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AICPA Town Hall
Small business environment and CAS strategies
01:01:17
Topics include: DC and profession update SMB environment and the election scenarios analysis Key technical updates Client advisory services (CAS) strategies and practitioner insights ...
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A
Welcome to the AICPA Town Hall Series, your resource for the latest news and updates on pressing issues facing the accounting profession.
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B
Good afternoon and welcome to this October 10th edition of the AICPA Town Hall. My name is Michael Cerami and I'll be your host for today. And this gentleman to my left, I'd like to welcome Gene Marks. How are you, Gene?
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C
I'm doing good, Mike. Thanks for having me on.
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B
Good. Great to have you here in studio today. June's going to join. June, Gene's going to join me in a conversation in just a moment. But before, before we get into that, let's go ahead and talk a little bit about today's agenda. So in just a moment, Gene and I are going to be joined by Mark Peterson. Mark's going to come in and give us a DC update and then we're going to join Gene, Mark and I in a conversation about kind of the small business environment. Gene happens to be a CPA and runs a small consulting firm specifically for, for small businesses. And we're going to talk a little bit about the small business economy and some of what we're seeing out there in the, in the overall marketplace. We're then going to invite in Lisa Simpson. Lisa will come in and talk a little bit to give us a technical update and cover a bunch of updates actually in that area for us. And then we've got a special session on Cash Strategies. We'll be joined by CPA.com's Kim Blasco and Rob Henderson, who leads the practice at Wine. So very full agenda over the next course of the next hour. Appreciate that you're able to join us here today. So let's go ahead and bring in Mr. Peterson. Good afternoon.
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D
Hello, Michael.
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B
How are you? Looking good.
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D
Well, thank you. Wonderful.
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B
So, Mark, I know Congress is not in session. They won't be back until November 5th. Hard to believe. We're actually less than four weeks now out, I guess, from, from the election. So what are you hearing, Mark?
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D
So, 26 days. 26 days till the election. Although I will tell you, there's early voting in, in many, many states. So millions of voters are actually out there right now casting their ballots and significantly in some of the battleground states. And let me just mention that again, you know, as we follow this, I focus on polling from rcp, Real Clear Politics, which is an aggregate of a bunch of different which I believe gives a balanced view. You can see, you know, national polls that are all over the place. And national polls matter because, you know, enthusiasm, media attention Fundraising, things like that. But I think drilling down into the, into the battleground states is, is the best indicator. So, you know, in states like Arizona and Nevada, Wisconsin, Michigan, Pennsylvania, North Carolina, Georgia, by the way, early voting is already occurring in Pennsylvania and Arizona. It is incredibly tight. I said that last town hall, but it's within a point. The biggest lead is in Nevada for Harris, which is just one point. So we're well within the margin of error. It is incredibly close. And then, you know, the other thing to think about is every time there's a presidential election, we always have something that happens in October, right? We very, very close to having what could have been a very economically damaging longshoreman strike that was, I think, estimated it would have been $5 billion a day impacting the economy that was averted. But we still have obviously, what's the conflict going on in the Middle east and then the natural disasters that have occurred in the last few weeks in Florida and the devastation there. And that's something that we do need to talk about because we've got some thoughts about relief from natural disasters.
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B
So let's go ahead and pivot to that Mark. And like you said, you know, I know our thoughts and prayers are going out to everybody that are impacted throughout, unfortunately, so many states by, by these latest weather events. But you do have some information from a, from a tax relief standpoint that I know you want to go ahead and review.
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D
Yeah, yeah, no, absolutely. There, there's, you're going to hear some, some, some noise around the idea of actually Congress coming back earlier than they're scheduled to come back. They're supposed to be coming back for lame duck and I think 33 days. But there is some pressure to come back in order to start to work on disaster funding. There is no doubt there will be a need for more funding for relief and that will definitely be part of the lame duck conversation that's going to happen among a couple other things which I'll mention. But it's unlikely that for that to happen, there's a amount of time that has to occur for the disasters to be assessed. And then it does take time for, you know, programmatic money to go out. So it's possible, but unlikely they come back early. But in lame doc, there's a couple things that could happen that are relevant for us. They are, you know, some relief around beneficial ownership information, which I'm going to talk about as well, and then some legislation around creating some certainty around the IRS and declaring a disaster. Let me, I'll talk about that. Legislation in a moment. But we are very grateful that the IRS did grant relief actually prior to Milton coming ashore. There is more work to do there, though. The IRS is considering expanding targeted victims even further into south Florida, Miami, St. Lucia. And so we're talking to the IRS. You know, in the end, the IRS does the right thing, but the issue is the amount of time it takes and the anxiety, you know, between it's when it's declared. One of the pieces of legislation that's a potential for lame duck, because it's bipartisan potential is legislation that we've been very supportive of, which actually allows the, the it would extend for the IRS automatic extension of filing relief based on when a governor declares. So FEMA usually declares later than when a governor does. And so that would actually provide more clarity, relief more quickly, possibility for lame duck, but I think very, very possible as they consider tax in the 2025 debate. And we know again that there's going to be significant tax discussion going on in 2025.
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B
Great. Well, thanks, Mark. Mark, Any, any, you know, this is kind of a sidebar that came in a little bit off a tax relief, but just, you know, maybe talk a little bit about the with does this impact people being able to get out and vote, do you think? And is there been any, you know, talk about that?
