Tuesday, May 21, 2019

More Delusion than Illusion

The other day (ever notice how many of my columns begin with those three words?) I received a call from a sole practitioner in the New York area who, as he nears 70, was thinking not of slowing down, but rather inquired as to whether I had any opportunities for him to absorb.


He thought that a young owner with a smaller firm would be willing to merge in with an elder statesman who obviously gave little or no thought to client transition or a buyout.

I thought to myself that this was as self-delusional as buffoonish New York Mayor Bill de Blasio declaring his candidacy for the Presidency in 2020. And had about as much of a chance of succeeding.

But my warnings fell on deaf ears.

He had no intention of slowing down anytime soon and certainly had no one in his firm to take over when he ultimately did decide to slow down.

That’s what colloquially is known as truly a man without a plan.

Not to be outdone, literally a day later I was contacted by a practitioner in New England with basically the same scenario, - in his mid-60s, no one on his “bench” but stubbornly refusing to consider merging up.

Tuesday, May 14, 2019

More than a Remote Chance

Back in high school I had a friend whose father was, often, home, when I came over to his house. I assumed he was unemployed, but then my friend explained that he was a financial planner, just when that line of work was beginning to make inroads to the career mainstream and that he worked from an office in their house.

His office was rather austere, a single telephone, rows of financial and accounting-related books on the shelf, an adding machine, certificates on the wall and an overflowing rolodex – remember those?

Desktop computers were still roughly a decade away from becoming an office staple.

As someone with two working parents – one based in an office and the other in a hospital lab, I found it hard to wrap my head around the idea of a home-based office. I wasn’t so sure I wanted to see my parents both in the morning and the minute I returned from school.

But that was then, and this is now.

I won’t go out on a limb and say that working “remotely” as opposed to the old vernacular of “working from home” has become the rule rather than the exception, but in a recent survey of some 200 CPA firms almost half (43 percent) had staff who worked exclusively from home. While more than 40 percent of those polled said that remote workers allowed them to hire outside their established geographic markets.  And some 82 percent indicated that they retained the remote worker even when said worker moved away.

Friday, May 10, 2019

Where does it all go?

Someone once asked legendary financier J.P. Morgan what kind of gas mileage he got on his newly purchased Rolls Royce.

Without blinking Morgan casually replied, “if you have to ask, you can’t afford the car.”

I can honestly disclose that the purchase of one of the world’s most luxurious automobiles was never a consideration in my household budget. So, asking about mileage on a car like that was sort of moot.

Not surprisingly, items such as mortgages, college tuition, food, clothing, power and telephone jumped to the front of the line at Chez Carlino in lieu of a $300,000 Rolls Royce Phantom or Silver Cloud.

But in a sort of related storyline I recently came across a survey that tracked household finances, with a spotlight on the average month expenses of what the poll termed “non-essential items,” as opposed to   monies dedicated toward savings and other critical financial targets like life insurance.

As it turns out, the average adult in the U.S. spends roughly $1,500 per month on these non-essentials, which, if my math is correct, extrapolates to about $18,000 per year.

Food and beverage costs top the list, specifically eating out, ordering take out, having drinks or buying lunch instead of brown bagging it. Others include “impulse purchases,” gym memberships (personally guilty), and even bottled water.

Tuesday, May 7, 2019

Two Blueprints for Succession Failure

When it comes to facing succession and ownership transition within CPA firms, experience has taught me there are two types of practitioners – those who are proactive to securing their next generation of leaders and those who continue to procrastinate despite repeated efforts to convince them otherwise.

Cases in point.

Late last week I was speaking to an owner in his mid-60s who runs a CPA practice in the Northeast. He has no succession plan, nor has he taken anything but cursory steps to rectify his situation. I had him meet with several firms and not surprisingly he found something he didn’t like in each – mind you nothing that could not have been easily overcome.

In fact, in one of his meetings, he deliberately put his feet on the desk of the managing partner and told him he didn’t want to go from owning a firm to becoming an employee.

