AICPA Town Hall: Small Business Environment and CAS Strategies

Date: October 10, 2024
Host: Michael Cerami
Panelists: Gene Marks, Mark Peterson, Lisa Simpson, Kim Blasco, Rob Henderson

Overview

This episode of the AICPA Town Hall centers on the rapidly evolving small business environment, the current political and economic climate, and proven strategies for building and transforming Client Advisory Services (CAS) practices. Featuring updates from D.C., discussion of disaster and regulatory relief, economic insight from the small business perspective, and practical CAS transformation frameworks, the episode offers actionable guidance for firms of all sizes navigating today's challenges.

Key Discussion Points and Insights

1. Washington Update & Disaster Relief

Speaker: Mark Peterson | Time: 01:43–09:22

• Election Dynamics:

  • 26 days until the election, with early voting underway in critical battleground states.
  • Polls are extremely close; battleground states like AZ, NV, WI, MI, PA, NC, and GA are within a 1-point margin.
  • “Every time there's a presidential election, we always have something that happens in October...” (03:00)

• Natural Disaster Impact:

  • Recent hurricanes (Helene and Milton) cause widespread disruption, particularly in Florida and North Carolina.
  • IRS has begun granting tax relief prior to disasters making landfall, but there's a call for more rapid action.
  • Congress may return early to address disaster relief funding, but it’s more likely to await the lame duck session.

• Legislative Note:

  • Bipartisan support for a bill that would allow IRS to automatically extend filing relief based on state (governor) disaster declarations, not just FEMA.

• Voter Access:

  • Disasters may impede people's ability to vote in affected states, varying by state laws on mail/early voting.

2. Regulatory and Filing Updates

Speaker: Mark Peterson, Lisa Simpson | Time: 08:14–23:43

• Beneficial Ownership Information (BOI) & FBAR:

  • FinCEN has extended FBAR relief in disaster zones; discussions continue for similar BOI relief.
  • Possible congressional momentum for a one-year delay in BOI deadlines, due to disaster complications.

• Practice Guidance:

  • CPAs with clients in disaster areas should assist in accessing SBA’s low-interest disaster loans. (Gene Marks, 09:40)
  • Strong recommendation for proactive outreach to affected small businesses.

3. Small Business Economic Outlook

Speaker: Gene Marks (with Michael Cerami and Mark Peterson) | Time: 10:59–22:56

• Reliability of Economic Data:

  • Gene prefers real-time, “from the field” business data over lagging government metrics.
  • “I've learned over the past couple of decades … to be a little bit dubious about government data... what doesn’t get attention is the revisions to it.” (10:59)

• Key Indicators:

  • Institute of Supply Management (ISM):
    • Manufacturing has been in contraction for 22 of 23 months; services sector is expanding.
  • NFIB Small Business Optimism:
    • “Small business … uncertainty and optimism is really at a historic low right now.” (13:30)
  • Tax and Regulation Uncertainty:
    • A major source of anxiety; election outcomes directly impact future tax and regulatory environments.
    • “Taxes are going to be a big conversation in 2025 and they really hit the pocketbook of America's small businesses.” (14:28)

• Other Leading Indicators:

  • American Institute of Architects Billings Index: Decline signals slower construction ahead. (17:42)
  • Baltic Dry Index: Shows global shipping costs; holding steady, signaling no panic. (18:13)
  • Bank, Retail, and Payroll Data:
    • CEOs' earnings calls, ADP, and Paychex seen as more reliable employment and economic metrics than government surveys.

• Overall Economic Sentiment:

  • “No one's panicking … We're not in significant growth mode, but we're waiting to see how the elections turn out.” (20:35)
  • Moderate growth, no recession expected, but prudent money management is advised.

• Election Impact on Business:

  • No clear small business favorite, but election outcomes on tax and regulation are watched closely.
  • Federal gridlock can have unexpected positive or negative psychological effects on business sentiment.
  • "If you have an administration that's very pro business, that encourages business to invest and to hire… If you have an administration that's more pro worker or pro regulation… businesses tend to pull back." (17:04)

4. Tariff Policy Differences by Candidate

Speaker: Gene Marks, Mark Peterson | Time: 21:04–23:26

• Biden Administration:
  • Targeted tariffs on Chinese goods: up to 25% (100% on EVs).
• Trump Proposal:
  • Universal 10% tariff on all imports, 60% on Chinese goods, and discretionary tariffs on others (10–25%).
• Both Candidates:
  • “We are in a climate of putting pressure, moving manufacturing home, focusing on U.S. jobs.” (22:56)
• Advisory Note:
  • CPAs must understand and prepare clients for the large cost impacts of these policies.

5. Tax Technical and Practice Management Update

Speaker: Lisa Simpson | Time: 23:43–36:05

• Disaster Relief Updates

  • Relief specific to recent disasters listed by state on IRS website.
  • AICPA Benevolent Fund is available for members facing hardship.

• Additional Technical Resources

  • Updates on Secure Act 2.0, TIGTA reports, digital asset guidance resources.

• Business Transformation Resources

  • Emphasis on reimagining tax practices and business models.
  • Upcoming webcast on talent pipeline challenges and solutions.