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D
You know, it's going to be interesting because it's, if you think about Helene and what's going on now in, in the aftermath of, of Milton, there will be an impact now. You know, the ability to get to the polls, whether people are cleaning up their lives. There's no doubt there will be an impact on that. On that. You know, and each state is different whether they allow mail in, whether they allow early voting. I talked a little bit about early voting in some states like Pennsylvania and Arizona. So it's kind of a state by state, state basis. And it's also case by case, you know, there are parts of Florida where it won't be an issue, and then there are parts where people have, have left Florida and they've got to figure out how they're going to do it. Now, it also depends on the state. You know, North Carolina got hit with Helene, and that is definitely one of those swing states I mentioned. So there's the impact on the election and then there's just the ability to engage in the democratic process.
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B
Well, go ahead, let's, let's go ahead and move over to beneficial ownership. Mark.
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D
Yeah, here's another one, you know, two other filing deadlines, FinCEN, which is a part of treasury that is responsible for for both FBAR and boi. Beneficial Ownership Information has announced relief for FBAR requirements. They are they are still under discussion and we're talking to them about providing relief related to the the beneficial ownership BOI requirements. The other thing I will say about that is so and we hope they provide the relief to the targeted areas where there's impact. One of the things that this could drive though is there's a discussion in lame duck about a one year delay, just delay related to the implementation of the deadlines for beneficial ownership. The fact that this is hap. This is these disasters have had could add to some of the momentum around those delays. That's a possibility for lame duck. Don't count on it, but it's a possibility.
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B
Great. Well, thanks, Mark. I know Lisa's got some other updates.
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D
More resources and details that Lisa is going to take us through.
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B
Great. So Mark, Mark, you're going to stay on with us and I want to go ahead and introduce this gentleman to my left once again. So Gene, great to have you here with us today.
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C
I know we want to get some questions about the economy and all, but I also want to mention that for any CPAs that have clients that are in those affected areas of this disaster, particularly Florida, North Carolina, whatever, the Small Business Administration has loans, low interest loans that they're giving out. Remember, the SBA does not they only extend loans in disaster relief situations. They normally guarantee loans. And I think as CPAs, if we have clients, they're certainly going to need some help applying for those loans. I think it's an opportunity for us to reach out to our clients that might have been affected and see if we can help them get those funds. So it's out there.
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B
Great. Now great point. Great reminder. So Gene, I know you again, I did a little bit of in your intro. I mean you're in a very unique position. You have a practice, you do a lot of consulting to the small business community. You're also an author, columnist, keynote speaker. So you're kind of at that intersection of the profession and small business. You have a little bit of a different vantage point from an economic standpoint. We like to talk about the economy, you know, frequently on on the town hall. So I know there's a certain amount of indicators maybe you follow that are a little bit non traditional, at least from what we talk about here on this show. So what are they telling you?
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C
So first I just to say so you know, I cover the economy for the Hill and for the Guardian and a few other places. So I write about it. My audience are small and mid sized business owners. So you know, that's why we're here. So as a cpa, I do get questions about the economy a lot. We all do as CPAs and we're here to provide that advice. So for starters, Mike, I have to say, and I don't want to completely discount this, but I've learned over the past couple of decades that to be a little bit dubious about government data, you know, it gets revised a lot. We hear about the inflation rate has come down a little bit, which is great. We hear about, you know, the unemployment rate, gdp, those tend to get a lot of media attention. But what doesn't get attention is the revisions to it. And most of that data is survey related. So it's subject to a lot of, you know, relooks and all of that. I like real, actual data from real, actual companies that are telling me how the economy is going. So somebody who writes and covers about the economy, I tend to go to specific types of statistics. You know the first one you have mentioned, it's the Institute of Supply Management. Right. So this is, it's an association mostly of purchasing managers. They get asked to submit, submit data every month as part of their membership about not only other businesses are doing, but what are they buying and how much and what are their purchasing plans. And to me that's like real information. And what the institute does is it divides it out between the service industries and the manufacturing industries. And you know, it's very revealing and just spoiler alert, manufacturing, not great down for the past six months. It's been in contraction for 22 of the past 23 months. If you have clients in the manufacturing industry, you know that they are, they're still struggling despite whatever government programs are going on, they're still struggling. Conversely, companies are in the service industry have been doing quite well. They've been expansion for the past 18 to 24 months. So it tells me as somebody who follows the economy that you know, manufacturers struggling, service doing okay. Something that's of interest to know to where, you know, where the economy is going and headed. So that's one, one metric that I like to follow.
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B
And how about nfib, National Federation of Independent Businesses.
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C
Yeah, I mean half the country's employees are employed by small businesses. Half the country's GDP is generated by small businesses. So when small businesses are feeling good, it's probably a pretty good sign for the economy.
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B
That's right.
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C
Unfortunately, this just got released just within this past week, the nfib, this is a survey. So but they've been doing this for like 40 years now. They have a very good methodology. You know, small business right now, their uncertainty and optimism is really at a historic lows right now. So as they're heading into 2025, the National Federation of Independent Businesses is telling us that these companies that are the drivers of growth and employment right now feeling very, very much uncertain and not optimistic about the earnings.
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B
Even post Fed move.
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C
We will even post Fed move because most people believe that the Fed's move is not going to have a major impact on their clients yet. It's going to take some time.
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D
Gene, on that. If you think about small business and two of the significant issues of uncertainty, tax and regulation, is incredibly election dependent, 100%.
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C
And Mark, you bring such a good point. I mean, I just wrote a piece in the Washington Times about the impact of tax regulations on the typical small business owner. And you know, I mean, unless something gets done with, you know, the qualified business income tax deduction, something gets done with the fact that, you know, half of our standard deductions are going to be cut in half a standard deduction, let alone just taking those aside, it's an enormous impact on a lot of small businesses. And they know it. They know it. So like Mark said previously, taxes are going to be a big conversation in 2025 and they really hit the pocketbook of America's small businesses.
