Accounting

Speakers urge emphasis on wellness for both clients and staff at Xerocon

Published

2 months ago

August 16, 2024

The accounting profession must address the persistent image problem that, increasingly, is making young people hesitant to enter it in the first place, according to Ben Richmond, managing director for North America for small business accounting platform Xero.

Speaking during the company’s annual Xerocon event this week in Nashville, Richmond noted that accountants don’t really deserve the image that much of the public carries about them, but acknowledged the unfortunate strength of this perception nonetheless.

“We need to address this perception challenge that we’re monotone, that we’re dull, that we’re going to be automated out of existence, because that perception is wrong. You don’t deserve it. The trust our small business clients offer us, the jobs we do, means we don’t deserve it. I am proud of my profession,” said Richmond.

He felt the general public was not aware of all the changes the profession has undergone in the last few years, notably its increasingly tech-driven nature as well as the decline of mundane compliance-based tasks in firms in favor of higher value advisory engagements. While he, himself, is “excited about what the profession has become and where it is going,” many others are not because they’re not aware of either.

“Put yourself in the shoes of a high school student who doesn’t know what it looks like inside this crazy room [at the conference] as they think about what they are inspired to study. Are they really thinking accounting sounds exciting?” he said.

Meeting this challenge means embracing the modern accounting practice and all the ways the profession has evolved over the years. A key part of this is truly defining one’s value as an advisor, capitalizing on the trust clients give to their accountants, something that had been difficult before as professionals were often burdened with “the compliance workload or the never-ending tax season.”

With technology automating many routine tasks today, much more focus can be spent on what he said was the real reason why people hire accountants: peace of mind and wellbeing for clients. He talked about helping his sister find an advisor for her business. They talked to two others before settling on a third, not because of their technical acumen but because they were the ones who truly took time to understand not just her business but herself as a person, including both her aspirations and anxieties. By creating this connection, he said, she let herself be vulnerable, which allowed the advisor to see not just the numbers but the reasoning behind it. More practitioners would benefit from such an approach, he said.

“Too many firms tell me still they’re just number crunchers. But you are a key lever to supporting your client’s wellbeing. You probably don’t wake up and think I’m the supporter of mental health for my small business clients, but think about the impact when you help them understand where they’re going. When clients know they’re talking to someone who relates, who speaks their language, that will make it easier to work with them and make them open and trusting about their fears and their concerns,” he said.

He said emotional intelligence is highly underrated in the profession, but it’s vital if one wants to run a successful firm. There is no amount of technology, he said, that can replace it. Instead, let emotional intelligence be your differentiator, your competitive advantage in order to deepen client relationships.

Demonstrating this kind of commitment is especially important in light of the profession’s persistent talent shortage. Speaking at another panel later in the day, Jeff Phillips, co-founder of recruiting company AccountingFly, noted that the unemployment rate for accountants and auditors in the US is just 1.8%, much lower than the 4.3% national rate.

“So, what does this tell us? Everyone who wants a job has a job. There isn’t a pocket of people where you can just post a job and find them. So what can you do? You have to compete for talent and you have to go out there,” he said.

Beyond higher pay and more support for remote work, however, Phillips noted that there is also the matter of addressing the profession’s culture. While the idea that accounting is monotonous repetitive work with no higher purpose is largely a matter of perception, it is all too true that many firms promote a punishing work schedule with little work life balance or mental health support, at least in North America.

“We work in a profession of very hard workers who are spending so much time at work, and there isn’t much time for physical or mental health and taking care of themselves. I have a friend who owned a firm who, last year, he did not want to tell his clients he was taking vacation because he was worried about how they would feel about him being off. I thought, you’re probably not going to be really on vacation, you’ll hate your vacation with that attitude. That is a problem that needs to be addressed,” he said.

Shayne Dueck, national leader of accounting and bookkeeping services with Canadian firm MNP raised a similar point, noting that while much is said about work life balance today, it is undermined by a certain pride leaders have in working such a schedule, an attitude which then trickles down to the staff.

“The badge of honor is how many hours did I work and how much can I pack into a week or a season. That needs to be outright questioned. … Sometimes it’s about calling it out. I don’t want that job. Who wants that job? We have people leaving the profession because they are overworked and burnt out. We have people not wanting to go into the profession because that’s what they hear,” he said, urging accountants to not be afraid to call out this attitude and provide a better example. “You can model that you can be successful, you can have balance, you can have mental health.”

