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  • Working Capital: Accounting Industry Update

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    Montgomery’s robust accounting industry is of major value to the capital city, helping ensure its business community has the financial knowledge and tools it needs to succeed.

    If hearing “accountant” conjures the image of an old, bespectacled man jotting in a ledger and pecking away at an adding machine in an office where he performs the same boring tasks day in and day out, you need to adjust the picture in your mind. According to John Fendley, President and CEO of Jackson Thornton, one of the largest and oldest accounting firms in Montgomery, just about every aspect of that stereotype is wrong. He noted that currently, more female accounting graduates are entering the accounting industry workforce than male, and diversity across other demographics is occurring at a rapid pace industrywide. He also stressed how enjoyable the work can be. “Today’s accounting is not the back-room person wearing a green visor with a desk covered with pencils and paper,” he said. “Public accounting is challenging, exciting and essential to almost all businesses. CPA’s get to work with clients in varied industries and help them be successful. The work is rewarding (and fun!).”

    The entire River Region reaps the rewards of our area’s accounting industry, which is vast. In the Montgomery area, there are approximately 1,000 certified public accountants (CPAs) practicing right now. This formidable footprint is a positive for several reasons, according to Sandy Coaker, CPA, Managing Member at Warren Averett. First, the size and scope of the industry here equals a lot of jobs created. It also translates into a large group of engaged professionals. “We often talk at Warren Averett about the legacy of the people who came before us, our strong traditions of providing not only financial support to many of our local organizations, but service as well, and that’s something we take a lot of pride in. One of our values at Warren Averett is called ‘Sharing our Success,’” Coaker said. “It is a core value of giving back to our community, and I believe our industry has a strong reputation of community support as a whole. As a CPA and member of the accounting community, I’m proud of that.”
    On the Horizon: Taxes 2022
    Jeff Windham, CPA, Partner at Aldridge Borden & Company, offered insight on what this year may hold in terms of laws changing for taxes and other related issues. “The new administration in Washington, D.C., will bring new tax laws,” he said. “The expected upcoming tax law changes will require a new level of tax planning, especially in the area of estate planning. I expect we will also see a trend of accounting firms providing compliance assessments related to companies’ ESG (Environmental, Social and Governance) policies and strategies.”
    Agile Assets
    Jeff Windham, CPA, Partner at Aldridge Borden & Company, shone a spotlight on the immense aid that accountants provided businesses during the worst of the pandemic, providing invaluable advice that, for many, kept the lights on during extremely trying times. “I believe the accounting industry best benefits the River Region by partnering with our business clients to assist them in identifying solutions to whatever challenges they may be facing,” he said.

    “Over the past year and a half, we have been able to help local business take on the challenges presented by the COVID pandemic by strategically identifying the best ways to access capital funding needed to keep their business open and employees paid.” Jeannine Birmingham, President and CEO of the Alabama Society of CPAs, echoed Coaker and Windham. “The vast number of members we have in the Montgomery region means so many active voices on nonprofit boards and other organizations, volunteering and lending their expertise,” she said. “Just in the Chamber, for example, the many CPAs involved have a positive impact on Chamber decisions and its work.” And simply in the course of their jobs, accountants help build a stronger business community, which benefits the city as a whole. “The work CPAs do for our clients helps businesses grow and thrive,” she said.

    Today, accountants are doing what they do better than ever before. Technology continues to usher in changes for every size and kind of business, but it is transforming the accounting industry, widening its scope and services, as Birmingham explained. “Many CPA firms have now integrated an array of technology tools, not only in tax work but attest and audit work too, and this tech gives them a more thorough understanding of a company’s total business, transactions and operations, which allows the CPA to be a better and broader financial advisor to the business,” she said. Instead of focusing on a single point on a business’ timeline, accountants can now see, respond to and advise on a bigger picture.

    Use of the cloud allows accountants access to increased amounts of data, which, according to Birmingham, can make their work more streamlined and less difficult too. But it doesn’t always mean their work gets done faster. “There is so much data now, right at their fingertips, but that also means there is more data than ever to analyze, so it doesn’t necessary speed up the process,” she said. Technology has done more than simplify and sometimes expedite accounting; it is letting accountants serve clients at a higher level by helping them educate and engage with their clients, as Coaker pointed out. “Many of those [technology] impacts are internal in the tools we use to produce our work, which makes us more efficient, but one of the greatest changes is in the use of technology to deliver advice to our clients,” she said.

