AICPA BV Conference Update: BV and public accounting: it's not always a bed of roses

The pre-conference session here in Las Vegas at the AICPA National BV Conference is on practice management--led off by Gary Trugman, Linda Trugman, Neil Beaton, and Ron Seigneur. One topic is the problem of fitting a BV practice into a CPA practice.

For solo practitioners, the conflicts can be obvious--"it's almost a guarantee that a lawyer will call you on March 15 in the middle of tax client meetings and demand that you're in court for the next two weeks," said Gary.

But other conflicts can be less immediately obvious--for instance the concerns that result when "retaining the tax client" becomes a bigger issue than billing appropriately for BV services rendered.

But the issue can also come down to the partnership issues--including financial ones.   "BV often runs negative accounts receivable because most of the work is on retainer," Gary continued.   "But there might be a tax partner who's sitting on a million in work in process.  The result?   I don't get a distribution because my partners can't collect."

Linda pointed out that there's also a natural sense among CPAs to not turn away work.  "You can get a lot of pressure to get work you're not qualified for" under pressure from partners, which can mean "your insurer cuts you off, or even than you lose your license."

Within BV, and BV staff, it's best to aim for a mix of practice areas.  "There's too much to know," said Gary.  So hiring and developing staff so that you have a range of expertise is a key part of growth, whether or not you're part of a CPA firm.

"And the problems start to occur when you stretch yourself into a new industry or area of practice," agreed Ron.  "We've finally got comfortable with not dropping our fees even when we're being undercut by the lowballers in your market."  And your tax and audit partners may want you to chase this work, even when it's not profitable or within your area of specialization.  "The key question for BV practitioners is perhaps whether you want to do work for $3000, or if you want to do higher quality engagements."

There's also the question of hiring accountants.   Some one who might look good to an audit partner "may be very uncomfortable with the very concept of future forecasting," said Gary.  "The typical conservatism of the profession may make the person struggle as an appraiser."

Another issue:  incentivizing good staff.  Another topic that can disrupt BV-CPA relations is compensation.   Billable hour targets, and resulting bonuses or incentive structures, might be very different.   "You can lose a rising star appraiser who is learning the business and mastering a speciality because the CPA firm managing partner says 'if we give this person a bonus we'd have to do it for all the accounting staff'."