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  • Indispensable Asset – Accounting Industry Overview

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    The impact of our area’s accounting industry adds up to more than you might think.
    In our increasingly complex world, accountants are integral. They assist businesses of all kinds in keeping
    their books balanced, while also helping them decipher and navigate the rules and regulations fundamental to running their enterprise right.
    “Let’s face it, the wheels of business would fall off without CPAs. Accounting is the language of business, and CPAs are its interpreters.” Diane Christy makes a strong case for the accounting industry, perhaps more than any other, being absolutely essential for a robust business and commerce climate. That’s no surprise, since she’s Vice President of Communications and Centennial Events for the Alabama Society of Certified Public Accountants. But her position doesn’t undercut her statements; it underscores them. ASCPA is 6,000 members strong, a number that gives the organization a truly “big-pic­ture” view.
    And local accountants, those “on the ground” in the River Region, echo Christy’s point. “Businesses can’t function without knowledgeable accountants,” said Nan Lloyd, CPA, EA, CTC, General Manager at Associated Business Services. “Especially small businesses.” While the largest companies rely on accountants too, Lloyd explained why small businesses are often even more dependent on them.
    “Accountants provide a broad range of ser­vices for small businesses. From legal con­cerns, to basic bookkeeping, to manage­ment of the business, to taxes, we play a lot of roles,” she said. And if accountants are crucial for the success of small business, they’re crucial for all, since small business is the backbone of our economy.
    Lloyd, whose firm is focused on medium and small businesses, also explained why businesses don’t benefit from a one-size­fits-all approach. “Many of our clients need more guidance, and it takes a firm com­mitted to that to best help them,” she said. “Many large accounting firms do a great job of working with big companies, but small-business clients aren’t really cost-effective for them and vice versa.”
    With such significant duties to perform, our area’s abundance of accountants with expertise in different sectors is reassuring. According to ASCPA, there are more than 700 CPAs in the organization’s Montgomery Chapter, which stretches from Selma to Clanton, to just south and east of Montgomery.
    This deep pool is a positive for multiple reasons, as Richard Stabler, CPA, Office Managing Member at Warren Averett, stressed. “The River Region is home to a number of very fine accounting firms, which as a whole, bring unique skill sets and experiences to serve a variety of indus­tries,” he said. “Businesses, in many cases, don’t have to look outside of our market to receive specialized services and industry knowledge.”
    MeKeisha Thomas, Principal Accountant/ Owner at Inaugural Accounting Group, agreed. “We all have certain areas of strength,” she said. “I won’t say I’m the best at every aspect of accounting, but I’m very good at what I do, which is working with small businesses and non-profits. There’s a guy down the street who’s great at doing accounting for churches.”
    The profession leaves a sizable philan­thropic footprint in our area too, and as Ned Sheffield, CPA, President and Managing Principal at Jackson Thorn­ton, pointed out, some of that stems from the nature of accounting work. “Bringing knowledge and a wide variety of account­ing and consulting services to our area is just the tip of the iceberg,” he said. “Our business is about connecting with people – whether it’s through the creation of jobs, philanthropic gifts or service."
    Christy also touted the level of community engagement in the industry. “Many CPAs serve on the boards of charitable and other organizations,” she said. “Warren Averett CEO Emeritus Carl Barranco served as chair of the United Way’s campaign in 2004. Dave Borden, former managing part­ner at Aldridge Borden, was also a chair of the United Way campaign. And those two men are only a microcosm of the incredible public service that CPAs provide across the River Region.”
    While accounting isn’t the world’s oldest profession, its basic functions have been important to society and economies for mil­lennia. But in just the last few decades, the industry has undergone some of its most transformative changes, including both a broadening and narrowing of its scope and offerings. “CPAs will continue to stretch the services that they provide to individuals and businesses,” Christy said. “There will be fewer tidy little squares that they will fall into. Niches are constantly being developed as needs appear. The rise of bitcoin, in­creasing need for cybersecurity, a growing reliance on big data and sophisticated analytics mean that CPAs are a more vital part of business than ever.”
    The industry is also working hard to ensure the next generation is ready to tackle and handle these obstacles, and it’s no simple task. “I think most firms would say that recruiting, staffing and talent development have been some of the most significant challenges,” Stabler said. “All firms have to be able to adapt to meet the needs of younger generations, providing them with meaningful, long-term career paths with the appropriate work-life balance. In the professional services business, you are only as good as your people.” 
    Sheffield echoed Stabler. “I would say the impact of new technologies and our profession’s ability to adapt to the rapid pace of change is a challenge,” he said. “We’ll need to attract and retain the best talent available in order to deliver to the clients of tomorrow; and the com­petition for talent is definitely increasing.”