That would be the Webster’s official definition of making a wrong impression. Trust me, I heard about it chapter and verse afterward from the buyer firm. I said when something like that happens, it’s obvious he wasn’t the least bit interested from day one.

Not to be outdone, earlier I had visited a long-time client, who, as he approaches 70, continues to log ridiculous hours when at that period in his life he should be more concerned about lowering his handicap.

Tuesday, April 30, 2019

Now Hear This!

There are inarguable certainties that accompany the aging process.

Receding hairline? Check. Well, to be accurate, no hairline.

Expanding waistline? Check – sort of. I like to think I’m fighting the good fight against that one. But in full disclosure it’s a lot harder now than when I was 25.

And perhaps more importantly than the physical deterioration, less patience? Absolutely!

My waning lack of patience has progressed to the point where if I’m in the rare mood for a quick-service meal, I refuse to go to the drive through and sit there idling while the cashier inevitably screws up the orders of the cars in front of me.

Ditto for the bank. I will not be held hostage behind someone who decided they need $200 in quarters and simultaneously requests a stack of deposits or money orders to boot.

Which brings me to the topic de jour of which I’m only going to say once.

Now that we’re post April 15th, I will again restart my conversations with potential successor and seller firms.

But for the record I will make two attempts to contact you and help you with your succession plans whatever they may be. After that you’re on your own. 

Tuesday, April 9, 2019

Customer Service Overload

When it comes to hoarding – whether clothing or functional accessories – I’m a split personality.

For example, when I find a comfortable nightshirt – it will often last through several presidential administrations. Other times, I wear something once and then immediately donate it to a local charity.

As best as I can remember I have had the same soft briefcase for nearly 20 years. It has carried me through three different jobs, hundreds of airline flights and conventions, and I have often even taken it on vacations.

In other words, it’s a keeper. Or rather it was.

Alas, the other day I discovered a tear at the bottom ridge which sort of would defeat the purpose of carrying items in a briefcase.

So, I decided to visit one of our area’s large electronics and office supply retailer and pick out a new one.

I had a fairly good idea of what I was looking for so I figured my visit there would be relatively short since I had other weekend errands to run. Just pick one out, pay for it and then exit.

That is until I ran into an eager-to-please junior sales clerk.

I explained what I was looking for and in return I received an understanding nod and an escort to what amounted to at least five racks of laptop/briefcases.

The ensuing conversation went something like this.

Friday, April 5, 2019

The Not-so-subtle Art of Reinvention

When you work remotely, you seldom bypass an invitation for a free lunch. Not only for a chance to get out of the office, but also for the opportunity to interact with someone personally as opposed to receiving an email or hearing a voice at the other end of the phone.

So, with the signs of early spring in full bloom in the Northeast, I made a 60-minute drive up the scenic Merritt Parkway in Connecticut to meet with the CEO of one of the country’s Top100 firms.

I was greeted by the executive at white tablecloth Italian bistro, and instead of a menu, he had his iPad spread out over the table displaying a power point presentation that detailed the sea changes that have occurred at the firm since he assumed the leadership reins some three years ago. In the first 10 minutes he shooed the waiter away three times.

The firm, which by design I’m keeping anonymous, had previously been quite active in the M&A arena often to the detriment of organic growth. He explained that he put the brakes on that strategy immediately and instead focused on how to grow internally and concentrate on what they do best as well as explore other rapidly growing niches.  

Where they previously had assigned managing partners for each office, he streamlined that down to a single managing partner for each region. That firm had a footprint.

Tuesday, April 2, 2019

No Such Thing as a Free Ride

I promise this will be my last auto-centric column for a while.

But in my meager defense this vignette actually has an accounting angle – sort of.

Over the weekend my health club displayed a gleaming new McLaren automobile – of course cordoned off from touchy feely onlookers with thick velvet ropes and patrolled by a security guard who looked like someone straight out of the Blackwater recruiting catalogue.

