Accountants must apply their management skills, business expertise and technical training to help business owners succeed. But with the complex changes in technology and the emergence of a global economy affecting both public and privately held businesses, owners expect their CPAs to move beyond their core competencies to provide a wide array of consulting services. The goal must be to deliver the solutions and guidance that enable clients to remain competitive and profitable.

 

So what exactly are the hot consulting opportunities for CPAs and what is the best way to tap into them?

 

The Trend
Although the public's reactions to the audit failures at Enron and WorldCom stress that audit and tax services must remain at the heart of public accounting, visionary firms are offering -- and will continue to offer -- a menu of nontraditional consulting services. Such services enable firms to become one-stop shops where clients can have their financial and business needs met under one roof, delivered by professionals who understand their business and family dynamics.

 

In an article in Accounting Today, Melissa Klein notes that 78 percent of the top 100 U.S. firms now offer business valuation services, 63 percent perform litigation support, 53 percent handle forensic/fraud matters and 49 percent promote personal financial planning. The 2002 member survey by PCPS, the American Institute of CPAs alliance for CPA firms, found that specialty services continue to gather momentum, with 72 percent of local and regional accounting firms reporting that they plan to offer new services such as elder care, profit improvement, valuation and information technology planning.

 

Hot Consulting Services
In today's world of consulting services, CPAs have been reaping success in five key areas.

 

Business Valuation
Business valuations are necessary in a variety of situations, including the purchase or sale of a business; a merger, foreclosure or liquidation; divorces or partner disputes; and in estate and gift tax planning. Since valuing a business is both subjective and objective, a CPA makes an excellent valuator. Armed with knowledge about the business, its industry and the general economic climate, a CPA can conduct the investigation, complete projections and perform the complex calculations necessary to accurately value a business or investment. Some specific considerations a CPA needs to take into account are the reasons for the valuation, the most relevant methodology and industry trends. And while a valuation tends to be transactional, it can lead to additional accounting work.

 

Growth in this niche was prompted by public demand and the belief that a CPA's analytical background provides an ideal foundation for determining the value of a business or investment. The skills needed for computing valuations, however, are quite different from those used in traditional accounting, which focuses on historical data.

 

"A valuation is a prophecy of what's to come," says Kenneth A. Arlein, CPA, Director of Videre's Business Valuation Services. "When I work on a valuation, I have a responsibility to go beyond my education as an accountant, using all available tools and resources to make accurate, reasonable assumptions about the future. I find this work challenging and exciting because the valuation plays a key role in business and personal planning. Most importantly, focusing most of my time on business valuations has energized my career," he adds.

 

Although CPAs are well positioned for performing valuations, special training and certification can enhance their value in this area. Anyone involved in business valuations should remain abreast of the changing landscape by taking courses and reading articles, books and industry publications. And while no specific certification is required to perform a valuation, several national associations offer ongoing training and certification.

 

Litigation Services
Lawyers and their clients have come to view CPAs as credible, articulate, knowledgeable and trustworthy witnesses when seeking to present a winning argument in court. Whether providing expert testimony, second-opinion consultations, or assistance in examining or cross-examining a witness, an experienced CPA working in the litigation services area can present and address complex business, financial and accounting issues. This includes gathering, organizing and interpreting financial data for lawyers, judges or juries. "We add value by assisting in the determination of economic damages, computing losses, or even facilitating bankruptcy when it is inevitable," notes Robert J. DiPasquale, CPA, Director of Litigation Services at The Videre Group.

 

Forensic Accounting
Complementing the litigation services area is forensic accounting. The current climate of corporate wrongdoing has turned the spotlight on financial statement fraud and white-collar crime. But fraud is not limited to public companies. Occupational fraud committed against U.S. businesses is estimated to cost $600 billion annually. Fortunately, however, business owners can protect their companies, or at least limit the possibility of fraud, by turning to their CPA to create strong internal controls.

 

"This niche area has been an important revenue source for our firm, as we have developed a reputation for spotting irregularities and uncovering fraudulent patterns," reports DiPasquale. "New legislation, such as the Sarbanes-Oxley Act of 2002, will only increase the importance of litigation services and the fraud audit as more corporations of all sizes come under scrutiny."