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B
Do you, and maybe this is a third RA question so we could put on it. But one of the questions is do we think, you know, the small business favor one, one candidate over another purely from an economics very, very tough to tell.
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C
The, you know, the surveys that I follow, the demographics both in the Small Business Administration and other more small businesses lean to the right than to the left. But like Mark was talking about, you know, where the polls are and the elections are even in the swing states, it's still very, very much, you know, it's very tight and it's funny in this election, you know it is, Mike. There are a lot of issues and a lot of reasons why to vote for your different candidates, but there are definitely stark differences between the two when it comes to economic policy and taxes.
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B
Sure.
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C
So I know we're going to get.
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B
Into those in a little bit. And Mark, I don't know, maybe one, one word from you. I mean, gridlock seems to be the prevailing, prevailing thought and gridlock's probably favored by a lot of business.
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D
Sometimes, you know, things not happening in Washington can Help business. Although I will say this, the most likely outcome, okay. Is that we have divided government that, you know, if you look at what's going on right now, the White House is a twin flip and potentially the Senate flips and the House flips, but it's divided, which kind of keeps us in a situation we're in now and narrowly divided. And we could say federal gridlock, but I wouldn't say gridlock because there's been a lot of activity in the courts and when the feds don't move, the states do. And that impacts small business as well. So yes, at the federal level, probably other than tax, there's going to be movement on tax because of expiring provisions, but there's still going to be an impact on the economy and on small businesses because of what states will do and court decisions.
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B
That is a great point. Did you want to.
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C
Yeah, I just want to say that Mark is absolutely right. And don't discount the psychological impact of even with gridlock. You know, if you have an administration that's very pro business, that encourages business to invest and to hire even in an area of gridlock, because they feel that's the environment. If you have an administration that's more pro worker or pro regulation, not there's anything wrong with that. You know, businesses tend to pull back a little bit on their hiring and their growth because they have things of they have to deal with. So that has an impact on small businesses.
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B
So some of these others I hadn't heard of. Maybe we hit them kind of quick. The American Institute of Architects. What's some other.
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C
It's a great leading indicator and I look at it every month. They, the architects submit their billings and the AIA says this is, you know, this is our billings index. Architects, you know, you follow residential and commercial construction. You know, when architects are involved, that's what, six to 12 months ahead of when construction happens. Buildings are down and they've been down the past few months. And that's gives me some concern about residential and real estate construction.
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B
And I'm going to guess that not many people follow the Baltic Dry.
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C
It's my favorite index. It's the Baltic Dry Index. I was taught this by an economist a few years ago and more than a few economists follow this. It is an index of freight costs through the Baltic Sea. Now, just full disclosure, I don't think I could pick out the Baltic Sea on a map, but it is one of the world's most traversed ways of, of shipping. So when freight is going up, that means There's a lot of competition for shipping and freight, and that means that that's good for the global economy. And when it's going down, it's the opposite. It's been holding its own. So from a global economy perspective, you know, shipping, commerce, export, import, holding their own and continuing to be at a decent level. So no panic. The takeaway there is, there's no panic in that.
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B
It's kind of balanced. And then maybe finally, I know you like a big source of kind of your, your data inputs are just some key earnings reports that are out or coming out.
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C
You know, again, when people ask me about how the economy is doing, this is, you know, in the American economy, we are driven by capital, we are driven by consumers, and we are driven by jobs. Right. What better place to know where capital is than listen to bank CEOs, for example, and every quarter, if you follow some of the larger bank CEOs, Jamie Dimon, for example, from JPMorgan Chase, you know, William tell you his thoughts. And he's just one. I'm not saying he's the final thought, but I listen closely to those guys because they are telling you what credit conditions are like from real, actual data from their actual customers. And not, not very bullish right now.
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B
He's been hedged.
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C
Retailers, same thing. I like to follow what Walmart's doing, what Amazon is doing. I listen to their CEOs. Andy Jassy from Amazon, consumers are still buying. They're a little cautious, but there's still. So that gives me good. And then finally there's jobs. I mean, you've got paychecks and you've got adp, the two biggest HR companies in the country. Why are we listening to a survey from the Bureau of Labor Statistics when you've got these companies that have millions of employees in their database and every month they report on their jobs index and their wages index. Both have been slowing down. They tell you, they tell me way more than any government survey is going to tell me because again, that's actual, real data. So another couple of metrics I follow.
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B
So just put a, put a cap on your. Where you're feeling about.
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C
I can tell you no one's panicking. No one's raising the red flags. Nobody's jumping off the ship right now. Nobody's feeling thrilled about the economy. We're not in significant growth mode, but we're waiting to see how the elections turn out. But if you follow the banks, you follow the payroll companies, you follow the retailers, you look at some of these other Metrics, I noticed you'll just see that we're at a moderate growth stage with no major storm clouds ahead, not expecting a recession anytime soon. But as business owners, we have to be careful how we manage our money.
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B
Well, good. So let's pivot. Just part of what we wanted to do is maybe just put the. The tariff proposals that each candidate has submitted and break it down for our audience.