Apparently, the local dealership was giving gym members a chance to win the car via $250 raffle tickets. Should you hit the proverbial jackpot a $300,000 McLaren Spider Coupe was all yours.

One member whom I shall refer to as Ralphie, decided to take a chance. Now Ralphie does not have the financial means of a hedge fund manager or a plastic surgeon – in fact Ralphie is one of the school bus drivers in my district. So, $250 would more than likely take a sizeable bite out of his weekly budget.

I tried mightily to talk him out of it. Thus, the conversation went something like this:

Friday, March 29, 2019

Car Shopping Made Easy!

A while back I used this space to veer decidedly from accounting and regaled you with adventures of perhaps my least favorite pursuit – car shopping.

In terms of pure enjoyment, I would rate shopping for my next automobile just slightly below a visit to a wax museum.

In other words, I’m not a fan.

But along the lines of “good things come to those who wait,” just this week I received an email declaring me the proud winner of a 2019 BMW Model 530i, metallic silver, 6-speed automatic transmission and equipped with a special cold weather package.

According to various websites, the vehicle MSRP on that model is roughly $55,000. Wow, I could not believe it, my first-ever luxury car! Providing you discount the 1969 Cadillac de Ville I was driving circa 1981.

And, apparently, I’ve also won a check for $1.5 million authorized by the British Gaming Board and the BMW Lottery Department. Odd, I wasn’t aware that BMW had a lottery department. But boy, does that fill a lot of financial potholes at Chez Carlino!

Now all I must do is email all my pertinent financial information to someone whose IP address ends with BMW@aol.com.

You see where I’m going with this right?

Tuesday, March 26, 2019

In Other News Water is Wet

As you might imagine, after either covering or consulting with the accounting profession for some 20 years, I’ve seen and read my share of industry-related surveys. I’ve seen polls on salaries and employment, technology, fraud, taxes and succession to name just a few.

And more often than not, I have taken something away for future use – usually when I’m teaching a live CPE session.

But I’ll have to admit in two decades of doing this I’ve never quite encountered a finding with such an absurdly obvious conclusion as I did last week.

One accounting publication featured an article co-written by a student and a professor at a Northeastern college which concluded that auditor productivity and quality declines when said employees are sick with the flu.

Let me repeat that – productivity declines with the onset of influenza.

What’s next, water is found to be wet?

Now, let me be clear – the flu is nothing to make light of.

Friday, March 22, 2019

Hiding in Plain Sight

For those who followed the Bernie Madoff scandal, you might recall that his company, which purportedly held nearly $65 billion in assets under management was – ahem – “audited” by a miniscule 3-person CPA firm located in a strip mall in bucolic Rockland County, N.Y.

Apparently, this accounting mismatch did little to attract any more than cursory attention from regulators and exactly none from the New York State Society of CPAs which, incredibly, allowed the owner to pen a regular column on auditing ethics. Let me repeat that auditing ethics. That was of course prior to the episode imploding into the biggest financial fraud in American history and earning Madoff a 150-year prison sentence.

Trust me, I can’t make this stuff up.

Along the same lines, but not nearly the same in scope, it has now come out that Key Worldwide Charity - the California non-profit at the nucleus of the burgeoning “Operation Varsity Blues” college admissions scandal failed to attract any notice from the IRS despite listing no employees, three officers who worked ZERO hours and no independent directors in its filings and taking in over $7 million in donations over the past four years.

And to think I got a rather terse email earlier this year from the IRS claiming an additional $3,000 in taxes stemming from a modest IRA disbursement.

And yet, with more yellow flags than undertow warnings at a beach resort, no one gave this organization a second look.

Tuesday, March 19, 2019

Entitlement Part II

Last week in this space I felt, or at least I hoped, I waxed rather eloquently about the recent “Varsity Blues” college admission scandal, whereupon a virtual national network of bribes, testing irregularities and fabricated athletic achievements were doled out like the buffet at Golden Corral in order for the children of hedge funders and celebrities to gain admission to some of the country’s most prestigious colleges.