    “The ability to record a video, publish an article online or host a webinar or podcast has expanded our reach to our clients and prospects. These tools allow us to share and maximize the use of our expertise both internally and externally; they bring information and advice to our clients in ways that fit their schedules and can be revisited, and they provide a great opportunity for our team members to use unique skills and talents.”
    From the Expert

    “The accounting industry is rapidly transitioning from compliance driven to data driven. We are taking steps to help drive profitability for our clients using data analytics, artificial intelligence and cloud software integration. Excitingly, this is where our industry can provide the most long-lasting value for our clients.” - Adam J. Finesilver, CPA, Shareholder. Finesilver & Associates, LLC

    “Our industry has a very successful history of providing and analyzing historical financial data. We must continue to do this very well, but at the same time, we must also commit to helping our clients develop strategies for the future. All of us who have been intimately involved in helping our clients navigate PPP, PPP2, FFCRA and Employee Retention Tax Credits recognize the value and the need to help our clients thrive in uncertain environments.” - Jerry W. Grant, CPA, PFS, Managing Principal, Bern, Butler, Capilouto & Massey, P.C.
    The Time is Right
    If you’re a small business owner, you may be wondering if you’re at the stage where working with an accountant makes sense. According to Nan Lloyd, General Manager with Associated Business Services, you probably are. In fact, you were when you hired your first team member. “As soon as they have employees, it’s time for a small business to consider hiring an accountant,” she said. “Certainly, when net income hits $50K or transaction totals grow. Business owners need to run the business, not try to be accountants. Accounting and tax planning help are as important as the power bill.”
    Lingering Liability
    Despite the improvements that technological advances allow and the innovation they foster, a major issue currently impeding the industry’s pace is a slowdown at the Internal Revenue Service, as Birmingham explained. “For CPAs in public practice, communication with IRS is and has been a big issue for us as we try to help our clients,” she said. She says the federal agency is underfunded and understaffed, so when a CPA needs a question answered on behalf of a client, it’s hard to get a timely response. She claims it’s a problem for the industry nationwide right now. “When the IRS sent folks home during COVID, it was not prepared to have its people work in a remote environment, so the slowdown there has been huge snowball of a slowdown,” she said. “There’s now a backlog of unprocessed returns, and there are many ramifications of that.” She stressed that she’s not knocking the IRS, and that the industry as a whole is looking for ways to assist the organization. “That includes asking Congress to help with funding for the IRS; it needs funds to get its tech capabilities where they need to be,” she said.

    The industry is facing another problem too, a dearth of talent, according to Nan Lloyd, General Manager at Associated Business Services, and Windham. “Finding qualified team members is a challenge right now,” Lloyd said. “There is currently a workforce shortage,” Windham added, “and the last few years have seen a noticeable decline in the number of college graduates with accounting degrees.”

    And while the number of students leaving college ready to start an accounting career is decreasing, there’s a rise in need for accountants. Fendley agreed with Lloyd and Windham. “The number of accounting graduates is declining, but due to the current business climate, the demand for accountants is increasing,” he said, calling the situation a “talent war.”

    His firm is well armed for this battle, though, using its longstanding internship program to attract and groom the promising candidates in the industry’s next generation. “Jackson Thornton has always had a sizable internship program; it’s a great way for us to identify potential full-time professionals in the very competitive accounting market,” Fendley said. In 2013, the firm created an additional weapon for the battle, the JT Forum. “College sophomores and juniors can apply for our Forum, and we typically invite 18-25 to Montgomery for a two-day session,” he said. “It’s so beneficial for these students to meet our team and learn more about Jackson Thornton and the Montgomery area. We take them on a city tour, enjoy local dining and have even taken them to Biscuits games as guests in our suite. We have local speakers come and share what makes Montgomery/the River Region special and a desirable place to live and work.”

    While it doesn’t directly address the shortage of CPAs, Coaker pointed to a solution that WA is employing for its continued growth and noted the opportunities that are opening up for those who previously never considered joining an accounting firm. “Our industry is having to look outside the traditional candidate pool and find talented people in other sectors who have experience and skills that can continue to support and expand our advisory services to our clients,” she said. “Career-minded professionals with an entrepreneurial spirit have an opportunity to find a career in modern-day accounting firms right now. Firms that offer expanded services and not just the traditional bookkeeping, tax and audit work, are looking for specialists in niche fields with non-accounting backgrounds to provide advisory services.”
    Today's Accounting Trends
    In the quest to find good employees in a small pool, firms in the accounting industry, like so many others, are working to give prospects what they want, which isn’t always a higher salary, as Coaker explained. “A current trend is the improved flexibility in the workday and workplace for so many in the accounting industry,” she said. “Work compression, due to filing and reporting deadlines, has long been a challenge in our industry, and finding ways to help our team members manage work/life balance during those times is crucial.” She said that flexibility often results in more effective and productive work time and lower stress levels in down time. “Being able to use technology to improve internal communication, create social interaction during the workday and create a strong sense of teamwork also helps with balance,” Coaker said. “I think it will be interesting to see what national trends emerge post-pandemic as a result of the experiences of COVID as it relates to remote work.”

