According to the results of the 2022 AICPA Private Companies Practice Section (PCPS), CPA Firm Major Concerns Survey, IRS service issues are a top concern for both small and large businesses. The problems with the service, however, are not the only ones.
Carl Peterson, CPA, CGMA, vice president-Small Firm Interests of the AICPA, and Lisa Simpson, CPA, CGMA, vice president-Firm Services, examine the problems and what they will imply for businesses in the future.
Neil A. Amato Welcome to the Journal of Accountancy podcast’s special episode. The Small Firm Philosophy podcast, created by the AICPA’s Firm Practice Management Section, commonly known as the Private Companies Practice Section, or PCPS, is produced by me, Neil Amato, and this episode represents the beginning of a cooperation between the JofA and the podcast.
Neil A. Amato In today’s episode, Lisa Simpson, the AICPA’s vice president of Firm Services, and Carl Peterson, the AICPA’s vice president of Small Firm Interests, discuss the findings of the 2022 PCPS CPA Firm Top Issues Survey with Jeff Drew, a former host of the JofA podcast who is currently a manager with PCPS. Following this announcement from our sponsor, you will hear that dialogue.
Jeremy Drew, I’m good. Well, let’s get started straight away. What are the main lessons you learned from the survey?
Robert Peterson, I have to tell you, Jeff, that in my opinion, from the perspective of a member, the IRS services may have finally cracked, and that COVID relief programmes have been excellent and, in my opinion, helpful for businesses in terms of income, activity, and client servicing. But in reality, it led to recurring issues that had an impact on the workload, procedures, and everything else in the practice.
Simpson, Lisa I concur. Looking at the survey results as a whole, I believe they are representative of the previous two years, during which time CPA firms played such a crucial supporting role for their customers that it put a lot of pressure on them to essentially be the first responders for their clients. You can see that, as well as the difficulties in maintaining COVID relief, the difficulties in working with the IRS, and the seasonality problems, which have, in my opinion, had a significant impact on many of the personnel concerns that you can see in the findings.
Drew: For the benefit of the listeners, we will include the top five issues or, if it looks better, provides a link to the top issues page in the show notes on both the JofA page and the Small Firm Philosophy page, as well as wherever you found us. If you haven’t seen them yet, simply browse through there to discover the problems.
Carl, the results for you are that succession planning was not in the top five, which I know you and I have discussed before, was a significant surprise. Of the eight size categories we tracked, it was in the top 10 for a few of them, but not any of the top five. Do you want to briefly discuss that?
I do, Peterson. The biggest surprise, in my opinion, was when firms began contacting me after tax season ended to discuss mergers and acquisitions, succession planning, and other topics that were more relevant to a retirement strategy than a growth strategy.
I visited ENGAGE. Through our professional liability insurance product, which primarily served smaller businesses, I spoke with some CNA employees.
They also said that beginning on April 19, they began receiving calls from members asking, “What do I do?” I’m taking a retirement. I intend to sell. Why not consider tail insurance? Everyone I spoke with had something to say about succession.
It’s the most hotly debated subject at the moment. As I previously mentioned, more businesses are contacting me and want to speak with me privately about their succession plans in the future.
Simpson: Carl, I concur. Smaller CPA firm owners will likely face a lot of pressure to sell or to try to figure out what to do with their businesses. In our Succession Planning Resource Center at PCPS, we have several excellent resources.
Some important factors to take into account as you consider selling your business or retiring include how to prepare your company for sale, how to position it effectively, and how to conduct due diligence on both the buyer and seller sides. I simply want to make sure that our listeners are aware of the tools we have at our disposal to support those discussions.
Yes, Peterson. There is a personal note I can offer. We underwent a merger to become a bigger firm before I joined AICPA. I can recall reading a book that I had purchased on what you ought to be doing.
Then, when I arrived at the AICPA and entered our Succession Resource Center, I thought, Oh my God, I could have saved the money on the book and the time and effort by utilising the resources that we already had. We have some excellent things.
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Drew: Interestingly, there were two major topics in the study regarding succession.
There were problems with the IRS, additional work created by COVID relief programmes, customary complexity and seasonality problems, as well as a huge number of interpersonal problems. The customary top problem, obtaining qualified employees, is what stands out the most.
Particularly for larger businesses, keeping qualified employees. One factor that, in my opinion, connects the two was how highly developing the future generation of leaders was ranked.
It appeared in multiple top 5s, a good number of top 10s, and possibly the majority of the top 10. However, if we could just briefly discuss the broad trends that the poll revealed. I’m sure Lisa has some opinions on that.