    Lloyd has seen the issue firsthand. “It’s hard these days to find even a bookkeeper-level accountant that is quali­fied,” she said. “But that’s good news for students. The industry is not shrinking; there is plenty of opportunity for an accounting career if you’re qualified.”
    Students at River Region higher-ed institutions like AUM are listening to this counsel. There are currently 177 undergraduates and 57 master’s degree students in the university’s accounting program as of fall 2018, numbers that are roughly unchanged from five years ago. Dr. Keren Deal, CPA, CGFM, Professor of Accounting at AUM’s School of Accountancy, also sees strong employment choices on the horizon for graduates. “According to the U.S. Bureau of Labor Statistics, the demand for accountants and auditors is projected to grow 10 percent from 2016 to 2026, which is faster than the average of all occupations.”
    Deal also emphasized that a career in ac-counting can take on many diverse forms. “When I talk to prospective students, I tell them that accounting has many options, from working with major corporations to traveling internationally to provide audits or data analysis for international organizations to providing litigation research to the legal system,” she said.
    Accountants have always been necessary for businesses of all kinds to survive and thrive, and now, having a prepared and adaptable accounting industry is even more critical. “Every organization needs someone with an accounting background either as a full-time employee or a consultant,” Deal said. Local leaders in the field believe the industry in the River Region is ready and able to meet today’s needs and those ahead, and that’s good news. “Consulting, long-term planning for individuals and businesses, wealth management, forensic accounting and litigation support are typical for public accounting firms. And that’s not even touching on the roles that CPAs fill in the corporate world,” said Christy. “Scratch the surface of any business, and you’ll find an accountant.”
    Every business relies on accounting information. Accounting professionals have the knowledge needed to make sense of this in-formation and help businesses use it to their advantage. Labor statistics show the need for qualified accountants will rise in the next decade, and here in Montgomery, The AUM School of Accountancy is educating and training future accountants to serve our area and beyond.
    Dr. Keren Deal, CPA, CGFM, Professor of Accounting at AUM’s School of Accountancy, outlined why the River Region should be proud of its efforts. “In the undergraduate pro-gram, our students can receive their B.S.B.A. with an accounting specialization,” she said. “Students who wish to pursue a graduate degree in accounting can now pursue the Master’s of Accountancy at AUM, and many of the courses in both programs articulate with the Certified Public Accountant (CPA) examination as well other national certification examinations such as the Certified Management Accountant (CMA), Certified Government Financial Manager (CGFM) and Certified Internal Auditor (CIA).”
    In addition, AUM has a very active Beta Alpha Psi (national accounting honor society) as well as an Accounting Club that gets students involved in both the professional community and giving back through service activities. The department also holds dual accreditation from AACSB (Association to Advance Collegiate Schools of Business), a distinction that places it in the top 1 percent of business and accounting programs internationally.
    Plus, AUM is getting its graduates ready to fill the niches that are currently trending in the industry. “Accountants are trained to focus on a variety of areas from financial to tax to audit, which are part of the ‘big picture,’ but an accounting graduate can also seek specialization in fraud, data analytics, business processing and/or nonproft accounting,” Deal said. “The undergraduate degree allows a graduate to find employment in the area that interests them and then pursue additional education (Master's degree), training and certification to be the expert in the field.”
    We live in a world inundated with technology, and it’s never moving backward, only ahead. Tools fueled by tech have rev­olutionized the accounting industry, allowing its practitioners to do more, do it better and do it faster. “Technology has allowed CPAs to offer so many other services to their clients and expand the complexity of their roles in the corporate world,” Diane Christy, Vice President of Communications and Centennial Events for the Alabama Society of Certified Public Accountants, said.
    While Ned Sheffield, CPA, President and Managing Principal at Jackson Thornton, fondly remembers the good ole days of thick paper files and adding machines that spit out paper tape (he still has one on his desk for nostalgia’s sake), he knows that technology has not just greatly affected the way he and his colleagues do their jobs, it has improved it too. “We’re now in a paperless environment with most information being maintained in the Cloud,” he said. “It all helps us provide even better client ser­vice by increasing our productivity and by allowing us more time to be proactive instead of reactive to our clients’ needs.”
    Richard Stabler, CPA, Office Managing Member at Warren Averett, shared the same sentiments. “The biggest change, by far, in the time I’ve been an accountant has been technol­ogy,” he said. “It certainly has made our work more efficient.” It’s also making accounting more secure and accurate. “By using innovative testing procedures, like blockchain-enabled software and data analytical techniques, clients can know more in less time, with greater precision,” Stabler said.
