Conviscating professional services

I’ve been watching a lot of the health care debate and town-hall meetings lately, as I believe this is a seminal issue that will define our view of rights vs. privileges in this country for a long time to come.  Now the analogy that I am going to draw is a stretch, but it really is the general direction that we are currently headed.

What if some legislators decided that everyone in America had a right to ‘affordable’ professional tax preparation?  How would this potentially affect the market for tax preparation services?  Furthermore, these same legislators want to tell you how to provide this service and help you define the extent of service each client may need.  At the same time, they will tell you how much this service is worth under the auspice of ‘negotiating the best deal for the customer.’

Would you be excited to be providing services in this type of marketplace?  Would the customers be excited to receive the services that are grudgingly provided by professionals who used to work in a free enterprise?  Would there still be the same incentives to become more effective and efficient and utilize technology or would these improvements be mandated with more legislation and grudgingly implemented?

How do you think that doctors and patients will fare any better than other professionals under the same circumstance?  Are they so much more altruistic that it will work?

AICPA partnership with Intacct

I don’t usually post a press release, but I was asked to pass this along by Bill Roberts at the AICPA.

NEW YORK and SAN JOSE, Calif. – April 7, 2009 – The American Institute of Certified Public Accountants (AICPA), its subsidiary CPA2Biz, and Intacct today announced a groundbreaking alliance to benefit millions of small businesses across America and improve the productivity of the CPA profession.

The alliance will help CPA firms and small and mid-sized businesses adopt “cloud computing” to improve their financial performance, take better advantage of financial advice and make better and faster business decisions. Intacct and CPA2Biz will also co-develop a new version of Intacct’s on-demand financial management and accounting applications specifically for CPA firms and their clients that includes unique content from the AICPA.

“In today’s economic climate, small and mid-sized businesses need to actively manage their financial performance by becoming continuously aware of their financial position and collaborate with trusted CPA advisors to make the best possible business decisions,” said Barry Melancon, president and CEO, AICPA. “Our vision for this new alliance is to improve productivity, increase transparency and reduce costs for both AICPA member firms and the millions of small and mid-sized businesses they serve.”

“We have seen a dramatic shift in the way CPA firms provide accounting services to small businesses, with technology being the primary driver,” said Erik Asgeirsson, president and CEO, CPA2Biz. “We’ve believed for some time that cloud computing was an effective model for firms to better support and collaborate with clients, but it’s taken many years for on-demand financial applications to mature. After an extensive, multi-year search for the right solution and partner we’re excited to be working with Intacct, whose applications, people, policies and track record are outstanding.”

“We’re honored and excited to join forces with the AICPA and CPA2Biz as their preferred provider of financial applications,” said Mike Braun, president and CEO, Intacct. “When you combine awareness and education from the AICPA with a new offering co-developed by Intacct and CPA2Biz, we are poised to improve the productivity of the CPA profession and millions of small and mid-sized businesses by driving the adoption of cloud-based financial applications.”

Key Details of the New Alliance:

The AICPA, and its subsidiary CPA2Biz, have named Intacct as their preferred provider of financial applications. CPA2Biz has also been named the preferred distributor of Intacct to the CPA profession.

The AICPA and CPA2Biz will make their unique intellectual capital, such as financial best practices, business guidance, benchmarks and industry templates available from within Intacct’s financial applications.

Intacct and CPA2Biz are co-developing a new and unique version of Intacct which will allow CPA firms to work together collaboratively with their clients. The new co-developed product will only be available through the CPA profession.

AICPA members will be eligible to receive discounts on all of Intacct’s financial management and accounting applications.

The benefits of the new alliance will extend to all of the more than 350,000 AICPA members, whether practicing in one of 45,000 member CPA firms or working in industry, and to millions of small and mid-sized businesses across the country.

“We applaud the AICPA for providing leadership to our profession by taking this unprecedented step to promote the adoption of cloud computing to allow all firms to better serve their clients’ needs,” said Al Anderson, CPA and Managing Principal, LarsonAllen LLP.

“As one of the largest accounting firms in America and an early adopter of Intacct, we’ve seen first-hand the benefits that this technology provides for our small business and non-profit clients, as well as for our firm. We’re huge fans.”