    Fendley echoed Coaker, stressing that while the concept of remote work wasn’t created by the pandemic, COVID conditions did speed up its wider acceptance. And technology makes it not just possible but profitable. “Cloud computing is a game changer, offering simultaneous access to accounting and core business systems from multiple locations,” he said. “Technology is the primary internal driving force within our industry, changing almost daily. Accounting firms must keep up or they will be left behind.” But keeping up is expensive. “The cost of investing in current technology is high and always increasing,”

    Fendley said. He mentioned two other tech topics trending in his industry: outsourced accounting services, fueled by the Cloud, and the increased use of artificial intelligence.

    Still, as Coaker, points out, the human touch, especially in a crisis like the pandemic, will always produce a positive return on investment. “I think the pandemic has provided a great example of how our teams bring valuable advisory services to our clients,” she said. “From the first phone calls with clients to say, ‘Here’s what we’re seeing and hearing, and we’re here for you’ when the pandemic hit, our teams have assisted with PPP applications and forgiveness, spent countless late night hours providing ongoing monitoring and advice related to the plethora of legislation passed and currently proposed, and been a sounding board and a strategic partner in many difficult decisions faced by our clients.”

    “The vast number of members we have in the Montgomery region means so many active voices on nonprofit boards and other organizations, volunteering and lending their expertise.” - Jeannine Birmingham, President and CEO of the Alabama Society of CPAs
    Lesson 1: Survey the Future
    “The future of accounting lies in adapting to technology change. The opportunities are there for accountants to use Artificial Intelligence, data analytics, blockchain and other innovations to improve auditing, reporting and the transparency of information. The difficulty is adapting to the pace of change. The CPA Evolution program being developed by the AICPA to remodel the CPA exam is an attempt to refocus the exam on technology. One of our faculty, Teresa Lang, is on an AICPA committee working on the new exam. We have a great accounting program at AUM, but we worry about attracting students to the major, and we worry about the increasing volume of knowledge needed to be a CPA.” - Dr. Scott J. Lane, Director, School of Accountancy, Auburn University at Montgomery
    All Encompassing: Today's Accounting Approach
    Sandy Coaker, CPA, Managing Member at Warren Averett, believes her industry is in flux and says that effectively communicating the wide array of services now offered by accountants is key to the future. “While a component of our work will always be focused on the past, with historical financial and tax reporting, our focus today is on being a strategic partner to those we serve,” she said. “We do that by bringing a depth of experience and expertise in specific industries, providing valuable strategy, knowledge, thought leadership and advice to help impact the challenges that our clients are facing today, and the goals they have set for the future.”
    Expert Accounting Advice
    MBJ asked some experts from the local accounting industry “What one piece of accounting advice would you give small businesses?” Here’s what they shared.

    John Fendley, President and CEO of Jackson Thornton:
    “It sounds self-serving, but the benefit of hiring a CPA will significantly outweigh the associated cost. In today’s environment of governmental assistance programs, tax law changes, rapidly changing technology and internet-based competition, it’s almost impossible for a business owner to manage his business on a daily basis without assistance. CPAs provide professional assistance and experience from working with other clients facing the same challenges.”

    Sandy Coaker, CPA, Managing Member at Warren Averett:
    “The numbers are important, and they tell a story. Work with a CPA and trusted advisor who will help you understand and tell the whole story about your business!”

    Nan Lloyd, General Manager, Associated Business Services:
    “Make a plan, know your industry and have a plan to grow within it. Part of that plan is your attorney and your CPA team members.”

    Jeff Windham, CPA, Partner at Aldridge Borden & Company:
    “Find an accounting firm that will get to know your business in such a thorough way that they can be a great resource to you throughout the year. You want to have a firm that is more than a historian that only provides financial reports. You want a firm that provides proactive and future looking advice to help you succeed sooner.”
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