Respondents to the First Quarter AICPA/UNC Kenan-Flagler Business and
Industry Economic Outlook Survey expressed pessimism for the upcoming year.
The survey of CPAs in business and industry, sponsored by the AICPA and the
University of North Carolina’s Kenan-Flagler Business School, also indicates
steps businesses are taking to prevent layoffs and prepare staff for the
continuing recession.
Forty-three percent of CPAs surveyed reported layoffs – a 12-point increase
from last quarter – to help their businesses survive the extended period of
recession. Across the board, organizations are looking to cut costs as
revenue and profits fall. Many organizations have been implementing various
HR strategies to budget for the upcoming year, maintain efficiency and avoid
layoffs.
“Businesses in all industries are feeling the impact of the economic crisis
in some form or fashion. It’s likely to get worse before it improves,” said
Margaret Fontana, CPA. “Companies need to take the necessary precautions now
to prevent unforeseen consequences in the future.”
Survey respondents listed various cost-cutting strategies including:
four-day work weeks, restricted overtime hours, early retirements, salary
cuts or suspended raises for executives and reduced delivery frequencies.
Below are the results from this quarter:
| |
Q4'08 Result |
Q1'09 Result |
Change from Q4'08 |
| Layoffs |
31% |
43% |
+12% |
| Facilities closings |
10% |
14% |
+4% |
| Capital spending cuts |
40% |
50% |
+10% |
| Travel restrictions |
34% |
44% |
+10% |
| Outsourcing |
8% |
9% |
+1% |
| Compensation freezes |
31% |
51% |
+20% |
| Hiring freezes |
36% |
47% |
+11% |
"We're in the process of looking at salary reductions and possibly even
suspending retirement plan contributions and discontinuing pension plans for
new hires," said a CPA in Lititz, Pennsylvania who asked not to be named.
Some businesses have been able to avoid layoffs altogether, “By freezing all
new hiring and meticulously planning our budget for the next fiscal year,
we’ve been able to maintain our staff at 100 percent capacity,” said Mark
Odom, CPA, chief financial officer, PGA National Resort & Spa.
In addition to various cost-cutting strategies, some companies are employing
educational tactics to assist their staff in managing finances and other
issues.
“Our company holds quarterly property-wide meetings, where we offer staff
free advice on how to manage personal finances. We also tie this in with the
company’s financial forecasting to inform and prepare them for any turbulent
spots later that year, recommending that they save overtime dollars earned
during busy periods,” said Odom.
Of the 1,183 respondents, 32 percent expect the economy will improve by the
end of 2009, 60 percent expect improvement in 2010, and eight percent do not
expect recovery to begin until 2011.
With the increased pessimism over last quarter, CPAs in business and
industry have been under pressure to accurately forecast their budgets. And
while not all organizations are expecting a decrease in revenue and profits,
cost-cutting strategies such as reduced hiring, 401k matching/cutting and
travel restrictions are allowing even the most vulnerable companies to
remain above water.
For more information and to view results of the First Quarter 2009 Economic
Outlook Survey, visit http://fmcenter.aicpa.org/ or
http://fmcenter.aicpa.org/Resources.
©2009 The American Institute of Certified Public Accountants