    “Technology has allowed CPAs to offer so many other services to their clients and expand the complexity of their roles in the corporate world.” Diane Christy, Vice President of Communications and Centennial Events for the Alabama Society of Certified Public Accountants
    Stabler agreed, noting the rise of specific industry and service specialization at the local level. “Thirty years ago, only the national accounting firms provided real niche offerings,” he said. “Businesses today want value-add­ed services and strong expertise, not just a focus on traditional compliance services. They want their account­ing firm to be a trusted advisor to help their business succeed and thrive.”
    Other trends include increasing and fostering commu­nication with new client groups. “We have to be able to meet the demands of millennial-owned businesses and clients,” Stabler said.
    The industry is facing fresh tests too, like constant and always complex changes in laws. “CPAs are asked not only to stay current, but to forecast for their clients or businesses what may be on the horizon,” Christy said. “That’s why the requirement of 40 continuing profession­al hours each year for CPAs is critical to their remaining relevant.”
    The Alabama Society of CPAs is a member service organization composed of 6,000 certified public accountants, and this year, it is celebrating its 100th anniversary with a series of local and statewide events that culminate in a gala cocktail party on June 13, 2019 at the Alabama Department of Archives and History in Montgomery.
    In recognition of the organization’s founding a century ago, the event will feature a “roaring twenties” theme. “Vintage automobiles will bring honored guests from the pinnacle of the accounting world as well as Alabama dignitaries,” said Diane Christy, Vice President Communications and Centennial Events for the Alabama Society of Certified Public Accountants. “Guests will have the chance to tour ADAH’s world-class galleries while listening to music of the Jazz Age and sampling signature cocktails of the era.”
    Three firms who also share the major milestone anniversary – Jackson Thornton and Aldridge Borden in Montgomery and Smith Dukes of Mobile – are being highlighted in a special January 2019 souvenir issue of the ASCPA’s CONNECTIONS magazine.
    By: Todd Dezoort, Phd, Cfe
    Teaching ethics in accounting is possible, necessary and worthy of great effort. Our profession is full of standards, rules and laws, but working as an accounting professional is more of an art than a science, because the discipline is built on individual judgment in highly subjective settings. Although judgment is a wonderful thing, it is very vulnerable to a wide variety of illegitimate and inappropriate influences that undermine ethicality.
    When teaching ethics, I distinguish “rules-based ethics” from “values-based ethics.” Given the nature of accounting, people often equate ethicality with rules’ compliance. While compliance with rules is obviously important, equating compliance with ethics can lead to a risky and misguided loophole mentality that puts professionals at great risk.
    As important as compliance is for maintaining order and confidence, it is not close to wholly sufficient for ethicality. It is critical to teach the need for a strong, values-based ethical compass to recognize the limitations of rules and extend thinking to be ready to handle situations extending beyond explicit rules.
    Fortunately, I typically find that students are hungry to learn more about ethics and ways to navigate the varied ethical challenges they face. Students tend to be amazingly open about their virtues, vices, biases, fears and vulnerabilities. For example, I marvel at how candid, introspective and self-critical my students choose to be when they develop Personal Codes of Ethics in my courses. Further, I’ve accumulated a large, persuasive body of evidence that teaching ethics can help students manage real-time ethical challenges they face by helping them recognize problems, impose structure under stress and engage the critical reasoning part of the brain.
    From my perspective, a critical part of teaching ethics is to address the gap between “knowing what is right and good” and “doing what is right and good” on a habitual basis. Students tend to believe that ethics is ultimately tested and revealed when large ethical dilemmas occur. This perspective can demotivate work on personal character and ethicality because these ethical dilemmas are relatively rare and difficult to access psychologically. I try to teach students that character and ethics are really developed and defend by all of the little things we do (and don’t do) on a daily basis. This approach helps motivate students because it makes ethics both practical and accessible.
    One stubborn obstacle in this area is a prevailing belief among many individuals that you simply cannot teach ethics. I strongly disagree with this based on existing research and my experience. I find compelling evidence that ethics can and should be taught, and that higher education is the prime time for the effort. I feel a strong ethical obligation in this area given the stakes involved.
    Usually, free advice has very little value, and that’s doubly true when it comes to accounting tips. But you can count on this wisdom gleaned from a few of the River Region’s accounting experts.
    Ned Sheffield, CPA, President and Managing Principal, Jackson Thornton:
    Make sure your accounting department is providing you timely information to help you continually improve your overall operations as well as help position you to take advantage of opportunities. Technology is going to continue to change the way we all conduct our business, so embrace change and learn to adapt.
