Going Concern

Area CPA Parlays Clients’ Need for Tax Advice, Love of Guns

Caleb Newquist
February 4, 2011

Richard Grassano is a CPA in Athens, Tennessee who just so happens to also be a gun shop owner. At some point in his 35 years as CPA, Mr Grassano noticed that during the traditional tax season he also saw a bump in gun sales at his gun shop (that just so happens to be next door to his office, in the same building). Being a savvy CPA, Grassano saw an opportunity:

All American is advertising tax preparation services along with a bonus gift card for use at the neighboring gun shop. The gift cards range from $5 to $25 based on the amount of the tax return. Grassano said he’s noticed that gun and ammo sales pick up every year around the time people get their tax returns. Tax season also is the busiest time of the year for his accounting business. “It’s cross-marketing,” he said. “We were looking for a way to tap into that increase in business that occurs every year around this time.”

Clearly Grassano knows that tapping into Americans’ distaste for taxes is a great opportunity for his gun business. Regardless if a client receives a refund or not, the mere idea of having to comply with the tax law and the IRS can send some people into a frenzy. A frenzy that may just cause someone to want to shoot something. So gift cards are a natural catalyst to help these people satisfy their desire for a little Remington steel.

But Grassano’s also no dummy when it comes to being familiar with his surroundings:

Athens, with the highest per capita number of concealed carry permits of any municipality in the state, according to the Memphis Commercial Appeal database, is obviously a great location for a gun shop. “I’ll have little old ladies walk in here, put an old pistol on the counter and say, ‘I don’t know what kind of bullets this gun takes, but can you get me a box?’ “Grassano said.

And btw, those little old ladies pay taxes.

Ready, aim, file! Accountant gives refund gift cards to use at gun shop [Knoxville News Sentinel]

Accounting News Roundup: Dov’s New CFO; ‘The profession doesn’t feel it works for shareholders’; PwC’s New Atlanta Digs | 02.04.11

Caleb Newquist
February 4, 2011

American Apparel names new CFO [Reuters]
American Apparel Inc (APP.A) said John Luttrell will take over as chief financial officer from Adrian Kowalewski, who will become executive vice president of corporate strategy. […] Luttrell, an industry veteran, joins from CFOs 2 Go Partners, a management consulting firm, where he was a partner. He has been CFO of Gap Inc’s (GPS.N) Old Navy chain, Wet Seal Inc (WTSLA.O) and Cost Plus Inc.

IRS Misfired on Plug-in Tax Credit Claims, U.S. Government Audit Discovers [Bloomberg]
About 20 percent of U.S. tax credits for plug-in electric vehicles and alternative-fuel vehicles were filed in error, according to a government audit. The credits are important to companies such as General Motors Co. and Nissan Motor Co., which have entered the plug-in market with the $41,000 Chevrolet Volt and the $32,780 Nissan Leaf, respectively. Buyers of those vehicles can claim up to $7,500 from the federal government, and the companies are relying on the credits to be competitive on price with gasoline- based models. Most of the erroneous credits, according to the audit, went to taxpayers who sought benefits for vehicles such as Hyundai Motor Co.’s Sonata and GM’s Buick Enclave that didn’t qualify for tax breaks. Prisoners and IRS employees were among those who erroneously claimed credits.

Auditors must treat shareholders as their client [Accountancy Age]
“The profession doesn’t feel it works for shareholders… because of this, the whole process isn’t working for the shareholders. It’s in your hands to change this,” Lee told the audience of audit stakeholders. “Competition is on price, not quality. We need to change the mindset that the audit is an annuity – a guaranteed cashflow. That’s a real concern.”

PwC moving to 1075 Peachtree [Atlanta Business Chronicle]
About 1,100 PricewaterhouseCoopers employees will move into five floors of the 725,000-square 1075 Peachtree building in mid-2012, the firim said Thursday. The building is part of 12th & Midtown, the mixed-use development that is a cornerstone of Atlanta’s Midtown Mile.

