Instigator

Howard’s Inner Circle No. 49: Becoming Human by Jean Vanier?

2012-01-23T09:34:00.000-08:00

Reminder; primer; connections; commonality; community; L’Arche, an example
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© 2012

Howard’s Inner Circle, No. 48: Does Your Birth Name Fit as Well?

2012-01-14T04:20:00.001-08:00

Akeem = Wise, insightful
Mario=From the G-d Mars

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© 2012

Howard’s Inner Circle No. 47: Is This What Alex & Walter Are Saying?

2012-01-08T06:01:00.000-08:00

Listen: life not fair; all in the effort.

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© 2012

Howard’s Inner Circle, No. 46: To Give the Entrants Strength?

2012-01-01T05:39:00.001-08:00

Two stone lions outside a hospital: Patients, Fortitude

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© 2012

Howard’s Inner Circle, No. 45: Futility?

2011-12-26T04:57:00.000-08:00

Store managers say, “Don’t tell me us about an employee’s superior customer service. Go on our online site and tell corporate.”

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© 2011

Howard’s Inner Circle, No. 44 Are You? Am I?

2011-12-20T08:54:00.000-08:00

Being successful depends of how success is measured, and who is doing the measuring.
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© 2011

Howard’s Inner Circle No. 43:Dignity

2011-12-14T06:37:00.000-08:00

Woman pushing empty wheelchair, just in front of older woman looking at fruit, treating her client like her mother.
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Howard’s Inner Circle, No. 42: Change Management

2011-12-06T11:44:00.000-08:00

Is change management having a sandwich, but only toasting one of the slices of bread?

© 2011
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Above may be reproduced in full if that fact is stated and Howard Wolosky at http://howardwolosky.blogspot.com is credited as the author. Change management

Howard’s Inner Circle, No. 41: Your Legacy Is How You Live Your Life

2011-11-25T07:07:00.000-08:00

"In my many years as Dean of Boys, I never come across a more enthusiastic young man who is at the same time social-minded, energetic, and fine tempered … a leader of vision, pronounced executive ability, courage and splendid civic ideals.”-- G.M., 6/4/45

“You have a rare gift of creative leadership coupled with a feeling of personal responsibility for carrying through details.” -- A.W., 6/18/48

“ … has made a very enviable record as a student, as a man – and your son. We only wish we could hold him here indefinitely, for he has an uncanny gift of keeping everybody around him working at top speed and yet happy at the same time.” – R.B., 5/21/48

“Not only is the report the best and most comprehensive of any that has been prepared during the past six years, but it reflects operations of the Law School Committee which have been more extensive, far better planned, and far more effectively carried out than those of any of your predecessors since the War.” – E.G., 3/12/52

“[T]he free dinner at Harness Commons which we gave the entire first-year class on the Saturday before school opened, along the lines of your suggestions, has resulted in more business than we ever had in Harness at this time. The Dining Hall Department has also got some good art work on its interesting posters advertising meal hours, etc., and we have not forgotten the work which you did in producing these various thoughts and others.” -- L/H., 9/23/52

“He was a leader in the social and civic programs of the Law School and was principally responsible for the inauguration at Harvard of a program to develop community leadership among the students.” –R.M., ?/?/??

If you are lucky this human being or someone like him touched your life.
© 2011
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Howard’s Inner Circle, No. 40: The Literal Disconnect

2011-11-16T06:36:00.000-08:00

I have always been intrigued by marketers and their interactions at accounting firms. Perhaps it is because, in my opinion, the role of marketers hasn’t been fully determined, or better yet, agreed to at many firms. The actual often conflicts with the expected and perceived roles.
Surprisingly, sometimes unwittingly, the marketer actually eliminates their position at the firm by being too successful as management then questions the cost and need of a highly-paid marketing director when its marketing efforts have matured with regard to branding, proposals, pipelines, and collateral materials.
Contrast that to firms where the seasoned marketing director is a vital and integral contributor to new business development and strategic planning. I believe these particular firms are enlightened, in part, because their marketing directors have a keen understanding of management at their firm and how to build a professional relationship deeply imbued with trust and respect.
It is important for relatively new marketers to develop a roadmap for professional success. The Association for Accounting Marketing can help with tools and in finding mentors. One tool, if it is still available from AAM, is a CD of the Managing Partner Panel Discussion from the AAM Executive Leadership Conference (February 2008), which Thalia Zetlin and I co-moderated. It provides an insider’s look at what it takes for a marketer to earn the trust, respect, and a voice in a firm’s strategic direction.
I would also recommend reading I'm Right, You're Wrong, Now What?: Break the Impasse and Get What You Need by Xavier Amador. With the commodization of services and changes in the nature and number of referrals, the importance of relationship building has increased. Although the firm/client relationship is all important, the first relationship that needs to be built properly by a marketer is their relationship with the firm, otherwise an unperceived impasse could doom a marketer’s future there.
© 2011
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Above may be reproduced in full if that fact is stated and Howard Wolosky at http://howardwolosky.blogspot.com is credited as the author. Note: The above also appeared on the Association for Accounting Marketing group LinkedIn site in the discussion and received a number of comments.

Howard’s Inner Circle, No. 39: Can Inanimate Objects Speak to You?

2011-11-04T06:36:00.000-07:00

I buy things that say something to me. For example, at the end of a two–day estate sale I purchased the October 1936, April 1946, October 1946, and January 1947 issues of Reader’s Digest. From their table of contents, I heard a whisper of hidden treasures. I found so many gems.

“Walking gives us that sense of proportion which we all need on occasion. In an automobile or airplane you lose your sense of time and distance. But on foot you soon learn how high is a hill and how long is a mile. And when you walked the same road through all seasons you know how certain is change and how gradual.”—from the article, “To Own the Streets and Fields” by Hal Borland.

“A man who will not write as zealously for a small audience as for a large one is a bad craftsman, and all Nature rejoices when a bad craftsman passes to his bad forefathers.”—from the article, “A Double Role for Writers” by Sinclair Lewis.

“I must decline your invitation owing to a subsequent engagement—quote by Oscar Wilde from the article, “The World’s Wittiest Talker” by Max Eastman.

Beautifully written articles include “What is Slang” by H.L. Menken, “Emotions Can Kill” by James E. Payne, and “The Beggar of St. Jude” by Fulton Ouster. “Beware of Athlete’s Head” explored hero poison, the publicity that student athletes receive. There also is a remarkable article describing “the experience of one of 36 conscientious objector volunteers who in 1945 were systematically starved for six months at the University of Minnesota in an experiment to find out what happens to a famine-stricken person.”

Most thought provoking were the articles entitled “The Most Unforgettable Character I’ve Met.” For Anne Morrow Lindbergh it was Edward Sheldon, “a once successful playwright who although blind and paralyzed with arthritis for over 20 years, still enriched the lives and thought of a vast number of friends and admirers.” For Pearl S. Buck it was Madame Hsiung, her next door neighbor for 17 years in Nanking, who, “had no whims, no prejudices, whatever she did was for the sake of the other person, not herself.”

Fascinating bits of information were revealed. It was reported that Eric Stanley Gardner, the creator of Perry Mason, stopped practicing law and became a writer because, “his law work kept interfering with his hunting trips.” I also found out that President Truman ordered the publication of the scientific, industrial, and military secrets of Nazi Germany. An infrared device for seeing at night, a rayon-weaving machine that produced runproof hosiery, formulas for more than 50,000 dyes, and how to pasteurize milk using ultraviolet light just to name a few.

I also love some of the tips such as placed in a fireplace an “orange peel make a wondrous blue flame; and when sticks of lavender smolder on the hearth, that delicious scent fills the room.” “Keep cut flowers in as deep water as possible and slice a little off the stems each day. Don’t cut them with a scissors for that closes the veins. Slice them diagonally with a knife.” That was one of the many tips in a four and one-half page article by Henry Penn, a past president of the Society of American Florists.

Yes some of the writings we would classify as sexist or racist today. But it was a different time when people were storing food in their cellars and the art of staying at home involved listening to phonograph records. But then again the times were no different as an aging parent writes about her torment and thinking in deciding whether to institutionalize a special-needs child or the numerous articles on the possibility of national insolvency and finding employment, especially for returning veterans.

The cover price of each of these four issues was 25 cents and one dollar was exactly what I paid at the estate sale. Their value obviously is still there some 60 plus years later. If I didn’t listen, they probably would have been thrown out in a recycle bin.

Do inanimate objects speak? My answer is yes. But the ability to hear them is an acquired skill that is developed by each of us listening to our inner voice.
© 2011
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Howard’s Inner Circle, No. 38: Whatever Comes Turn Towards It: Even Wildfires

2011-10-07T15:43:00.000-07:00

I am fascinated by the myriad of religions and philosophies. However, I have always had difficulty understanding the essence of any particular religion or philosophy that I’ve studied. That was resolved when it became apparent that to obtain the requisite insight I needed to see the application of the religion or philosophy in a practical context. Such was the case when I read Fire Monks: Zen Mind Meets Wildfire at the Gates of Tassajara by Colleen Morton Busch about a wildfire threatening a Buddhist monastery.

By giving the participants’ backgrounds, the monastery’s history, the firefighters’ warnings, and describing, in detail, the actions and decisions of those at the monastery, I became an observer after the fact on how an individual’s beliefs and life experiences determine their actions. Seeing this application into an actual situation enabled me to relate to and finally fully to understand why I have this fascination with religions and philosophies. You see, in the essence of each, there is something I can learn to live my life better.
© 2011
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Howard’s Inner Circle, No. 37: The Tapestry of Adriana Trigiani

2011-09-29T12:03:00.000-07:00

Many of us grow up without role models or mentors. Others are luckier and able to observe the wisdom of others directly at a young age when their foundation is being laid, and are taught the importance of
• Relying on no one to take care of you;
• Having a moral code that elevates your thinking with your behavior following;
• Paying your bills;
• Defending your good reputation as you can’t get it back once it is gone; and
• Leaving your children your values, not your stuff.

When I was editor-in-chief at Practical Accountant, I would describe our articles as marble sculptures. They would start in the raw with an idea, and after contributions from experts, they would be shaped into the final form using the best that was given and letting the beauty and individuality of the article shine. We all are artists, not just in what we do day to day, but also, and more importantly, in how we conduct ourselves, and who we become.

Lucia Spades Bonicelli and Yolanda Perin Trigiani were two very talented artists both with the objects and the people that they touched. Yolanda was an owner of a garment factory who made sure every blouse that she shipped was of the highest quality. Lucia was a seamstress who believed that you should have the best whether she was making a worker’s overalls or an evening gown. They met only once at the wedding of Yolanda’s son to Lucia’s daughter, but these two artists contributed to a masterpiece, their granddaughter.

In the exquisitely and beautiful crafted (like the clothes her grandmothers made) Don't Sing at the Table: Life Lessons from My Grandmothers, Adriana Trigiani, shares the legacy of these two remarkable women. I fully understand what Adriana means when she says. “They showed me, in their own ways, how to get out of my own way and carve out a fulfilling life, a peaceful life, a gracious life, and a secure life.”

Adriana is so very lucky to have had Lucia and Yolanda teach her how to best sew together her life’s clothing.
© 2011
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Howard’s Inner Circle, No. 36: Pavlov’s Customers

2011-09-07T08:37:00.000-07:00

Very few scientific experiments fascinate me. An exception was Milgram’s dealing with obedience to authority. Another is Pavlov’s regarding the creation of conditioned responses. They captivate me because of their detrimental implications in our lives.
Take the following ways merchants integrate Pavlov’s principles as a component in their customer relations management philosophies.
• Using so-called rewards-based loyalty programs to compel further sales to the same customer.
• Self checkouts that make the customer perform the duties of staff with no compensation.
• Lip service, form letters, and platitudes about providing superior customer satisfaction to complaints.
• Discouraging concrete and mortar store shopping by eliminating low-level supervisors and staffing store with inexperienced staff. Little attention to display and layout and standard response by staff if you can’t fine what you want, go online rather than accessing computer and offering to order it for you.
• Fast food restaurants where special orders aren’t listened to.
• Fish hooking with freebies that lock you into expensive long-term service contracts.
• New, must-have improved version of the same product unveiled every six months.
• Charging more for those who commit early or buy directly from provider, rather than via third-party Web site.
There are many other examples of customers being conditioned to buy on the merchant’s terms at the customer’s expense. But unlike the dogs in Pavlov’s experiments rather than salivating, customers are beginning to snarl, and bite those who ring the bell.
© 2011
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Howard’s Inner Circle, No. 35: How Developed is Your Self-Control Intelligence?

2011-08-20T14:42:00.000-07:00

This has been an issue since the first human took a bite out of that apple. But now in We Have Met the Enemy—Self Control in an Age of Excess, Daniel Akst makes a strong case that social, economic, and technological changes have dramatically altered the self-control landscape.

He believes people are having greater difficulty sacrificing short-term pleasures for long-term gains. In part, Akst indicates it is because practical barriers to short-term pleasure are now a lot lower. He also points to a decline in the importance of certain types of communities, changes in attitudes to religion, lack of familial influence, and the appeal of individual self-actualization.

I always thought that lack of self-control was just a matter of not having enough willpower. But it is much more diabolical than that and can be attributed to many other reasons including biological, economic, and even visual ones. Do you know that there is a study that shows people eat dramatically more M&Ms simply by putting ten different colors into a bowl instead of seven (consumption increased 43 percent)?

All is not lost since Akst offers some ideas as to how you can improve your self-control. My favorite is utilizing the Web site StickK.com referred to as a “precommitment device.” That site lets you put up some money and make a binding agreement let say to lose a pound a week for 15 weeks. You can appoint a person to monitor the progress. If you fail, stickK.com gives some of the money to a charity you have chosen.