Kayur Patel, a PwC tax partner and another panelist, said it is largely about taking the same advice they give to their clients all the time.

“For anyone who has had clients like a family business, you’ve probably been in a situation where you advise the client they’re doing alright and they can take the foot off the gas and spend more time with family. But as an industry we don’t do that ourselves. I think we should take some of our own advice in how we run our own practice because sometimes we know what the right answer is for our clients, but we’re not doing it ourselves,” he said.

One example to look towards might be accountants in Australia. Heather Smith, the head of Australian firm Anise Consulting, noted that the work culture is quite different not just in accounting firms but the entire country. Saying Australians are “lifestyle first people” she pointed out that workers in general get four to five weeks holiday every year, plus 10-13 public holidays annually, and a standard 37.5 hour work week. On top of that, Australia allows up to 10% of an accountant’s continuing professional education be about mental health awareness, giving credibility to the topic.

“Australians aren’t perfect, but we are having the conversation, we are actively in communities looking out for each other,” she said.

When she critiqued a UK accounting body she was a member of for only talking the talk about mental health, she noted that they proceeded to roll out an educational platform on the topic as well as put on more events and activities to support the profession; she noted that mental health and wellness doesn’t have to be just rest and relaxation but also nutrition and spirituality and social connectivity that lets people feel stimulated.

Emma Reid, a partner in the UK’s Cotton Group, raised a similar point, noting that it’s okay to take an expansive view on wellness. What is important is not to make some perfunctory measure and call it a day but, rather, find what actually works for people. She noted that, at her own firm, there was little response to things like mental health apps or gym memberships. While certain firms might be tempted to call it a day regardless, her own firm continued experimenting to find something people would actually respond to, which ultimately was fun activities they can take part in.

“It’s finding those things that actually make a difference versus offering something just because it looks good,” she said.

Accounting

GASB issues guidance on capital asset disclosures

Published

2 hours ago

October 18, 2024

Business Finance News

The Governmental Accounting Standards Board issued guidance today that will require separate disclosures for certain types of capital assets for the purposes of note disclosures.

GASB Statement No. 104, Disclosure of Certain Capital Assets, also establishes requirements and additional disclosures for capital assets held for sale.

The statement requires certain types of assets to be disclosed separately in the note disclosures about capital assets. The intent is to allow users to make better informed decisions and to evaluate accountability. The requirements are effective for fiscal years beginning after June 15, 2025, and all reporting periods thereafter, though earlier application is encouraged.

The guidance requires separate disclosures for four types of capital assets:

Lease assets reported under Statement 87, by major class of underlying asset;
Intangible right-to-use assets recognized by an operator under Statement 94, by major class of underlying asset;
Subscription assets reported under Statement 96; and,
Intangible assets other than those listed in items 1-3, by major class of asset.

Under the guidance, a capital asset is a capital asset held for sale if the government has decided to pursue the sale of the asset, and it is probable the sale will be finalized within a year of the financial statement date. A government should disclose the historical cost and accumulated depreciation of capital assets held for sale, by major class of asset.

Accounting

On the move: RRBB hires tax partner

Published

2 hours ago

October 18, 2024

Business Finance News

Suha Uddin

BRIAN BOUMAN MEMORY CREATIO

Suha Uddin was hired as a tax partner at RRBB Advisors, Somerset.

Sax, Paterson, announced that its annual run/walk event SAX 4 Miler, supporting the Child Life Department at St. Joseph’s Children’s Hospital in Paterson, has achieved $1 million in total funds raised since its inception in 2012.

Withum, Princeton, rolled out a new outsourcing service offering as part of its sustainability and ESG practice designed to help companies comply with the European Corporate Sustainability Reporting Directive, the mandate requires reporting of detailed sustainability performance as it pertains to the European Sustainability Reporting Standards , effective January 2023.

Accounting

Armanino takes on minority investment from Further Global

Published

3 hours ago

October 18, 2024

Business Finance News

Top 25 Firm Armanino LLP has taken on a strategic minority investment from private equity firm Further Global Capital Management.

The deal, which closed today, is the latest in the series of investments by private equity in large accounting firms that began in 2021 — but with a key difference, Armanino CEO Matt Armanino told Accounting Today.

“What’s maybe the punchline here — what’s really unique, I think — is that we wanted to focus on a minority investment that allowed us to retain not just operational control of the business, but ownership control of the business,” he said. “Those are some of the guiding principles that we’ve been thinking about over the last number of years, and we felt like if we could accomplish those things strategically with the right partner, it would really be just a home run, and that’s where we think we’ve landed.”

