liability associated with it, compliance and proper planning are also top issues of concern. Certain previously extended federal tax provisions will expire on December 31, 2012, representing a finite window for business owners to initiate extremely beneficial estate planning and wealth management strategies, and new international personal income tax reporting guidelines have a significant impact on the way U.S.

citizens working abroad report income and pay tax upon income earned outside the U.S.

As of now, the tax cut provisions announced last year will expire one year from now. How are you working with your clients to help them maximize the opportunities that have been presented to them prior to their expiration?

Chris Allen, Deloitte & Touche LLP

Assuming that ordinary and capital tax rates will be increasing in 2013, we are assisting clients in re-evaluating their overall tax planning strategies and putting timely plans in place so they do not miss opportunities. This includes: acceleration of ordinary income and capital gains into 2012 and planning for the alternative minimum tax; reviewing opportunities to trigger qualified dividends in 2012 primarily from closely held companies; deferral of deductions into 2013; and using the increased exemption for lifetime gifts and reviewing their

current estate plans.

Don Williams, Grant Thornton LLP

Educate, Educate, Educate. We follow the changes in tax law so our clients do not have to. We regularly hold tax planning meetings with our clients to discuss the regulatory and legislative environment so they understand how changes will affect their company’s operations. There is still plenty of uncertainty surrounding which tax provisions may expire and which may be extended. The key is for businesses to understand the outlook and begin preparing now so that they can act when the legislative situation becomes clearer. It is also important to remember that tax planning is only one element of a business decision. There are many factors to consider, but clients educated about the tax environment can make better, well-rounded decisions about potential business transactions. Shane Orr, San Diego Tax Partner, provided this response.

Elsa Romero, AKT LLP

We are continually working with our clients’ tax planning needs regardless of expiring provisions. We also work hard to inform them on future changes. Maximizing tax opportunities is a normal course of service to our clients from year to year. As would be expected our clients are at various stages in their business cycle. As such we help them evaluate tax planning opportunities not only in the income tax area, but also in the estate and gifting tax areas. Meeting regularly with our clients to make sure we are up to date on these opportunities is important.

Harvey J. Schroeder, White Nelson Diehl Evans LLP

The difficulty with tax planning around expiring tax provisions is that their expiration may not come to fruition. A prime example of this is the AMT personal tax exemption which has been set to sunset nearly every year but continues to be extended. The year 2012 will be especially difficult in this regard. Favorable tax rates for certain dividends and capital gains are set to expire at the end of year. Do we encourage our clients to sell appreciated assets before capital gain rates increase? Similarly, favorable depreciation rules are set to expire at the end of 2012. Do we encourage our clients to invest in their infrastructure? As a firm, we continually monitor actions taken in Congress and alert our clients to changes that affect them and their businesses. We find that by constantly working with our clients and keeping them informed of the ever-changing income tax situation promotes more communication between us and results in tax planning that is year-round instead of just a year-end activity.

Wade McKnight, J.H. Cohn LLP

One of the most significant changes for businesses is the expiration of the 100 percent Bonus Depreciation provision. This provision allowed 100 percent write off of new qualifying fixed asset additions and certain Qualified Leasehold Improvement Property placed into service after September 8, 2010, and before January 1, 2012. Unless Congress extends this provision, the Bonus Depreciation write off will be reduced to 50 percent for 2012 qualifying asset additions. Additionally, the Internal Revenue Code Section 179 deduction for new or used qualifying additions up to a total of $500,000 will decrease to $139,000 in 2012. By accelerating business expansion purchases into 2011, our clients were able to maximize these tax provisions’ benefits.

We also work closely with our clients in light of the possible expiration of the Research and Development and Work Opportunity tax credits to help identify and maximize qualifying costs for 2011 and help them leverage other new business credits that are applicable to their business. In anticipation of increasing tax rates, we have looked at the benefits of expanding company retirement plans through the use of Defined Benefit Plans and other types of arrangements. We also assisted our clients in planning for the increase in long- term capital gain rates after 2012 and the persistent challenge of minimizing the impact of the Alternative Minimum Tax.

How should companies evaluate their accounting firms?

Chris Allen, Deloitte & Touche LLP

Trust is essential. We believe that professional services firms are best evaluated based on trust created by a track record of consistently providing quality services and bringing incremental value to clients by not just being responsive, but also being proactive. Firms should also have a practice of straight talk that is forthright about the issues, risks, options, and preferred solutions that clients face, as well as a working style that is collaborative and involves proactive knowledge transfer to the client.

A professional services firm should have breadth and depth of services to help its clients compete in an increasingly complex environment. One of Deloitte’s differentiators is our comprehensive business portfolio. Our multidisciplinary approach – audit, tax, financial advisory and consulting – gives us the resources necessary to help clients find solutions for today’s demanding marketplace.

Don Williams, Grant Thornton LLP

The current trend seems to be that companies are evaluating their accounting firm based on cost. The old allure of brand or experience is becoming less important during tougher economic times. However, companies often realize that choosing an accounting firm based solely on cost will drastically reduce the quality and level of service received. Companies should instead evaluate an accounting firm based on attention and accessibility, applicable industry and technical knowledge, and the right fit of professionals. Having an affordable firm will not carry much weight if they are unresponsive, inexperienced, or simply do not work well with a company. This is illustrated in Vault.com’s recent ranking of the best accounting firms to work for. Grant Thornton placed first in the Vault survey that measured several factors including satisfaction and prestige of a firm.

An important consideration also is whether the firm will have the right skills, knowledge and resources to serve a company, not only presently, but as it grows. In addition, companies should consider the relationship with the firm, selecting a team that is the right fit of advisors, not just a group that will check the box.

Elsa Romero, AKT LLP

While cost of service is important it is not the only criteria to use. We believe that working with a firm that specializes in the clients’ industry is important as well. At AKT we strive to train and develop our people so we can provide our clients with a true professional that not only understands their business, but works as their long-term advisor. Communicating with our clients throughout the year - rather than once a year - is also a major component of providing great service. Our goal is to have direct ongoing communication with our clients.

Harvey J. Schroeder, White Nelson Diehl Evans LLP

Your accounting firm should be your partner in business. As such, companies should look for a firm with similar values to their own. An accounting firm should know your industry and be able to offer not just traditional tax, accounting and audit services, but also a variety of consulting, financial services and referrals to other services, such as legal and banking. Does the firm offer cost effective “one stop” shopping for all the services you need? An accounting firm is only as good as its personnel. Companies should inquire about staff retention rates and continuing education policies. Companies should also ask for and check references. They should also ask what do other clients think of the accounting firm’s work, performance and reputation in the community. Fee, of course, will always be a part of the decision; but companies should be careful not to let fees be the only factor. The adage - you get what you pay for - can certainly be true when hiring an accounting firm.

Wade McKnight, J.H. Cohn LLP

Companies need to ask, is our independent accountant viewed as a trusted business advisor capable of providing insight to help management in their decision making and business planning? Does the firm have a reputation for quality? What are the results of their most recent peer and PCAOB reviews? Is their service delivery timely and are their fees commensurate with the level of service? Do they have the requisite knowledge of my industry? Do they have a strong reputation in the community? Can they make introductions to other business and community leaders who can address my business needs?

A formal client service plan, for example, helps us to document our commitment to achieving the highest level of client satisfaction. We look at how we can help our clients gain insight, manage costs, and achieve their goals