On October 7, Dohman, Akerlund & Eddy, LLC (or DA&E as we’ll refer to them for the remainder of this article) of Aurora, Nebraska sent out letters to 82,207 people whose data — including name, address, date of birth, Social Security number, medical treatment/diagnosis information, dates of service, health insurance provider name, health insurance claim information, and/or treatment cost — was accessed through a breach of their network in February of this year. As is required by the law, they also filed a breach notification with the attorney general of Maine as 19 of those 82,207 people are residents of the state.

We wrote about a similar breach just a week ago (see: A Firm With 55 People Finds Itself at the Center of a Data Breach Affecting 127,431) and wondered out loud at that time how a tiny little accounting firm with 55 people working there would find itself in possession of the medical/treatment information of 127,000 people. In the case of DA&E, we don’t have to wonder. They spell it out in a press release put out today.

It said:

Dohman, Akerlund & Eddy, LLC (“DA&E”) announces a data incident that impacted some protected health information stored on its network. DA&E provided auditing services to some Aurora area hospitals.

As far as the breach itself, DA&E detected suspicious activity on its network on February 28, 2024. They brought in third-party specialists to conduct an investigation and determined “an unknown party accessed certain files” on the network (duh). The press release says the files were accessed on the 28th but the notification filed with the Maine AG says it was February 11.

Well whatever. Here’s what happened after discovering the breach, bringing the experts in to figure out how bad it was, and concluding the investigation on September 26:

DA&E began a comprehensive review of the files at issue to determine the information the files contained and to whom the information related. DA&E’s review included the assistance of third-party data review specialists and determined the potentially impacted information included the following types of information related to some patients of hospitals in the Aurora area including name, address, date of birth, Social Security number, medical treatment/diagnosis information, dates of service, health insurance provider name, health insurance claim information, and/or treatment cost. [Emphasis ours]

DA&E notified law enforcement of the incident. The firm “has no reason to believe any of the information described above has been misused” but is providing 12 months of credit monitoring and identity protection from IDX including CyberScan dark web monitoring. IDX Complete costs $355.32 a year which means the retail cost to cover 82,207 people for just a year would be more than $29 million. Surely the firm isn’t paying retail.

DA&E is presumably too small to appear at all on the INSIDE Public Accounting Top 500 (the last firm on the list is Shannon & Associates of Kent, Washington with revenue of $6,063,000). According to this their revenue is $3.5 million, Dun & Bradstreet says sales revenue is $0.86 million. Who knows, who cares.

In a separate consumer notification that appears to be related to this breach as it occurred during the same time period, 3,687 people were notified that their name and Social Security number were accessed by whoever was digging around in DA&E’s network back in February.

Anyone else feel wildly uncomfortable about your private medical information just sitting there on some tiny accounting firm’s server ripe for the looting by bad actors?

The post DAE Get Sick of Hearing About Accounting Firms Getting Their Data Breached? appeared first on Going Concern.

Jordan Boston here has a beef with the good folks of WMDD&H:

The only non-Google photo for this place is from Jordan.

These people have a beef with the firm too but it’s not nearly as entertaining as some guy getting chased off by a lady with a Sonic haircut for metal detecting on the property.

Before you ask, yes it is a slow news day. The next time we write about this place it will be far more interesting, I promise.

The post This Might Be the Strangest Review of an Accounting Firm Yet appeared first on Going Concern.

To tide you over until we can do that deep dive, the good folks at TR just published an article on tax firms’ top strategic priorities. Talent continues to influence the obsessive thoughts that bubble over in firm leadership’s brains when they’re trying to fall asleep every night however growth, pricing, and efficiency are of significant importance, too. Depending on what size firm you ask.

Here’s a handy chart:

Says the full report:

• Small firms (1-3 people) tended to lean in the direction of maintaining the status quo, preferring a more balanced approach to prioritization.
• Midsize firms (4-29 people) were much more likely to pursue talent development as a priority and drive efficiencies through streamlined workflows and aggressive use of automation.
• Large firms (30-plus people) had the resources to pursue multiple priorities at once, including talent development and growth through efficiencies found using more sophisticated technology and automation. Large firms were also more likely to explore different pricing strategies for the broad range of business services they offer.