Cloud computing refers to the variety of ways in which technology companies offer computing services over the Web from remote data centers. Gartner, a leading technology research firm, estimates that the market for cloud-based services was more than $46 billion in 2008 and will grow to more than $150 billion by 2013.

Do the angels hear god?

I was watching Supernatural this week and a discussion among the angels reminded me of a couple middle managers in corporate America.  The angels had been asked to do some questionable things, and proceeded to do so under the premise that they must carry out the will of God. One angel pointed out, is this really the will of God (it certainly doesn’t seem consistent with what we know of his nature) or is this just an order from one of our superiors?

In corporate America the same thing occurs when an upper middle manager has his/her own agenda that is not in keeping with the objectives of the company.  Those middle managers under the rogue upper middle manager will do what they are told, thinking they are carrying out the will of the company, when they are really just carrying out the will of that manager.

The moral here is to think for yourself and be willing to question things that don’t pass the smell test.  Even if you feel like you are putting your head on a stake for doing so, you may end up being a company hero for exposing gross mismanagement.

An apology

I just realized today that my spam blocker was picking up and deleting a lot of legitimate comments to the site, and I wanted to take a moment and apologize to anyone who did not have their comments posted due to this oversight on my part.  As for a resolution, I have now disabled the spam blocker and will moderate every comment manually to ensure this will not happen in the future.

Government Health Care

This presidential race has garnered much attention for those who wish to socialize medicine by having the government guarantee health care for all.  Some of the problems in our current system are due to the government being a major customer of most if not all health systems.  However, the government either federal or state do not generally contribute to the profit of these health systems.

Medicare and Medicaid both work under a “cost reimbursement” system that only allows the government to be billed the actual cost of the procedure, rather than the market rate for that procedure.  The effect here is that to maintain profit margins across the whole system the “market rate” for those with private insurance and those who pay for themselves must be increased.  So we pay for the government health care plans with our tax dollars and further pay a subsidy to the hospitals through increased health care costs and higher insurance premiums.

A move to a single payor system (the government pays for and regulates all health care) could eliminate the profit from healthcare and greatly diminish quality.  It’s hard on the people with private insurance to make up the difference for Medicare and Medicaid twice (taxation and subsidy), but if a governmentally run healthcare system eliminates the profits from the industry there will be less pay for doctors, less structural improvements, less equipment upgrades, and more regulation of services provided. 

The effect of this change would not be apparent over night as it would be several years before the lack of structural improvements took a toll on the whole system, but it seems the system would necessarily deteriorate over time as profits were replaced with cost reimbursements across the board.

How much money can we print?

Yesterday the Federal Reserve released doom and gloom comments to the markets.  It seems that they believe the answer to the lack of cash in American’s pockets is to print more money, (rates have been cut by 3.25% since September 2007) so that there is more cash to go around.  Fortunately they measure inflation in a way that makes us appear to have little or no inflation, so they are able to lower interest rates and pretend it does not affect consumer prices. 

Unfortunately, America’s economy is highly dependent on oil, which is traded in dollars, making the Fed’s decisions to devalue the currency even harder on citizens as they attempt to buy the same goods today and tomorrow with an ever depreciating dollar.  Perhaps Americans should start saving their money in Euros until the Federal Reserve gets out of inflation denial.

Backyard ethanol?

Twenty percent of US corn production has been diverted to produce ethanol, and it is being heavily subsidized to get it up to speed. Now E-Fuel corporation wants you to make ethanol in your backyard from either sugar or liquor. In an article in Scientific American the company asserts that it takes 14 pounds of sugar to make 1 gallon of ethanol and the company will provide you with bulk rate sugar for between 15 and 30 cents per pound.

If my math is correct, that means that just the cost of the input, excluding the cost of the $10,000 machine, water, and electricity, is between $2.10 and $4.20 per gallon. In the same article the company states that one of its main objectives is for customers to be able to produce ethanol for about $1.00 per gallon. This seems to be unattainable until you consider the possible dilution of the ethanol (the same article states that 65% ethanol is acceptable to fuel an automobile, suggesting water for dilution).

Considering dilution the best possible cost is between $1.37 and $2.73 excluding the cost of the machine, electricity, and water. This also assumes that the company delivers on its promise to provide a source of sugar at the rate of 15 to 30 cents per pound. This may not solve our energy independence issues overnight, but it is at least a step in the right direction, putting power in the hands of the people.

