Preface: For years industry observers have warned about the aging of existing CPA professionals, the growing portion that were working beyond intended retirement age, the mass exodus of middle level producers at larger firms, and the lack of younger accountants coming into the public accounting industry. Yet none of that predicted the accounting industry crisis that we are facing now. My own observations are from the limited perspective of a sole practitioner trying to find a sustainable solution.
This is the time of year when many individuals find out that, for some reason, the person who prepared their financial statements or tax returns in the past is no longer available. Self employed CPAs, accountants, tax preparers change their business circumstances with surprising frequency. Some speculate that they are simply sucked into a black hole. I’ve helped to clients in this situation already this past year. This disappearance can happen for a number of reasons: retirement, death, a physical illness, a mental disorder (depression, for example), relocation, a new job, a non-complete clause in an employment contract. It happens with surprising frequency.
I have a personal “inside line” on how this might happen. In 2006 I was stuck by a truck and had to give up all my clients suddenly. Many of these were lifelong relationships. Because of my head injury I wasn’t thinking straight, didn’t notify them properly and was acting more out of negative emotions and fear. I went back into practice nine years later but have not contacted any of these earlier clients. It would be inappropriate to interfere with their current service relationships.
Ideally, every accountant would have a succession plan for the practice to ensure that their ‘disappearance’ from practice would not trigger alarm. In reality, that rarely happens. Too many small accounting practices are unstable and unsalable at the time the principal retires. The primary obstacles for transferability are outdated internal practices and pricing that lags behind current market costs. As a result, small existing independent accounting practices are dying out and few new ones are established. I’ve given much thought to a succession plan for my own practice (and how I might be involved in other accountants’ practices) but I haven’t make any tangible progress on an agreement even after having approached more than two dozen potential candidates to discuss the topic. I haven’t found any other practitioners interested in a buy/sell agreement, for example. This will continue to be a goal for my practice until I find a solid solution. In the meanwhile, larger firm solutions are available.
I ask my clients during a review “What if I were no longer able to continue to …” and we discuss options with the succession and continuity of their accounting. It would be a bigger deal than they realize, especially for those who have not bothered to gain an understanding of their own business record-keeping. A few of my clients, for example, would not know how to locate their physical or online electronic records. For most individuals and small business people the simplest and most effective way to address the issue, I think, is to have considered a clear response to the question: “What if my accountant disappeared?” Include a provision addressing this question in your business plan or personal financial plan and let others (key employees, spouse, attorney or intended executor) know about your accounting contingency plans.
If you find that your accountant is no longer available this tax season and you can work with an online remote professional, I would welcome the opportunity to discuss how we can work together to pick up the pieces and move forward on a more stable plan for the future.