Again, I was not only astonished by the scope of these egregious acts, but rather some of the attitudes of the children of these parents who are now going to either serve jail time for or pay out astronomical amounts in fines and prepare to perform public service.

Which brings me to sort of an ancillary topic – accumulation of college debt and this ongoing call for “student debt forgiveness.”

How many times have you recently seen the media interview some clueless student who purports to be the leader of this or that movement, demanding free college tuition and elimination of all school debt loans? “Student loan forgiveness,” they call it. They insist a college education is literally a birthright and should be free.

But then in the next breath, admit they have absolutely no clue on how to pay for it.

For the moment, let’s take the cry for loan forgiveness and apply it to say, purchasing a car.

Friday, March 15, 2019

Was it Really Worth It?

More years ago than I care to remember I had just completed a two-year hitch at a junior college due to an overlong apprenticeship as a young screw-off and was in the process of filling out applications to several four-year schools.

In the end, I had narrowed the choices to two: Cornell University or the University of Denver. The choice was made easier for me when the powers that be at Cornell took a look at my grades and told me to go to Denver. Technically, Cornell wait-listed me much to my father’s amazement.

“You? Cornell? Really?”

So much for a patenal booster in self-confidence. But to be fair, my mother was equally astonished.

So, I spent the next several years in the Mile-High City getting my degree and like countless other students, accruing debt from school loans.

Flash forward to the present. I, like probably millions of others was a bit shocked when the national scandal broke concerning under-the-table payments for admission into elite colleges, a ring that included coaches, administrators, scores of obscenely wealthy parents and two high-profile actresses who, often played rather wholesome characters on television.

Not that I was so naïve as to believe that test cheating and side bribes to get into college didn’t occur on a regular basis, but what was so hard to believe was the massive scope of this national disgrace.

My first question was “where were all these people when I was applying?” I was joking of course.

Sort of.

Friday, March 8, 2019

You Can Lead ‘em to Water…

As a parent for nearly three decades, I’m sort of used to having my advice ignored. Whether it be music, TV, clothing or food, my daughters dutifully listened to their father’s suggested guidance and then just as promptly ignored it.

But that goes with the territory – especially during that joyful tantrum-filled period between middle school and high school graduation. I think I personally kept the manufacturers of Maalox in business or at least buoyed their share price.

But perhaps no urging I put forth was as vehement was my strong directive that each study accounting in college. Having either covered or consulted on the accounting profession for nearly 20 years I was well-aware of both the opportunities and the large talent void in the pipeline that existed.

And true to form each decided to eschew accounting and instead pursue marketing and public relations. Not that they haven’t up to this point become successful – in fact one recently received a promotion to media buyer. And each explained that what they currently do is/was far more exciting than looking at tax and audit spreadsheets in some cubicle. To that point it was hard to argue.

But along these lines I noticed an online survey titled College Factual recently unveiled a list of the top 10 accounting schools in the country and wouldn’t you know it, my youngest’s alma mater Binghamton University, a school well-known for its engineering and STEM curriculum in upstate New York, was ranked No. 8.

Tuesday, February 26, 2019

They Have to Want to Be Helped First

Growing up I had a neighbor, Lou, who could have been the poster child for the evils of bodily abuse. He smoked at least two packs of filter less cigarettes a day and by the 11 o’clock news had conservatively gone through nearly a fifth of bourbon on a nightly basis. The only exercise he performed was walking to and from his car to buy the abovementioned vices. I won’t even begin to guess as to his diet.

Looking back, it was sort of a medical miracle that he lasted until 62 when his heart, lungs and liver collectively surrendered.

Afterwards I asked my father why he never even attempted to stop, or at least reduce his tobacco and alcohol intake and he simply shrugged his shoulders and said, “Someone has to want to be helped first.”

Lou obviously did not.