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C
So tariffs have a big impact on the economy, Mike, and particularly small midsize businesses get impacted by this stuff. There is this ongoing debate whether or not they cause inflation, they don't cause inflation. Where they create jobs, where they don't create jobs. I. I don't think we have time to even, you know, to scratch that surface of that debate. But I just, I want you, if you're a CPA and you're advising your clients to know the Biden administration, their strategy for tariffs is they're focusing on China, and they have already implemented tariffs on Chinese goods, as much as 25%, 100% on electric vehicles. So, you know, if you have clients that are buying and selling to and from Chinese customers and suppliers, you will see a big hit on tariffs, which is going to have a big hit to their. To their costs. So that's. And that's already happening. Right. The Trump administration, you know, if Trump gets elected, he wants to take it a whole other step, and he wants to have an overall 10% increase in tariffs as well. 10% tariff on all goods that come into the country. He wants to tax all Chinese goods 60%. And then also he wants to have this discretionary tariff anywhere from 10 to 25% on countries he thinks that are taking advantage of. Of the US Whoever gets on his bad side, you know. Yeah. So his strategy, again, is, you know, he wants just not just Chinese companies to, you know, to be, you know, suffering from tariffs, but all company, all countries. He wants to keep the work in this country. And again, there's pros and cons to each of those strategies, but we have a responsibility to understand that so we can help our clients navigate through that.
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B
Thanks, Jen. Mark, how about. What do you want to add to that?
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D
No, there are differences between the two, you know, the two candidates, but we are in a climate of, you know, putting pressure, moving, you know, manufacturing home, focusing on U.S. u.S. Jobs. Both candidates, I mean, to be honest, there's a lot. That's where they're the most similar, if you think about it. They may tariff differently, but they're the. They're definitely focused on, you know, manufacturing, jobs at home, those types of issues.
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B
Well, good. Well, Gene, thank you. Mark, thank you. You guys will both be back in open forum. We do have a ton of questions so we'll, we'll integrate them a little bit later on. But these guys will be joining us in in just a moment. So let's go ahead and pivot and you know, bring in Lisa Simpson.
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E
Hey, Lisa, good to see ya.
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B
Good. Good to see you, Lisa. So I'll go ahead and turn over to you for a technical and resource update.
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E
Sounds great. Thank you. I've been keeping an eye on the questions and we've got some interesting ones coming in. But we're going to start with unfortunately, the topic that we've talked about for quite some time over the last few months, disaster relief. As Mark mentioned, Hurricane Helene disaster relief came out very quickly and we're happy about that. The details of what states are being given that relief and in particular states it's not an all. And then in some states it is all. So you'll see the state specific announcements there because I know so many have been impacted by this. We are waiting on the details around Milton Relief and I've seen some questions coming in about will it include the entire state of Florida because trying to address the challenges of both Helene and Milton hitting Florida very recently. So our team is working with the IRS to understand what scope they're going to provide in that relief. We've talked about FBAR relief, still waiting on beneficial ownership information reporting relief. So we'll keep you posted as soon as we hear anything from the irs. It is obviously on their radar and we are obviously advocating for that relief. For you. Some additional disaster relief that isn't on the slide is around the state of Washington. And again, you'll find a link to the IRS website in our Disaster Relief Resource center where you can get the most up to date by state, by year. Also, IRS announced extended relief for victims of attacks in Israel. So again, you've got the link there you can click on. It's always important for me to call out the AICPA Benevolent Fund. This is a benefit for AICPA members who have been impacted by short term hardships and these days a lot of that is disaster related. So please, if you're an AICPA member and you've been impacted and you need assistance, reach out to the Benevolent Fund. That's what it's for. And then we also have some disaster financial issues tools that you can leverage to help your clients or help you if your firm has been impacted. So again, we'll let you know as soon as we get the details on Milton and you know, hopefully we'll see a decline in the disaster relief conversations that we continue to have on upcoming town halls. Our thoughts are with everyone who's been impacted and then you're going to find in your downloaded slides resources that go into some fairly niche topics that I wanted to make sure on your radar. So this is something we've been doing for the last few sessions. Download those slides. Not only are you going to get links, live links to everything, but you're going to find some things we don't really dig into during the live session. But there are things in there About Secure Act 2.0 guidance around long term part time employees. Some really interesting TIGTO reports. So the Treasury Investigations Unit has released several reports very recently on some interesting topics. So I've given you links to all of those and again, just download those slides. I wanted to spend a few minutes so that's it for our Tax Technical update, which is probably a good thing since it's October 10th, but I wanted to spend some few a few minutes thinking about what's next. And I can't tell you enough about how impactful this reimagining your tax practice series could be for you. It is free. It is with your peers. These are your practitioners who are going into their in depth discussions around what they're doing to reimagine how their practice operates, all designed to help smooth out the impact of busy seasons and filing deadlines. I've given you a look at the upcoming topics. I'm going to call out the one on December 18th around right sizing your client base. We've talked a lot about it over the past couple of years and this one we're actually including the resources that PCPS has developed that you can leverage as a toolkit. It gives you simple communication, evaluations, right fit, and those kinds of topics, along with links to podcasts with conversations from practitioners who have made these changes and talk about the benefits that they've realized. So don't forget to sign up for those. They are free. There is no cpe, but there's a new innovative offering that you'll find on that hub that we've linked to that can tell you how you can look at getting CPE for those. And then another resource that I wanted to make sure that you've still got on your radar is the Tax Section Odyssey podcast. The latest one is around digital assets. I know that the IRS guidance has been coming out repeatedly over the last few years. So there's a great podcast that helps you demystify all of that new guidance that's out there. You'll see a list of some of the others that are out there as well and the link on the resource hub will take you to all of those and you can find those easily. Now I'm going to switch a little minute from tax related things to practice management and I wanted to call out especially for our small firm practitioners, whether you're a sole practitioner or, you know, in a small firm. Carl Peterson, our Vice President of Small Firm Advocacy Releases, has released these recent articles that I thought would be good to make sure that you know about