A number of years ago I discovered a book by Daniel Goleman that illustrates in extraordinary detail the importance of emotional intelligence. I believe self-control intelligence is no different, but maybe not as obvious.
© 2011
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Howard’s Inner Circle, No. 34: Grating Expectations

2011-07-11T08:01:00.000-07:00

There is nothing wrong in having fantasies. Many dream of a multi-million lottery win. Fantasies don’t hurt the dreamer unless they become expectations.
Some might say the only danger is if the expectation is an unrealistic one. I disagree as expectations create a mindset which substitutes a foregone conclusion for wishful thinking. Consciously or subconsciously we develop tunnel vision which controls both our thoughts and actions. We do everything we can to obtain the desired and anticipated result, not considering or reflecting what else is happening. Often, unhappiness or others’ anger or resentment, brings us back to reality. Most importantly, expectations interfere with our ability to adapt, the key to survival.
© 2011
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Howard’s Inner Circle, No. 33: A Two-Question Rx for Doctors

2011-07-01T13:43:00.000-07:00

“Every child has to eat at least a pound of dirt before they grow up” is the wisdom many family doctors imparted to parents years ago. A holistic and humanistic approach that is lacking in many of today’s medical practitioners.
It is understandable as there is more specialization, need for greater efficiencies lower reimbursements, many procedures being performed by third parties, greater use of specialized outpatient centers and labs, increased reliance on test results, and higher malpractice insurance premiums. The skilled and trained professional still exists but something is missing that patients find discomforting.
We can’t go back but let me suggest a simply way of making the patients experience better. It is a simple technique used by an accounting firm in Ohio. Just as work is completed it gives clients a prepaid postcard with two questions regarding the engagement. There is a high-response rate and always any needed follow-up is done.
Doctors could give their patients a similar postcard at the close of each visit asking: ‘What did we do well?” and “What could we do better?” Expected responses might be the doctor didn’t talk about the side effects of a medicine or a particular technician made the patient very comfortable by detailing exactly what the testing machinery would do. Of course, there must be any necessary follow-up and additional patient communication.
Adopting this approach might help in a number of ways including awareness of patients’ areas of discomfort, a testing of implementation of “best practices,” and efficiency without sacrificing effective treatment. In the age of the Internet, online reviews, social networking, e-mail, and text messaging, patients will be sharing their good and bad experiences, so obtaining customer (patient) feedback is an imperative. Doctors are not good at this. The medical establishment, including the AMA, should take notice. Perhaps that two-question prepaid postcard is a good starting point.
© 2011
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Howard’s Inner Circle, No. 32: Being Right—An Introspective Examination Is Desperately Needed

2011-06-14T11:06:00.000-07:00

Practical Wisdom-The Right Way to Do the Right Thing by Barry Schwartz and Kenneth Sharpe begins by citing Aristotle’s writing on ethics. They immediately state that practical wisdom “demands more than the skill to be perceptive about others. It also demands the capacity to perceive oneself—to assess what our motives are, to admit our failures, to figure out what works or not and why.”

Unfortunately, the authors conclude that many of society’s institutions and the practices by those in a number of professions discourage and penalize the exercise of practical wisdom except by “canny outlaws.” Schwartz and Sharpe believe telos, the purpose or aim of a practice is the key to these individuals’ requisite “moral skill and will.”

I really enjoyed the book, but the title doesn’t seem “right” to me. I would have preferred The Destruction of Practical Wisdom.

© 2011
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Howard’s Inner Circle, No. 31: Bothered by Footnote Two of Chapter Seven

2011-04-21T09:04:00.000-07:00

“Take a look as some of these seemingly petty disagreements that grew into full-blown war:
• A dispute between the cities of Modena and Bologna over a well bucket about nine hundred years ago began a war that devastated Europe.
• A Chinese emperor once went to war over the breaking of a teapot.
• Sweden and Poland flew at each other’s throats in 1654 because the king of Sweden discovered that his name in an official dispatch was followed by only two et ceteras, while the king of Poland had three.
• The spilling of a glass of wine on the Marquis de Torey led to war between France and England.
• By throwing a pebble at the Duc de Guise, a small boy caused the massacre of Yassy and the Thirty Years’ War”2

The above footnoted passage in the book I just finished reading fascinated me. Unfortunately, footnote two read “Source unknown.” I had expected to find specific support for these five emphatic statements. I wish the author would have instead said in the text that they reportedly grew to a full-blown war with his accompanying footnote “Source unknown.”
© 2011
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Howard’s Inner Circle, No. 30: “Yes! No. Yes! Has Nothing to Do With Uncertainty

2011-03-21T07:31:00.000-07:00

When someone asks for you to agree to do something you can say Yes, No, or avoid responding. Since giving an accommodating yes bothers me and not responding usually upsets me, I have always wished I could say no better.

A “Yes! No. Yes!” may be the solution. In his book, The Power of a Positive No—How to Say No and Still Get to Yes, William Ury explains the first Yes expresses your interests and value. The No asserts your power. The second Yes furthers your relationship often by having a plan B that is at the ready to suggest.

A natural No is seen not as a rigid and inflexible position, but rather a firm stance that flows organically from your interests.
Based on his years acting as a negotiator in economic and political disputes, Ury believes that the key to facilitating a satisfactory agreement is to arrive at one that reflects not just your interests but the other party’s interest as well.
© 2011
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Howard’s Inner Circle, No. 29: “Simple” Rules to Live By?

2011-02-26T15:50:00.000-08:00

There are three basic rules that I try to live by. They don’t provide a moral compass or perpetuate any religious belief. But rather allow me to be very comfortable with my decisions and actions.

Rule No. 1: Stay in the Present—The past is to be learned from, not relived. The future can be planned for, but not fanaticized about. Being right here in the present helps me maintain the proper perspective and focus. This concentration prevents my mind from wandering and allows me to perform at my optimum level.

Rule No. 2: Watch for Emotions—Reacting emotionally doesn’t mean that you are right or wrong. But it does reflect a fight-or-flight mentality allowing others to comment on and criticize the emotional outburst, instead of addressing the issue at hand. Putting the emotional component in context and under control brings clarity.

Rule No. 3: Go With Your Gut—We listen to our heart, to our mind, and sometimes to both. Neither one nor the two together are as reliable as the gut. Your heart can prevent you from seeing what you need to see. While you mind might make an out-of-context intellectual decision. Listening to your gut ensures that all conscious and unconscious considerations are factored in.

© 2011
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Howard’s Inner Circle, No. 28: A Token of These Times

2011-02-21T08:11:00.000-08:00

To enter the New York City subway system you must use an electronic MTA MetroCard. It is generally purchased and refilled outside the subway stop entrance. That differs from when I was a wee lad. Then a small token was purchased from a station agent for 15 cents. If you had a problem when you inserted the token at the turnstile, the station agent would help you gain admission.

Unfortunately now at many station entrances there are no longer any attendants. And that’s a problem when the MetroCard machine at the station reads “No Cash Accepted.” The first time this happened to me I called the customer service telephone number on the back of my MetroCard that needed replenishing. To my surprise a recording stated the number was no longer in use and gave me a new number. I called and after following eight or nine prompts I gave up on informing the MTA about that MetroCard machine that wasn’t taking cash.

As I began walking to find a subway entrance machine that would take my cash, I pondered whether my experience was today’s token of the times.

© 2011
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Howard’s Inner Circle. No. 27: A Variation of Pass It On /Pay It Forward

2011-01-26T14:32:00.001-08:00

To many “pass it on” and “pay it forward” means when someone does something nice for you; you should in turn do something at least as nice for someone else.

A good samaritan might pay the subway fare for someone who doesn’t have it. Rather than paying it back the traveler agrees if he or she comes in contact in the future with someone similarly situated to pay their fare.

What’s great is the giver and the receiver of the generosity are both at ease, and someone else will probably benefit in the future. Otherwise, one of the parties feels uncomfortable as the giver usually doesn’t want to be paid back, and the receiver feels obligated to do so.

There are many other instances when a kindness makes the recipient feel like they have an obligation. Perhaps a solution might be if the recipient of a kindness would make a donation to a charity in honor of the giver and in appreciation of the good deed. It could be one favored by the good samaritan. If desired, he or she could be informed that a donation has been made and the reason for it without revealing who made it.

© 2011
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Howard’s Inner Circle, No. 26: Eight Random Observations

2011-01-14T07:00:00.000-08:00

1. There should be greater study as to why there is a jobless recovery.

2. Companies are extensively utilizing independent contractors and falsely representing them as employees to customers.

3. Standards of journalism are disappearing.

4. Consultants abound.

5. Blogs and social media both have a distinct stream of consciousness flavor whose impact isn’t fully understood yet.

6. More CEOs have not previously worked in the type of business that they manage.

7. Globalization, commodization, and marketing spin is changing the customer relationship into a defacto adversarial one.

8. Embracing diversity and looking for common ground
© 2011
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Howard’s Inner Circle, No. 25: 1+ 1 = …

2010-12-21T09:59:00.000-08:00

I noticed a significant, surprising, and welcome change at the recent New York State Society of CPAs’ 2010 Practice Managing Conference. All four accounting firm managing partners freely shared on a panel and in roundtables at lunch their views on firm mergers and acquisitions. It wasn’t a discussion in the clouds as they didn’t play it close to the vest as many managing partners normally do. They openly shared providing extensive details on all aspects of the merger process including their individual firm’s merger philosophy, retirement funding, capital requirements, payouts, and method of integration.

Here is my take on their cumulative M&A wisdom:
1. A Real Due Diligence--Determining compatibility of cultures requires “dating.” It goes beyond financials, getting firm information, and meetings with the managing and other partners. It can involve walking around a firm unaccompanied and going with a prospecting partner to present a proposal to a possible client.
2. Use of Guarantees--To get needed buy-in and alleviate anxiety, incoming partners can be guaranteed in the first two years that they will earn at least what they previously earned. Some firms have a no-harm, no-foul one-year period that allows for a quiet unraveling of the merger or the departing of an unhappy incoming partner. This option is rarely exercised and included to provide comfort that the merger isn’t cast in stone.
3. Maintain a “No-Jerk” Zone--Closely evaluate incoming partners so a problem partner isn’t brought aboard. Interestingly, the other incoming partners are usually happy that individual is gone.
4. Pay Attention to Integration--Transition should begin quickly and be comprehensive. Benefits, culture, career development, and opportunities should be detailed. Training is instituted right away as well as meetings are conducted to provide quick and effective integration of practice areas and niches.
5. Belief in Increased Value--There is a significant distinction between an actual merger and an acquisition. Just calling something a merger doesn’t make it so. A real merger is based upon a substantial potential for increased value. 1 plus 1 equals at least 3. For example, it might be that growth is identified by the offering of more services to key clients of the firms. This is in contrast to an acquisition which is simply a retirement payout to retiring partners. The ultimate actual payouts with regard to mergers and acquisitions significantly reflect the differences.
6. Individualized Guidance--Professional coaching should be given to each partner so they fully understand and acclimate to the new firm.
7. Understanding Why--The reason for a firm merging in often involves succession issues such as retirement funding or an inability to grow. In contrast, the more dominant firm might need a niche, more staff, or expansion into a new geographic market. Both should understand why the merger is being sought by the other. A merger should always be part of a comprehensive strategic plan.
8. Better Usage of Staff--A merger allows a firm to reassign staff and place them in more suitable positions. Larger firms permit greater specialization whether it is a particular practice area like taxes or a niche like litigation support.
9. Greatest Difficulty--There are always problems incurred with a merger or acquisition. Even if everything is done right expect some. The most common one involves software, such as when the two firms were using different tax software. It can take a full one-year cycle to rectify.
10. Be Realistic--In a merger there is usually one dominant firm and that firm’s culture and processes and procedure will, with minor exceptions, normally control. It is rare to see a real merger of equals. The reason is for that to be successful there needs to be the creation of an entirely new culture with attendant new processes and procedures.

I walked away from the conference with the distinct impression that each of these managing partners represents a new type of firm leader. One who really understands that win-win is an integral part of their successful firm business model.
© 2010
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The above may be reproduced in full if that fact is stated and Howard Wolosky at http://howardwolosky.blogspot.com is credited as the author.

Howard’s Inner Circle, No. 24: Outsourcing as a Revenue Center

2010-12-16T07:15:00.000-08:00

For many years, the local branch of a nationwide bookstore, upon request, gift wrapped the book that you purchased. There was a choice of at least five wrappings and a cute little bow was attached. This week when I purchased a book, rather than the cashier wrapping, it I was directed to two individuals in pink at the end of the counter. They were obviously affiliated with a foreign dance company. I knew this because there was a video playing by them. As one took the book to wrap the other began to talk to me and gave me a brochure with performance information for the dance company. Neither understood when I asked if they had wrapping paper other than holiday wrap. When I picked up the wrapped book I noticed much cheaper paper was now being used, the wrapping looked amateurish, and there was no cute little bow. As I left I wondered if outsourcing of the wrapping is a revenue generator for the store.

Outsourcing is increasing, often hidden, whether it is a mattress delivery by a leading mattress seller or service provided by the support staff of a technology company. At first cost cutting was the primary motivator for outsourcing, now that is coupled with a motivation for revenue generation. I am still getting calls from the technology company’s so-called support staff trying to sell me a product for my computer.

Increased efficiency and continued effective delivery of a quality product or service should be the primary objective when outsourcing is utilized. If the focus is too much on cost cutting and revenue generation quality may suffer. Is this bookstore ensuring a deterioration of a number of long-term customer relationships each time a book is wrapped?
© 2010
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The above may be reproduced in full if that fact is stated and Howard Wolosky at http://howardwolosky.blogspot.com is credited as the author.

Howard’s Inner Circle, No. 23: “Customer Crazy Glue”

2010-12-09T10:41:00.000-08:00

I first saw it when I was with Practical Accountant. Tax research companies began purchasing tax prep software companies followed by the acquisition of those companies specializing in payroll software and CRM systems. The acquisitions allowed for suite offerings. The suite business model is based on the idea that it is more difficult for a somewhat unhappy customer to leave if they are getting more than one service or product from the company. The problems for suite customers are that quite often the new product isn’t best-of breed, the acquiring company has little prior in-depth understanding of the new product, and integration with existing products is slow and often poorly done.

This isn’t the only form of “customer crazy glue” that I detest. There are the customer loyalty programs in which you are urged to join, some of which have an annual fee. An example is those offered by airlines which rate passengers on miles flown to determine the different baseline of service they will give to a flyer. It reminds me a bit of the different passenger classes as portrayed on the Titanic in movies.

My least favorite “customer crazy glue” is the customer support offered by technology companies which are marketed so beautifully when you purchase the product. You soon find out this support is outsourced, that a charge is often incurred, and a good portion of the call, which takes numerous prompts and a long wait, is consumed with a pushy sales pitch for an additional product that you supposedly really need.