I often encounter that kind of apathy – albeit business-related as opposed to physical – when speaking to CPA firms who continue to roll merrily along literally without a care in the world about succession planning or do something so absurd as to wonder how they ever passed one of the most difficult professional exams currently administered.

Friday, February 22, 2019

What Do You Want to Do When You Grow Up?

My last missive in this space dealt with the often, painstaking process of interviewing job candidates. Yes, sometimes I have felt root canal would be a preferable option to sitting across the table from a total stranger preparing for the eventual weeding out process.

But just last week one of my daughter’s friends dropped by the house for a brief visit. She had been an accounting major in college and had worked briefly as a bookkeeper for a small financial firm but was now interviewing for a job at one of the major audit firms in the tri-state area.

She had done well enough during the first series of sit-downs to earn an audience with one of the senior partners – specifically the one who would be her ultimate boss should she be hired.

She recounted how the partner glanced at her resume’ and notes from her other interviews, kicked back in his chair and asked her point blank:

“So, what do you want to do when you grow up?”

Friday, February 15, 2019

Hiring Hell

The other day I was having lunch with a former colleague who, after years as a “foot soldier” so to speak, was suddenly thrust into a management post. True, he received the requisite bump in salary, but what he didn’t count on was all the ancillary duties a supervisor position entails.

So, in between the appetizer and the main course, he began to tell me of all the new responsibilities tossed in his proverbial lap and the one he disliked most was…. he didn’t get to finish the sentence because I finished it for him – interviewing job candidates.

For three decades it was the bane of my existence as well. Whenever someone tendered their notice of resignation, I was not so much disappointed in their leaving as I was dreading the prospect of bringing in numbers of potential hires for an interview.

To put it plainly, I would rather volunteer for jury duty than pose the standard questions to each hopeful. Nevertheless, I will boast a bit and say that I did register some spectacular hires, the last three who have been with my former company for an aggregate 45 years.

No applause necessary.

Tuesday, February 12, 2019

“Let Me Think About It”

For a brief period during a misspent youth, I was employed by a long-defunct chain of gyms called European Health Spas. My job was two-fold – one to help the members design suitable exercise programs and the other – to sell as many multi-year (and often inescapable) member contracts as possible.

For that I was outfitted in black pants and a white short-sleeved lab coat reminiscent of a barber. And in full disclosure I was terrible. With no formal sales training my soft-selling skills were basically non-existent. At that point in my life I would have had trouble peddling air conditioners in Phoenix.

But we did have one superb sales person – a woman who, in contrast to myself, could sell blocks of ice in Anchorage. Stunningly attractive with a silky voice that had male members of all ages swooning like lovesick kittens, she not only broke the existing membership sales record for the entire company, but later became one of the most successful real estate agents in the state.

Her technique was quite simple. Whenever a prospect was on the fence about signing and tried to leave with a “let me think about it” parting line, she sat him or her down in her office, closed the door and glared at them like a school principal would a repeat truant.

“I’ve been in this business a long time and never once has ‘thinking about it’ ever gotten anyone into shape.” 

More often than not she closed the deal. 

Friday, February 1, 2019

Just Expense It- Not!

As many of you draw closer that three-month ordeal known as filing season, I like to take this opportunity to bring a somewhat lighter note before CPAs and EAs across the country begin routinely logging 70-80-hour weeks.

And that is highlighting the most “creative” expenses that employees attempt to push through their accounts payable departments.

This has been an annual undertaking for me ever since one of my former employers immediately dismissed a woman for attempting to legitimize a fur coat on an expense report.

Trust me I can’t make that up.

And to think I was once flagged by a company auditor with a sense of humor surpassed only by an undertaker, for an $8 bottle of cold medicine when I once fell ill during a conference in Chicago.

But on to the topic de jour.

AppZen, a vendor of expense management software has compiled a recent report gleaned from over 1,000 businesses across all fields stating that companies are now more closely auditing employee expense report claims and are becoming increasingly diligent in rejecting some of the more nebulous charges.