again. Once you're past the filing deadlines or if you are looking for 10 minutes to think about something else, these are some good topics to keep on your radar. M and A I can't talk to a single practitioner today without the topic of M and A coming up. Carl's got some great insights in there about how PE might be trickling down, but also even if you're not interested in pe, what you can be doing to make your firm more attractive. Hot topics in practice management man. Some great insights around talent compensation models, metrics, technology and efficiency. So really good insights there. And then a look at the top issue survey that you all helped by participating in. We've got a roadmap coming out in the next few weeks that will help map the resources to the topics that you've identified as your challenges. So I'm excited about that coming out and we'll let you know as soon as that is out as well. And next up, I've got an update on transforming your business model. If you've been listening for the past couple of years, you've heard me talk about the project that pcps, which is the Firm Practice Management Resource center, has undertaken to really help firms adapt to this ever changing landscape. We all know we've got pressures on our talent pipeline. We all know that we need to be thinking about how to leverage technology to drive efficiency and quality and using automation, changing how we do work, who does the work, where they might be located. We also need to be thinking about what services we're providing, how we're billing those services, and are we working with the ideal clients that really value the work that we're doing. We've packaged all of that in what we're calling our transforming your business model resource and we are adding resources on a regular basis. So I wanted to call out something that I'm really excited about I get nerdy about governance structures and we are getting ready to be releasing a governance toolkit developed by a couple of really well known consultants in the profession who are going to help give some concrete ideas around how governance structures can change and maybe should change as firms grow and as they get bigger. And maybe it's time to move away from a one partner, one vote model. We'll be looking at partnership agreements and those governance structures. I love the topic because I think if firms can really leverage an effective decision making model, they'll be able to take advantage of opportunities more quickly, they'll be able to pivot, they'll be able to make strategic decision making based on the long term success of the firm. So good stuff coming and I've got a great conversation to kick it off with, and that is with Denise Bullock, who is the CEO of a top 100 firm in Utah called Squire & Company. The firm has experienced tremendous growth and Denise gives us a look at how the governance structure within the firm was designed to change as the firm got bigger. So really good things coming out of that one. Got a ton more resources for you at that link I've given you. And I have to call out the podcast that our team has been doing because we're talking with practitioners again, your peers, about changes. Not just changes, but really transformational shifts in how they're tackling particular subjects. It could be capital, it could be recruiting, it could be people development and bringing in internal coaches and mentors. So all kinds of great insights from your peers that I want to make sure you're checking on. And then the last topic, I'm going to zig back to a technical oh, sorry, never mind. I forgot which side was next. Let's go back to that slide. Michael, I apologize, I confused you. We've got an upcoming webcast around the talent pipeline and I want to call this out to you because every one of us has a role to play in the talent pipeline. So let's look at some of the research that the hard data that Gene Marks referenced earlier in his comments. We've got hard data on what is causing our talent pipeline challenge and some of the things that people are thinking about as they consider whether to enter the accounting profession or finance or engineering or STEM or something else. So really good intel there that you can think about as you're crafting your personnel strategies. We'll talk about developments in the pipeline acceleration plan and how you can be helping build the pipeline. It is free and anyone can attend. So bring in the HR person in your firm, bring in your recruiting people into this conversation. It's really important for all of us and it's at no cost and you are eligible for CPE with this on the next Town Hall, Sue Coffey is going to join us to talk about a couple of exposure drafts that tie into this topic. One is around creating a potential new pathway into the profession, and then the second is around changes to the Uniform Accountancy act, what we call the uaa, that would help enable that alternate pathway. Big topics that we all need to be engaged in. So please make sure that you read those Journal of Accountancy articles and then join us for the next town hall. All right, now back to my technical zig, because this relates to our next conversation, which is growing Advisory services. We have recently released a proposal that talks about preparation of financial statements kind of as a byproduct of ongoing client accounting and other types of advisory services. So it's really an attempt to help create some clarity and consistency in practice around how these prepared financial statements are looked at from a Is it a quality, Is it an ARSC statement, or is it a consulting standard? So I've given you a link to a Journal of Accountancy article and we're going to talk more about this as the comment period comes to as we get a little closer. But I'm bringing this to your attention because it is part of the evolution of advisory services and client advisory services, which is our next topic.
- [36:05]
B
Hey, Lisa, as usual, that's a great update. Lots of good stuff there. A lot of questions, but I'm going to spare you those until Open Forum because as you said, I think this topic bridges nicely into our next segment. I know you're going to join us at the end of this next segment. We're going to go ahead and pat you back in, but thank you for that update, Lisa. A great, great job. And Lisa's right, this is important and it really does speak to the amount of growth and evolution that's taking place in cas. And so I want to go ahead and invite in Kim Blasco. Hey Kim.
- [36:45]
A
Hey, Michael. How are you?
- [36:47]
B
Good. How are you doing?
- [36:48]
A
Great. Happy to be here.
- [36:50]
B
Well, welcome, Kim, to your first town hall. Kim is with CPA.com and leads our professional services group specifically around CA CAS. It's something we formed fairly recently, within the last couple of years. And the best way to describe it is Kim spends the bulk of her time out there speaking with firms of all sizes around strategies around how to help their cast practices grow. So she's A wealth of information in this area. But we were excited about this segment because this is such a hotel and growing area. It applies to firm of all sizes. But we, you know, as. As long as CAST has been around, there's still a lot of things that are not standardized. For instance, I'm sure if I polled everyone on this, on this town hall and asked them to define their caste practice, we'd have thousands of different definitions of what that caste practice looks and feels like. They'd be at very different parts of the journey in building that CAST practice. A lot of folks would be revisiting maybe something that they launched. And now I've learned a lot and are trying to remake that practice area. So it's a very fluid area. It's a high growth area. But the beauty of it is there's a lot to learn from all the other firms who have kind of gone before us. And I think that's what we want to get into a little bit here, Kim, is to bring in Rob Henderson and maybe the two of you have a little bit of discussion about how Rob is building out the practice at Wine. So I'll go ahead and welcome Rob and turn it over to the both of you to take us through the segment.