“We Can’t Get Carried Away by Our Success.” [CFO]
As advertising revenue grew across all its media platforms, ESPN bucked Corporate America’s current cash-hoarding ways and instead invested in projects such as last June’s launch of ESPN 3D. The network expects to offer about 100 live events in 3D in its first year. In September, ESPN also entered into a long-term, wide-ranging agreement with Time Warner to supply many new cable customers with access to ESPN stations, online content, and video on demand. The month before, as part of its push for growth via overseas markets, ESPN acquired broad rights to UK Premier League Soccer for the next three seasons.

What Did Chase Know, and When Did It Know It? [Floyd Norris/NYT]
About Madoff, that is.

CFOs

Starwood Hotels CFO Not in Denial About This Egypt Situation

Caleb Newquist
February 4, 2011

Frankly, it’s bad for business:

“The political turmoil in North Africa, especially Egypt, is of course hurting our business,” said Vasant Prabhu, vice chairman and chief financial officer of the hotelier during a post-earnings conference call Thursday. He noted Starwood has 16 hotels across North Africa that generated between $10 million to $12 million in fees last year.

“We expect that our fees will be hit in North Africa,” he added. “It is too early to tell how we will be impacted, but this is clearly a risk that needs to be closely monitored.”

SEC’s Storied Tradition of Producing Unreliable Financial Statements Makes for an Awkward Situation

Caleb Newquist
February 4, 2011

Namely, the Commission would like a bigger budget because Dodd-Frank is making their lives increasingly difficult but since they got such bad marks from the GAO the Times reports that it might be just a tad inappropriate since, ya know, the SEC’s own numbers are, arguably, unreliable:

Since the commission began producing audited statements in 2004, the Government Accountability Office has faulted its reporting almost every year. Last November, the G.A.O. said that the commission’s books were in such disarray that it had failed at some of the agency’s most fundamental tasks: accurately tracking income from fines, filing fees and the return of ill-gotten profits.

“A reasonable possibility exists that a material misstatement of S.E.C.’s financial statements would not be prevented, or detected and corrected on a timely basis,” the auditor concluded.

The auditor did not accuse the S.E.C. of cooking its books, and the mistakes were corrected before its latest financial statements were completed. But the fact that basic accounting continually bedevils the agency responsible for guaranteeing the soundness of American financial markets could prove especially awkward just as the S.E.C. is saying it desperately needs money to increase its regulatory power.

S.E.C. Hurt by Disarray in Its Books [NYT]

Career Center

Best Place to Work Bupkis

Caleb Newquist
February 3, 2011

Last week we went through the painful ritual of listing out the accounting firms blessed with a spot on Fortune’s 100 Best Places to Work. All the usual suspects made an appearance but ultimately a regional firm, Plante & Moran, took the highest spot among accounting firms (but they didn’t get to ring the closing bell, did they?).

None of this is of interest to you and frankly we’ve had about all we can stand when it comes to these lists but Adrienne pointed us to this post by Laura Vanderkam that takes the debunking to an intricate level, starting with something that we all know, that most of these lists are opted into by the companies HR or Marketing Departments (emphasis ours):

To be eligible for a list, you have to fill out whatever paperwork the tabulators require […] This means that not only do you have to be a great place to work, you have to be a company where management cares about being listed in magazines as a great place to work. Only 311 organizations bothered this year, out of thousands of employers in the US. So if you went through the whole process, your odds were pretty good. But that doesn’t means that the 311 employers that did try are better than the thousands that didn’t.

Our resident math genius is on vacay but if you do some rough calcs, your chances are, what, 1 in 3? Decent odds. Then, comes the strange phenomenon of where these companies fall and why:

[I]t’s strange that a magazine with such great reporters as Fortune relies on such a flimsy methodology for creating their rankings. If you believe this list, then Americans prefer to work at Nugget Market (a 9-store supermarket chain) than at McKinsey, at Google vs. Facebook even though some headline-making defections would point otherwise, and we should want to work at Aeropostale because, as one young employee put it “Where else can you talk to the boss over pizza?” (Um, where can’t you?)

The Trouble With “Best Places To Work” Lists [BNet]

News

Busy Season Problem of the Day: Approaching a Co-worker About Their Disgusting Bodily Functions

Caleb Newquist
February 3, 2011

Over at our British sister site, AccountingWEB UK, the following problem was put to the group:

We have an employee at the practice where I work who constantly makes a pretty horrible snorting sound with the back of her throat. It happens all year but is worse when she has a cold, which she does at the moment.

