Q: How are accountants reacting to the Corporate and Auditing Accountability,
Responsibility and Transparency Act (the Sarbanes-Oxley Act) of 2002?
A: 'Our members are very concerned about any possibility
that the provision would begin to be applied universally to all businesses of
all sizes,' says J. Clarke Price, president and CEO of the Ohio Society of CPAs.
'The SEC and Congress [passed the law stipulating it be applied to] publicly
traded companies, and for a variety of good reasons. They were clear it was
not intended to apply to small and closely held businesses, private businesses,
that are the backbone of the United States. One of the effects of making that
universal would be it drives up the cost of doing business, because they have
to bring in other consultants and advisers, who in turn need to learn about
the business, its goals, and the issues that it is facing.'
Q: How has joining the RAN ONE network helped your firm?
A: 'The RAN ONE network provides us with tools
to help business owners to work to make businesses operate more profitably,'
says John Wert of Anne E. Dalzell, CPA. 'It's an international network of CPA
firms started in Australia. What we've found is our business clients are very
small clients. In addition to doing accounting work, they tend to look to us
for advice on how they operate. We have used some of the tools the RAN ONE network
provides to help clients with questions they may have.'
Q: How do the Financial Accounting Standards Board's standards relative to business combinations, goodwill and other intangible assets affect Northeast Ohio business?
A: 'These new standards significantly change initial
and ongoing accounting for business acquisitions and intangible assets,' says
Craig Thornton, office managing partner with Plante & Moran, LLP. 'Companies
will need to implement these standards in preparing their 2002 financial statements.
New criteria for identifying and recording intangible assets other than goodwill
in accounting for an acquisition during the year will need to be met.'
Q: What advice do you have for accountants to remain independent while meeting their clients' needs?
A: Accounting reforms, which are revising auditor
independence rules for firms that audit public companies, will most likely impact
professionals engaged in privately held company audits,' says Denise M. Griggs,
CPA with Brott Mardis & Co. 'These auditors need to work closely with top
management to ensure that their role is that of an adviser' and not a decision-maker.'
Q: How have the laws changed to enhance employees' abilities to save for retirement?
A: 'There are two distinct changes in the law that
provide big opportunities to save more,' says Kathy Seitz-Watson, a principal
at CBIZ Inc. 'First, for any individual age 50 by Dec. 31 of 2002, they can
save an extra $1,000 in 2002 and $2,000 in 2003. That extra amount, called a
catch-up contribution,' is not included in any kind of discrimination or limitation
testing that plan sponsors have to do with their retirement plans when they
are deciding how much money can go into them. Second, salary deferral programs
like a 401(k) or a 403(b) are no longer combined with other retirement savings
when doing limitation testing. In other words, salary deferral contributions
can now be made on top of other types of pension plans, which means in 2002
a salary deferral of $11,000 plus a catch-up contribution of $1,000 can be made.'
Q: How can shareholders or business owners ensure they have enough liquidity to manage businesses through the cyclical economy?
A: 'You need to be proactive in planning for the
near term and the long term,' says David R. Menning, principal and manager of
the corporate finance group with Barnes Wendling CPAs Inc. 'Once you've taken
the expense out of the business, which most companies have at this point, do
they have enough sources of capital? That could be capital on their balance
sheet, through balance-sheet management, that could be third-party sources of
capital, which could be a banker or investor, or it could be shareholders in
that business.'
Q: In light of Enron and other corporate failures, what are some of the key issues facing businesses and their financial organizations?
A: 'In today's environment, one of the biggest
things for our accountants, our financial people, or CEOs, etc., is ethics,
ethics, ethics,' says Lee Thomas, a partner with Ernst & Young who leads
the retail distribution and manufacturing practice in Northeast Ohio. 'Do they
have the right ethics, are they communicating with the right people, are they
setting the right tone at the top, throughout the organization, to make sure
that people within the company are doing the right things? Does the answer,
does the solution, does the result make common sense? Is it clear and understandable?
Is it so complicated that people can't understand it, then you raise the question
and say, Well, maybe it's not the right thing to do.' '
Q: Which services have been of interest to clients during the last year?
A: 'We have conducted a number of internal control
and systems audits on behalf of boards of directors and ownership groups,' says
James. P. Carulas, vice president of Meaden & Moore, Ltd. 'Boards are ultimately
responsible for the reliability of information provided by management and, therefore,
they are concerned with the effectiveness of a company's financial internal
control systems. We have been able to provide a systematic approach, which evaluates
the efficiency and effectiveness of a company's systems and procedures.'
Q: What are the advantages of having small businesses meet two or three times a year with a panel of experts in various disciplines to help a business grow and prosper, particularly in uncertain times?
A: 'After two or three meetings,
having the presence of an advisory board is another tool for the owner to mobilize
the internal forces to do a better job of planning,' says David Gaino, president
of Moore Stephens Apple Corp. 'The business decisions that are now being made
by the companies that are taking advantage of this idea are so much better,
because they've been, if you will, sounded off a panel of experts.'