Perhaps I hate this “customer crazy glue” retention because I grew up working in my father’s store where a customer didn’t have any special ties encouraging them to come back. It was a time of “The customer is always right.” So when someone complained that a mop they purchased disintegrated on its first use we would replace it at no cost with a cotton mop and explain that disintegration probably occurred because they use used bleach and that wouldn’t happen with this, a cotton mop.

Customers aren’t always right but they also aren’t fools and they will become more aware of customer glue traps and how to avoid them. It will be interesting to watch the marketplace reaction to this.

© 2010
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The above may be reproduced in full if that fact is stated and Howard Wolosky is credited as the author.

2010-10-07T08:17:00.000-07:00

Howard’s Inner Circle, No. 22: I Could Be …

On the whole according to Karen Schulz, “our indiscriminate enjoyment of being right is matched by an almost equally indiscriminate feeling that we are right.” She adds “If being right is succulent, being wrong runs a, narrow, unhappy gamut from nauseating to worse than death.”

This aversion for being wrong is perhaps why I found “Being Wrong—Adventures in the Margin of Error” by Kathryn Schulz so fascinating. First of all it is a subject that few fully understand, explore, or write about. Second, and most important, it is a professional journalist’s treatment of the subject. Ms. Schulz provides many well-documented examples that illustrate how being right and being wrong are interrelated in so many surprising ways and how significantly they impact our emotional and societal frameworks.

As to the individual, Schulz points out that “…[O}ur beliefs are in extricable from our identities. That’s one reason why being wrong can so easily wound our sense of self.” Regarding to the communities we live in, she points to a so-called disagreement deficit which supports what we think as being right. “First our communities expose us to disproportionate support for our own ideas. Second, they shield us from the disagreement of outsiders. Third they cause us to disregard whatever outside disagreement we do encounter. Finally, they quash the development of disagreement from within.” Schulz observes.

One of the questions that Schulz asks is: “Do we have an obligation to others to contemplate the possibility that we are wrong?”

Is she right?

© 2010
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The above may be reproduced in full if that fact is stated and Howard Wolosky is credited as the author.

Howard’s Inner Circle, No. 21: Being Proactive When There is Uncertainty

2010-09-17T09:59:00.000-07:00

A number of speakers at the UJA Federation of New York 41st Annual Sidney Kess New York Tax & Financial Planning Conference urged attorneys, CPAs, and financial planners attending to encourage their clients to review their wills. There was concern that the federal estate tax repeal for 2010 could have a devastating impact on the distribution of property if they died in 2010.

A particularly expressed concern were those wills with formula clauses that assumed the existence of an estate tax. Martin Shenkman with Martin M. Shenkman, P.C. in Teaneck, NJ indicated that relying upon a state-enacted stop-gap law that assumes an estate tax of a certain date for purposes of a formula clause might not work as it could result in the disposition not intended by the actual formula clause in the will.

I believe it was Daniel Daniels of Wiggin and Dana LLP in Stanford, Conn. who opined if a change in a will is needed, a deficient formula clause might be replaced with a bequest to a giant QTIP trust providing flexibility to deal postmortem with the estate tax uncertainty. This is especially true if the estate tax is imposed retroactively to individuals dying towards the end of 2010.

Shenkman also pointed out how the estate tax repeal discourages charitable bequests in a will since there is no estate tax charitable deduction to utilize. He offered a number of alternatives which would result in a deduction for income tax purposes. He also added that similar logic would apply upon reinstatement of an estate tax if the estate is under the estate tax exclusion amount.

Also in dealing with uncertainty, Steven Siegel of the Siegel Group in Morristown, NJ recommends including alternative dispositions when drafting, as this allows for the greater effective utilization of disclaimers to accomplish a desired result despite the uncertainty.

It is extremely unfortunate that the Congress that enacted the “Economic Growth and Tax Relief Reconciliation Act” and subsequent Congresses, especially and including this one, created and continue to perpetuate this uncertainty. In 2001, while I was editor-in- chief of Practical Accountant, I mentioned in a cover story on this subject that a practitioner observed tongue-in-cheek, “Some advisors are having clients sign a living will where the plug will get pulled five minutes before the end of 2010.” My fear is this Congress will take no action in 2010 and a plug might be pulled or someone might commit suicide just before 2010 ends so the death occurs before the estate tax is reinstated.
© 2010
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The above may be reproduced in full if that fact is stated and Howard Wolosky is credited as the author.

Howard’s Inner Circle, No. 20: Seeking Clarity

2010-08-25T06:13:00.000-07:00

Not having a job doesn’t mean you’re not working. Much of my efforts are focused on “staying in the present.” I’m finding that it is particularly difficult. So, as I often do, I turned to a self-help book. The right one is easy to find at a library, bookstore, or online by simply looking at some titles. Publishers of self-help books are adept at reeling you in that way.

Arriving in Your Own Door--108 Lessons in Mindfulness by Jon Kabat-Zinn is the one I picked to read and the following is helping me to stay in the present:

“When you are taking a shower, check and see if you are in the shower. You may already be at a meeting at work. Maybe the whole meeting is in the shower with you.”

“Our thoughts may have a degree of relevance and accuracy at times, but often they are at least somewhat distorted by our self-centered and self-serving inclinations, our ambitions, our aversions, and our overriding tendency to ignore or be deluded by both.”

““The intention would be to see things as they actually are, not as we would like them to be or fear them to be, or only what we are socially conditioned to see or feel.”

© 2010
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The above may be reproduced in full if that fact is stated and Howard Wolosky at http://howardwolosky.blogspot.com is credited as the author.

Howard’s Inner Circle, No. 19: Did You Ever Notice?

2010-08-05T06:25:00.000-07:00

The older you get the more you understand that what is right is subjective.

If you tell someone to do many things at least one won’t be done, but if you ask only for only one thing, it will be done.

Lately popularity governs what is “news.”

Control shouldn’t always be gained, but is often better given up.

A blind spot is hard to see even when someone points it out to you.

Today we have almost unlimited tools to create and inhabit a manufactured reality.

How hard it is not to leave footprints?

Howard’s Inner Circle, No. 18: The Subjective Forms of Succession Planning

2010-07-19T11:05:00.000-07:00

When I was editor-in-chief at Practical Accountant, I was always intrigued by succession planning at accounting firms.

It seemed to be missing at most small ones. Probably because most practitioners viewed the practices as totally identified with themselves and were busy attending to business. At best, a few had practice continuation agreements with other firms in the case of death or disability.

In the case of the medium-sized firms, especially where the founders were still in control, it seemed like there was an enforced belief that further succession planning wasn’t tolerated or needed. The founders assumed, when they retire shortly, the firm would last long enough to make the payouts under the partnership agreement.

The larger regional firms paid the most attention. I was impressed when there was a smooth transition and the managing partner handed the baton over to a named successor over a stated extended transition period. Then, there were the knockouts of the long-term managing partner closely identified with past successes but seen as an obstacle by rainmaking partners to a needed new direction. My favorite was where the very successful, political savvy managing partner closely guarded his or her power and so ensured he or she had no successor at the firm. Those firms often ended up being acquired by an even larger firm or consolidator.

Perhaps I was so intrigued because I didn’t really understand how subjective succession planning is. Rather than looking at it from the prospective of ensuring the future survival of a firm, my starting point should have been to better understand the individuals, the size of the firm, and the firm’s power players’ interests as they would more likely determine the favored succession plan.

© 2010
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The above is from the newsletter, Howard’s Inner Circle, which periodically appears on the blog, “Instigator” at http://howardwolosky.blogspot.com/. It may be reproduced in full if that fact is stated and Howard Wolosky is credited as the author.

Howard’s Inner Circle, No. 17: Seeking Solutions

2010-07-16T09:24:00.000-07:00

I loved doing mazes as a child and I thought I had an original approach to solving them. A couple of years ago I planned to use a maze as an opening exercise for conference attendees. After giving them time to solve the maze, I explained my theory which I had held onto for over forty years and no longer believe. You see, prior to my presentation, Justin, the art director of my company had looked at the maze and said the best way to solve that particular puzzle was neither from the start nor the finish, but to begin from the middle. He was right!

Howard’s Inner Circle, No. 16: Entries in My Black Book

2010-07-05T11:50:00.000-07:00

Not sure all my readers know what a “little black book” is. Wiktionary defines the phase as “an address book, especially one in which the details of previous lovers are recorded.” Don’t think that applies to mine, a looseleaf binder with about 80 encased-in-plastic pages of quotes and paraphases from books I have read.

Periodically I reread my black book to see if what I captured still has value. Also, I revisit it when I feel out of kilter and want to achieve a better balance, or improve my interactions with others.

Here are five quotes that particularly caught my attention today:

“If I ask people what they think of me, they are usually polite. But if I ask them if they’d be willing to tell me what other people say about me, I give them the opportunity to say things without putting them in an awkward position of criticizing me to my face.”

“The word listen contains the same letters as the word silent for good reason.”

“You learn in life the only person you can correct and change is yourself.”

“The more innovative your ideas, the smaller the number of people who will understand it.”

“I know G-d will not give me anything I can’t handle. I just wish he didn’t trust me so much.

Maybe Wiktionary’s description as “an address book, especially one in which the details of previous lovers are recorded.” isn’t so far off. Without giving specific attribution, the five quotes are by Sam Horn, Katherine Hepburn, David Maister, Mother Teresa, and Harry Beckwith.

© 2010
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The above is from the newsletter, Howard’s Inner Circle, which periodically appears on the blog, “Instigator” at http://howardwolosky.blogspot.com/. It may be reproduced in full if that fact is stated and Howard Wolosky is credited as the author.

Howard’s Inner Circle, No. 15: Dramatic Changes in Tax Planning

2010-06-22T15:30:00.000-07:00

I met Dean Zerbe a number of years ago when he became National Director in alliantgroup's Washington, D.C. office. He was formerly a Senior Tax Counsel on the Senate Finance Committee. I took a liking to him immediately and was lucky enough to hear him speak last week at a Firm of the Future free breakfast hosted by Philip Whitman of Whitman Business Advisors and Robert Fligel of RF Resources.

Dean Zerbe understands intimately the dynamics of tax legislation and is especially attuned to the changing winds in Washington. I like that his free newsletter is only sent out when he has something important to say. Most importantly he pulls no punches when he describes the factors and the players that influence tax legislation.

There were some keys points he made that morning indicating to me that accounting firms should be making changes in their approach to tax planning, and in identifying which clients and potential clients are impacted by tax legislation.

Tax legislations’ increased industry focus.--It was particularly evident in the recent health reform legislation according to Zerbe that taxes were imposed on industries or a tax benefit was given to an industry. Take the therapeutic credit/grant which is a limited $1 billon program which ends once that amount is allocated. Interestingly if a qualified company picked by the IRS can’t use the credit it gets a grant. Zerbe points out the IRS form for applying was expected to come out momentarily and there is a very limited time to file. He expects future tax legislation to continue to focus on specific industries as that is easier than changing tax rates in general. Another example of this continued type of focus is a controversial proposal trying to increase payroll taxes for S corporations where shareholders are professionals.

Taking the penalty.—Zerbe expects more companies to pay the penalty for not proving medical insurance benefits as that will result in a greater savings than continuing to pay the benefits. He predicts taking the penalty as increasingly being viewed as a viable option in other situations.

Choosing to pay the estate tax for those dying in 2010.--Zerbe predicts one option that Congress might select is allowing certain estates of those deceased in 2010 subject to carryover basis to pay an estate tax instead and get a stepped-up basis for the property. If this option is adopted or the carryover basis rules are left alone, there are significant fiduciary obligations for these executors and administrators and planning opportunities for the disposal of property with a carryover basis with regard to heirs.

Watch out for tax whistleblowers—According to Zerbe, underpayment of tax whistle blowing is on the increase such as the reporting of companies taking advantage of promoted tax shelters. With downsizing, a move to independent contractors, and the informality of e-mails, it should come as no surprise that a disgruntled ex-employee might seek a reward from IRS. What is fascinating is the number of law firms who are specializing in this. Just do a search on the Internet.

Highlight costs of compliance-- CPAs and the organizations representing them need to put a greater effort in convincing Congress to calculate the costs of compliance when a tax law change is proposed suggests Zerbe. The figures could be included in Congressional reports the same way the revenue impact of specific law changes are displayed.

© 2010
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The above is from the newsletter, Howard’s Inner Circle, which periodically appears on the blog, “Instigator” at http://howardwolosky.blogspot.com/. It may be reproduced in full if that fact is stated and Howard Wolosky is credited as the author.

Howard’s Inner Circle, No. 14: What is a Community?

2010-06-01T14:20:00.000-07:00

Some might suggest a dictionary is the best place to find the definition of the word “community.” Others might point to the entry in Wikipedia. After reading, Wikipedia at http://en.wikipedia.org/wiki/Community, it is readily apparent that the definition depends upon the context in which you are using that word.

You no longer have to live in the same town, nor have direct personal and business contacts, or vote in the same local election to be part of a community. The Internet, e-mail, and other technologies have really broadened what constitutes a community and how many members can belong at any particular time. Also a member of a virtual community takes many forms including being an observer, a registered member, an active participant, and a community administrator. The form can change in an instant. Unlike geographic communities, there are often few ties (a job, home, family, etc.) which bind you tightly. You can simply leave that community and go to another if it doesn’t serve you well.

What do you look for in a virtual community? How about a mission statement you feel comfortable with, that the members believe in, and try to follow. Throw in a code of ethics and list of responsibilities for all its members and participants, including advertisers? How about transparency and full disclosure? And like some geographic communities, security, comfort, and diversity. Deep down a community that promotes the common good, while still encouraging, within reason, self-interest.

Much of business is obtained from referrals. In my experience, writing about CPA firms for many years, they were often the result of a CPA’s relationship building skills with clients and other professionals in the immediate geographic area. The problem is those geographic communities don’t have the stability they once had. Globalization, changing economic conditions, and technology are decimating some communities and creating new ones, often at a dizzying rate.

