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SOX 404: Build a Niche Practice

If you've not yet jumped on the Sarbanes-Oxley Section 404 bandwagon, now may be the time. Non-accelerated filers, those publicly-held companies with less than $75 million of market capitalization, will be working overtime between now and 2007, the year by which they must be SOX-compliant. Accelerated filers are now in the second year of their SOX requirements. Due to already-stretched internal staffing situations, internal control consultants will remain in high demand. There's such a great deal of opportunity for freelance accounting and IT professionals in these arenas, a full-time niche practice could be a good growth strategy for enterprising solo-practitioners.

In addition to pursuing SOX assignments in publicly-held companies, I believe it will be productive to go after many of the mid-sized and larger private businesses (and not-for-profit organizations) for internal control assignments. Owners and managers of these entities should be receptive to scaled-down, "SOX-like" initiatives to help them identify and remediate control deficiencies and related risks in their operations. For example, well-designed and executed $10,000 to $50,000 consulting engagements could pay big dividends for your clients. Your assistance will likely help to reduce fraud, financial reporting, and other risks. This can benefit clients by increasing the comfort level (and in turn, overall business value!) of their lenders, investors, M&A partners, auditors, and other interested parties.

News Alert
Relating to these SOX opportunities, COSO just last week finally released its long-awaited financial reporting guidance for smaller public companies. This is a must-read for those involved in SOX consulting. Download the new 207-page exposure draft

QuickBooks...or Microsoft?

I attended yesterday's Intuit-sponsored "Maximizing Your Practice with QuickBooks 2006" seminar, along with about 200 other solo and small-firm practitioners. Held in Atlanta, this was one of the sessions of Intuit's "QuickBooks 2006 Accountant Update Seminars" being hosted at various cities around the country.

Having used QuickBooks in my own firm for over ten years, and after helping many clients install and customize it for their businesses, I was already sold on its cost-effective, user-friendly functionality. This seminar solidified my view that QuickBooks is truly a bargain...at twice the price. For more info: QuickBook's 2006 Solutions for Accounting Professionals

Now, what about the new Microsoft product...MS Office Small Business Accounting 2006? We can be sure this will be an excellent tool for us and many of our clients. I'll definitely be taking a closer look at its features and capabilities, especially given the heavy dependence on MS Outlook, MS Excel, and MS Word in my practice. Microsoft is undoubtedly hoping accountants like us (and our clients!) will shift allegiance from QuickBooks. Time will tell. For more info: Microsoft 2006 Professional Accountants' Network

A Report on Microsoft Office Small Business Accounting (SBA) from the QuickBooks Consultant’s Perspective – Part 1 http://www.sleeter.com/articles/1126049162

Finally, I must pay a compliment to Joe Woodard , of Creative Financial Software, a Georgia-based QuickBooks training and consulting firm. As the presenter of yesterday's great QuickBooks seminar, he did a tremendous job of sharing a lot of practical information in a fast-paced and entertaining way. Great job, Joe!

Are You a True Professional?

Periodically, each of us should evaluate our work routines, practices, and attitudes, and ask ourselves, "Am I a true professional?"

To answer correctly...we must not only be honest with ourselves, but also know with certainty what true professionalism really is and how it's practiced in our profession.

To help with the latter of these two requirements, I highly recommend the book, True Professionalism, in which the author, David H. Maister, describes "real professionals" as those who:

• Take pride in their work, and show a personal commitment to quality
• Reach out for responsibility
• Anticipate, and don't wait to be told what to do--they show initiative
• Do whatever it takes to get the job done
• Get involved and don't just stick to their assigned role
• Are always looking for ways to make things easier for those they serve
• Are eager to learn as much as they can about the business of those they serve
• Really listen to the needs of those they serve
• Learn to understand and think like those they serve so they can represent them when they are not there
• Are team players
• Can be trusted with confidences
• Are honest, trustworthy, and loyal
• Are open to constructive critiques on how to improve
• All of the above can be summarized in one phrase: Real professionals care.

True Professionalism is essential reading, as are all of Maister's books, including Managing the Professional Service Firm, The Trusted Advisor, and Practice What You Preach. He's also authored numerous articles and other writings, many which are posted on his website. For example, he co-authored an article entitled The Laws of Service Businesses. Take a look at it right now, then rush to your local bookstore and pick-up several of his excellent books.