On the topic of pricing, Thomson Reuters says this is the first time ever it has appeared in the top priorities list. Ron Baker and the rest of the Death to the Billable Hour gang will love this part:

…largely because the wisdom of hourly billing is being questioned by both clients and their firms. Many clients don’t like hourly billing because it is unpredictable; hence the rise in flat-fee and project-based pricing, among other alternatives types of pricing. Firms, too, have come to realize that hourly billing doesn’t necessarily capture the true value of their services, particularly in the areas of business consultation, tax strategy, and decision support.

This makes a lot of sense when you think about how popular advisory services are these days. Don’t expect this change to happen as rapidly as automation, they’ve been debating this for like 15 years and the old-timers are really having trouble letting go. Here’s Ron Baker’s value pricing pitch from almost ten years ago:

A big problem with hourly billing is it’s an internally focused metric. It looks at our costs and our inputs. It doesn’t look at our outputs and outcomes. There’s nothing in the hourly billing formula that looks at client value.

The other problem with it is it limits an accounting firm’s income. As more and more firms are moving to the cloud, a lot of labor that CPAs used to do is now being automated. If you’ve got a business model that says, “I sell time,” and the time it takes you to do more work is being driven down because of all these technological changes, unless your hourly rates are increasing faster than productivity, your income is going to suffer, and your profitability is going to suffer. And our hourly rates have not been increasing faster than our productivity. So it’s a very limiting business model.

But back to the report. Comparing 2023 to 2024, we see efficiency still dominates the list, talent is once again a headache (note: retention is now the word of the day when we talk talent which should not be confused with the pipeline problems that get all the headlines), and growth has slipped a bit.

“Growth may have slipped down the priority list; but then again, lack of growth hasn’t been a problem for most firms either,” says the report. “Indeed, a majority of firms reported an average revenue increase of 24% over the past 12 months. So whatever firms are doing, it’s still working.” Mid-size firms interpret growth as expanding their client base while the larger firms see implementation of automation as the best way to grow. In other words, “growth” means different things to different-sized firms.

We’ll do a deeper dive into the report later, hopefully this has whet your appetite.

Survey Methodology:
Surveys for the 2024 State of Tax Professionals Report were conducted in the first quarter of 2024.* The survey involved 500 respondents from tax & accounting firms of all sizes, although a bit more than half (51%) of respondents were from midsize firms (4-29 people), and 38% were from small firms (1-3 people). By region, slightly more than half (51%) of respondents were from firms in the United States; the rest were from firms in the United Kingdom, Canada, Australia, Brazil, and Argentina. Also, 60% of the respondents were male, and the age range of all respondents was represented relatively equally by decade, from under 40 years old to over 60 years old. The vast majority (85%) of respondents reported having leadership roles in their organization, and almost half (48%) were either partners or principals.

The post Let’s Talk About This Year’s Strategic Priorities at Tax Firms appeared first on Going Concern.

Among the #TaxTwitter trends we’ve witnessed of late — like enforcing proper onboarding and not proceeding with the relationship if the prospective client can’t bother to complete it — a new one is emerging. Faced with staffing shortages, firms are taking the unconventional approach of turning away work that isn’t worth the trouble.

Exhibit A:

Sucks for clients but great for the overworked professionals who serve them. Don’t say you weren’t warned, clients.

The post Confidential to Clients: You Better Act Right, You’re Getting Graded Now appeared first on Going Concern.

According to earlier reporting, the property in Gray, TN (pop. 1,342) could have been turned into a school. Instead it will be filled with the glorious sound of dozens of accounting firm staff with earbuds in hoping no one talks to them once the space is ready for Blackburn Childers & Steagall PLC to move in.

Per a building permit pulled by Channel 11, a local construction company will be doing $265,000 of demo work first.

The current office is in one of those beige professional parks that make you question what you’re doing with your life when you pull into the parking lot every morning so this will be a nice upgrade.

Why is this news? Because sometimes we like to hear about what the little guys are doing. It is also a strong signal that the littler firms are going all in on return-to-office and getting their staff under one roof these days. The MP literally said that. “We feel like being under one roof is going to help us give better client service and be more efficient with our work and gives us plenty of room to grow into the future,” said managing partner Andy Hatfield to WJHL. There’s another 75,000 square feet in their new building, no tenant has signed for now.

BCS is #244 on the esteemed INSIDE Public Accounting Top 500 with $18,594,028 in revenue.

Accounting firm preps for move into Citi building [News Channel 11]

The post The 244th Largest Accounting Firm in the US Is Getting a Big New Office appeared first on Going Concern.

I have a small firm in [redacted].

I have been reading constantly about how the large firms are merging, paying more for top talent, taking people away from other firms, etc. due to the natures of the current accounting marketplace.