What communities you belong too is an important decision. In the past, it often revolved around the geographic location and great thought and due diligence would occur before joining a particular community. Because of the ready instant access and the need to participate within these virtual communities, I believe similar standards should be applied in selecting all the communities that we “live” in.

© 2010
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The above is from the newsletter, Howard’s Inner Circle, which periodically appears on the blog, “Instigator” at http://howardwolosky.blogspot.com/. It may be reproduced in full if that fact is stated and Howard Wolosky is credited as the author.

Howard’s Inner Circle, No. 13: Two Diverging CPA Firm Business Models

2010-05-14T11:12:00.001-07:00

Being a detached, independently paid and unpaid observer of CPA firms for over two decades allows me to freely comment.

The early successful business model was a firm with a number of rainmakers, often as little as two or three. They were great at business development especially via one-to-one contacts, and also adept at maintaining and working a tight referral network where referrals were expected to go both ways.

Over time, this well-established model has morphed itself into two new distinct business models. One is where those rainmakers have become the executive committee of a CPA firm that runs in a corporate style. Where previously, firm policies and strategies were hashed out in open discussion at partner meetings, decisions are now made at closed executive committee meetings. And no matter how it is sugar-coated, it is understood who are the powers-that-be, and how getting into the inner sanctum, the management committee, is only done by invitation or by a successful power play.

Contrast that with the second business model that also developed from the earlier rainmaker model. These are firms that strive to operate as a team with management building consensus and having a real understanding of the importance of the various individual’s contributions in the firm’s successes.

If I were to predict which of these two models will prove better, I would select the later. This modified team approach:
• Grooms successors;
• Encourages collaboration;
• Has greater multi-disciplinary capacities;
• Rewards innovation
• Promotes a firm-wide project management instead of a capture-what-you- kill mentality;
• Is more susceptible at building real working alliances;
• Taps well into intergenerational resources;
• Promotes widespread mentoring in both directions;
• Supports technology at all levels; and
• Is structured for everyone to be focused on their roles in business development.

In both models relationships remain the key, and referrals are still the main source of new business. The real difference is the lack of community in the corporate model. Although lip service might be given; it exists only in name and spin. The second model, the modified team approach, with a real manager rather than a CEO, truly promotes community. This approach will turn out better in the long run as all indications are technology, globalization, outsourcing and many other factors are permanently changing the rules of the game. Businesses and professional firms will be seeking to become members of various communities and will do so only by building trust and cultivating loyalty as the basis for relationships. Only one of these diverging CPA firm business models lives that.
© 2010
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The above is from the newsletter, Howard’s Inner Circle, which periodically appears on the blog, “Instigator” at http://howardwolosky.blogspot.com/. It may be reproduced in full if that fact is stated and Howard Wolosky is credited as the author.

Howard’s Inner Circle, No. 12: The Current Decrepit State of “Journalism”

2010-05-06T07:21:00.000-07:00

One article entitled, “Ditching a $500,000 Salary to Teach Lit,” says it all. I found the article on Yahoo! Finance at http://finance.yahoo.com/career-work/article/109420/ditching-a-500000-salary-to-teach-lit?mod=career-worklife_balance. It was provided by CCNMoney.Com and written by a contributor.

What I expected as I read the title was a story about a difficult decision and how the transition went. The hope was to learn from this individual’s experience. I would have never read the article if the title, although a bit longer more accurately read “Ditching a $500,000 Salary and Selling Your Business at Age 50 for $6 Million to Teach Lit.” We can work at shortening my title if you want, but you get the idea. By the way, there were three bold faced tips in this short article on how he did it. They are 1. By Taking the First Good Offer; 2. By Investing Conservatively, and 3. By Drawing Down Cautiously.

This is the current state of “journalism.”

© 2010
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The above is from the newsletter, Howard’s Inner Circle, which periodically appears on the blog, “Instigator” at http://howardwolosky.blogspot.com/. It may be reproduced in full if that fact is stated and Howard Wolosky is credited as the author.

Howard’s Inner Circle, No. 11: What Is the Best Book You Ever Read? Why?

2010-05-03T11:02:00.000-07:00

I read a lot of self-help and business books and always get a few kernels of brilliance from them. However, the self-help books often bother me as many are constructed as workbooks filled with exercises and warnings if you don’t do the exercises you won’t get anything from the book. The business books are also heavy-handed, as authors after making one keen observation apply it in every context he or she can think of to prove its worth.

The most recent book I read was Paper Airplane by Michael McMillan mentioned by Tim Storey in Utmost Living. It was very good, but not my favorite. It tried to be too many things: a self-help book, a business book, and camouflaged with brilliant design work, also as a children’s book. In the end, it reminded me of my favorite book.

Tom and Pippo Make a Mess by Helen Oxenbury is hard to find as I believe it is out-of-print. I discovered this so-called child’s book at well over age 50, when it was brought to my attention by Alex’s father. He had been reading the book to Alex for many years (my guess at least eight). Alex, a remarkable young man, who has fought with tenacity since he was born at a birth weight of 21 ounces, loves the book, and often, after his father finishes reading it, rips up the book and makes a mess.

Every adult and child can benefit from its message whether as a gentle reminder or as a wake-up call. Unlike the many self-help and business books, Tom and Pippo Make a Mess has an ever so-light touch, and encourages the reader to think and reach his or her own conclusions. Equally important, the book’s message with Alex’s comment resonates louder the more times you read it or have it read to you.

What’s your favorite book? Why?
© 2010
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The above is from the newsletter, Howard’s Inner Circle, which periodically appears on the blog, “Instigator” at http://howardwolosky.blogspot.com/. It may be reproduced in full if that fact is stated and Howard Wolosky is credited as the author.

Howard’s Inner Circle, No. 10: 2011 Accounting Cover Stories

2010-04-26T08:20:00.000-07:00

For many years each month as editor-in-chief of Practical Accountant I decided on what would be the cover story. It wasn’t hard do but for one fact; we had to decide on the subject matter as much as a year and a half before the issue came out. The reason was the editorial calendar had to be in place in July of the preceding year and there was no guarantee that each month there would be a development affecting the accounting profession worthy of cover story coverage.

Because habits are hard to break I decided why not have some fun and pick out 12 possible 2011 cover story candidates now for a magazine for the accounting profession.

Tentative and Very Hypothetical 2011 Editorial Calendar
January--Plethora of Estate Tax Engagements
February--How CCH, RIA, Intuit, LexisNexis, and Others Are Utilizing CPA Firms as Business Partners
March--Reverse Mentoring: Overcoming a Firm Management’s Deep-Grained Aversion
April--Success Stories and Best Practices from Early Social Media Adopters
May--Increasing Revenue and Correctly Positioning a Firm During an Economic Downturn
June--CRM: What Firms and Clients Are Doing Wrong
July--Regionals Replacing Nationals as Auditors of Public Companies
August--Outsourcing Manufacturing and Distribution Functions
September--Walking the Cost-Cutting Walk: Fee Reductions on Modified Engagements Complement Advice
October--Tax Prep--Protecting Against Fee Erosion and Client Flight
November--The Practice Development Joint Ventures Art Form
December--Hidden Benefits of Firm Associations, State Societies, and Trade Groups
© 2010
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The above is from the tenth issue of the newsletter, Howard’s Inner Circle, which periodically appears on the blog, “Instigator” at http://howardwolosky.blogspot.com/. It may be reproduced in full if that fact is stated and Howard Wolosky is credited as the author.

Howard’s Inner Circle, No. 9: Not So Fast with a Roth Conversion

2010-04-16T07:59:00.001-07:00

If it sounds too good to be true, l have learned to pause and reflect. That is just how I feel about conversions of traditional IRAs to Roth IRAs. For some time there has been extensive positive press coverage regarding the fact that in 2010 the income restrictions have been lifted for a conversion and the resulting taxes can be paid over two years. Many of the articles are written as if it is a forgone conclusion that the election makes sense. I think the dangers and reasons why it might not pay to make a conversion must be more fully explored.

The fact that the participant should have adequate additional assets (other than using retirement plan distributions) to pay the tax and how the conversion affects the current tax rate is often mentioned in passing. What specifically isn’t being adequately explored is the immediate impact on an individual’s current and future net worth.

People who are eager to convert as much as possible must understand the taxes due on the conversion and on liquating assets to pay the tax on conversion can be very substantial. It would take a good deal of time to recoup that expenditure and achieve again the same compounding. That nest egg will take a very substantial hit.

Equally important, I see very few detailed projections using the comparisons of the tax impact of making or not making the conversion. Also missing are state tax implications which might include penalties for early distribution if the state doesn’t follow the federal rules on conversion, and the difference if the individual moves to another state. Assumptions also must be made as too whether there will be significant future changes to the income tax rules including the possibility of an excise tax being imposed on Roths of certain values.

Other major considerations are when the money might be needed, avoiding required minimum distributions, the ability to make controlled withdrawals at lower tax rates, as well as what happens if money is withdrawn within five years. The uncertain estate tax ramifications and estate planning implications especially as to possible distributions to heirs and charities also come into play. One article I read raised an interesting point as to whether a conversion to a Roth would more greatly expose the underlying assets if there is a subsequent divorce.

Also not sufficiently addressed is the mindset of the individual considering whether to make a conversion or not. Will they remain comfortable with the conversion if after they pay the taxes, the investment in the Roth goes down substantially or if economic adversity requires tapping into a Roth? How will that participant view the advisor who helped the participant make the Roth conversion? Although a conversion can be undone, the option is available for a very limited amount of time.

Assuming the decision is made that a Roth conversion pays particular care must be taken. For example, if institutions will be changed, make sure there is no tax withholding from the account when the transfer is done. Also it should be reviewed whether nondeductible IRA contributions were made.

Finally, an advisor should ensure that the participant fully understands and acknowledges all the possible ramifications of a conversion as the impact is substantial, immediate, and long lasting. Although the possible future benefits could greatly exceed the costs, the decision is a gamble, and as such, it should be a fully educated one.
© 2010
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The above is from the ninth issue of the newsletter, Howard’s Inner Circle, which periodically appears on the blog, “Instigator” at http://howardwolosky.blogspot.com/. It may be reproduced in full if that fact is stated and Howard Wolosky is credited as the author.

Howard’s Inner Circle, No. 8: Big Four Shouldn’t Be “Too Big to Fail”

2010-03-15T10:47:00.000-07:00

Early during the financial crisis, the phrase “too big to fail” received a lot of media play especially with regard to AIG. Similarly, a number of years ago following the demise of Andersen I got the distinct impression that the powers that be viewed the Big Four accounting firms also as “too big too fail,” probably a comfort to those Big Four firms. Rather than blaming the firm, the focus then became one of blaming individuals at the Big Four firms when certain undetected frauds and accounting irregularities came to light.

It will be very interesting to watch what happens regarding Ernst & Young, as the 2,200-page Lehman bankruptcy report by a court-appointed examiner puts E&Y in a very unfavorable light. Lawsuits can be expected but of more interest is what, if any, actions the PCAOB will take. Just as important is whether the PCAOB will publicly address the role that auditors played with regard to the financial crisis and what, if any, regulatory changes need to be made.

My belief is there has to be serious debate on whether the current way that auditors of public companies are employed should be changed. With the bulk of the audits being conducted by the Big Four and employment as an auditor subject to the decision of the executives of the company being audited, it should come as no surprise, auditors at the Big Four are very careful not to ruffle feathers.

In May of last year I urged the AICPA and CPAs to take the lead in closely reviewing and critically evaluating the way in which auditing of public companies is currently performed, beginning with the illusion of independence. See “Auditors: Doing the Right Thing?” at http://howardwolosky.blogspot.com/2009/05/auditors-doing-right-thing.html.

As long as the Big Four perform the overwhelming bulk of the audits of public companies, the marketplace and those firms are positioning those firms as too big to fail. That is great for those firms and their revenue especially if the government regulators are in agreement.

Unfortunately, as we saw with the financial crisis, those who were too big to fail actually profited greatly until the balloon burst and then they were bailed out with public dollars. Andersen wasn’t that lucky and I don’t believe that the any of the remaining Big Four should be.

As with those Wall Street firms, the Big Four has a special revenue-generating mindset. The problem is that this mindset has become quietly synonymous with the auditing of public companies and colors the auditing. The only way that this can be changed is if auditing public companies can be restructured so auditors are truly independent.

© 2010
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The above is from the eighth issue of the newsletter, Howard’s Inner Circle, which periodically appears on the blog, “Instigator” at http://howardwolosky.blogspot.com/. It may be reproduced in full if that fact is stated and Howard Wolosky is credited as the author.

Howard’s Inner Circle, No. 7: Reducing the Divorce Rate of Accounting Firm Nuptials

2010-02-09T13:17:00.000-08:00

I have always been intrigued by mergers and acquisitions of accounting firms. The initial exploratory discussions are usually described as “dating,” and if the parties are serious, a due diligence is conducted to see if a “marriage” will follow.” As with most courtships, the parties are on their best behavior and there seems to be a sort of tentative dancing so the parties get to know each other better and see if they’re truly compatible. You might even see some passion as one, or both firms, see their coming together as meeting a deep need that couldn’t be met otherwise. If there is a perceived dealbreaker, the parties go their separate ways and begin dating again with another firm, or swear off dating for a time.

I dislike the dating analogy--but if we’re going to use it, be forewarned that half of marriages end in divorce, and unlike what we read about messy divorces, we see very little about the messy firm demergers that occur or the exodus of incoming partners a few years after the two firms join. My guess is both are more prevalent than we expect and, of course, kept very quiet.

If I was giving advice to a firm that was “dating” another firm, in addition to discussing typical issues such as compensation, buyouts, equity, firm management, etc., I would advise the due diligence to focus significantly on compatibility, and the possible obstacles to, as well as, the details of integration.

I believe the most successful firms with regard to mergers and acquisitions are those that have the most experience with them, and therefore know quickly in discussion with firms if the deal should go forward. They are also very adept at, and understand, the importance of quickly integrating the two firms so the all the firm members have a common firm identity. Firms with less experience with mergers and acquisitions are usually successful because they really know the other firm well, and once they wanted to date, knew whom they wanted to ask.

The firms that don’t do well probably need to be a little more analytical and observant before jumping into marriage. I am not urging a longer courtship only searching for a deeper understanding of what their marriage is likely to be, and how a foundation for a solid marriage can be laid. It requires going beyond agreeing on terms and concentrating on the M&A process and the associated dynamics.