As is common with CPA firms taking on private equity investment, Armanino LLP will restructure to an alternative practice structure, splitting into two independently owned and governed professional-services entities: Armanino LLP, a licensed CPA firm wholly owned by individual CPAs, will provide attest services to clients, and Armanino Advisory LLC, a consulting and advisory firm, will perform non-attest services.

Inside the deal

As have many large firms, Armanino LLP had been looking at private equity for some time.

“We’ve been analyzing the PE trend over the last few years and our discussions with Further Global actually began several years ago, and along the way we confirmed our initial inclination that Further Global would be a great partner for us,” CEO Armanino said.

“We had the opportunity to meet with dozens of leading private equity firms,” he explained. “Ultimately we concluded that Further Global would be the best partner for us based on their expertise in partnering with professional service businesses in particular, and our desire for a minority deal structure.”

While citing Further Global’s “deep domain expertise” in financial services and business services firms, Armanino noted that this would be the PE firm’s first foray into the accounting profession: “This is their first accounting firm deal, and I think they’re only focused on this one at this time.”

An employee-owned PE firm, Further Global invests in companies in the business services and financial services industries, and has raised over $2.2 billion of capital.

Guggenheim Securities LLC served as the financial advisor and sole private placement agent to Armanino LLP, while Hunton Andrews Kurth LLP acted as its legal counsel. Further Global was advised by Pointe Advisory, with Kirkland & Ellis as legal counsel.

“Armanino ranks as high as any CPA firm in the country with the private equity community,” commented Allan Koltin, CEO of Koltin Consulting Group, who has advised Armanino for over two decades. “Their deal with Further Global fit just like a glove. They will keep control and now have the capital structure to compete on the biggest of stages.”

Internally, the Armanino partner group was unanimous in its support for the deal — and in its insistence on only selling a minority stake.

“We’ve had transparent discussions at the leadership level around not only adding an outside investor, but we knew very early on that a minority investment was the best path forward for us, and we were very excited that there was unanimous support from the entire partnership group around that decision,” Armanino said. “This structure is also going to allow the long-term owners and partners of Armanino to maintain full control over our day-to-day operations, and the proud culture that we’ve built.”

“No other firm in the Top 25 has a structure like this, and I think that’s pretty significant,” he added.

Capital plans

The goal of the deal is to give Armanino the capital it needs to take itself to a new level of growth while also addressing some of the most pressing challenges in accounting: investing in technology, pursuing inorganic growth through M&A, and attracting and retaining talent.

The firm has always been tech-forward, and recently has been a major pioneer in artificial intelligence.

“The capital will enable us to fast-track our investments in advanced technology solutions, particularly AI,” said Matt Armanino. “We’ve seen growing desire from our clients to deploy real applications for AI solutions. And while we’ve been at the forefront of automation and AI since the early days, with the development of our AI Lab a few years ago, innovative AI-driven solutions that address our clients’ most urgent challenges remain a top priority for us.”

Beyond technology investments, the firm plans to continue its aggressive M&A strategy, which has brought on 19 acquisitions since 2019.

“Those transactions have allowed us to expand our capabilities and enter into new markets and drive greater value to our clients,” said Armanino. “And we think we can accelerate that now with this capital structure that we have.”

All that M&A has brought the firm a lot of fresh talent, but no firm these days has enough, and that’s a third purpose for the new capital.

“We think there remains a lot of ripe talent across the country out there,” he said. “I think the capital will support our efforts to attract, retain, develop and reward top talent by investing in people who drive our entrepreneurial spirit here at the firm.”

The deal will allow the firm to reward top talent, for instance through equity plans that allow them to extend the firm’s ownership culture beyond the partner group that it has traditionally been restricted to.

“In many cases, for our most senior employees today, there’s not a natural mechanism to align their effort to the success of the firm to the growth of our enterprise value and how that ultimately rewards them,” explained Armanino. “And we are very excited that we have new mechanisms, and plans in place, that are going to allow us to do that very well, and effectively push down the benefits of ownership and that ownership culture to our most senior employees.”

“Finally,” he added, “speaking to our innovative culture — and that’s a big part of our brand — the capital will empower us to say ‘Yes’ more frequently to great ideas, to entrepreneurial ideas and initiatives that truly make a difference for our clients and set us apart as a leader in this industry.”