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2011 Accounting Outlook

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Kentucky accounting firms have moderated optimism about economic prospects this year. Businesses without debt loads are expected to move forward with projects that have been postponed during the downturn of the past two years. Federal tax policy and investment incentives enacted in December should help give a small but noticeable boost to the economy.

Penny Gold, CEO
Kentucky Society of CPAs

“While the CPA profession wasn’t as impacted as others by the recession, last year’s accounting graduates did experience a more difficult time finding positions. This year, however, hiring is picking up and new financial professionals are getting placed sooner. This is an excellent indicator of a recovering economy, since CPAs serve the needs of all types of business and industry.”

Steve Jennings, Partner
Crowe Horwath LLP

“Businesses are beginning to see modestly increasing revenues, yet hiring remains relatively flat and cost-cutting measures are still in place. This indicates that higher profitability may be on the horizon. The credit markets are still tight, and we expect highly leveraged companies to be slower to rebound and continue to struggle in certain industries. Additionally, in the last half of 2010, we saw a substantial increase in merger-and acquisition activity and anticipate this momentum continuing in 2011.”

Michael B. Mountjoy, CPA/ABV/PFS
Mountjoy Chilton Medley

“The prediction for 2011 is still that of cautious optimism. The housing market and construction industry don’t appear that they will have much improvement. Therefore, accounting firm clients are under pressure and are experiencing slow or no growth at this time. This is leading to continued interest in mergers of firms to bring together the resources necessary to expand the client base.”

Richard Dorton, President/CEO
Dean Dorton Allen Ford, PLLC

“Though unemployment remains high, we believe the overall economic outlook for 2011 is promising. The two-year extension of Bush-era tax cuts and the ability to deduct 100 percent of capital expenditures in 2011, combined with low interest rates and low inflation provide opportunities that should produce confidence and spur investment. As a larger firm with expanded resources, we are especially eager to help clients grow and prosper and we expect to have a great year in 2011.”

Timothy Snavely
Managing Partner, Kentucky/Southern Indiana

BKD, LLP“While questions about the long-term impact on the federal budget deficit linger, there should be a short-term boost to the economy. Look for the pace of business spending to pick up in 2011. An increase of about 10 percent is likely, buoyed by a souped-up tax break included in the stimulus legislation approved by Congress in December. Businesses will be allowed to expense 100 percent of the cost of assets put in use in 2011.”

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

“While we are cautiously optimistic that the economy is showing signs of improvement in 2011 and beyond, we do predict that businesses will begin to proceed with projects and initiatives that were put on hold in the down economy. Tax reform at both the state and federal level appears to be on the horizon, and financial statement reporting standards are a concern for businesses with the impending requirement to adopt international accounting standards. With these changes and the challenges and opportunities ahead, CPA firms will become even more valuable to the clients they serve.”

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