How ethical is corporate taxation?

Nothing said here will bring an end to corporate taxation, but I would like for a minute to pretend that it is negotiable to examine its legitimacy and the effects of the system in place.  Our founding fathers waged war with England for taxation without representation, but when we levy taxation against non-voting entities that is exactly what we get.

The corporation is a legal liability shield and capital raising device used to run many American businesses, however, without real people (employees, shareholders, vendors, customers) this legal entity is just a shell.  Most citizens are persuaded by politicians to look at corporations as merely a shell rather than to look at them for the sum of their real-people parts.  Thus, taxation of no one in particular is better than taxation of a specific person, so corporate taxation is popular.

This does not come without side effects as taxation without representation is not entirely true.  There is not legally sanctioned voting representation, so representation comes through the back door with lobbying, political contributions, and good old-fashioned bribery.  The result of taxing a non-voting entity with much money and power is a lot of unethical behavior brought about by the structure of the system.  The answer is not to police the unethical/illegal activity further, but to examine the system that produces it.

An excellent tenant of good government is transparency.  This is another problem with corporate taxation – the taxation of no one in particular.  Who really pays corporate tax (the corporation of course)?  The real people involved with the corporation must pay the tax in some way shape or form, because the shell in and of itself has no income or wages to tax.  The shareholders pay with decreased stock appreciation and lesser dividends.  The employees pay with lower wages and lesser benefits.  The vendors pay with lower profit margins themselves.  The consumers pay with higher prices used to subsidise the tax.

The lack of transparency imposed by corporate taxation may be the worst of all as the government is able to raise revenues with little to no legal accountability.  The group paying the tax is ambiguous, so it is hard to unite an ambiguous group to oppose tax increases or to help in drafting better tax policy (except for the opposition from the corporations themselves).  The opposition comes in the form of lobbying and bribery, which ends up being rather effective, but further muddies the ethical considerations and transparency of government.

Get paid to interview?

After reading about Notchup on the Neil McIntyre blog, I went to the site to investigate how this project works.  The most interesting part to me was how they make the sale to the companies that will pay you for an interview.

If I were running HR for a company, I would seriously consider using a service like this.  By companies paying for your time (instead of paying a recruiter to find you) they are getting qualified candidates who are potentially more engaged for a fraction of the cost a recruiter would charge.

This truly seems to be a win/win situation for all parties involved, a shining example of people motivated by capitalism.

The key to this process for the individual, is that you need to have experience and qualifications that are in demand (the types who are always getting calls from recruiters).

I think small businesses would do well to look into this arrangement as an alternative to other recruiting methods that are either very costly or rather ineffective.

Leveling the playing field

In an article on WebCPA.com, there is an assertion that the workers in Generation Y (born 1978-1990) are gaining traction in the workforce due to increased demand for workers to replace those retiring baby boomers. The things that these Generation Y employees are looking for are career development and increased work/life balance (generally less work and more of a life). However, when you run a CPA firm that is dominated by the billable hour, how do you empower the employees and give them what they want while keeping up the hours/employee to remain profitable?

The simple truth, you either have to rethink your business model or somebody is going to not be happy with the outcome: more hours worked or less top-line revenue per employee. When there is a conflict of interest between partner desires (increased revenue) and employee desires (more life outside of work), who wins? In the past, partners would win this hands down because new accountants were plentiful, so if someone quit because of this issue, they were easily replaced. Now it appears the balance of power may be shifting to the employee as article after article in the accounting realm comes out touting ways to improve employee retention and attract top talent in an increasingly tight job market.

I don’t think we are near mutiny, as there is always a certain respect due to the one who signs your paycheck, but we are at a point where there is an opportunity for younger staff to have some input on the way firms are run going forward into the future. The partners and administrative staff in charge of recruiting are looking more to the recently hired staff to determine what it was that attracted them and what it takes to keep them happy and get them to stay.

I think it is in the best interest of public firms in this tight job market to keep pay very close to private sector pay and manage the workload as much as possible to avoid constant retraining due to increased lack of retention. Public accounting is great experience, but public practices need to work harder now more than ever to see the benefits of that experience within the firm, rather than letting private clients reap the benefits of the public accounting training.