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Not just crunching numbers

CPA firms are adding to their fields of expertise in order to take advantage of new opportunities

Brett Johnson//February 27, 2017

Not just crunching numbers

CPA firms are adding to their fields of expertise in order to take advantage of new opportunities

Brett Johnson//February 27, 2017

New Jersey Society of CPAs CEO Ralph Thomas has seen accounting firms become a sort of jack-of-all-trades over the past several decades.

He has seen firms adding a wider range of business consulting and advisory services with each passing year — entering areas he never expected, such as human resources.

Keeping to this pace — several more decades from now — who knows? Accounting firms may be purchasing psychiatrist couches or stethoscopes.

Already, the speeding up of diversification at firms has changed what firms are looking for in their employee base, Thomas said.

“In some cases, firms are hiring more professionals in those areas than the traditional (tax and audit) areas, so that’s a big change,” Thomas said.

The needs of accounting firm clients have advanced alongside the expectations of professionals entering the industry, Thomas said. Even the CPA exam is being adjusted later this year to match that shift, he added.

Rich Jeanneret, EY Americas vice chair and Northeast region managing partner, said the profession has had to respond to the acceleration of opportunities offered to accounting firms.

State of the estate
Two months into the state’s estate tax exclusion being raised from $675,000 to $2 million, there are no sure signs that wealthier individuals who left the Garden State are eyeing a return to it.
Roxanna Hammett, member of the trusts and estates and tax groups at law firm Chiesa Shahinian & Giantomasi P.C., hasn’t heard of any examples from clients, despite it being touted as a potential advantage of the change.
“Between the state’s income taxes and property taxes, I don’t believe it’s likely to be the only factor people consider in moving back,” she said.
Michael Karu, a CPA at Levine, Jacobs & Co. LLC, said that, by the tax’s slated elimination at the beginning of next year, it could have some influence, but only by a matter of degrees.
“It should reduce some of the migration of older people, but it’s not going to eliminate it,” he said. “If you look outside and it’s 35 degrees and snowing compared to a 75-degree sunny day in Florida — well, that might just be the deciding factor.”
Of course, that’s assuming that the total phase-out even takes effect under a different governor next year.

“We had talented people to do good tax work that opened up the marketplace to a diversity of thought and perspective,” he said. “(People we hire now) can be CPAs, but we don’t necessarily look for that — we look for people with deep consulting experience to meet a certain need; we end up hiring technologists, data scientists, engineers, people with all sorts of backgrounds.”

The talent is less homegrown — taken straight from college campuses — than it once exclusively was.

“While we still do that, we’re hiring experienced professionals more than ever before,” he said. “If you think about the increased complexity of business needs today, a younger person coming off a campus may not have the requisite experience to handle that for several years. And that development would be too long to meet the demand for services today.”

Just as often, firms look to merge with other companies that fit a niche that there is client demand for. Obviously, however, not all companies have the resources required to chase acquisitions.

Michael Karu, a CPA at Levine, Jacobs & Co. LLC, said his smaller Livingston firm has been successful in keeping up with the proliferation of services under the accounting umbrella, regardless.

“There is competition from all sources, and we’ve needed to be more service-oriented,” he said. “And smaller firms sometimes have difficulty competing. But that doesn’t mean every firm has to be huge, and the smaller firms will always have a place because they handle small businesses.”

Despite the fact that there has been a migration out of traditional tax services, tax and audit has remained a reliable staple for even some of the largest firms.

Alex Serrano, partner at Citrin Cooperman, said his firm puts a lot of emphasis on in-demand areas in accounting, such as technology and risk consulting as well as merger and acquisition consulting, but tax and audit is no less important.

“We shouldn’t lose sight of that being the bread and butter of our firm,” he said. “It’s the level of trust we establish with those services … that makes for a natural progression to adding (other) services. Because once a client shares such personal information with tax experts, it creates a very personal relationship that clients aren’t likely to want to go out and re-establish.”

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