© 2010
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The above is from the seventh issue of the newsletter, Howard’s Inner Circle, which periodically appears on the blog, “Instigator” at http://howardwolosky.blogspot.com/. It may be reproduced in full if that fact is stated and Howard Wolosky is credited as the author.

Howard's Inner Circle No. 7: A New Kind of Leadership

2010-02-02T09:00:00.000-08:00

"A leader must be visionary and paint a compelling picture of the future. The leader has to articulate the vision and attract the kind of people needed to make it happen. To be effective, leaders must be respected and admired. Above all, they must be trusted. Your people must have confidence that, in difficult situations, you will do the right thing.” says Managing Partner Larry Unruh of Hein & Associates in Denver.

I used his quote in a recent presentation to the New York State Society of CPAs Large and Medium-Sized Firms Practice Management Committee on a new emrging style of leadership at a number of regional accounting firms. Although many of the leaders of these firms were rainmakers, they understand because of a constantly changing marketplace, increased competition, and expansion beyond compliance services, a firm had to stand out as providing value-added services and modify the rainmaker business model.

Referrals and personal relationships are still extremely important, but business development is now more of a firm-wide effort. These successful firm leaders also understand the importance in excelling at knowledge, change, risk, talent, and project management. They also recognize the increased need for strategic planning, transparency, application of best practices, a team mentality, the creation and maintenance of trust, consulting with futurists, ending of a book-of-business mentality, and greater non-CPA involvement.

A great firm begins and ends with the leadership. The other basic keys are a shared vision, an ability to promote and distinguish, and providing quality professional services. Too often I have seen firms in which a long-time managing partner molds the firm to reflect that individual’s style. That firm’s success is usually short-lived and ends soon after that managing partner retires. That is why this new style of leadership is so appealing. As these managing partners mold their style to the firm’s needs thus allowing for a smooth transition to the next managing partner and the firm’s continued flourishing.
© 2010
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The above is from the seventh issue of the newsletter, Howard’s Inner Circle, which periodically appears on the blog, “Instigator” at http://howardwolosky.blogspot.com/. It may be reproduced in full if that fact is stated and Howard Wolosky is credited as the author.

Howard’s Inner Circle, No. 6: As Revenue Sources Dry Up, Experiment

2010-01-20T07:16:00.000-08:00

In New York City there is a plethora of unused offices and underutilized event spaces which is resulting in a great deal of creativity. As to the empty offices, they are being rented out in a temporary, as-needed basis. The address is usually a prime one such as Midtown. The interesting thing is what is being rented out. You get the use of an office in a suite of offices under a plan such as one that offers office space for 12 hours a month. There is a receptionist to answer the telephone and welcome visitors, Internet access, a telephone number, and the ability to rent out conference rooms by the hour. You share the suite with a multitude of businesses and individuals.

Companies, especially those with salespersons, are renting out these offices as a cheap, cost-efficient way to have suitable locations for their representatives to meet clients. Consultants also take advantage of these rentals. Building owners are very happy as the office space would otherwise remain vacant.

With regard to event places, rather then relying on corporate parties etc., the event place owners are working out deals with networking groups. The bulk of their revenue doesn’t come from rental and catering, but from what is earned by selling drinks to the attendees. The events usually occur at off times such as Monday, Tuesday, or Wednesday. I was recently at a free rooftop networking event with great views of the Empire State and the Chrysler buildings. The idea is if the networking group can get a couple hundred of attendees, it will be well worth it for the event place owners. I am sure many of those owners are trolling sites like Meetup.com which contains lists of these networking groups.

These techniques and many others are successful in these tough economic times because suppliers understand it’s no longer business as usual and creative marketing and advertising aren’t the keys. The idea is to minimize expenses for potential customers while still meeting their basic needs. This requires creativity and a willingness to question a business model that might have worked very successfully for many years.
© 2010
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The above is from the sixth issue of the newsletter, Howard’s Inner Circle, which periodically appears on the blog, “Instigator” at http://howardwolosky.blogspot.com/. It may be reproduced in full if that fact is stated and Howard Wolosky is credited as the author.

Howard’s Inner Circle, No. 5: Holistic vs. Silo Business Development

2010-01-12T12:45:00.000-08:00

When I became editor-in-chief at Practical Accountant a decision was made that shaped the editorial coverage of the magazine for the many years that I was there. The decision was to primarily focus on regional accounting firms, not just those in the various large cities, but throughout the country.

The reasoning was they were reacting best to the significantly changing business climate. Yes, the managing partners and partners of these firms provided the leadership, but what was different from years past was that non-CPAs were playing increasingly more important roles at these firms.

That is why readers saw so many marketing directors on the covers of Practical Accountant. Because of the increased competition and the need to attract business beyond traditional tax and accounting engagements, firms relied on marketers to: develop brochures and other marketing materials, create and publicize a firm brand, formalize the proposal process, get client feedback, accumulate and analyze marketplace information, assist on niche development, focus on new client and staff attraction, create sophisticated client relationship management systems, and help design dynamic firm Web sites.

However in the last few years, I have noticed a disturbing trend, many seasoned and highly respected marketing directors are leaving some of these regional firms. These firms appear to view marketing primarily as a cost center and support operation and have decided that a lower-cost maintenance mode is possible since the primary work of those marketing directors is done.

I believe that is short-sighted and CPA-myopic.

Contrast these firms to others that view and groom marketers to become business developers. They often formally make the marketer a firm principal ensuring they play a key, direct role in executive decisions. I expect these firms will also be transforming their marketing operations as revenue centers advising some firm clients directly on marketing or acting as consultants and advisors to assist in the clients’ marketing decisions.

These enlightened firms understand that the CPA-rainmaker approach is no longer enough. They follow a team approach, work at firm buy-in, and follow firm governance procedures that ensure a more holistic, although still CPA-centric, approach to business development.
© 2010
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The above is from the fifth issue of the newsletter, Howard’s Inner Circle, which periodically appears on the blog, “Instigator” at http://howardwolosky.blogspot.com/. It may be reproduced in full if that fact is stated and Howard Wolosky is credited as the author.

Howard’s Inner Circle No. 4: A Proliferation of Pop-Up and Virtual Brick-and-Mortar Stores

2009-12-29T12:11:00.000-08:00

Here today and gone tomorrow. A strange philosophy for a store, but that is the case. A number of retail chains and those introducing new products are doing it in a big way to generate increased sales and media coverage

This holiday season Toys ‘R’ Us opened “pop-up stores ” in eighty shopping malls and added temporary toy departments in its Babies ‘R’ Us stores. Target has been doing it for a number of years. It opens up holiday pop-ups for fifty days offering some of its best-selling holiday products. As the Washington Post reports, “Products are displayed in windows, and shoppers mark their selections on the clipboard menu before bringing the order to a register to check out -- much like at a cafeteria. All stock is pre-wrapped and picked up next to the registers.

“The merchandise includes a Keurig mini coffee brewer for $89.99, a Liv Girls doll for $19.99 and a Sigg water bottle for $21.99.”

These pop—ups are usually opened up in high traffic areas such as Times Square in New York City. However, last year Reebok launched a pop-up shop at an art gallery. My favorite one is a Subway sandwich shop physically attached to the Freedom Tower as it is being built in its World Trade Center location in New York City. According to the New York Post, the sandwich shop is “fitted into a shipping container-like structure fixed to one of the tower cranes, alongside a bathroom and construction offices for the project managers.

“The concession stand will rise with the tower, eventually stopping near the 105th floor -- at roughly the height of the old Twin Towers.”

I expect this pop-up store trend to continue and expand going beyond national chains and those with new products. With so much retail space available, commercial retail landlords will find this option attractive. There also will be cottage industries including suppliers selling or renting display units that can be easily set up and taken down in minutes. Because of the high unemployment, there will be a ready workforce. Also expect the entry of franchisors offering turnkey pop-up store operations.

So don’t be surprised if you see a calendar store from October to December and stores geared to particular holidays only open for a month or two. It won’t be just for Christmas as you will have Halloween stores and stores for holidays only celebrated by certain cultures. Add to this mix, bicycle rental stores in the summer, and state tourism agencies opening up stores in adjoining states for a month to encourage tourism.

These pop-ups are often mobile in the form of vans and other vehicles moved from place to place preceded by advance publicity. Some pop-ups are basically showcases for a retailor’s Web site with limited products to sample and assisted kiosks allowing easy ordering and shipment to the store for pick-up if desired.

Brick-and-mortar retailing is undergoing a remarkable and rapid transformation as online retailing takes hold. This pop-up trend is just one of the ways it can survive and benefit the national chains and the individual entrepreneurs, formerly known as “the mom and pop store owners” with which many of us grew up and loved.

© 2009

For additional reading on the subject, check out:
http://www.trendwatching.com/trends/POPUP_RETAIL.htm
http://www.washingtonpost.com/wp-dyn/content/article/2009/12/10/AR2009121003919.html
http://nymag.com/daily/fashion/2008/11/reebok_store.html
http://popupstores-nyc.com/
http://www.wired.com/promo/wiredstore/aboutus.html
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The above is from the fourth issue of my newsletter, Howard’s Inner Circle, which periodically appears on the blog, “Instigator” at http://howardwolosky.blogspot.com/. It may be reproduced in full if that fact is stated and Howard Wolosky is given credit as the author.

Howard’s Inner Circle, No. 3: Two “Bicycle Condom” Business Models

2009-12-21T08:24:00.000-08:00

Being unemployed and looking for revenue opportunities, I find potential ones in the weirdest places like standing in the rain waiting to meet someone in Hoboken, Jersey. It was by the PATH station, a commuter subway that goes to New York City. It was 5 P.M. and I was by a bike rack with fifty bikes locked up. Forty-nine bike seats were soaking wet, and one seat was bone dry as it had a plastic bag wrapped around it.

I pointed that fact out to an individual standing by me, whose name I later found out was Mike, and asked him why did he think only one biker protected his or her seat. His answer was, “It wasn’t raining this morning.” I asked a rider who was unlocking his bike and he gave me the same answer. By the way, the prediction was for rain in the afternoon.

I conferred further with Mike and asked him what he thought about the viability of selling plastic rain protectors for seats that could be stored under bicycle seats. They could be different colors and have logos from different teams, fashion houses, or retailers. Told Mike, I didn’t have a name for the product, and he suggested, ‘Bike Condom.”

Saw a brilliant partnership being formed with a 60/40 split of the profits. Just would have to draft a partnership agreement, write a business plan, check out the competition, hire a lawyer, find investors and financing, work out a deal with a manufacturer and a distributor, create a marketing and advertising campaign, develop packaging, and market test the product.

A quick Internet search found that the term “bike condom” was already taken as at http://www.treehugger.com/files/2009/01/bike-condoms-new-for-bike-sharing.php, there is the following statement: “In bike-sharing mecca Barcelona, there's a new way to make waste - put a pair of bike condoms onto the handles of the shared bike you are just about to take for a spin.” And at http://www.instructables.com/id/Bicycle_Seat_Condom, a rider tells us of a method to protect a seat from the rain, “During the Fall semester I started riding my bike to school and learned I hated riding in the rain after a seven hour class. I dreaded the idea of riding in the rain with a wet bike seat causing me to stand while pedaling. Luckily, being surrounded by Low density polyethylene (LDPE) cutoffs in the studio I began experimenting with vacuum forming this material to create a reusable bicycle seat cover that is durable, flexible, and waterproof.” My favorite bike seat cover was selling for $15 and made of durable urethane-coated ripstop nylon at http://www.rei.com/product/623806.

Looks like too much work and risk for Mike and me if we develop our own commercial “Bike Condom,” so let me offer an alternative business model in which we can immediately go to market today at no cost. We simply advise bike riders to stuff a plastic bag under the seat on their bicycle. So if there is a prediction or possibility of rain, they can wrap the plastic bag around the seat. If the rider must make a statement, he or she can use a plastic bag with a logo they like. And for those who decide to do so there is a charge, simply consider making a donation in any amount that you decide to charity or an individual that needs it more than you. With this second business model, Mike and I will still follow the same 60/40 split, but rather than sharing the profits, we hope to profit in a different way.
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The above is from the third issue of my newsletter, Howard’s Inner Circle, which periodically appears on my blog, “Instigator” at http://howardwolosky.blogspot.com/. It may be reproduced in full if that fact is stated and Howard Wolosky is given credit as the author.

Howard’s Inner Circle, No. 2: Businesses Turning to the Independent Distributor Model

2009-12-14T11:05:00.000-08:00

The greatest overhead expenses are often those associated with employees. This is why many companies are reducing severance benefits or eliminating matching contributions to 401(k) plans. Some are being more creative and instead minimizing the size of their workforces by utilizing so-called “independent distributors.”

I have recently seen this with an energy provider to businesses and personal residences as well as a company that sells video telephones. The attraction is savings on guaranteed salaries, payroll taxes, employees’ benefits, and many of the costs associated with supporting inside salespersons. These companies might provide some help on setting up a Web site by providing templates, but the ones I came in contact with didn’t even provide a uniform style for business cards for these independent distributors.

Businesses are doing a great job by promoting this new status, and rather than using the old term “commissions” speak of “residual income” and play up the fact that it is a new industry or a new product subject to exponential growth. In this tough economic environment, any source of potential income draws interest. Because younger individuals might not see the importance or availability of medical insurance and retirement plans benefits and have difficulty finding jobs, independent distributor opportunities have great appeal.

Companies like the fact that underperforming independent distributors won’t hurt their company’s bottom line as much as full-time underperforming employees and are likely to give up after awhile.

There are a number of downsides to relying on independent distributors including the expected government scrutiny asking if these individuals aren’t really employees and should be treated as such for payroll taxes purposes. “Look for an Obama administration to aggressively challenge independent contractor status.” is the prediction (at http://www.webcpa.com/prc_issues/2008_10/29348-1.html?pg=2) from Dean Zerbe, former senior counsel and tax counsel for the Senate Finance Committee and now national managing director for alliantgroup. Another potential disadvantage is the fact that an independent distributor might be working for more than one company at a time and place his or her maximum efforts and loyalty with the product or service that is generating the greatest revenue at the time.

