Opportunity in Turmoil
By Troy Waugh

Accountants have been embarrassed with the negative press surrounding our industry. Jay Leno and David Letterman have told more accountant jokes in the last year than attorney jokes. During all this turmoil, sweeping new legislation has been quickly passed into law. Conventional wisdom says the effect of the new Sarbanes-Oxley Act, (along with the tightened rules at the Securities and Exchange Commission and most governmental agencies) will be as great as the Securities Act of 1934 on our profession.

Industry Revenue Projected to Top $100 Billion
With projected revenue topping the $100 billion mark, CPAs will have many opportunities to expand their practice in areas never available before. The primary reason for this will be the segmentation of allowable services for large public companies. No longer will the 17,000+ publicly held companies hire just one accounting firm to do all of its audit, tax and consulting work. These large companies have used a variety of law firms for many years, so the increased complexity won’t be new to them.

Sophisticated Bookkeeping – An Opportunity
One of the first areas of tightened regulation more clearly defines certain services the independent audit firm cannot perform. Bookkeeping is one huge area. There is a heavy burden on large firms to avoid making adjusting entries or in calculating tax provisions. For the entrepreneurial accounting firm, there is a significant opportunity to help large companies clean up their accounts in preparation for the independent audit. In most cases, much of this work can be done in the fall and early winter, before tax season gets started.

Internal Audits and Advice
Another significant area of opportunity will be in providing internal audits and advice to audit committees and management. Internal audit assignments can no longer be performed by the independent attest-firm. In some cases, the independent auditor will give up the attest role because the internal work is less risky and more profitable. This opens the door for those accounting firms with deep expertise in SEC registered companies to increase market share.

There are reports of audit committees, CEOs and CFOs engaging accounting firms to provide them assurance that the financial statements they are endorsing are fair. 

Price Increases
Large audit firms have packaged services in the past so that audit fees were discounted in order to obtain more lucrative tax and consulting assignments. This approach will be more limited in the future. Larger firms will price in the “risk” of the independent audit engagements. With such price increases at larger companies, we will experience a ripple effect on smaller and non-public companies. 

There will be opportunities to increase attest fees for traditionally low-priced engagements. Not-for-profits and governmental agencies, who have enjoyed a cheap ride on the backs of accounting firms, will no longer have it so good. Discounting will be less of an issue as these organizations purposefully shy away from less competent auditors, for their own protection. 

There are many more service opportunities in a highly regulated market place for accountants and consultants. As the full effect of Sarbanes-Oxley is felt and states adopt their own rules, we will see the market for accounting services greatly expand.

About the Author
Troy Waugh has more than 30 years of experience in marketing professional services. In 1991, he founded Waugh & Co. to serve the accounting profession. Waugh draws on his experience as the national sales manager for a major investment firm, the CEO of a publishing company and a manager with Price Waterhouse. 

More Information
Download The Market for Corporate Board Service presentation to MACPA Regional Advisory Council by Olivia Kirtley, AICPA Board of Examiners chair. She stressed CPAs should take advantage of the opportunities the new regulatory environment presents.

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