AICPA Encourages CPA Bloggers

In researching ways to help make this blog more useful to solo-practitioner accountants and consultants, I came across an article published in the June '05 issue of the AICPA's Journal of Accountancy. Here are a couple of excerpts from the "Would You, Could You, Should You Blog?" article, authored by Eva B. Lang, CPA/ABV, ASA:

"Interest in blogs as an information-sharing tool with many business opportunities has been growing. Fortune magazine called blogging one of the Top 10 Tech Trends in 2004 and the February 2005 Harvard Busines Review cited it as one of the "breakthrough ideas for 2005."

"CPAs may find value in a blog as a knowledge management tool. Firms can use internal knowledge blogs to help current employees work more efficiently and to get new hires up to speed quickly. As a repository of 'institutional memory,' knowledge blogs can remind current employees of policies and procedures, link to documents employees need to read, and document best practices."

Read the entire article at http://www.aicpa.org/pubs/jofa/jun2005/lang.htm

Your Time: It's Your Inventory!

My professional career began with seven years in public accounting, five with a Big-4 firm and two with a Top-25 Atlanta local firm. What did I appreciate most about making the change to private industry and then to independent consulting? Was it the reduction of long hours or travel? No, it was that I no longer had to complete bi-weekly time reports for each hour worked, and then have to explain why my actual hours and utilization (% of billable time to total time) didn’t line up perfectly with what had been planned for the year. Can you relate? I never fully realized what a chore this was until I no longer had to religiously report my every move.

As a budding sole-practitioner, I certainly tracked my billable hours...so I could bill everything possible. There was no thought whatsoever, however, to keeping up with development or administrative time, or for time not worked because of vacation or holidays. Also, I stayed away from a reporting system that even remotely looked like a traditional time report; instead, my preferred system was more of a “back-of-a-napkin” methodology.

My non-serious view of time tracking changed when I went to perhaps the most useful CPE conference I’ve ever attended. This was the AICPA Small Practitioner Conference, held in San Diego over three days in 1989 (or thereabouts). One of the breakout sessions I attended was entitled, “Your Time: It’s Your Inventory!” Suffice it to say that my eyes were opened. For the first time, I finally truly understood why time-tracking and utilization planning and management is so important in a professional services firm, even when the only professional spending time is “me.”

I immediately designed and began using a detailed time reporting system. Once again, I was back-in-the-saddle, meticulously keeping up with my every move, and studying it on a daily, weekly, monthly, and yearly basis. How sad! No, in fact, this was very good for my practice. I began to view my time as though it were inventory, and tried to manage it just as closely as I advised clients that had tangible inventory in their businesses. In other words, I wanted to know how much time I had, where it went, and was it adequately protected against slow “turns” and pilferage. You get the picture, don’t you? I became somewhat obsessed with the level to which I planned, tracked, and analyzed the usage of time in my practice. This went on for at least three years. I finally relaxed things a bit, and now have a system that is not as detailed, but nonetheless very effective for my needs.

Four Effective Internal Controls

Many small businesses suffer from weak internal accounting controls. This is mostly due to the lack of segregation-of-duties in these companies, especially those relying on a single bookkeeper or controller to handle all accounting tasks. Such firms are especially vulnerable to employee theft, false financial reporting, and other business threats. Here are four controls I often recommend to help mitigate the control voids found in these situations:

1. Require dual signatures on checks above a specified dollar amount.


2. Have the owner receive monthly bank statements unopened, and then review all contents for unusual items.


3. Enlist someone other than the bookkeeper to reconcile bank statements.


4. Insist on timely-prepared monthly financial statements and subject them to a simple “inquiry and analytical review” process to be conducted either by the owner (if he/she is adept in accounting matters) or an experienced, independent accountant.

Clean-Up Those Messy Books!

Extremely poor accounting records are a major problem for many businesses. Inaccurate and delinquent financial statements and other information can create havoc within a business. Making good business decisions is difficult when you have little confidence in the financial data you receive. Left uncorrected, the effects of messy books will take an increasingly negative toll on any company. You should act now if your company is suffering from this situation. Here are two suggestions:

1. Hire a stronger accountant to fix the problem, or retain outside professional assistance on an interim or part-time basis to get the problem under control;
2. Don’t worry right now with cleaning-up prior months. Focus first on generating an accurate balance sheet for the most recent month-end. For each subsequent month, demand timely and accurate balance sheets and income statements. Later, it may be necessary to correct the accounting for earlier periods, but at least you’ll now have the financial data needed for current decision-making.