This will be an interesting trend to watch and advisors to businesses especially lawyers and accountants are sure to benefit as they counsel the many businesses who might consider utilizing independent distributors, as well as defend those when federal and state agencies question this status.

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The above is from the second issue of my newsletter, Howard’s Inner Circle, which periodically appears on my blog, “Instigator” at http://howardwolosky.blogspot.com/. It may be reproduced in full if that fact is stated and Howard Wolosky is given credit as the author.

Howard’s Inner Circle, No. 1: Polyglot Your Business Instantaneously

2009-12-08T09:14:00.000-08:00

I bet most don’t know that everyone working in the pharmacy departments of the many CVS drugstores in New York City can understand Arabic, Armenian, Cantonese, French, German, Hindi, Hmong, Italian, Japanese, Khmer (Cambodian), Korean, Laotian, Mandarin, Polish, Portuguese, Russian, Spanish, Tagalog, Thai, and Vietnamese.

Unfortunately because of not sufficiently publicizing this fact, my guess is that most current and potential CVS customers aren’t aware of this. The primary way they would know is by seeing an 8-1/2” X 11” laminated paper posted on the cubicles where prescription consultations are conducted.

That paper reads at the top “Interpretation Service Available.” Below that title are 20 boxes for each of the above languages each with a hand with a pointed finger directed at 20 different foreign languages translations of “Point to your language. An interpreter will be called.” The Web site for the company, LanguageLine Services, which CVS utilizes is www.languageline.com. At this site you can see the many more languages available for translation and that an interpretation can be purchased on an as-needed basis. There are many other companies (e.g.,TransPerfect, www.transperfect.com/) out there that offer similar services.

Think of the marketing and business development advantages in offering this type of interpretation service. I have already spoken to someone at Staples and a number of managing partners of New York City accounting firms of the obvious advantages. Can you imagine if contractors and do-it-yourselfers knew at their Home Depot or Lowe’s they could converse via a third party with the expert staff at these stores in their own languages? Not-for-profits can benefit too. Although many hospitals have interpreters on staff, there usually are a limited number of languages available. Think of how many more citizens could utilize government services if they could converse in their language with government officials.

Most importantly, offering and publicizing this type of service promotes community among the various cultures that are part and parcel and make up our nation. With globalization’s continuing increasing impact, it is an imperative to be able to communicate in as many languages as possible. The belief that one language should be supreme to the exclusion of others really makes little economic sense. Hopefully, the expanded availability of reasonably-priced translation services will mean more companies, not-for-profits, and governments will understand and recognize it pays for these entities and their employees to become instant polyglots.
© 2009

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The above is from the first issue of my newsletter, Howard’s Inner Circle, which periodically appears on my blog, “Instigator” at http://howardwolosky.blogspot.com/. It may be reproduced in full if that fact is stated and Howard Wolosky is given credit as the author.

President Obama: With All Due Respect, I Am Still Waiting

2009-11-10T09:11:00.000-08:00

The following was sent to the White House via e-mail a number of weeks ago (I checked the box asking for a reply) and the only thing I received so far was a mailing with President Obama’s name on it asking for a political contribution.
“We as a nation need to publicize what an untapped and extremely valuable resource the unemployed are as they currently are. Rather than defining someone’s worth, “being currently unemployed” should be shown as equivalent to a respected profession. I believe the need to change perceptions is a key imperative especially because of the percentage of unemployed, the length of time they will be employed, and the ages of the unemployed. In my opinion, it is a priority similar to providing benefits and training.
“Governments at all levels should take the lead role in this regard by setting up programs where unemployed individuals apply their skills helping business, not-for-profits, and governments in a limited role for a limited time. In return, those individuals might be able to obtained reference and testimonials regarding their work. I written about one way the media can help in my October 7th entry in my blog entitled, “Might Seem Counterintuitive, But It’s Not at http://howardwolosky.blogspot.com/. Please read it as I couldn’t paste the text down because of the limitations of the White House system.
“G-d bless all including all the readers of the e-mail. Hopefully, the last reader will be President Obama
“Sincerely yours,
“Howard Wolosky”

A $7.5 Million Open Letter to Michael Bloomberg and Bill Thompson

2009-10-17T14:10:00.000-07:00

October 18th, 2009
Dear Future Mayor of New York City,

Complaint: Since it occurred on both of your watches and you are both running for mayor, I thought I would bring this matter to your attention. It involves the fact that in the adult section of the reconstructed Brooklyn Public Library Kings Highway branch there are no signs on the bookshelves indicating the range of the catalogue numbers for the books. To find the book on travel I was looking for I had to walk among the 14 different sets of multi-tiered bookcases.

As reported in the New York Times on June 11, 2009 “After a four-year, $7.5 million renovation that was held up by extensive construction delays, the Brooklyn Public Library is reopening the Kings Highway branch in Midwood — historically the second-busiest branch of the Brooklyn library system after the central library on Grand Army Plaza — on Thursday morning.”

I complained about this problem repeatedly. The latest being today. Interestingly in the children’s section on the second floor, there were signs (handtyped by a librarian) on each of the bookcases with the catalog number for the books

Suggestion: Go to this library and take out a book, In addition to the problem I spoke of, you will find other problems such it is hard to find the few books on travel in the New York State using the computerized catalog searching system at that branch and I doubt if many of the users know how they can reserve such a book from other branches which might be more useful. Additionally, you will find like it hard to check out a book with the self-checkout system. Adopting this hands-on walking-the-walk approach might ensure that $7.5 million is well spent

Respectfully yours,
Howard Wolosky

Might Seem Counterintuitive, But It’s Not

2009-10-07T14:08:00.000-07:00

Yes magazines are closing down right and left, but here’s an idea for a new one. The working title is “The Unemployed.” The working tagline is “Harnessing Their Untapped Power and Wealth”

It will explore and publicize what an untapped and extremely valuable resource the unemployed are. Rather than defining someone’s worth, “being currently unemployed” could be shown as equivalent to a respected profession at which you can work at becoming better at.

Contributing reporters, copy editors, artwork submitters, and technical support would generally be those who are unemployed. There would be included extensive bios on these individuals. Each issue would have three or four features, departments, and commentaries.

Here are three possible features for the first issue:
“Tales of Charitable Giving” detailing individuals who increase their charitable efforts. E.J., who while searching for his next career opportunity, is delivering Meals On Wheels to the elderly; helping out at Cancer Action, and leading a weekly walking group of seniors.
“Seller’s Guide to Selling Gold” explains that most gold is purchased to be melted down so gem worth isn’t generally considered and offers vary greatly, easily as much as 75% to 100%. When selling, it advises to check with a number of vendors and ask that offer stay open for a stated period of time. It points out items should be grouped and weighted together by their carat type to get best value and applicable state law should be checked.
“Overcoming the Stigmas: Yours and Theirs” deals with the psychological and stereotypical aspects of unemployment from the viewpoints of the unemployed, family friends, former colleagues, etc. There would be a number of personal experience boxes where individuals such as Warren Buffet, Bill Gates, and an out-of- work 58 year old former steelworker describe how they or people they love dealt and deal with unemployment.

Departments could feature reporting on state programs that allow employers to combine reduced work hours for employees with partial unemployment benefits and how industries are combating unemployment such as contractors, landscapers and interior decorators turning to staging and rehabilitation of personal residences. There would be a books to consider section showcasing such books as “No More Mondays: Fire Yourself-and Other Revolutionary Ways to Discover your True Calling At Work” by Dan Miller

The magazine would be print and online and be a paid subscription model with a code of responsibilities and conduct for subscribers, advertisers, and contributors. The annual subscription rate would be from $10 to $250 as determined by the subscriber with a deferral, if desired, by those currently unemployed.

For the purpose of transparency and full disclosure, I am suggesting this publication in part so that I would be considered for the position of editor-in-chief. I was previously editor-in-chief of Practical Accountant, and what particularly qualifies me for consideration was my last column there, which in a sense of poetic justice, was automatically published on the day after I was told it was my last day.

Excerpted Text of WebCPA column
“’New’ Alternatives to Layoffs
(January 13, 2009)
“In these tough economic times, as in others, there are many news items on companies declaring bankruptcies and announcing substantial staff cuts. What is different this time is that I am also reading about a number of cost-cutting strategies that are gaining in popularity and aimed at reducing expenses without disrupting business operations or laying off staff.
“Fortune 500 companies, as well as smaller ones, have stopped their employer matching of employee 401(k) contributions. Factories are being closed down for a specified period of time with the unpaid furloughing of employees. Unpaid holidays are being given. Then there are those businesses that indicated there will be no salary increases in 2009. And I just came across a report that one of the largest accounting firms in Israel is reported to have made across-the-board pay cuts of 5 to 10 percent, except for certain lower-paid staff. We are also seeing the introduction of four-day weeks.
*******
“These creative cost-cutting strategies indicate the economic downturn is impacting more, and they also reflect an expectation that it will continue for some time. On the plus side, in general, they also indicate that companies are developing an arsenal of intermediate moves short of layoffs or a declaration of bankruptcy.
“This aversion to staff reductions can be attributed to a number of factors, including that often operations would be impaired if cuts were made, skilled employees are difficult to replace, and once the economic times get better the company doesn’t want to be understaffed.
“Interestingly, there seems to be understanding and acceptance by many in the workforce who are affected by the end of employer 401(k) contributions, unpaid leaves, etc. It appears to be based on the belief that, ’At least I have my job.’
*******

Led to Gold

2009-09-27T13:11:00.000-07:00

I can be pretty good at what I do and currently I am unemployed. The good thing is that it is the third time so I have experience.

However, many things have changed since the last time. Now a possible question during an interview, is, “Do you have any experience working in a matrix organization? Also, rather than mailing in resumes with targeted cover letters, you end up filling out a questionnaire and submitting your resume into a company’s computer system, probably never to be evaluated by human eyes, but eliminated based on one of your answers. Interestingly, many companies then continually send you e-mails about other similar job openings.

What’s also different is the growth of an industry targeting the unemployed. Job search sites, resume evaluation companies, coaches, and job fairs are examples. I have interacted with a number of them and the greatest benefit that I have received was at a free seminar that John Telep (http://www.smartresumetoday.com) conducted.

It wasn’t the good advice or the fact that he answered every question with great thought and care. The benefit is a book he recommended to the attendees, which included entry-level individuals to the most experienced.

The very deceptive title is “The Alchemist” by Paulo Coelho. After reading it, I conclude that alchemists have been given a bad rap. You see we are all alchemists searching to find what will make us happy. In the introduction, Coelho explains the importance of your personal calling. “It is G-d’s blessing, it is the path that G-d chose for you here on Earth. Whenever we do something that fills us with enthusiasm, we are following our legend.”

The problem is that there are many obstacles and where you end up might not be the treasure that you originally sought. The key to success isn’t just following your heart or your head, but paying attention to what Santiago, the book’s protagonist, discovered. “[T]hat intuition is really a sudden immersion of the soul into the universal current of life, where the histories of all people are connected, and we are able to know everything, because it’s all written there.”

An Unemployed Reader: The Best Kind

2009-09-18T08:50:00.000-07:00

Each day I go on my computer searching for potential jobs, looking for job fairs, checking my push e-mails, doing a little social networking, making some calls, and perusing the many articles with advice on how I can get a job. This is the third time in my working life that I have been out of work. It is the longest and toughest in some sense because of the current status of industry I worked in and my age. In these tough times, many have similar experiences.

What I find now is that I have more time for reading, and those of you similarly situated probably do also. I recommend that you consider reading the following three books:

“The Power of Kindness: The Unexpected Benefits of Leading a Compassionate Life” by Piero Ferrucci is a gentle reminder of how kindness comes and can be given in many forms. Separate chapters are devoted to honesty, warmth, forgiveness, contact, sense of belonging, trust, mindfulness, empathy, humility, patience, generosity, respect, flexibility, memory, loyalty, gratitude, service, and joy. An example he gives is a photographer who goes to an orphanage to take pictures of the children because a fine photograph makes adoption more likely. The author, a follower of Roberto Assagioli, who developed psychosynthesis, believes "K]indness and the goodwill of many is a resource, an energy on par with oil, water, wind, nuclear, and solar energy. It would be immensely useful (this is already happening) to pay more attention to it, find ways of evoking it, and harnessing it, organize training courses for it, teach it in schools, publicize it, use it in ads, turn it into a fashion." I concur.

“Emotional Resilience: Simple Truths for Dealing with the Unfinished Business of Your Past” by David Viscott provides remarkable insight into what makes us and others tick and react the way that we do. I believe, for most, reading this book will help more than going to a therapist. Two concepts, "Emotional Debt" and "Toxic Nostalgia" will provide remarkable clarity and understanding for many for the first time.
Here are two excerpts from the book: "The pleasure of life often falls to the unresolved pain of the past. This is especially true when old characterological attitudes intrude, diminishing joy, spoiling the good, and finding injury where none is intended." –and—
"Being happy comes from accepting the past and taking responsibility for your part. That acceptance allows you to view yourself as a work in progress, so your imperfections do not argue against your worth.”

“Working with Emotional Intelligence” by Daniel Goleman illustrates in extraordinary detail the importance of emotional intelligence and makes a compelling case for its preeminent role in the modern and changing workplace.

Neglected and Underdeveloped Knowledge Management

2009-09-09T10:02:00.000-07:00

It’s no surprise that CCH recently announced the release of KnowledgeConnect, a knowledge management system for accounting firms. According to CCH, KnowledgeConnect is “a central, indexed, and easy-to-search knowledge management system that will empower staff to make faster and more informed business decisions, avoid work redundancies and reduce project cycle times. KnowledgeConnect will also allow you to, quickly find the best answers for improved customer service, eliminate work redundancies by documenting special knowledge, and easily identify subject-matter experts.”

I first wrote about knowledge management and accounting firms in my August 16, 2005 WebCPA column “Do You Have a Chief Knowledge Officer?” at http://www.webcpa.com/news/14079-1.html.

Knowledge shouldn't just reside with individuals, but needs to be captured and institutionalized within the firm so that it can be accessed easily by all. I gave the following examples in the column: templates for audit engagements, checklists and established procedures for tax return preparation, a sophisticated client relationship management system, and a knowledge database on the firm's Intranet.