Several colleagues have asked me to have a word with the partners to ask them to say something to her about it because they find it so distracting and even nauseating. Incidentally it’s an open plan office so it’s not like people can avoid hearing it.

So my question is, if I did have a word with the partners, is there anything they could actually do about it? And if not, should I tell them anyway just to get it recorded and so that I can tell my colleagues that I have had a word? Nobody feels close enough to her to talk to her quietly themselves, which would have been my instinctive first suggestion.

Okay, so after getting over the weirdness of idea of “recording” of this conversation just to prove it to your co-workers, we admit that this is serious work environment issue. We’ve all been there. That certain someone who, for whatever reason, feels necessary to dig deep in the far ranges of their physiology to get some phlegm out but just can’t seem to EXCUSE THEMSELVES to do so. Or see a doctor, because you know, there might be something seriously wrong that COULD KILL YOU.

And it doesn’t stop with the throat clearing. What about the the co-worker that sounds like Tony Soprano when they eat?

What about the dude that’s obviously enjoying those four to six sodas a day because you can hear him slurping from three cubicles away? And then there’s the subsequent burping. And not like frat boy burping; we’re talking about the gas that he tries to internalize quietly but it’s actually more annoying and disgusting than if he belched the entire alphabet. YOU FEEL ME?

So what to do? Well, first off, despite your desire to FLIP OUT and scream at the offender(s) in question, they probably aren’t even aware that they are causing you to throw up in your mouth a little bit every day. But you certainly don’t want to embarrass the person (maybe some of you do) and buying noise-canceling headphones for the entire office isn’t really economically feasible, so what’s the solution? Here are some initial thoughts:

1. Slipping he or she some Emily Post.

2. Quit your job.

3. Humming at audible levels. (We realize the risks associated with this approach but desperate times, amiright?)

4. Hiring a “personnel monitor” whose sole task is to quietly address these issues with the offender and to issue written warnings, fines and punishments depending on the repulsion level, number of individual co-worker complaints and simultaneous offenses (e.g. slurping and burping).

Seems like a good start. Now it’s your turn.

News

Are Accountants Really That Depressed?

Caleb Newquist
February 3, 2011

Apparently! Health.com churned out “10 Careers With High Rates of Depression” and lo and behold, Financial Advisors and Accountants made the list of “fields […] in which full-time workers are most likely to report an episode of major depression in a given year.”

Stress. Stress. Stress. Most people don’t like dealing with their own retirement savings. So can you imagine handling thousands or millions of dollars for other people?

“There is so much responsibility for other people’s finances and no control of the market,” Legge says. “There is guilt involved, and when (clients) are losing money, they probably have people screaming at them with regularity.”

Over at CPA Success, Bill Sheridan writes, “That strikes me as a simplistic and overly dramatic conclusion, with no mention at all of the opportunities CPAs have to help their clients improve their personal and professional lives. But what do I know?” We agree with Bill, that the write-up doesn’t really portray accountants accurately, some might say, “bullshit” but stress is part of your job. Does that mean everyone feels like running into sick room and sobbing every day? Well…maybe some of you. There are plenty of people that thrive on the stress and then there are those that bottle it up until they finally quit with a melodramatic sendoff.

Everyone knows that working long hours for weeks on end can eventually get to even the toughest of white-collar warriors but your run-of-the-mill stressed out accountant typically has methods for dealing with the the busy season blues. Some people exercise; some people get their religion on; some people drink/smoke/snort themselves into oblivion. Do those things work? Sure, sometimes. But we’ve all worked with that person who you expect to suddenly not show up. Are there more of those people than there used to be? Hard to say. Maybe we should talk about it. Let it out; it will feel good. Plus, we’re cheaper than a therapist.