- [38:32]
A
All right, thank you, Michael. So I'll start off by saying, you know, Michael mentioned that cas, our client advisory services that we refer to cas, has been one of the hottest growing areas inside of firms and basically reporting double digits year over year. Accounting today actually reports that 36 of the top 100 firms show CAAS as the fastest growing service offering, which is very different than when I came into this practice area for sure. But it's not just happening in the large firms. We are also seeing opportunities in firms of all sizes because client needs are changing and they're looking for deeper insights and strategic guidance as they continue to grow. So technology is one of the reasons that has helped create capacity and capabilities within firms to automate the repeatable processes as well as AI, which we hear about all the time now, which is augmenting how humans interact with that technology and then freeing up time to bring more insights and value to the clients that firms are working with. So today, many of the firms that we work with are on a transformation through changing from traditional accounting and bookkeeping practices to more of that high value business, business insights, CAST practice. What we've referred to@cpa.com is CAST 2.0. So you might hear me say that a couple times today as we go through our segment. I'll Also mention that we do have a definition@cpa.com that we follow for client advisory services, but truly, it can be very different from firm to firm. And I'll talk a little bit more about that as we talk about establishing a vision. So for most firms, they're getting into cast 2.0 through a transformation journey. So let's talk a little bit about that transformation journey. I'll set it up and then I'm going to be bring Rob into the conversation. So maybe Michael. Yeah, perfect. Thank you. So we believe that cast 2.0 is a journey that ha. That has to be very intentional. Right. So there's several components that we talk about when we talk about going through the transformation journey. We start with firm strategy and governance. You actually heard Lisa talk about this on her segment as well. So in our world, when we talk about it from a CAST perspective, we want to bring that senior leadership together with that CAST leadership to talk about what the evolution of CAST is going to look like within their firm. And then we dive into that through building a CAS vision and thinking through what industries that CAS practice is going to work in and what the service offerings they're going to have. And also some of those key metrics that the CAST practice should be following as they go through their transformation. And then we talk about ideal client profile and. Right. Sizing your clients. So Lisa talked about this as well. You know, looking at the clients that you have today and saying, are those clients still a right fit for the practice that we're building of the future? And then also looking at your team that you have today and the service offerings in the industry that you're going to work in? And do you have the team that fits what you need in order to service the clients that you're going to have moving forward? And if you don't, what are those gaps? And then technology, a big part of it. CAST practices are built off of technology and the processes that go around it. So taking a step back, building new processes, figuring out that tech stack by industry, and then implementing that technology and those processes to go along with that. And then probably one of the number one questions I get from firms all the time is how should I price, pricing and technology tend to be the two big things everybody wants the Magic 8 ball for. I don't have the Magic 8 ball, but I definitely have some tools that we can help with firms when they're looking for those types of resources. And along with that is the client experience side of it. And how do you onboard clients do you Do a formal assessment that you charge for within your practice or you do more of an informal assessment that has to do with developing that scope of work and the proposal that you're going to bring to those clients, those potential clients that will be new to your practice. And then last but not least, marketing and sales. You know, we talk about internal marketing from the very get go. You know, how do we keep the leadership informed of what we're building out in our CAST practices and then how do we go to market with a philosophy and how do we set ourselves apart from the firm that's down the street? But I will also say that every firm's vision and what they work on can be different. You do not look need to look like John Smith's practice down the road. But we do know that most people are very, very good. Most firms are very, very good and transactional through controller work. And firms are still very much struggling with cast 2.0, you know, bringing in that business insights. So what better way to discuss practice transformation than to bring a practice leader in? So, Rob, thank you for joining me on Town hall today. I appreciate having you here.
- [43:20]
F
Yeah, absolutely, Kim, thanks for having me. It's been a couple months since we last spoke at Engage and our practice, you know, continues to thrive and we're very excited about that. So you really laid it out very well from a practitioner standpoint. We entered into this journey about two years ago, really. I'm a tax professional and for the last five, six years I had been focused on providing exit planning and MA services to my clients. And as I was sitting down with them to start to go through financial due diligence, I was really quickly finding out that a lot of my clients didn't have budgeted financial statements, forecasts, things that potential buyers were looking for during due diligence. And so I knew that wines we had a bookkeeping practice, we had a pretty large transactional practice. And I went to them to see how they can maybe help me on the exit planning side. And I quickly found out that the business insight piece was lacking from our practice. And I was pretty interested in going out and figuring out how to build this. So through some of my curiosity, one night I ended up on a LinkedIn advertisement for FP&A software that I quickly typed my name in there and my email address and what do you know? The next day I got a response from CPA.com and one of your cast firm strategy managers and asking me what it was I was looking for. And as we were having this conversation it became pretty clear that we did not have a cast 2.0 practice and that we really needed to go back to the foundation, the fundamentals, and really reconsider a relaunch of this service using a methodology as it's outlined here in front of you. And so I took that conversation and I went to our managing partner and talking to our managing partner, this was certainly something that the firm wanted to look into. We had been hearing the hype in the industry and very excited about it. And again, we already kind of had, you know, the transactional piece in place. And so they empowered me to go out and, and work with CPA.com to hop into this Cast 2.0 practice transformation journey.