The profession is clearly in a transition. Big firms turn away clients. Those clients turn to the next rung. That rung cuts clients loose. All the way down.

After a while, it trickles (more like a raging waterfall) down to small firms and sole practitioners. This is the problem. Those who have been sole practitioners are dying or retiring in droves. New accountants coming into the job market are being wooed by larger firms to the point we can’t hire them. In addition, where historically many accountants who, after 10 years or so decide to become a sole practitioner by either buying out a retiring person or just hanging out a shingle, this type of accountant doesn’t exist anymore.

I am overworked to the hilt as new prospects call on me all the time because their accountant died, retired, or tripled their fees. I can’t hire anyone because I can’t compete against the top 100 firms for talent.

Do you have any thoughts about addressing this?

Happy to address it but not sure what can be done about it? Ah well, let’s break it down anyway.

75 percent of AICPA members were eligible to retire by 2020 (per an AICPA estimate) and as we know the pandemic only accelerated many CPAs’ exits from the profession, be it due to illness or just coming to the realization that chasing clients down over receipts is not worth dying over. The flood of retirements was well underway prior to 2020, Covid just helped it along. The AICPA has 421,000 members, 75 percent of that is…315,750 which leaves 105,250 people to do the work of 421,000. Not to say that all those people are actively leaving, just know that they can in coming years. Boomers make up 47% of AICPA membership (58-76 year olds) and new accounting graduate numbers are trending down after a peak in 2015-16 meaning there will probably come a point where the Boomer vacuum becomes obvious. Maybe we’re already there.

The 2022 AICPA Private Companies Practice Section (PCPS) CPA Firm Top Issues Survey tells us that finding and retaining staff are not the top concerns for sole practitioners and very small firms (5 professionals on staff max), once you get to firms with 6-10 professionals ‘finding qualified staff’ becomes the #2 concern and for firms with 11-20 professionals and 21+ it is the top issue. At the bottom of the ladder, the smaller firms are most bothered by challenges working with the IRS, keeping up with changes and complexity of tax laws, and keeping up with Covid relief programs.

If we look ahead five years, even the small firms are stressing over staff. ‘Staffing (recruitment and/or retention)’ rises to the #1 issue impacting small firms of 2-5 professionals:

We tend to focus on the pros of the current market — an accountant shortage means wage pressure and leverage for the workers both of which benefit your average Going Concern reader — because we focus on Big 4 firms making $40 billion a year that can afford to pay their staff higher salaries (or can they?). But what happens when there’s no one to do the work at the bottom rung? Where do clients go? The PCAOB is already concerned that turnover at audit firms of all sizes could be a disaster for audit quality. Are these clients going to end up at shady strip mall tax places with dollar signs in the name? WON’T SOMEONE THINK OF THE CLIENTS.

Would anyone care to propose some solutions? Automation seems to be the obvious one but can we even automate our way out of this?

The post Letter to the Editor: Small Firms Are Suffering in This Market, Does Anyone Care? appeared first on Going Concern.

In 2012, I started an accounting firm, although I didn’t realize that I was starting an accounting firm at the time. I was merely working under contract for a few businesses in the New Orleans area; as I got busier, I started to add help, and voila, Aguillard Accounting was born. Like everyone I knew, I hired locally. I went out and leased the most amazing office space I had ever seen. I started with two interns and spent time training them in my beautiful office. My next hire was a staff accountant, and within a year, I added an administrative assistant.

It reduces overhead

Eventually, the interns left for bigger firms in bigger cities and my staff accountant moved with her husband to a new job. When my administrative assistant declared that she would be heading to law school, I took a long, hard look at our needs. We had two contractors in other cities working on projects already; they weren’t employees, but they worked as seamlessly as if they were. The administrative assistant’s duties were almost exclusively related to managing an office space that no one came to. Around the same time, I decided to give up my tax practice and focus on monthly accounting and software integrations, which is my love. My clients were across the country, and my local clients rarely came to the office. This was the final decision that led to downsizing our physical office space. I have saved $45,000 a year by moving to a one-room office about six blocks from my home in a shared building, and letting my staff work from home or coffee shops.

I find more qualified staff

I run a strictly Xero firm. When I started looking for bookkeepers in 2013, I could not find any in the New Orleans area that were Xero-certified and had experience. I finally found a bookkeeper in the Philippines where there is a lot of outsourcing to New Zealand and Australia, much bigger Xero markets. Since then, Xero help has been easier to find in the U.S., but I have still looked outside Louisiana to find the best candidates, looking for specific skill sets that aren’t common, like cloud-based app integration and process experience.

