This Week: John Green — Managing Partner of EGP PLLC
What has been the effect of the economic downturn on the profession of accounting? Firms found their clients to be shrinking or at least not growing, and the development of new ventures stalled. This put firms in the position of either cutting expenses, with labor easily being the largest, or increasing their efforts to gain new clients. Most made cuts in personnel early in the recession. Locally, the effects have not been as severe as in other geographic areas, and some firms have achieved growth during the last couple of years.
How will healthcare reform affect accountants? The legislation, to say the least, has been a moving target, and some significant issues are being tested in the courts. The initial legislation created more than 50 changes in the federal tax code. Public accountants can deal with the tax changes, but the greater challenge will be in assisting their clients with strategic decisions regarding the new law. All employers need to realize that the law, in some form, is here to stay. Those who are exempted from providing coverage to employees and choose not to provide it may find themselves at a competitive disadvantage in hiring and retaining employees. Those who find themselves providing new or additional coverage may need to calculate the effects of needed price increases to cover the additional costs.
Have you found that businesses are hesitant to make decisions because of uncertainty over tax reform? It depends on specific circumstances, but businesses have to make a profit before they worry about paying taxes. Most are driven by a profit motive. However, a change in tax law may have a huge impact on a particular industry. In some circumstances, a special tax break may be the main factor in attracting investors or customers. In general, I would say that businesses are much more hesitant to make decisions based on uncertainty over economic circumstances other than taxes than they are because of uncertainty over tax reform.
How can businesses, particularly smaller businesses, best protect themselves against fraud and embezzlement by employees? Small businesses are often vulnerable to fraud and embezzlement because too many duties are handled by too few people. Accountants refer to this as a lack of segregation of duties. Small-business owners often take the position that it isn't economically feasible to hire more people to diminish the risk and may very well be right in that assessment. Still, there are measures that can be taken to mitigate the risks. Fraud and embezzlement are more prevalent than most people realize and generally take a huge toll on the victims. I think most businesses would find it well worth the time and money to have their processes and procedures reviewed by their outside accountants
