I used to be an accountant. I left public accounting to be a controller and then a publisher. Now I’m an accountant again. Or, at least, I want to be.
Several years ago I put my CPA license on “retired” status to avoid the annual continuing education requirements. Now I have to go back and take all the courses that I enjoyed not taking while I was retired. But, at least I don’t have to re-take the CPA exam.
Accounting has changed a lot in the years that I’ve been on the sidelines. Not surprisingly, hourly billing rates are higher and there’s a lot more regulation and structure now, this being the result of the Enron and WorldCom scandals I would guess. Those scandals gave CPA’s a black eye and the profession responded like a bull in a china shop.
Rule making in the accounting profession used to be pretty much a consensus thing. If consensus couldn’t be obtained the subject was dropped from the agenda. That was in the days of the old Accounting Principles Board, which was made up entirely of private sector accountants. It was replaced some years ago by the Financial Accounting Standards Board (FASB) whose membership includes all kinds of folks, including representatives of government and the securities industry.
It’s a new world for me
The post-WorldCom accounting world has been shaken by both the Sarbanes Oxley law and new, no nonsense rules passed by the FASB. The FASB has some teeth now, and they’re chomping down and seem little concerned about building consensus. It’s a new world out there.
Another change I have noticed is the new-found prestige of auditors in the hierarchy of accounting firms. In years gone by, in all but the huge national accounting firms, the tax professionals were the prima donnas while audit and accounting types were tolerated. The new rules and laws have pushed the audit department to a higher level of respectability. The tax folks are still a critical part of the equation, but they’re having to share the spotlight with the auditors.
Shaking things up
Speaking of the tax department, a recent happening has shaken, or it should shake, tax professionals up quite a bit. The IRS has long had the power to fine tax professionals for taking questionable positions on tax returns. You could extricate yourself from potential problems with the IRS by fully disclosing all questionable positions taken on the tax return itself. This shows the IRS your cards and calls attention to the dicey deduction, a decidedly unpopular thing to do.
Even without disclosure, you wouldn’t be fined if your position passed muster as one enjoying a realistic possibility of success. That’s a pretty low target to hit. Things have changed in the last few months. Hidden deep inside the U.S. Troop Readiness, Veterans’ Care, Katrina Recovery,, and Iraq Accountability Appropriations Act of 2007 is a change in the standard for avoiding preparer penalties under Section 6694 of the Internal Revenue Code. Who would look for a tax law change in a bill with a name like that! Nonetheless, it’s in there. See, all this continuing education is already paying off.
The new standard is that, without disclosing the questionable position on the tax return, the deductibility must be more likely than not sustainable to avoid penalty. While this change may appear minor to non-tax practitioners, it most decidedly is not. There is a vast ocean of difference between having a realistic possibility of success and meeting the standard of more likely than not. The old rules required a confidence factor of, maybe, 15%-25% whereas more likely than not is clearly 51% plus. The IRS will be looking for opportunities to test their newfound muscle in order to establish some case law. Practitioners — beware!
The accounting profession has been very good to me over my career, and I’m looking forward to getting back in the grind. I have to take about 120 hours of continuing education, and I’ve completed over half of that. I don’t think I’ll go back into the tax arena. Some folks say that you shouldn’t attempt consulting work unless you have grey hair, and since I clearly fit that description I think that’s what I’ll do.
In addition to general business consulting, the field of business valuation seems to be wide open, and it’s an area that really interests me. I don’t plan to start a practice in the traditional way, by hiring staff and developing clients. Though my strategy is untried, I plan to market myself to CPA firms to do contract work by the hour. I can help add manpower in times of work overload and perhaps bring some expertise in areas where staff is not experienced. Brain power by the hour! That’s what I’m planning.
I hope to teach some Junior Achievement courses and sign on as an adjunct faculty member at one of the local colleges. Maybe write some, too.
I retired for about three weeks after selling the Mississippi Business Journal to Dolan Media earlier this year. My wife is addicted to HGTV, so I watched people tearing out rooms and putting together new rooms until I could stand it no longer. I found myself looking forward to “Oprah” just as a diversion from all of those home improvement projects. I realized after a few short weeks that I missed the “smell of the greasepaint and the roar of the crowds.” If I survive the deluge of continuing education courses, I should be happily back in the saddle soon.