While it sounds a bit counterintuitive, remote staff can’t fake their ability, because their work product is the sole grounds on which they are judged. In an office, there can be an appearance of “being busy” or social politicking that clouds true merit, but in a remote environment, my employee’s output is what I see.

It empowers parents

I’m a single mom and built my firm so I could be available to my children. It is important to me that I have the kind of firm that gives other parents the same opportunity. Whether it is starting the workday an hour late, so I could attend a school ceremony with my son (which I did this morning) or being able to stay home if a child is sick, I believe in ultimate flexibility. Being a parent is hard enough, and I don’t want my employees to have to choose between work and family. The result is that I get engaged, committed staff who are incredibly efficient in their work.

Image: iStock/Aleutie

The post Why I Have a Strictly Remote Workforce appeared first on Going Concern.

Cloud accounting doesn’t have to look like this. In fact, it can’t look like this if businesses want to stay competitive and ahead of the curve.

As more companies begin to rely on remote employees, it’s become imperative for businesses to develop strategies that genuinely integrate them into the team. With the right standards and policies in place, cloud accountants can connect with each other and with those in the physical office in ways that maximize productivity and collaboration, making it no different than if you were sitting five feet away.

But if your company isn’t using those strategies, it may be up to you to get the ball rolling. Here are some ways you can become part of the team when working remotely.

Technology is your friend

Today there are a number of applications that give cloud accountants a team presence and allow you to collaborate more effectively.

Slack provides a virtual workspace where both physical and remote workers can chat, share ideas, and ensure project deadlines are met. The platform is flexible–some businesses use it as a one-stop shop for communication and project management, while others utilize one feature exclusively, such as text chat.

Video conferences are also a great way to bring you and your team together and get people talking face to face. Zoom is perhaps the easiest and most user-friendly, though other organizations swear by Skype or Join.me.

Keep it fun

As a remote worker, you’ll often miss out on the employee outings and general office camaraderie that help elevate collaboration, strengthen teamwork, and even build friendships.

“It’s easy for remote workers to feel isolated, and without a way to build camaraderie, it’s easy for everyone to go their own way instead of pulling together and working as a team,” says Patti Scharf, Co-Founder and COO of Catching Clouds.

But it doesn’t have to be that way. There are ways to bring yourself into the cultural fold, no matter how remote you may be.

Try sending out an email with a personal question to your entire team, encouraging them to hit reply all with their responses. You can ask about their favorite travel experiences, war stories of nightmare clients, or whether they’re called “jimmies” or “sprinkles” (the correct answer being sprinkles, of course.) This will get the team talking about something unrelated to work, sparking conversation and debate that can foster personal connections.

Online games are another great way to bring remote teams together. Poll your coworkers and see what kinds of games they like best. Depending on the responses, you might suggest anything from regular online scrabble tournaments to Call of Duty deathmatches.

Sites like teambonding also provide a number of virtual solutions that help remote workers connect in fun, personal ways.

Don’t get frustrated

Building teamwork and collaboration isn’t really your responsibility. Using the above strategies are great ways to show initiative and get the process started, but if your company isn’t committed to keeping its remote employees connected, there isn’t a whole lot you can do.

“It can be very difficult to integrate remote workers, because that essentially implies a hybrid model,” says Caleb Stephens, Controller at Automattic. “Hybrid models can be really hard to pull off if they aren’t functionally aligned.”

As long as you’re doing everything in your power to stay connected and collaborate with your teammates, know that you’re doing it right–even if your employer isn’t.

And if lack of communication starts to affect your output, it might be time to look for a new position. There are plenty of firms out there that know how to foster remote collaboration, and if you’re bold enough to try the above strategies on your own, we’re sure they’d love to have you.

The post How to Be Part of the Team, Even When Working Remotely appeared first on Going Concern.

The lead kvetcher, latex_man, posted a thread entitled “I just did my taxes and it turns out I lost almost everything” and let’s all have a good laugh together:

I bought 2 BTC in early 2017. I did a few trades between BTC and dollars but in the end effectively I sold it late in the year for about $40k and changed my mind and bought them back a few hours later. I got weak hands, what can I say.

Anyway, I still got that 2 BTC (and no cash). My accountant said because of my trades, I have to pay like 35% income taxes (short term gains) on it with state and federal, so like $15000. If I sell it now for $10k each I’m only gonna end up with $5k left over. He says I owe $15k by April no matter what happens this year to my bitcoins even though it crashed by 50%.