You don’t have to be a large regional accounting firm, a business with hundreds of employees, or buy CCH KnowledgeConnect or a similar software application to take advantage of knowledge management. It doesn’t have to cost much as long as time is spent on developing an understanding of how knowledge management can be applied and training those that will utilize it.

I speak from direct experience. With only two-full-time editors and one part-time editor (including myself) working on Practical Accountant, the quality of our editorial content was directly attributable to our ability to take advantage of knowledge management. We used push technologies to keep informed of developments, blast e-mails to pre-qualify article interviewee volunteers, and an Outlook 1,200-plus contact database searchable by subject matter. Running lists of possible coverage for each department, profiled accounting firms, innovation award winners, and what appeared in recurring sections were also maintained.

In today’s world where accounting firms and businesses of all sizes are focusing on reducing costs and improving efficiency, knowledge management is an invaluable tool. Sophisticated software can be helpful, but that’s not the key. What’s necessary for effective knowledge management to work is getting buy-in and participation.

Savvy Buyers, A Misnomer?

2009-09-01T13:07:00.000-07:00

There is an article entitled “Savvy Buyers Use Self-Directed IRA to Buy Homes” at http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/08/31/BUQI19FAVM.DTL that really scares me.

My discomfort begins with the title which runs counter to my thinking and continues then with portions of the article that give reasons why investing in real estate via an IRA might be ill-advised. As I read the article, I also noticed many of the so-called savvy buyers had simply purchased the property so I would say the jury is still out with regard to how “savvy” they really are. The article also cited those who promote self-directed IRA as support for investment by self- directed IRAs in real estate.

I am sure holders of distressed property would welcome an influx of new “savvy” buyers to take property off their hands. I am also sure that those with self-directed IRA, especially those that went substantially down in value, will be looking for new investments they can believe in.

It’s probably because I am the former editor in chief of Practical Accountant and WebCPA columnist that this article struck such a raw nerve. Luckily, in today’s age even without that platform, I can still publicly express my viewpoint.

Roy Rogers and the Age of Transparency

2009-08-21T10:54:00.000-07:00

I have always been fascinated by codes of conduct and marketing, perhaps because I believe the two are compatible and aren’t mutually exclusive even though it might not often be easily implemented in practice
My favorite codes were the ones I discovered back in my childhood. The text of two are reproduced below from http://www.elvaquero.com/The_Cowboy_Code.htm:

Roy Rogers Riders Club Rules
1. Be neat and clean.
2. Be courteous and polite.
3. Always obey your parents.
4. Protect the weak and help them.
5. Be brave, but never take chances.
6. Study hard and learn all you can.
7. Be kind to animals and care for them.
8. Eat all your food and never waste any.
9. Love God and go to Sunday School regularly.
10. Always respect our flag and our country.

Gene Autry's Code of Honor
1. A cowboy never takes unfair advantage - even of an enemy.
2. A cowboy never betrays a trust. He never goes back on his word.
3. A cowboy always tells the truth.
4. A cowboy is kind and gentle to small children, old folks, and animals.
5. A cowboy is free from racial and religious intolerances.
6. A cowboy is always helpful when someone is in trouble.
7. A cowboy is always a good worker.
8. A cowboy respects womanhood, his parents and his nation's laws.
9. A cowboy is clean about his person in thought, word, and deed.
10. A cowboy is a Patriot.

When I was a kid if you joined a fan club you were able to get a copy of these so-called Cowboy Codes and you could carry them around so you could live by these rules of conduct. Marketers have a published code of ethics. The Statement of Ethics of the American Marketing Association may be found at http://www.marketingpower.com/AboutAMA/Pages/Statement%20of%20Ethics.aspx.

I wonder how many marketers and those marketing their products and services carry a copy of, live by, or are even aware of this code of ethics. In this age of the Internet where non-brick and mortar businesses abound, and a professional look can be obtained for a Web site for pennies, not to mention sites like Amazon and eBay where a millions of secondhand businesses have mushroomed overnight. And let’s not forget “reality” television and second life technology environments in which the image that we want to become reality becomes “reality.”

Yes, Roy Rogers and Gene Autry played fictional characters, so it too was a false world. And maybe I live in my own false world. But in my world, there is a professional marketing code of conduct that must be followed similar to those Cowboy Codes of yesteryear.

Questioning Our Consumption Accelerator

2009-08-17T13:26:00.000-07:00

In an article that I wrote for Practical Accountant at http://www.webcpa.com/prc_issues/2009_1/30188-1.html entitled, “Money in Going Green,” I explained how greater environmental consciousness at accounting firms is increasing efficiency, generating revenue, and aiding in staff attraction and retention.

I believe this type of increased awareness is also evident in other businesses and with respect to individuals in a change in thinking and an understanding that “going green” isn’t a cause, but rather a possible and viable choice. This explains why reducing carbon footprints are being incorporated into many businesses’ long-term plans.

The economic recession is helping. Trading in gas guzzlers and, taking advantage of tax credits, and a turning to tap water are just two examples. Here are hyperlinks to four articles that conclude the economic recession is providing added support for going green: http://www.presentations.com/msg/content_display/incentive/e3i38bf3aadfb41b3f62638aed77e4ea253, http://www.cosmosmagazine.com/news/2751/consumers-going-green-despite-crisis-study, and http://www.associatedcontent.com/article/1748322/combat_the_economic_crisis_by_going.html.

Technology is playing its part as used textbooks are being sold on Amazon and second-hand reasonably priced clothing is widely being purchased at sites like eBay. This going-green trend is also evident with regard to charitable donations. Rather than throwing used appliance, cabinets, and fixtures away, those who are remodeling are making donations to charity for distribution to the needy. And there are the stadiums and restaurants donating prepared food that isn’t sold at the end of the day to charity. An article in the New York Times at http://www.nytimes.com/2009/08/16/sports/baseball/16stadium.html?_r=1&scp=1&sq=yankees%20food&st=cse describes a program that arranges for the food from Yankee Stadium to be delivered to a church for distribution following a game.

Changes in behavior and thinking are often caused by a change of circumstance. It looks like this economic recession’s impact will have long-lasting effects. It’s nice to see one of those will really benefit society long-term.

A Vital, Missing Soft Skill

2009-08-11T07:54:00.000-07:00

Whether it is a professional firm, a business or a not-for-profit, many in upper management have a common complaint that workers and staff don’t deal with, or want, change. That rationale is often the reason why individuals are laid off or frozen out and not consulted. I wonder if the problem isn’t an opposition to change, but rather that very few people are skilled at managing change.

Interestingly, there is increased attention to the development and perfection of soft skills. Training is provided in such areas as listening better, negotiation, consensus building, project management, etc. However, I haven’t noticed much employee training on developing and perfecting change management skills.
How good are you and others at your organization at:
· Recognizing the need for change,
· Anticipating changes affecting your industry or profession short- and long-term,
· Identifying and evaluating the steps that need to be followed when making a change,
· Adopting to change,
· Encouraging others to change, and
· Making a change quickly?

The impact of new technology, commoditization of good and services, online communities, globalization, and the economic environment are just a few of the factors requiring businesses to be more nimble. By developing change management abilities at all levels, both the entity and the individuals will benefit

Upper management needs to understand that to change isn’t about getting rid of employees and staff, but rather about creating an environment where employees and staff are the contributors to change.

The Recession Psyche

2009-07-10T12:09:00.000-07:00

In these tough times, understanding the psychology of human nature is paying economic dividends.

Restaurants are restructuring their menus offering specials such as “recession-busting burgers” and “bear market brisket.” There are also those frequent-buyer deals where the seventh or tenth meal is free.

Jewelry stores with sales plummeting are turning to buying gold. They and companies advertising mail-in services are promising quick and easy cash. The ads are enticing especially to those in need. Interestingly, if you go to five stores, there may be a 50 percent difference in the purchase price. This is a reflection of a buyers’ market awareness of desperate sellers.

Psychology is also seen in the limited employer-provided outplacement services for laid-off employees. Employers are hoping in part, that departing employees don’t bad mouth them hurting their reputations, and that the remaining employers’ are comforted by that benefit so their morale isn’t adversely impacted.

These psychological aspects are all at the surface. The recession is also causing deeper psychological problems. For people out of work, it is affecting their perceived self-worth. Many, at times, view themselves as failures, although they aren’t at fault. It is also affecting many of those with jobs, dramatically impacting and changing their spending patterns and investment philosophies. Many are becoming much more risk adverse and want guarantees. The growing appeal of annuities and the move from equities are proof.

There is a particular need for a greater study and understanding of human nature and psychological ramifications of this prolonged recession. How many of our parents and grandparents were identified as having a depression mentality and how did that impact their behavior and thought processes? Will there be generations similarly impacted by this recession?

In that regard, I expect businesses and professionals will be paying increased attention to understanding the psychological implications of this recession and how to capitalize on it. For example, some financial planners will incorporate so-called “financial-planning therapy” into their service package in various ways.

The Real Technology Learning Curve

2009-07-02T08:32:00.000-07:00

I am fascinated watching the newest technologies and how individuals and business experiment with them. There is a perception if you aren’t taking advantage of the latest technology you are totally out of it. The converse is that if you are utilizing the latest technology, you must be with it. Neither is true. Examples are Twitter, which often reads like a stream of consciousness, and those businesses encouraging their employees to experiment with new technology without providing guidance or effective evaluation and monitoring of the progress.

Just because you have mastered how to utilize a particular technology doesn’t mean you are promoting a greater good or using it in the best ways possible. Just think of all the text messaging going on including “talent” shows on television that allow viewers to vote for their favorite performer. People quickly vote and incur a charge, often a dollar a vote. Those in the media aren’t helping in their reporting on technology as often they are often just promoting the latest and greatest. You read and hear constantly on the newest, “improved” version which feeds a consumer-oriented culture.

Both the hype and wastefulness really turns me off. The technology learning curve that fascinates me is when a real problem is solved with technology. One example is remote tracking cell phones that allow you to log on to a Web site “to see the exact location the child is currently at. If the child changes location, you will be able to track and see the movements on the map. If the child is in or driving a car, you will be able to see the travel speed along with the direction of travel.”

Another one is Nationwide Insurance’s new mobile application for iPhones that acts as an accident toolkit. According to Nationwide, it:
· Calls emergency services,
· Helps you collect and exchange accident info,
· Stores your insurance and vehicle info for easy lookup,
· Locates Nationwide agents near you,
· Takes and stores accident photos,
· Converts your iPhone into a handy flashlight,
· Helps connect you with towing services,
· Helps you start the Nationwide claims process,
· Finds Nationwide repair facilities.

Giving a child a tracking cell phone might calm many a parent who is worried when there chiild is late in coming home. Similarly a cell phone application to assist when there is in car accident could be very useful and calming.

The bottomline of the technology learning curve should be figuring out a worthwhile use, not just about mastering a particlur technology.

Revisiting My Best Of

2009-06-29T10:28:00.000-07:00

Out of the hundred of www WebCPA.com columns I have written, Here are my five favorites and the reasons for their selection.

1. “It's Not What, Rather It's How You Read,” at http://www.webcpa.com/news/21944-1.html stresses the importance of understanding how most people now read.
2. ”A Thought Follower, and Proud of It,” at http://www.webcpa.com/news/25852-1.html points to the advantage of learning from others.
3. “Bothered by the Silo Effect?” at http://www.webcpa.com/news/27603-1.html sees a need to focus more on integration and execution.
4. “Voting for a Two-Question Survey,” at http://www.webcpa.com/news/28178-1.html is a simple way for getting honest customer feedback.
5. “It's Time for an Efficiency Rating,” at http://www.webcpa.com/news/10237-1.html identifies five keys for improving effectiveness.

A Three-Part Answer to What Do You Do?

2009-06-16T14:51:00.000-07:00

I am noticing more and more that when you ask someone for a business card, the individual pauses to decide which one he or she should give you. For example, an accountant might carry one that prominently shows a CPA credential and another one that identifies the individual as a consultant. I have also met two individuals who offer one card for resume writing services primarily to entry-level job seekers and another for career coaching aimed at more experienced workers.

These aren’t marketing ploys, but indicative of a rapidly changing marketplace. The assumption of many identities is a natural result. There is a need to have greater varied appeal in the marketplace so there is a willingness to be identified with a number of different descriptions.

In conjunction with this, there is also an increasing understanding that job security and employer and employee loyalty is rapidly disappearing. Cost-cutting is focusing on higher-salaried benefits and reducing benefits. Individuals are beginning to understand that to protect themselves it pays to simultaneously have three separate vocations so they aren’t reliant upon a single job for their livelihood. A good example is the individual that works for accounting firm, also does independent consulting on the side, and is the part-time editor of a magazine.

It used to be that individuals worked more than one job in order to provide for the immediate needs of their family. Now, it is in part because of the uncertainty of continued employment. The Internet helps as it is very easy to market oneself as a consultant, establish an online business presence, etc. These additional vocations provide comfort in knowing that you can hit the ground running immediately, rather than having to spend substantial time reeducating yourself and trying to begin a new career.

We keep hearing that most people will have many different employers and even careers in their lifetime. Won’t it be better some of these jobs and careers are concurrent?

If Cash is Really King, Then Off with Their Heads

2009-06-09T09:15:00.000-07:00

Many businesses like getting paid in cash and many of their customers know it. There are obvious advantages including avoiding the added costs associated with accepting a charge card. Another reason, commonly known but rarely stated, for favoring cash is that it makes it easier to evade taxes. That is why some merchants will give customers discounts off the stated price or not charge sales taxes. It is a practice that I have observed for many years.

There are periodic crackdowns and this is one of those times. The evidence I point to are a number of jewelers in New York charged with evading hundred of thousands of dollars in sales taxes on cash jewelry sales in the million. This is probably overestimating of the dollar amounts of sales, but the jewelers were easily caught when prosecutors sent in undercover agents as customers to purchase jewelry for cash and no sales tax was collected on the sales.

A couple of arithmetical assumptions and a review of sales records were the basis for determining the amount of the alleged sales tax avoided. The jewelers can be convicted of a crime and could end up paying a significant amount in sales taxes, fines, and penalties, as well as being subject to additional liability for income tax evasion.