Tuesday, January 15, 2019

Let’s Break Tradition with Non-Tradition

Prior to January 1, I have an annual ritual that I have adhered to for nearly 20 years.

Prior to the onset of a new year, I write down all the things I’d like to see and hopefully accomplish in the ensuing 365 days.

As one would imagine, some are easier to achieve than others – i.e. drop 10 pounds, budget money more carefully etc., as opposed to finally sitting down to write that novel or picking the correct numbers for Powerball.

As far as the accounting profession goes, know what I’d like to see in 2019 – one conference session – just one, addressing one of the fastest growing trends currently unfolding – the exponential increase in the number of CPA firms merging with entities that are decidedly not accounting practices.

It is estimated that 20 percent of all mergers by larger CPA firms are affiliations with businesses such as cyber-security companies, HR and payroll consultants, medical and dental concerns and data analytics firms.

Just last week, one of the major accounting publications carried four separate articles detailing such recent mergers. Last year I participated in a podcast on non-traditional mergers and it  received over 2,000 downloads. Yet, not one session is dedicated to that subject in all the major conferences whose agendas I have scrolled through recently.

Last year and despite all the evidence to the contrary, I submitted a speaking proposal to the AICPA to specifically address that topic at Engage 2018 and was not even given the courtesy of a response. To be somewhat fair to them, similar proposals were also ignored by several of the larger state societies in the Northeast.

Instead, attendees at various national and local CPA gatherings are regularly treated to the same repetitive bromides – engaging millennials, value pricing, choosing the correct software etc.

And some still wonder why live attendances at conferences have been declining for years?

But here’s the rub. With pending technologies threatening to reshape the way traditional accounting firms operate and automate certain client services, firms are or have been scouring the M&A landscape for specialty niches to help differentiate their practices and prepare them for those quantum changes.

Closer to home, we have over the past year, facilitated several such mergers and are on the cusp of closing two more prior to the end of January.

And yet, I continue to hear crickets in terms of anything remotely approaching the subject.

Sadly, I fear I’ll be a lot closer writing my novel. 

Tuesday, January 8, 2019

‘Tis the season – for scams

Now that we’re a week or so into 2019 there are always things you can count on upon beginning a new year.

A sudden flood of people joining health clubs, longer than usual lines at stores specializing in organic and farm-to-table foods and a surge in the downloads of financial calculators as to hopefully better save and budget money.

You know what else?

Scams – whether electronic, snail mail or via the phone.
At the tail end of last week, I received in order: an email from my bank (with a black and white logo I may add) warning me that my personal information had been lost and I needed to re-enter my account numbers and just for added precaution, my Social Security number as well. Next, came a call from someone purporting to be a representative of a collection agency saying that I have a $2,000 outstanding debt and face serious prosecution if I don’t pay up immediately. For my convenience they could offer me a pre-paid card and my record would remain clear.

Friday, January 4, 2019

To Make a R-E-S-olution, You Need R-E-S-olve

Welcome back and Happy New Year.

By now, most of your hangovers – whether food or alcohol - are thankfully a thing of the past. On a personal note, my new best friend for the months of January and February will be the treadmill at my local health club. One more over-sized holiday meal and I could have easily performed my best impression of John Candy.

But with a new year comes the perfunctory annual resolutions. You know the usual bromides, lose weight, make more money, spend more quality time with the family... etc.

You can always tell when it’s early January at my above-referenced gym as people you’ve never laid eyes on before suddenly begin to populate the workout area – a typical New Year resolution that usually lasts at most until the end of the month before cobwebs once again begin accumulating on their membership cards.

Sadly, the same lack of resolve is often seen at CPA firms – particularly those who have done little or nothing in terms of succession planning. “Next Year” is a phrase often tossed my way when I inquire about succession plans – the same barren promise often heard in the locker rooms and front offices of perennially losing sports teams.