- [46:04]
A
Yeah, that's great. Thank you for sharing that. And you know, I, I talk a lot about vision. I think it's one of the most important things that we do, maybe next to the firm strategy and governance, getting buy in from leadership. And I know like, like when you started this journey, you said you started thinking all you needed was the FPA technology. Right. But I think you realized fairly quickly and from what you said that your vision changed as you, as you went and, and technically you ended up with a different role after all of this vision happened. So maybe talk to us a little bit about, you know, kind of where your vision went and maybe where you are today from the difference between where you started and where you, where you've ended up.
- [46:43]
B
Yeah.
- [46:44]
F
So as you said, you know, we recognized pretty quickly that this was going to be a much heavier lift than we thought. Right. And so we really looked at what we had and over, I would say maybe six months, you know, we decided to make a leadership change and I took over the department, I brought in two other people to help me lead. This certainly wasn't something that I could do on my own. And, and I wanted this to be a group effort. And once we really got the buy in and the support from everybody, we quickly realized that many of these foundational pieces, and like you said earlier, especially like human capital technology, the pricing and the packaging, we realized we didn't have. And so I went to our growth officer who was good at helping us put these together, and I would say that span of next six months or so, we really dove into productizing our services and putting together a three tier pricing strategy that all new prospects went through this assessment and we were able to price the engagements and things really started to take off. And so we were increasing the types of clients we were working with and we were generating more revenue and then we started to see that in some of the other areas like technology, human capital, processes and procedures, that we needed to spend some more time there because we wanted to make sure that our tech stack didn't get too wide. Right. We wanted to make sure we were using automation and AI. We needed to make sure that we had the right people in place. We had to go hire someone who was actually in industry as a CFO and bring them in on our team to help us provide the CFO services. And it all really came together really quickly. So over, you know, it's been about a two year journey now that we've been doing this. And at this point I can say very comfortably that we have really built the foundation that we need in order to really grow the department exponentially. And now that, you know, we just started our fiscal year here in July, our goals, our goals for the department look very different than what they looked like two years ago when we started re envisioning the practice. And we're very proud of that. And, you know, we're off to a great fiscal year.
- [49:07]
A
Great. Thank you. So, Rob, we could talk about transformation all day long, you and I, and we probably have at some point in time, but Wines is a large firm. Lisa, you work with firms of all sizes and you're very familiar with client advisory services for firms here today. On the call with us, you know, what are your thoughts about them embarking upon a cast year?
- [49:27]
E
I think this is a huge opportunity for smaller firms to really differentiate themselves and to expand that role from just compliance and seeing their clients once a year to building out that deeper relationship that I think a lot of small firm owners and the folks within their firms really are looking for. Technology is the great enabler. I hear Eric Oscarson say that all the time, and especially in this client advisory space or client accounting space, whichever one you want to call it, really being able to pivot quickly, to be agile, to identify your ideal client. Those are things you can control in a firm that is of smaller soul. And then you can just really dig in and go with what you like to do. I think the opportunity in this space for smaller firms is huge. And I love seeing so many firms that are starting from scratch. Younger firm owners, older firm owners who are just kind of saying, I'm going to create my own firm and this is what I'm going to do for my clients. Because I want that deeper relationship. I want those advisory types of conversations not here's how much you need to pay on your third quarter estimate. All Right.
- [50:44]
A
I think you. We're going to pass it over to you, Lisa, to wrap up and move into the next segment.
- [50:49]
E
Thank you. We'll bring you two back and. Well, I think we're moving on to Open Forum, so Michael will join us and hopefully he's been looking at some of the questions and has some easy ones picked out for all of us.
- [51:01]
B
Yeah, there's a. There's a bunch of questions and we. Great job on that. On that update, guys. Really good conversation. I know you probably wished you had twice as much time. So before we, before we get into Open Forum, though, we did have a bunch of questions, as Lisa always does predict. I mean, there's going to be a lot of smaller firms that say, is this really applicable to my practice? And I think she just did a great job of answering that. But how do I get started or how can I begin to scope out what this looks like? So we want to just point out some resources for folks. One is our Intro to Cast workshop. I think, Kim, you'd recommend. That's a great place to start if you're really just thinking about launching or revamping a cast practice. For the first time, we have a white paper out there on the future of client advisory services and then a blog that talks about some of the biggest challenges. I think Lisa nailed it with her last comment there, too. The key is to really start out with what is your vision. Cast practices are very different in scope. They all look very different. So it's really about you defining what type of a service you want to offer out to your clients. I think once you kind of start with that North Star, you can begin how you build that out. So when we have a ton of resources to support you in that regard. So let's bring everybody back in. We have a very full group here today, but great discussion so far. So I'm going to do a little bit of a round robin. I don't know, Mark, Lisa let you guys do kind of a jump ball on this one, but I'll summarize one of our favorite topics. Boi. I mean, there's clearly consensus. I'm telling you what you know, but that there is just a. An inordinate amount of clients who still aren't even aware of BoI. And I. You know, I don't know if there's any guidance or anything we want to shed on that. I don't know how much outreach Finston's doing to alert people. I know CPAs on, on the town hall are doing there, but you Guys have any guidance comments?
- [53:07]
E
Because this is virtual. This is my only opportunity to win a jump ball against Mark Peterson, at least 15 inches taller than me. So I'm gonna win this one, Mark.