In these tough times, I expect more prosecutors to adopt a similar approach and go after the underground economy. Tax collections are down, and W-2 earners and those who are unemployed probably aren’t as eager to look the other way, so the political environment is ripe for these easily constructed stings and the resulting news conferences. I wonder if a prosecutor or two will even go after a tax preparer who signs a return for one of these businesses caught in a sting.

Eulogy: The Demise of Middle Managers

2009-06-01T12:19:00.000-07:00

Extremely productive individuals are dying off in epidemic numbers and soon they will be extinct. Unfortunately, they aren’t dying of old age, but are being killed off figuratively by a number of contributing factors introduced in recent years to the business environment.

These individuals, known as middle managers, perform very important functions. They possess a vast working practical knowledge of the industry or service area in which they work. They came up through the ranks and had a keen understanding of what that means. They also act as an all-important buffer between workers and upper management, as well as insuring that the needs of customers are met. In part their success is attributed to their long-range view of things and an understanding that maximizing short-term profits isn’t the ultimate goal and that cost-cutting, a double-edge sword, must be handled with great delicacy.

So what is making these middle managers extinct? Here are just some of the tendencies of modern businesses contributing to their demise:
· There is little or no coming up through the ranks nor serving in the ranks by upper management to gain an insider’s understanding;
· Throwing up a lot quickly indiscriminately and seeing what sticks;
· A blind follow-the-industry-leader attitude;
· Big-picture closed-door planning becoming more important than and overshadowing execution and worker feedback;
· Upper management no longer knows the industry or service area that it is “managing;”
· A technology mentality is encouraging first-in-time marketplace pushes at the cost of quality;
· Bearers of bad news are punished;
· Little respect for existing products;
· No real supervision downward;
· Expertise expected instantly;
· Misplaced accountability at lowest levels;
· Responsibility scrupulously avoided at upper levels;
· Brain drain not feared;
· Making something look right overriding doing something right;
· High turnover accepted and encouraged;
· No apologies offered;
· Short-term view;
· Exit strategy in the forefront;
· Placating upper management has become a fine art form;
· Lower-level managers are working managers;
· A belief that technology can replace workers; and
· A lack of respect for the consumer.

This eulogy isn’t meant to lament the demise of middle managers, but to explain it and to celebrate all that the many middle managers accomplished. It is also to point to the legacy that was left behind and to encourage the generations that remain to build on that legacy so upper management and workers create a business world that would jointly assume the vacated roles that middle managers performed.

My Final Practical Accountant “Editor’s Note”

2009-05-25T05:22:00.000-07:00

As of the February/March issue of Practical Accountant, my position as editor-in-chief was eliminated. I had worked on the magazine since it was acquired in the early nineties by Faulkner & Gray, a predecessor of the current owner (Source Media), and for well over a decade, I have been lucky enough to be its editor-in-chief.

It was a long and happy run, but I didn’t get a chance to say thank you to the many people who made Practical Accountant into a magazine that I was extremely proud of leading. These individuals include the many CPAs, marketers, vendors, consultants, profession leaders, firm administrators, and technologists who willingly contributed and shared their expertise and insight. It also, of course, includes those at SourceMedia (and the prior owners of Practical Accountant) whether in production, circulation, operations, and sales that helped put out the magazine. Most of all, I want to thank all the editors and reporters who worked with me, and in particular, Jeff Stimpson. In the last few years Jeff and I did most of the articles and departments, and Jeff did an absolutely marvelous job.

As editor-chief, I saw the magazine championing small to medium size firms, acting as an information filter, and identifying and analyzing trends that would help firms grow and prosper. Jeff and I often used regional firms as role models and highlighted innovations wherever we saw them. There was a particular emphasis on business development, and in that regard we owe a tremendous debt to the members of the Association for Accounting Marketing and firm associations like the Leading Edge Alliance for their support and assistance. During my tenure as editor-in-chief and with my WebCPA columns, I attempted to be a positive force, and other than government leaders, the AICPA leadership, and those who I considered unethical, limit my criticism.

I wrote this last “editor’s note” primarily to thank those who contributed to Practical Accountant and created a substantial body of work that I think will stand the test of time. I am also writing it so I can have closure, on my terms, of that chapter in my life.

G-d Bless!

Auditors: Doing the Right Thing?

2009-05-19T06:27:00.000-07:00

Recently, I was surprised to see an older man walking in the street wearing a baseball-type cap that said, as I remember, “Special Forces.” I stopped him and thanked him for his service and pointed to the cap. He quickly said he hadn’t served with the Special Forces, but was recently honored by them for his service with the OSS in World War II.

Gus explained he had volunteered for the OSS after six months of service in the Army. He told me about his parachute training by the RAF, who took him and his colleagues up in an airplane, and when their number was called, each would move to the action station. Gus was No. 3. As he watched No. 1 and 2 each step up and be quickly sucked out of the airplane, Gus said that he found comfort in a quote from Mark Twain that “Courage is resistance to fear, mastery of fear--not absence of fear.” He explained the training was necessary so they could parachute behind enemy lines. I thanked him again for his service, and told him of my son’s gallant service in the Navy. He asked me to extend his gratitude to my son.

A couple of days later, as I was shopping in a fruit and vegetable store, I came across another individual walking with a cane and wearing a hat indicating he was a Korean War veteran. I asked if I could shake his hand to thank him for his service.

He was appreciative in a very kind and gentle way, and then told me he survived Pork Chop Hill, a battle of which I was probably aware because of the movie of the same name. He then said sadly that 2,000 of his colleagues were lost in that battle and he added that he survived a later battle on an unnamed hill in which another 2,000 lives were lost. I became even more upset when the veteran mentioned that second hill. But then he told me he had saved 161 lives in Korea for which he received the Silver Star.

We parted to get our fruits and vegetables. When I went to the cashier to pay, I saw the Korean War veteran again and asked him if he needed any help. He said no and indicated that he wasn’t in a rush as all he had to do later today was go to a meeting of Korean War veterans. I asked that he extend my thanks to each of them for their service.

These two individuals and many others--scarred, injured and, may they rest in peace, those who have passed on--did the right thing in the most difficult of times. The times in which we live are also difficult, although in a much different way. Like these two fine human beings did, we should all step forward and do the right thing.

For example, although many already do, all CPAs and non-CPAs at firms should step forward and help one another, their clients, and their fellow human beings in need. Just as importantly, they should examine closely what part, if any, they, as professionals, played in causing this economic crisis, the worst since the depression. In particular, CPAs should closely review and critically evaluate the way in which auditing of public companies is currently performed, beginning with the illusion of independence, rather than its actuality, that exists.

One commentator (at http://www.rgemonitor.com/us-monitor/256477/todays_financial_crisis_corporate_governance_and_the_issue_of_third-party_liability) suggests that, rather than having public companies select their auditor, regulators instead should make the selection. Ethan S. Burger, adjunct professor at the Georgetown University Law Center, states:
“Imagine if the SEC or federal Public Company Accounting Oversight Board (PCAOB) assigned accounting firms to companies. Do you think that the auditors might have shown some skepticism when individuals were being approved for mortgages for amounts greatly exceeding three times their income?‌ Would questions have been raised about “no doc” loans?‌”

I believe that this change is possible, and might even involve the regulator supplying a list of three to five auditing firms to the public company from which to pick based on industry expertise and the size of the company being audited. The auditing firm might serve for a stated term, say five years. There also could be a limitation of the damages that can be imposed in the event that an auditing firm is sued as a result of an audit of a public company.

Interestingly, I have heard about a bank that told a company which auditor it should use for audited financial statements, which needed to be submitted to obtain a loan. Adoption of this new auditing regime would allow auditors to be more aggressive, independent, and not to be fearful of losing an engagement because of its findings and statements.

In order to promote discussion, debate, and evaluation, I sent an e-mail to six individuals working at the AICPA, requesting the following:
“Because of these times in particular, I respectfully request the AICPA to consider doing the following two things:
1. Alert the appropriate AICPA members to the article.
2. Promote open discussion of this idea, with the AICPA not taking a position until the public discussion and debate has progressed significantly.
Thanks for the consideration of my request.”

As of this writing, almost a month after I sent the e-mail, there has been no response from the AICPA. I do hope, however, that I will receive a response from the AICPA in the near future.

Call to possible action: I further hope that AICPA members consider asking the organization to honor (or at least acknowledge) my request, and to push for open discussion and debate in order to evaluate whether a seismic change in the performance of audits is desired, necessary, and will help limit the severity of this and any future economic crisis.

Online/Brick–and-Mortar Business Development Acumen

2009-05-18T05:52:00.000-07:00

“An Educated Consumer Is Our Best Customer®” is how an off-price clothing retailer positions itself. Although not similarly copyrighted, as of late, I have come across a number of other businesses that live by that slogan with a single word change, “An Educated Consumer Is Our Worst Customer.” Unlike that off-price clothier, they don’t publicize the slogan that they actually live by, and, in fact, do their best to hide that fact. Here are two of them:
1. A vitamin chain offers a particular supplement for 10 dollars more than its online price. A clerk at their store refuses to match the price for a regular customer. The manager insists that the customer must go home and print out the proof even though the store has Internet access.
2. A bank automatically renews you two-year CD unless you come in. The rate is one percent, while if you came in, you could obtain a higher rate by renewing the CD for only seven months. Additionally the bank is offering those that open a two-year online CD a much higher rate of 2.85 percent.

Contrast those two examples with a national department store chain advertising that customers can check on computer terminals in their stores for cheaper prices available from competitors on the brand appliances its sells, and that it will match the competitor’s cheaper price.

Clients will be needing help adjusting and prospering in this brave new world where technological advances are overhauling and significantly transforming the rules of the game. Is your firm ready to help? And more importantly, how deep is the firm’s understanding and knowledge of the virtual and brick-and-mortar worlds and the possible interactions.

To find out, how about giving a 12–question test to firm members from every level of the firm--the managing partner, partners, staff accountants, marketers, technologists, and administrative support (if applicable)? One key aspect of this test is that it is an “open-book” test, in which you can use any technological aid and ask anyone outside the firm. There should be a time limit, e.g., three hours or overnight. The typed answer sheets are anonymously submitted and assembled for review by whomever the management of the firm determines is appropriate. There is no marking of individual exams.

The 12 questions are designed to focus on testing knowledge of the use of technology, the ability to obtain competitive intelligence, and business development acumen.

Questions
1. Where on the www.AICPA.org site is a database of firms which is searchable by state, city, and size of professional staff, number of branches, AICPA practice monitoring sections, and AICPA centers?
2. Is it possible in New York and a limited number of other states to buy a long-term care insurance policy that will allow the insured to qualify for Medicaid without spending down their assets? If so, what is the policy commonly called?
3. Webcams are being used more and more by churches, funeral homes, and day care providers as a service? Briefly explain how.
4. Give three examples where enhanced cell phones and other handheld devices are being used to enhance a brick-and-mortar business. Hint: Might involve calling a number with recordings or entering a zip code where there is Internet access.
5. Name a Web site for a company that will give you 250 free business cards or more (except for minimal shipping costs) and lets you pick from over 40 different, distinct designs.
6. Name the tax service that allows the user to search for federal and state and local tax incentives by the address of the business.
7. Give three novel networking techniques used by other firms? Example: One firm offers a day at a spa.
8. How many members are there in the Young CPA Network group on Linkedin, and what are the names of four specific accounting firm alumni groups on Linkedin? (If possible, pick firms in your firm’s region.)
9. Name a well-known site for helping you create and maintain a free blog.
10. How might search engine optimization come into play when a potential employee submits his or her resume electronically?
11. Name five specific strategies being used by businesses and other firms in response to the economic crisis. (Don’t include any strategies you firm is using or advising clients to utilize?)
12. How did you obtain the above answers? Please indicate all methods that you used.
Personal knowledge
Internet search
E-mail
Text messaging
Twittering
Discussion group inquiry
Telephoned someone
Directly talked to someone
Other, please describe

I’m not providing an answer key as the test’s purpose isn’t to determine who scored what or even how well research can be performed; but rather, the purpose is for the firm, as a whole, to focus quickly and in a fun way on their knowledge, the tools available to broaden knowledge, and developing a deeper understanding of changing business trends that will significantly impact clients.

Final thought: I recommend that as soon as the answers are assembled and prior to management reviews, sets of the answers be distributed, as is, to each individual who took the test (better yet, all the firm members). The idea is by that doing this the community aspect of the virtual world is being further explored, instilled, and encouraged in a primarily brick-and-mortar firm.

Are Ethics and Profits Mutually Exclusive?

2009-05-17T16:22:00.000-07:00

“The Darwinian concept of the survival of the fittest has been substituted by a philosophy of the survival of the slickest.”

This Martin Luther King, Jr. quote still rings true.
It is particularly evident when you look at the alleged Ponzi schemes that we read about every day. Many of these individuals show a remarkable knowledge of how the financial marketplace works and are skilled at gaining prestige, obtaining political influence, and escaping regulators’ wrath. They also seemingly have an innate and sharply developed ability to manipulate individuals and entities to their advantage.

The marketing of adjustable rates and balloon mortgages with little down and no real credit checks coupled with the packaging of these mortgages into investments promising high return is the best illustration of where this philosophy of the survival of the slickest is taking us.

Martin Luther King was ahead of his time as now many are seeing the truth of that quote. This awareness, the developing community concept derived from the Internet, and the fact that the Internet ensures the uncensored widespread and quick dissemination of information, discussion, and debate, signifies change is coming.

Many in all levels of society including a few CEOs, consultants, and professionals are sensing a new business model is imminent in which ethics and profits aren’t mutually exclusive and in fact, compatible and necessary for a changing marketplace. To get buy-in from all the necessary stakeholders, businesses, not-for-profits, groups, and communities on the Internet, codes of conduct and responsibilities will have to be developed. There will also have to be actual transparency and demonstrated delivery of win-win to all the stakeholders.

CPAs, often identified as the most trusted advisor of businesses and individuals, can be one of the prime catalysts for this seismic change. Many firms are perfectly positioned, especially these very successful regional firms that have been “walking the walk” for a number of years. They created infrastructures, procedures, and safeguards to maintain quality and still experience sustained growth. Their focus is long-term, and most importantly, there is understanding that trust is constantly earned, and although profits might be the result, ethical means can always be utilized and makes business sense.