• Governance Toolkit Preview

  • New governance resources/structure advice for growing firms.

• Practice Management Hot Topics:

  • M&A, talent, compensation, tech efficiency, and right-sizing client base.

6. CAS (Client Advisory Services) Strategies & Transformation

Speakers: Kim Blasco, Rob Henderson, Lisa Simpson | Time: 36:45–50:49

• CAS Growth:

  • Fastest-growing service area among top 100 firms (“double digits year over year”).
  • Technology and AI drive capacity and shift focus toward higher-value advisory.

• CAS 2.0 Transformation Framework:

  • Key Elements:
    • Firm strategy and governance
    • Vision and ideal client profiling
    • Team and talent alignment
    • Technology and process optimization
    • Value-based pricing
    • Client onboarding and assessment
    • Internal and external marketing

• Real-World Example:

  • Rob Henderson (Wine):
    • Practice moved from transactional services to productized, multi-tier advisory.
    • Invested in FP&A tech, revised leadership, and prioritized buy-in and vision.
    • “I can say very comfortably that we have really built the foundation … to really grow the department exponentially.” (48:30)

• Applicability to Small Firms:

  • CAS transformation is feasible and strategic for firms of all sizes, including sole practitioners.
  • “I think this is a huge opportunity for smaller firms to really differentiate themselves … to building out that deeper relationship…” (49:26, Lisa Simpson)

7. Open Forum & Listener Q&A Highlights

Time: 50:49–End

• BOI Awareness and Compliance:

  • Many clients remain unaware of BOI requirements.
    • "NFIB did some surveying that the vast majority of their members, small businesses, were not prepared for this, had no idea." (53:19, Mark Peterson)
  • Practitioners should emphasize risk ($10,000 fine per entity for noncompliance—Gene Marks, 55:11).
  • Use AICPA resources for client communications; clarify whether you’re offering this service.

• BOI Filing Confirmation:

  • No automatic confirmation from FinCEN; practitioners should take screenshots upon submission. (56:34, Lisa Simpson)

• CAS Adoption for Small Firms:

  • Sole practitioners can launch CAS with technology and selective client intake; start with vision and scale with growth.
  • "You could be a 1,2 partner firm that is focusing primarily on cast services ... if you're ... open to technology, automation, AI." (58:08, Rob Henderson)

Notable Quotes and Moments

• On Economic Data:

  • "I like real, actual data from real, actual companies … it tells me how the economy is going."
    —Gene Marks (10:59)

• On Gridlock:

  • “Sometimes…things not happening in Washington can help business. Although I will say…the most likely outcome is that we have divided government.”
    —Mark Peterson (16:07)

• On CAS for Small Firms:

  • “I think this is a huge opportunity for smaller firms to really differentiate themselves...”
    —Lisa Simpson (49:26)

• On BOI Penalties:

  • “...when you make your clients aware that they could be facing up to a $10,000 fine per entity... it wakes people up.”
    —Gene Marks (55:11)

• On Practice Transformation:

  • “Once we really got the buy-in and the support from everybody, we quickly realized that many of these foundational pieces… we didn't have. … we really dove into productizing our services and putting together a three-tier pricing strategy...”
    —Rob Henderson (46:44)

Key Timestamps

• 01:43 | Washington & Disaster Update (Mark Peterson)
• 09:40 | SBA Disaster Loans and Small Business Perspective (Gene Marks)
• 10:59 | Real-World Economic Indicators Discussion (Gene Marks)
• 17:42 | Architects Billing Index / Baltic Dry Index / Bank Data
• 21:15 | Tariff Proposals Comparative Breakdown
• 23:43 | Technical Update: Disaster Relief & Resources (Lisa Simpson)
• 36:45 | CAS Transformation Strategies Discussion
• 43:19 | Rob Henderson’s CAS Journey at Wine
• 49:26 | CAS Opportunities for Small Firms
• 53:07 | BOI Awareness and Guidance
• 56:34 | BOI Filing Confirmation
• 57:24 | Smallest Firm That Can Offer CAS

Resources & Guidance

• AICPA Disaster Relief Resource Center: State-by-state relief info, including for Israel victims.
• AICPA Benevolent Fund: Financial assistance for members affected by disasters.
• CAS Resources: Intro to CAS workshop, white papers, blogs—advice for starting and scaling.
• BOI Resource Center: Client communication templates, compliance checklists.
• Upcoming Events:
  • Digital CPA Conference (focus on CAS and innovation in December)
  • Webcast on the talent pipeline (Free, with CPE available)

Final Takeaways

The CPA profession faces a period of unprecedented change and opportunity. Small business sentiment remains cautious due to regulatory and economic uncertainty, and tax policy remains a looming national debate. Meanwhile, the transformation of accounting firm business models—especially around CAS—offers both growth and resilience, powered by technology and a client-focused advisory mindset. Disaster relief, regulatory updates, and evolving talent strategies all require proactive, client-centric action and access to best-in-class resources.

Action for Practitioners: Stay informed, leverage AICPA/CIMA tools, communicate clearly with clients—especially on BOI and disaster compliance, and consider how a purpose-built CAS practice, no matter your firm size, can add differentiated value in today's market.