- [53:20]
D
So, Lisa, that is, you could try maybe if we got you something to stand up. But let me tell you what the way I would respond to that is. Yes, it is. I mean, actually, NFIB did. Did some surveying that the vast majority of their members, small businesses, were not prepared for this, had no idea. FinCEN is reaching out. We're having conversations with them. FinCEN is actually having conversations with a member of Congress who has a bill that would actually delay for a year. We're also hearing that they're reaching out to other organizations, including state CPA societies, to try and get the word out. But there's not a lot of time left to get the word out. And so, you know, there is momentum for delay, but, you know, you have to meet momentum, has to meet political opportunity, and days are running out.
- [54:10]
E
And I will just say that on the awareness piece, we have resources within our BOI Resource center that help you communicate out to your clients about the BOI filing requirement. And then you can choose. If you're going to offer those services, you can include that. If you're not going to offer those services, very clearly state that. Make them aware to the best that you can as a practice risk management technique. And Michael, can I zig really quickly? Because, you know, I like to zig. Apparently the link to the National Pipeline Advisory Group webcast is working, but if you try to actually register for it, then you get an error message. I apologize for that. I've emailed the team and they'll be looking into that, and we will make sure that we get the correct or updated cart item for you as quickly as possible. I'm so appreciative that so many of you tried to sign up for it, and I apologize for that. We'll make sure that that gets included in the newsletter.
- [55:11]
C
Michael, can I add something about BOI as well? One should. One thing, guys, that has worked for us as well is when you make your clients aware that they could be facing up to a $10,000 fine per entity if they don't do this filing requirement. It wakes people up.
- [55:28]
B
Sure.
- [55:29]
C
So as we're heading into the end of the year, that might be a factor. Yeah.
- [55:36]
B
And I think what's nice, though, is having these resources that kind of amplify that coming from FinCEN, because it puts the practitioner in a little bit of a challenge position. Having to deliver that news for the first time. Lisa, use zig. So maybe I'll zag. You spoke about links. Can you repeat the links? Is it for the tigta?
- [55:59]
E
Yeah. So basically everybody needs to just go download the PowerPoint slides from today. They're in your resources as a PDF. You're also going to find some other things in there. Our comment letters asking for relief and those kinds of things. Download all of those materials and that's where you'll find the slide that lists out those tick toe reports.
- [56:20]
B
Great. And just jumping back to Boi because this was another commonly asked question and I don't think we touched on it. Is there any way right now to get confirmation once you filed?
- [56:34]
E
There's not and so we would ask that you take screenshots or print screen or something like that to prove that the report was submitted.
- [56:45]
C
That's a great question.
- [56:47]
B
Yeah, it is. It was a commonly asked question too.
- [56:51]
D
We could add that to the list for our conversations with Fence.
- [56:55]
B
Perfect. And then maybe final question and Gene, you could weigh in on this one as well is just, you know, realistically, what is the smallest size firm that can roll out a cast practice? I'll go first. Maybe if you're a sole practitioner. I think as long as you're, you could be a single professional maybe with a, with an extended team. You need some level of resource to do it. But Lisa, I'll invite you to maybe start.
- [57:24]
E
Yeah, I agree with that. And I just recently spoke with a sole owner of a CPA firm and he has one part time employee and as he grows his practice, as he gets takes the clients he wants to take, which I think is really important in that small firm environment, then he'll look at adding on additional staff. So I think it really is an opportunity for a firm owner to think about what they want out of their offering and who they want to work with and then control the growth at the pace that they want to.
- [57:59]
D
Great.
- [58:00]
B
And Rob, I'll give you a final word on that. I know Wines is a large firm, but I'm sure you have smaller firms asking you for input on this quite a bit.
- [58:09]
F
Yeah, absolutely. No, I agree. Especially with the use of offshoring to help with staffing. I agree you could be a 1,2 partner firm that is focusing primarily on cast services and, and if you're, I would have to say you're going to be technology. You got to be open to technology, open minded and leverage into technology, automation, AI. But there's no doubt, I think this is definitely an area small firms can explore and get into and actually probably be very profitable at doing it if they have certainly the background and expertise in these types of business advisory services.
- [58:51]
B
Super. Well, thank you to all of our participants. Appreciate great panel discussions today folks. And before we let everybody go, I'll quickly just call out our digital CPA conference. Speaking of cas, this was a conference that we founded specifically around cas. It was formed over a decade ago and grew out of the growth in in the CAST practice area. So it definitely skews. You have a significant number of firms here who attended for the CAST tracts we've recently audited, you know, added very innovative audit and tax tracks as well. So that's coming up in December if you want to consider registering for that. And I'll remind you of our new AISPA Town hall rebroadcast feature. This has been very well received. So you can now get the Town hall on demand. You know, for times like today where we're bumping up against a deadline and you can watch it on your own own time and for CPE as importantly. And we'll remind everybody that October 24th we have an all Star lineup coming in again. So we will see you then at 3pm Eastern Time. And for now thanking everybody and wishing everybody a very happy rest of the week. So thank you.
- [60:12]
A
Thank you for your participation. You can now subscribe to the AICPA Town hall series on your favorite podcast platform, as well as watch archives on YouTube and AICPA TV. Tune in for live broadcasts Thursdays at 3pm Eastern Time.
- [60:30]
G
This podcast is designed to provide illustrative information with respect to the subject matter covered and does not represent an official opinion or position of the AICPA or AICPA.org it is provided with the understanding that The AICPA and AICPA.org are not engaged in offering legal, accounting or other professional service. If such advice or expert assistance is required, the services of a competent professional person should be sought. The AICPA and AICPA.org make no representations, warranties or guarantees as to, and assume no responsibility for the content or application of the material contained herein, and especially disclaim all liability for any damages arising out of the use of, reference to, or reliance on such material.