Accounting News Roundup: Senate Votes 81-17 to Repeal 1099 Requirement; Baker Tilly Launches New Cloud Practice; PwC Drops Oscar Ballots | 02.03.11

Caleb Newquist
February 3, 2011

Tax-Preparer Oversight Still Years Off, Says Auditor [WSJ]
A U.S. tax-policy auditor Wednesday said it will likely be three years before the Internal Revenue Service’s new federal oversight of paid tax-return preparers is in full force, finding that the IRS has inadequate resources and processes in place. “As a growing number of Americans now use paid preparers to file their returns, the IRS must move forward expeditiously with its preparer oversight program,” said J. Russell George, the Treasury Inspector General for Tax Administration, in a statement Wednesday. “Our review found that more needs to be done.”

Senate votes to rescind IRS repog> [Reuters]
Bowing to pressure from small business groups who say the new reporting requirements will tie up entrepreneurs in paperwork, the Senate voted 81-17, for the amendment, which was appended to an unrelated aviation bill. Small firms and the self-employed are up in arms about the provision that, starting next year, they will have to submit 1099 tax forms on purchases of goods and services that total more than $600. “At a time when we need small businesses to help our economy grow, saddling them with expensive new requirements and paperwork burdens will only further hamper their ability to aid in our economic recovery,” Susan Eckerly of the National Federation of Independent Business said in a letter asking senators to support the amendment.

Democratic senators tout agreement on prisoner tax fraud [On the Money/The Hill]
A group of Senate Democrats is touting a new agreement between the IRS and federal Bureau of Prisons aimed at cracking down on prisoners’ ability to collect fraudulent tax returns. An inspector general report released in January found that prisoners had been issued at least $123 million in false federal returns between 2004 and 2009. The two federal agencies came to an agreement on the issue after a push started by Sen. Sherrod Brown (D-Ohio) and other Senate Democrats. In a statement, Brown called the agreement “a long-overdue, common-sense solution.”

Obama proposes ‘green tax’ incentives [FT]
Barack Obama will on Thursday propose to cut oil and gas subsidies to make way for new “green energy” tax incentives designed to encourage US businesses to upgrade their commercial buildings and make them more efficient. White House officials said the move was intended to spur job growth in the construction industry and make commercial buildings 20 per cent more energy efficient by 2020. Officials declined to comment on the cost of the expanded tax credits, but said Mr Obama was “committed” to paying for the investments by eliminating subsidies for the oil and gas industry.

Baker Tilly teams up with NetSuite [AccMan]
Is there potential for a perceived independence issue?

Seven Ideas to Guide Tax Reform [TaxVox]
The Tax Policy Insitute’s Donald Marron laid it out in testimony yesterday before the the Senate Budget Committee, “America’s tax system is broken. It’s needlessly complex, economically harmful, and often unfair. It fails at its most basic task, raising enough money to pay our government’s bills. And it’s increasingly unpredictable, with large, temporary tax cuts not only in the individual income tax, but also in corporate, payroll, and estate taxes.

Final Oscar ballots hit the mail Wednesday [LAT]
Everything is due back to P. Dubs by February 22nd 5 pm PT sharp.

News

As Predicted, There’s a Battle Over Who Will Get Credit for the 1099 Repeal

Caleb Newquist

February 3, 2011

The repeal of the 1099 provision in the healthcare reform law has been dogging Congress since the bill was signed into law last March. Because small businesses will no doubt lead the economic recovery, remove all the snow that has dumped on this great land and may just get the Egypt situation under control, every pol within a stone’s throw of the Potomac is trying to get their name on this thing. Nebraska’s Mike Johanns (R) and West Virginia’s Joe Manchin (D) seemed to have this locked up but as we surmised, other Democrats are trying to get in on some of this small business saving action.

The Hill’s On the Money blog has the latest:

Senate Republicans expressed some confusion and approval Wednesday that their push to repeal the unpopular 1099 provision from the healthcare law has been taken over by Democrats.

Sen. Debbie Stabenow (D-Mich.), who has signed onto a bipartisan bill sponsored by Sens. Mike Johanns (R-Neb.) and Joe Manchin (D-W.Va.) that has the support of 61 lawmakers, proposed her own amendment that adds five words to the Johanns-Manchin repeal measure ensuring that no “unobligated funds” are used from the Social Security Administration.

