New tax laws have accounting firms booming
Published: February 10, 2005 / Author: Mendoza College
CLEVELAND – Accounting firms are busier than usual this tax season, preparing companies for a set of regulations passed in the wake of corporate financial scandals.
The largest accounting firms are so busy that they are referring some business to smaller firms. Hiring is up as firms and their corporate clients seek help to comply with the new rules.
The increased demand also is trickling down to accounting schools.
“There’s been a renewed emphasis on auditing as a career,” said Tim Fogarty, chairman of the department of accountancy at Case Western Reserve University in Cleveland.
The national accounting crunch is the result of looming deadlines for implementing parts of the 2002 Sarbanes-Oxley law, said Joel Allegretti, spokesman for the American Institute of Certified Public Accountants.
In a traditional audit, accounting firms examine a client’s financial statements against generally accepted accounting principles. Under Sarbanes-Oxley, firms still do that, but they also will audit and test a company’s internal controls for effectiveness.
An internal control is something that would detect an error, said Randy Misch, audit principal at Moore Stephens Apple Inc., an Akron public accounting firm. For example, it could be a requirement that two people sign each check.
In testing that control, an outside auditor would check a sample of checks to see if two people have signed them.
In the last year, Moore Stephens Apple, which has a staff of 100, hired eight to 10 people on the accounting side of its operations but still had to turn away some work, Misch said.
Compliance deadlines for the largest publicly owned companies are as early as mid-May. Smaller publicly owned companies have an additional year to comply.
Because these new audits will be conducted annually, the changes are likely to impact accounting firms for years to come.
“The amount of work is effectively doubled,” said Jim Sanfilippo, managing partner of the Grant Thornton accounting firm in Cleveland.
The demand has helped spur the study of accounting, said Bea Sanders, vice president of academic and career development at the American Institute of Certified Public Accountants.
She said there was a decline in accounting majors in the late ’90s when many students entered technology fields during the dot-com boom.
But from 2000 to 2003 there was a 17 percent increase in accounting programs nationwide, according to the institute.
The University of Notre Dame has seen the number of graduates in its master’s accountancy program nearly triple since 2000. Many states require that level of education for licensing as a certified public accountant.