Accounting outlook: Slow growth, reform and tax change will keep CPAs busy

Leaders of Kentucky’s major accounting firms talk about what they expect in 2013 for their firms and Kentucky as a whole

By The Lane Report

Kentucky’s CPA firms expect to see an increase in demand for their services through 2013 as the U.S. economy continues its slow growth out of the recession. Healthcare reform and changes in tax policy at the federal and state levels should mean plenty of businesses seeking their expertise and advice in still financially tight times. Washington politics are still preventing an upswing in business activity.

Penny Gold is CEO of the Kentucky Society of CPAs.

“There is cause for cautious optimism in 2013. Nationally, housing permits were up 19 percent in 2012, with growth continuing in the first quarter of 2013. The United States has experienced significant growth in gas and oil production in the last year; good news, since natural gas is a particularly important sector for Kentucky. The Purchasing Managers Index shows expansion in the automotive industry, a sector particularly important for Kentucky. Finally, even with sluggish economies abroad, international exports are improving. Export growth bodes well for Kentucky as we are among the top 10 exporting states.”

Penny Gold, CEO
Kentucky Society of CPAs

L. Roberts Porter

“We are seeing improvements in the businesses we represent and notice certain industries are expanding. However, we do anticipate that clients will be looking at higher tax and business costs due to the changes enacted by the latest tax act and the phase-in of healthcare reform during 2013. In preparation for these changes, we have addressed these issues and feel that we are well positioned to be a leader with our clients for 2013. We also believe there will be an increased need for CPAs in leading roles as trusted advisers and specialized consultants in niche industries such as healthcare.”

L. Porter Roberts Jr.
Shareholder, Barr, Anderson & Roberts PSC

Tim Snavely

“Even with increased taxes in 2013 and the added costs of healthcare reform, many of our clients indicate a bounce in optimism for the first time in nearly three years, as well as a small but positive shift in hiring sentiment. The optimism results from improvements in revenues, profits and spending levels. As we head into the fourth year of recovery, we cautiously anticipate continued improvement in the economic environment, especially later in the year.”

Tim Snavely
Regional Managing Partner, BKD LLP

Michael Mountjoy

“We expect 2013 to be another year of a slight improvement in the economy. The housing market is starting to recover, which should increase employment. However, continued political uncertainty with the federal debt ceiling and inability to restrain spending are causing concern to the consumer. The markets could see a reasonably good year as we continue working out of recession. In public accounting, there will be a separation of generally accepted accounting principles for large and small entities, which should improve reporting for closely held small businesses serviced by accounting firms. Accounting firms’ consulting work will continue to grow as there are more demands by clients in the areas of technology, human resources, mergers and acquisitions, and specialized industry expertise. We believe 2013 will be an improvement over 2012.”

Michael B. Mountjoy
Chairman, Mountjoy Chilton Medley

Jennifer Hughes

“As the economy improves, businesses are catching up on initiatives that were on hold during the worst of the recession. This will generate opportunities for our industry in 2013. In our firm, the struggling economy resulted in clients placing more value than ever on our expertise in the planning phases of business decisions. Mergers and acquisitions in the public accounting industry will continue, but firms will be more selective in acquisition targets. Our firm remains focused on providing quality, specialized services to our clients. Public accounting will continue to become more niche-focused due to ongoing tax structure revisions at federal and state levels, as well as changes in financial reporting and accounting standards. In spite of all the changes and challenges, 2013 is off to a great start for our firm, and we are excited about the opportunities for our clients.”

Jennifer R. Hughes
President, Deming, Malone, Livesay & Ostroff PSC

Steve Jennings

“The accounting profession is starting to see growth again, but uncertainty in Washington is still keeping the economic market relatively flat. Crowe Horwarth’s continued diversification and national expansion efforts guided us through the recession; we continue executing our vision of being a national firm, branded globally. In the Kentucky market we’re seeing increased economic activity with businesses continuing to invest, expand and seek acquisitions again. Maintaining a trend from last year, companies are retaining or increasing profitability as they distance themselves from the recession. Businesses with strong balance sheets have weathered the past several years better than those that are highly leveraged, of which many have continued to struggle.”

Steve Jennings
Local Office Managing Partner, Crowe Horwath LLP

David Bundy

“Business leaders are facing a tremendous amount of uncertainty as 2013 begins. There will be additional impacts from final ‘fiscal cliff’ negotiations, but it will be some time before those are known. Also, some of the healthcare reform legislation is just now being felt by employers. Businesses must navigate through these two events, while continuing to face an economy that is still struggling. The unknown impact of national legislation coupled with an economy that is slowly recovering presents business leaders a situation in which the success of every business decision is critical. CPAs who are poised to assist clients in understanding these national changes and how the changes will impact their businesses will see an increase in demand for services in 2013.”

David Bundy
President/CEO, Dean Dorton Allen Ford PLCC

Alan Long

“The economy is still soft overall. With uncertainty in what legislation may come out of Washington, it seems most consumers and businesses are sitting on the sidelines afraid to do anything. The first half of 2013 will be more of the same until some certainty with regard to the debt ceiling is settled. We also could still get more substantial tax changes that will have an effect on the consumer and businesses. If these changes are put off to the end of the year, it could continue to keep the economy in a very stagnant area for the entire year. We predict some growth in our firm because businesses will need more help from CPAs as the new tax legislation comes out. Also, with the full implementation of Obamacare in 2014, businesses now have to get ready for that in this coming year.”

Alan Long
Managing Member, Baldwin CPA