So Senator Stabenow’s little maneuver has her nicely positioned to lay claim as a champion of all the Mom and Pop shops out there and shockingly, Minority Leader Mitch McConnell is cool with it:

“It turns out Senator Johanns did such an outstanding job raising awareness about the 1099 requirement that Democrats took the idea and are now claiming it as their own,” Senate Minority Leader Mitch McConnell (R-Ky.) said. “Which is fine with us. It’s not a bad precedent actually. We’ve got a lot of other good ideas that we’d be happy to share.”

While Senator McConnell sounds like he’s fine with Stabenow semi-jacking the bill, a staffer was less impressed:

“Dems went from putting it in the bill, to opposing the fix, to sponsoring a different fix, to sponsoring the Republican bill,” one senior Republican aide told The Hill.

Gotta love politics.

Senate Republicans express confusion over 1099 amendment [On the Money/The Hill]

News

Annoying Busy Season Problem of the Day: Streaming Video of Live Sporting Events Is Under Attack

Caleb Newquist

February 3, 2011

From the Twitbag:

For those not fluent in all things Internet, Atdhe and many other live sports streaming sites are being taken down like ~~Mubarak~~ the Nixon Administration. The Department of Homeland Security is all over this, having seized ATDHE.net but apparently they’ve relocated here. All of this uncertainty has our reader concerned:

If you’re suffering from a similar malady, please advise below how you plan to deal or merely suggest an alternative prescription for making busy season more bearable.

News

More Proof That Busy Season Could Kill You

GoingConcern

February 3, 2011

The following post is republished from AccountingWEB, a source of accounting news, information, tips, tools, resources and insight — everything you need to help you prosper and enjoy the accounting profession.

During the tax season of 1995-1996, Norm Lorch was not feeling well. He had a sore throat, but told himself it would go away. In any case, he did not have time to go to a doctor.

Lorch is principal of Owings Mills, Maryland-based Norman J. Lorch, Chartered, a firm that assists contractors, accountants, and attorneys in areas unique to government contracts.

Eventually, he spoke with a doctor on the phone who prescribed antibiotics – two weeks on and off – but he still did not feel much better. At one point, Lorch passed out, but he told himself that he had tripped on something, picked himself up, and went back to work.

While attending an American Bar Association conference, Lorch met a friend who would be conducting the session he was planning to attend. The friend told him in “pretty clear English” how he looked and said he needed to see a doctor. Lorch said no, but the friend insisted, saying that if Lorch didn’t call a doctor, he would stop the session.

Lorch set up an appointment for the next day. The doctor’s diagnosis was strep throat and made an appointment with a cardiologist for the following Monday. At first Lorch said “No, I have to go to Chicago,” but eventually he acquiesced. The strep had settled in Lorch’s aortic valve and destroyed it, causing congestive heart failure. He was given three to five days to live if he did not have immediate surgery.

“This is a crazy profession. Accountants are nuts. We work ourselves to death. I had allowed my clients to be the most important thing in my life. I didn’t listen to anybody,” Lorch told AccountingWEB.

“Making a few bucks less won’t kill you. When you are tired, quit. When you don’t feel good, stop working. Yes, some clients may leave, but they are going to find someone else if you die,” he said.

“I made a lot of money that year and eventually earned a penalty for underpayment of estimated taxes. I called the Internal Revenue Service to explain, spoke with a supervisor, and she said, ‘if you receive another penalty notice have them contact me.’

“Now, my priorities are my health and my family. My daughter had to leave college during her exams because of my medical condition, and I nearly missed her graduation. My clients can wait, and those that can’t wait can go. When you remember what comes first, everything else will fall in line,” Lorch said.

“When I teach, I tell everybody about this and what stress can do to your health because if I can help one person, it is worth it. I persuaded the moderator at an AICPA tax conference to allow me to speak to a group of 50 or 60 people when I wasn’t scheduled. As we were leaving, one man said, ‘Thank you very much. I am going to the hospital,’ Lorch said.

Since his illness, Lorch has lost weight and is careful what he eats. He walks five to seven days a week for one and a half miles. When he doesn’t feel well, he calls his doctor.

A specialist in financial oversight, compensation, and administration of U.S. government prime contracts and subcontracts, Lorch travels at least 50 percent of his working hours, but now plans travel with his health in mind. “I try to extend the hours, spreading two days of work over three.”

