Kentucky’s accounting services sector is expecting better business in 2012, but also sees its industry here going through a slow structural evolution that is taking place across the nation as well. Leaders of state CPA firms expect mergers and a demand for more
complex, specialized services.
There are multiple social and business influences.
The economy is slowly improving and finally luring cautious business operators back into action. International trade is increasing.
Federal tax policies are hitting their expiration dates, and state government has initiated a tax reform process. Compliance with business regulations put in place in response to the 2008-2009 financial crisis is more complex, especially for public companies.
Baby boomers who launched and built up CPA firms during the past generation are beginning to enter their retirement years; their focus is shifting to estate planning, and they are now considering merging or selling their accounting businesses.
The business world’s need and demand for CPAs’ expertise and informed advice is growing in 2012. Firms need talented members.
The collective mood and expectation is distinctly, if not universally, positive for the coming year.
“The accounting profession is continuing to deal with ever more complex issues. We’re looking now at IFRS, international financial reporting standards that the world is using. We are also dealing with more complicated accounting disclosures. There are changes on the horizon for us in public accounting. I predict we will see more mergers in 2012 and beyond in order to provide services that continue to meet more complex client needs. The majority of our clients are Kentucky-based companies, but they are doing business across the nation and the globe. As a result, we have tax professionals who are well-versed in state and local tax laws and who deeply understand international tax. It’s a pretty complex world we live in. By merging and growing larger, it affords us the ability to have the specialists needed to provide a full range of services to clients.”
“You’re going to see a lot more merger activity among CPA firms, and some contraction in the number of firms because of the merger activity. This phenomenon has been going on for the last few years nationwide. Part of it is due to succession planning – the aging of CPAs – and part is due to the market environment we’re in with the economy. We have been through three mergers in the last seven years. The industry is becoming a lot more specialized to offer more services to the client at a better price. Specialization is becoming more and more critical. Smaller firms will become more niche-oriented.”
“Though the economy is still struggling, we are seeing increased signs of economic life: The stock market is off to a good start in 2012 (at least so far), merger and acquisition activity seems to be increasing, and business leaders are emerging from a cautious ‘wait and see’ posture and are again looking for ways to expand and improve their businesses. We also note that because income tax rates are scheduled to increase in 2013, the estate and gift tax laws are slated to become less favorable, and there is considerable talk about tax reform. Many businesses and families are looking for ways to take advantage of the current tax environment before it changes. We are convinced that the improving economy and the uncertain tax climate will drive up demand for CPA services in 2012, especially for consulting services, and we believe our firm is poised and staffed to help meet that demand.”
“While the recovery period appears to be over, the accounting profession is still facing slow growth, and profitability will remain relatively flat. There is also still uncertainty in the economic market, but Crowe’s diversification has helped us remain stable and to continue toward executing our vision and long-term growth strategy. What we’re seeing in the Kentucky market is that while profitability is better for many companies, credit is still a bit tight and companies with heavy debt loads continue to struggle.”
“I’m very optimistic for the future, in terms of our current client base. I see a lot of activity for new business through Greater Louisville Inc. When that happens, it provides opportunities for firms like ours to help businesses get set up and organized. We do more than just prepare tax returns; we play a role in assisting our clients in growth. We work with them in terms of strategy and planning, their organizational structure, and help them achieve their goals and objectives.”
“Despite the economic trends of the past few years there appears to be some increased activity in small and medium-sized businesses. This could be attributed to record-low interest rates, surplus labor and, of course, the opportunities entrepreneurial types seize even in the harshest of environments. While larger companies may reduce staff, products and/or services, other organizations are investing in property and equipment, hiring the best and brightest displaced by the recent downturn, and charting their course for the long term. Complex negotiations, acquisitions and tax-planning will all result from the aforementioned increase in activity in certain sectors. Thus, trends in the accounting industry will include increased demand for public accounting services and niche consulting work.”
“We predict that projects and expansions will increase in 2012, but businesses will take fewer risks and will be much more cautious in new endeavors. Tax reform at both the state and federal level is still a concern, as is financial statement reporting standards with the continued pressure to adopt international accounting standards. We predict that 2012 will bring continued merger and acquisition activity in the public accounting industry as firms continue to capitalize on the efficiencies of technology and as many of the baby boomer CPA firm partners continue to retire. CPA firms will continue to fulfill the role of a valued business partner to the clients they serve.”
“At a time of such constant change and growing complexity, we clearly see a bright and expanding future for a multidisciplinary professional services firm providing audit, tax and advisory services. As the economy continues to recover, we’re helping OFFICE our clients improve their business performance, address regulatory change, redefine their risk management structures, buy and sell assets, restructure their debt, and improve the depth and transparency of their financial reporting. Demand is solid for all of our businesses, as clients are turning to advisers for traditional consulting skills, coupled with deep know-how in risk, regulatory and tax matters that is independent from any particular technology or outsourcing solution.”
“Given the current state of our economy and the growing focus amongst leaders of all sorts around effective management of financial, strategic, operational and regulatory risks, there has never been a better opportunity for our profession. While a core focus of many in our profession is related to auditing and tax matters, everything that we do in some form or fashion addresses risks that our clients face. We will continue to see the profession become even more relevant in helping organizations of all types succeed in this very uncertain time and gain advantages by being on the front edge of risk management. I only see the accounting profession growing and being a key part of the growth of organizations in Kentucky, whether in a service role or in training the future leaders of these organizations.”
“I think 2012 will be a great time for the Kentucky accounting industry, especially the public accounting profession. Several factors make the need/ demand for CPAs even greater. With the increased complexity of the financial PARTNER reporting requirements – i.e., GAAP (Generally Accepted Accounting Principles) – clients will need to consult with an expert. With the federal, state and local budgets looking for revenue, this will make reporting in the proper jurisdictions and tax compliance essential. Other factors: Clients’ demand for current and up-to-date feedback on their financial information and the current changes in the tax laws that will have an impact on their business; new software that increases the efficiency in preparing client engagements; and firms looking for quality personnel.”
“The 2012 business outlook offers signs of improvement. In south central Kentucky, we are seeing more commercial construction across various industries and sectors. With such activity being a leading indicator for the overall economy, looks to be a better year. There has been an increased level of regulatory oversight on financing activity, which has caused some additional challenges as the economy begins to display some signs of recovery. Considering these factors, we do expect to see growth in the firm’s services for 2012 from increased business activity as we continue to assist our clients with their efficiency and profitability. This shift should also provide additional employment opportunities across the board from industries to the public practice of accounting.”