    MeKeisha Thomas, Principal Accountant/Owner, Inaugural Accounting Group:
    Make sure you keep good, detailed and organized records. And watch out for commingling of personal and business funds.
    Nan Lloyd, CPA, EA, CTC, General Manager, Associated Business Services:
    If you can’t afford good accounting and tax advice when you start your business, you don’t have any business being in business. It is an expense that’s as important as the power bill.
    Richard Stabler, CPA, Office Managing Member, Warren Averett:
    I would suggest that all businesses develop a relationship, early on, with a trusted, qualified accounting and consulting firm that can obtain a deep knowledge of their business and bring valuable solutions to their business needs.
    Dane Floyd, CPA, ABV, CVA, CFF, Partner, Aldridge Borden:
    Business owners should understand their business is more than a current stream of income. Their business is an asset that has potential value over and above the income they earn on a year-to-year basis. A key value driver for the business is a strong financial accounting system that not only allows the owner to manage the day-to-day operations, but also gives po­tential buyers or investors confidence in the underlying performance as reflected in the financial statements.
    Britt Taylor, CPA, Partner, TaylorChandler:
    All businesses need a good working relationship with a CPA.
    Jerry Grant, CPA, PFS, Bern Butler Capilouto & Massey, P.C.:
    Last year, the Tax Cuts and Jobs Act brought us some of the most significant changes to the income tax code in more than 30 years. I believe it is now our job (as CPAs) to proactively guide and advise our clients on how to benefit from some of the tremendous tax savings opportunities that are available under the new law.
    Willis Teel, CPA, Partner, Carr, Riggs, & Ingram, LLC:
    Ensure that you have blocked out time on a regular basis to record your accounting transactions. This keeps your business in real time and helps you to know where your business stands at any moment. As part of that process, also pay particular attention to billing timely and just as important, following up on receivables from customers and clients.
    We asked some of our expert sources to identify the “up and comers” in the accounting industry working in their firms.
    • Warren Averett, Jeri Groce, CPA
    • Jackson Thornton, Erica L. Bailey, CPA, CFE
    • Associated Business Services, Sethany Hagel Accounting Staff Trainee
    • Aldridge Borden & Co, Amanda Hines, CPA Manager, Attestation
    • Aldridge Borden & Co, Corey Savoie, CPA Manager, Attestation
    MeKeisha Thomas, Principal Accountant/Owner at Inaugural Accounting Group, was an auditor for the State of Alabama for several years. She offered this caveat for those seeking tax advice in the wrong places. “If you sit in front of me or any auditor, I am talking to you. You are the one on the hot seat. So you need to be sure you have some understanding of the information you’ve given your accountant. It’s not them being audited. And it’s not your beautician or cousin either. Be careful the advice you take. You can’t rest on ‘My accountant told me…’. Or ‘My friend told me…’. If you can’t show me where it says in the uniform tax code that you can do this or that, any tips you got and where you got them are irrelevant.”
    Content Expert: ACCOUNTING
    By: M. Clinton Freeman, Cpa
    Everyone is going to exit their business at some point. Are you ready? If you are preparing to sell your business, consider the following steps for value creation:
    High-level goals – Goal setting for the horizon helps you focus on where you are now, what you hope to achieve and what is hold­ing you back.
    Value gap analysis – It is important to determine the future value of the company in light of value creation, risk and potential future strategies.
    Business attractiveness – Worldwide databases exist to score your business against sim­ilar organizations and establish a benchmark to improve value.
    Personal readiness – It is im­portant to assess your personal, financial and emotional readiness in terms of staying with or transi­tioning out of the business.
    Business readiness – Business­es should prepare a pathway to move forward, which includes exit planning strategies and steps for a successful transition.
    Value creation – A review of current financial health and fore­casts help develop and refine a strategic plan.
    After navigating the value creation steps, several items should be addressed as the market date ap­proaches. Sell-side due diligence will help with any buyer concerns about the reliability of financial data provided, which could derail the deal. This due diligence pro­cess includes improving Earnings Before Income Taxes Deprecia­tion and Amortization (EBITDA) and strategic preparation on the seller’s side. Leadership and cultural changes, the implemen­tation of major cost-cutting or process changes and the loss of a major revenue source all need careful planning ahead of the market date. Tax items such as unresolved state and local tax liabilities, worker classification (as an employee or independent contractor), uncer­tain tax positions and accounting method changes should also be considered in a deal-making scenario.
    By performing sell-side due diligence, businesses can help to anticipate buyer concerns and satisfy expectations.
    MEET THE EXPERT: Clint Freeman is a Member in Warren Averett’s Tax Division and the Firm’s Tax Technical Best Practice Leader. He has more than 30 years of public accounting experience.
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