Earlier:
BKD Partner Found Dead at His Office

Career Center

Can a Sole Practitioner CPA Jump to CFO?

Caleb Newquist

February 2, 2011

Welcome to the two-out–of-three-groundhogs-can’t-be-wrong edition of Accounting Career Emergencies. In today’s edition, a CPA with nine years experience as a sole practitioner has CFO aspirations but isn’t having any luck landing interviews. Does her near-decade of running her own shop hurt her desire to rejoin the corporate ranks?

Need advice on your career? Got a co-worker saying nasty things about you? Getting impatient while you wait for the perfect time to start your embezzlement scheme? Email us at advice@goingconcern.com and we’ll save you from yourself.

Back to the boss:

I am a female CPA in my mid-40s who has been a sole practitioner accountant for the past 9 years. I’m confident, aggressive and customer-focused. Prior to my accounting career, I worked 12 yrs in the Technology industry, for companies like AT&T and Motorola – in positions of increasing responsibility – my last 2 jobs were VP-level. I also have an M.S. and B.S. in Mathematics.

Here’s my dilemma, I would like to re-enter corporate America but this time on the finance side as CFO or Sr. Controller of a private company. I’ve just started talking to accounting/finance recruiters and I’m getting a luke-warm reception to my background. They return my calls, tell me I’m “unique”, but I’m not getting any interviews. I’m wondering if being a sole practitioner is holding me back?

My question for the guru is: what is the perception in the finance & accounting industry of a sole practitioner – are we considered to be a “lesser” form of CPA, unable to perform as a CFO? I’m also wondering how my “accounting as a second career” is perceived? It does appear that most accountants are kind of “born that way”, rather than deciding mid-life to become a CPA, like I have. But what can I say, I always had CFO-envy in my first career, so I decided to pursue my passions, start my own business, get my CPA, and go for what I wanted – one would think that would be looked at positively?

I’m really hoping you can provide some insights. I don’t have any CPAs to talk to, since my main interaction with my peers has been when I take business away from them. And I tried to get career advice from a female mentor program sponsored by my state CPA society – but all they wanted to talk about is flex-time and work/life balance!

In need of a reality check,

Dear In need,

So it sounds like you’re tired of being the boss without having anyone to boss? Or maybe you miss the friendly confines of corporate America? Whatever your motivation, we have a simple question for you: are you nuts? What do you hate most about having your own business? The flexibility? The money? Not having to deal with stupid co-workers? Sigh. Forget our questions, we’re here to help.

Nine years is quite a stretch to have your own practice and from the sounds of it, you’ve been successful and you had a decent run in the corporate world prior to that. Regarding the tepid reaction from recruiters, we’re curious if you’ve pressed them for reasons for the lack of interviews. These people are working for you, don’t forget, and any failure on their part doesn’t reflect very well on their abilities. Get some straight answers out them.

Now, then. The perception that the F&A industry has of sole practitioners is, well…they don’t pay much mind. We’re guessing you’re preparing plenty of tax returns, maybe a few small audits and providing financial advice to your clients. Anyone looking for a CFO wants someone that can lead and run the finance and accounting departments. Despite the twelve years of experience you have in the corporate world, your most recent experience has been working for yourself and serving clients. Not much management experience (from an f&a function or employee perspective) there. It’s not that you’re “unable to perform” but your track record doesn’t really demonstrate that you’ve been working towards that goal. Furthermore, small company CFOs these days are taking on more responsibilities including IT and HR decisions. Chances are most companies will hold out for someone with the total package. Or at least a package more complete than yours. We’re not trying to discourage you but we do see a disconnect between your experience and the position you desire.

That said, there is no shortage of small companies that need CFOs and controllers. Be sure you’re using an executive recruiting firm to assist you in your search and ask them honestly if your background is problematic.

One other thing to consider: maybe shop around to the CPA firms in your area that wouldn’t mind having your book of business. Perhaps they’d be interested in admitting you as a partner in their firm. It’s not exactly in line with your goals but it could pave the way if your CFO search runs into a dead end. Good luck.

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