WTF?

Fuck taxes man. This is so fucked it’s like I didn’t earn anything.

Langlois combed through the comments which are filled with comically bad advice for this forlorn trader, and I have got to imagine there’s a lot of this going on right now. I hope you tax accountants with naive crypto traders as clients are letting them down gently.

[MW]

The post Cryptocurrency Traders Learning That Taxes Are a Thing appeared first on Going Concern.

I don’t have to tell any of you that a whole bunch of powerful men got their comeuppance last year after preying on women for decades. Now, most accountants are not famous or powerful, but by god, that hasn’t prevented some of them from using what little power they have to coerce a subordinate into a sexual encounter.

And this guy had the worst move that you could possibly imagine:

Eileen Kim claims in the new Manhattan Supreme Court suit that married boss Young Tai Choi’s creepy behavior started weeks after she went to work for him in January at his East 30th Street home office.

“Choi began telling her that she needed to come in after hours for ‘alone sessions’ with him on Sundays to teach her about personal income-tax returns and accounting,” according to court papers.

During the session, he told the churchgoing New Jersey resident that “she was an angel sent to him for sex and compared himself and her to Adam and Eve,” according to court papers.

When Choi yanked her onto his lap and tried to kiss her, she screamed and pushed him away, the suit says.

This is what amazes me about these men who pursue women in this awkwardly predatory fashion — they actually think it will work! This deranged individual (allegedly) thought to himself, “I’ll go over the basics of a 1040 and then move on to the Divine Providence of us getting it on. Maybe I should do it wearing a towel? Or maybe I’ll just offer to give her a massage while discussing the underlying theory of double-entry? Yeah, that’ll do the trick.”

All you scumbag accountants should plan on keeping your eyes on the TCJA this busy season. And then once you think you’ve got it down, read it again. And then again. And then translate it into Mandarin. Do whatever you have to avoid being a scumbag.

[NYP via Workforce]

Image: iStock/Antonio_Diaz

The post Reminder, Creepy Accountants: Offering to Teach a Subordinate About Tax Returns Is Not an Opportunity to Get All Handsy appeared first on Going Concern.

The survey found that partnership on average remains overwhelmingly male. The current survey shows little change from studies done in years past, which have typically found less than one-quarter of the partnership ranks made up of women.

That “overwhelmingly male” breakdown is 78%/22% for men and women. The survey drills down further by firm size:

This does compare well to the previous survey in 2015:

These numbers were little changed from the 2015 survey results, when women represented 20% of partners at the largest firms, 27% at firms with 21 to 99 CPAs, 39% at firms with 11 to 20 CPAs, and 43% at firms with 2 to 10.

Yes, you’re reading those numbers correctly; the numbers from 2017 are largely worse than those from 2015. These trends are even worse when you consider the disparity of equity partners within these firms as well:

As you can see, and as the report states, the larger the firm, the greater the gap. Also of note, the survey cites another study, the PCPS/CPA.com National Management of an Accounting Practice (MAP) survey, that found that parity between men and women existed at nearly every level of a traditional firm, from associate to non-equity partner/director. However, that parity craters at the equity level. Perhaps in a few years, the numbers will start to spill over into the partner ranks, but nothing in the report suggests that’s what’s about to happen.

Gail Perry is a member of the WIEC and she says that while “there always seems to be disappointment that there aren’t more women partners,” she’s “not sure it is supposed to be equal” at the partner level. “Our society pressures men to be the breadwinners,” and “to fight for those leadership positions,” otherwise “they’re seen as failures,” she says. “The same pressure doesn’t exist for women.”

The pressure for women is different, however, most notably “to have it all” (even CEOs of Big 4 firms). This implies having a successful career of some measure, but also keeping family a high priority. When Dad misses a soccer game, no one bats an eye, but if Mom does, that’s when society considers her a failure.

Study after study has found that businesses perform better with more women in leadership positions. With a bigger pool of resources (i.e., including more women) the chances of success are that much greater. And yet the gender diversity — diversity, period — at the top of the accounting profession remains elusive.

[2017 CPA Gender Firm Survey]

Earlier: Here’s Another Lousy Stat on the Number of Women Partners in Accounting Firms

Image: iStock/Ryzhi

The post The Number of Women Partners in Accounting Firms Is Still Abysmal appeared first on Going Concern.