 

CPAs interested in building a practice in forensic accounting should earn the designation of CFE awarded by the Association of Certified Fraud Examiners.

 

Elder Care
In 2001, it was estimated that 16.6 million people were over 75 years old. Along with the aging of the world's population has come an increase in the amount of wealth concentrated in the elderly community. At the same time, today's hectic lifestyles have left many families unable to help their elderly members with financial and other matters. All of which has created new challenges and opportunities.

 

Accounting firms involved in elder-care consulting provide a variety of services: paying bills, submitting insurance forms, providing income and gift tax planning, reviewing investment and trust activities, managing property, and preparing tax returns for caregivers and other household employees.

 

According to the AICPA, "elder-care assurance services are close to the traditional services rendered by CPAs." Firms often find themselves "backing into" these services as their own clients age or come to them with concerns about aging relatives. "Videre initially became involved in elder care when we began performing generational planning for our clients and realized the importance of our role as advisors and financial planners," says Videre Partner Philip J. Murphy, CPA.

 

Firms that are looking to establish -- or find themselves establishing -- an elder-care practice should keep in mind its "highly personal" and "time-intensive" nature, notes Murphy. It means dealing with people and assisting aging clients with emotional issues, such as the evolution from living at home to assisted living, and offering advice on how to prepare financially for these changes, he adds.

 

Financial Planning
Despite the economic climate, The Merrill Lynch World Wealth Report 2002 notes that the number of Americans with at least $1 million in assets to invest rose in 2001. As business owners accumulate more wealth, their financial issues become more complex, requiring a range of integrated services: financial plans, investment risk and return analysis, tax advice and estate planning. Increasingly, CPAs have become the advisors of choice because of their familiarity with their clients' financial situation and awareness of their hopes and dreams.

 

Step one in the financial planning process is to help a client with determining his or her goals. Once those goals are identified, the CPA's next job is to gather key data and analyze the client's unique -- and complex -- situation. This leads to writing, implementing, monitoring and updating a financial plan. Combining client intimacy and a broad knowledge of financial matters, CPAs have earned the role of respected financial advisor.

 

"I feel good when I know that I am safeguarding our clients' assets and applying my expertise to help them grow and preserve their wealth," says Ira S. Herman, CPA, Director of Estate Planning and Financial Counseling at Videre.

 

CPA firms that provide financial planning frequently establish separate entities to protect their accounting practice from unexpected liabilities. Some professionals also participate in rigorous training, earning new certifications such as the AICPA's Personal Financial Services (PFS) designation or the College of Financial Planning's CFP credential.

 

In addition to the five hot areas listed above, CPAs are finding new consulting opportunities in the areas of mergers and acquisitions, profit improvement, management consulting and information technology. Once you settle on a consulting area, or areas, you would like to develop, the next step is to do some research. Some key questions you should answer include:

Marketing Consulting Services
Clients naturally look to CPAs for accounting and financial statement analysis, tax planning and compliance. For firms that want to branch out, the challenge is to develop a marketing plan that will reach two critical audiences: existing clients who need to be exposed to the new services, and prospects who need to be educated to differentiate your firm. Generally what is needed is a mix of communication tactics: advertising, direct mail, website content, e-marketing strategies. As with traditional services, however, personal contact and word-of-mouth referrals remain the most effective ways to sell consulting services.

 

Conclusion
In nearly every instance, it is the personal contact and strong relationships that CPAs maintain with their clients that will continue to be the basis for the success of new consulting services. As the world changes and clients' situations alter, CPAs must adapt and respond, as they seek to provide the services necessary for business owners and individuals to grow and thrive. One of the joys of our profession is assisting clients in new ways, helping them define short- and long-term goals, conducting market research, becoming more proactive in strategic and financial planning, and performing the performance and benchmarking analysis that they need to remain competitive.

 

DAVID S. TALESNICK, CPA, CEO of The Videre Group, is a recognized authority in the areas of strategic business planning, succession planning and mergers and acquisitions. He has been listed in Who's Who of New Jersey Business Leaders and is a member of numerous professional associations. He can be contacted at 973-631-8000, or dtalesnick@videregroup.com.