Tips for the Troubled Company

You’ve always taken pride in paying your company’s bills on time. Your employees have never worried about receiving their payroll checks on Friday. The bank has always been eager to loan you more money. Things are different now, however. Cash is tight, and everybody’s anxious: suppliers, staff, the bank…and you. How should you respond?

Take Action Early - Don’t waste time! Take action as soon as your “gut” tells you the business might be suffering. Identify the root causes of the cash shortages, then quickly formulate and implement corrective steps. Delays will erode critical goodwill with vendors, employees, and bankers…and postponement of sound management action can result in complete business failure.

Seek Competent Legal Assistance - An experienced bankruptcy attorney should be consulted before you have extensive discussions with nervous creditors. The lawyer can help you formulate proper responses to increasing pressures from suppliers and lenders who will demand precious cash and collateral needed by your business.

Communicate With Creditors and Employees - Decide which creditors and staff are critical to your company’s future success, and provide them with periodic status reports about the troubled situation. By keeping these interested parties informed of the steps being taken to benefit their interests, you’re more likely to obtain cooperation during the crisis period. A word of caution: Don’t make promises you can’t keep!

Stop the Cash Bleeding - Insufficient cash flow can easily cause a company to fail. To save a financially-troubled business, quick steps must be taken to preserve cash. Develop and use a 13-week and 12-month cash forecast tool (using Microsoft Excel) to plan and control cash receipts and disbursements. Maximize cash by following these suggestions:

• Develop detailed weekly/monthly cash forecasts
• Reduce costs
• Defer A/P
• Accelerate A/R collections
• Liquidate excess inventories
• Sell unneeded assets
• Discontinue unprofitable operations
• Obtain new debt or equity funding

Embezzlement: When, Who, Why?

It’s not uncommon to hear business owners say something like, “My controller (or bookkeeper) would never steal from us. I trust her completely.” Entrepreneurs are generally not aware of just how vulnerable they are to various forms of employee fraud. Here are sample answers to the above “When, Who, Why” questions:

When: When there’s little chance of detection…due to weak controls.
Who: An otherwise “honest” person, experiencing serious financial problems.
Why: They rationalize by saying, “It’s not that much; I’ll pay it back,” or a discontent employee might say, “The company owes it to me.”

Why Freelancing is so Popular

More-and-more professional accountants and consultants are leaving their full-time jobs, or returning to the workforce now that their children are older...to enter the world of independent contractors. This is because freelancing provides:

1. Flexibility in the scheduling of work assignments, which leads to better work/life balance;
2. Increased variety of clients and projects, or for specialization in niche areas;
3. Overall satisfaction and self-fulfillment from owning your own business;
4. Strong earnings potential; and
5. Opportunities to grow your practice.

Rick Telberg's recent article: Tips and Traps for Going SOHO

Welcome to the JE Moore Blog!

After enjoying the many benefits of practicing as a solo-practitioner CPA/Consultant for over twenty years now, I want to share some of what I've experienced and learned...with the thousands of independent accountants and consultants serving businesses of all sizes, from start-up and other small private companies, on up to the largest organizations in the world. "Going solo" is a fantastic way for professionals to experience the work/life balance they desire, and to provide the top-quality services needed by their clients.

My purposes for establishing this weblog are as follows:

• To help other solo-practitioners better serve their clients and build their practices...by providing timely, practical, and profit-enhancing ideas, information, news, and suggestions that are relevant to them and their clients;
• To help my firm better serve its clients...by increasing the size and quality of its already-strong network of freelance accountants and consultants. I'm hopeful that new JE Moore associates will evolve from interaction on this site, and that they and my current associates will both be better equipped to serve clients as a result of regular visits; and
• To help each JE Moore client operate more profitably and deal more effectively with the wide variety of challenges, projects, and issues that arise in their organizations. Even though most of the posts will be addressed towards JE Moore associates and other practitioners, clients hopefully will find that a great deal of the material relates to practical aspects of their business operations.

While much of the blog's content will be written or sourced by me, the more visitors contribute, the more extensive and useful the collective knowledge will be. We'll see how it goes. I encourage you to visit regularly and hope you'll post comments whenever you have questions or ideas about particular blog posts or the site as a whole. I look forward to some interesting interaction.