Optimism Across the US Accounting Industry

April 5, 2021 - Bland Garvey, P.C., Calvetti Ferguson

Despite ongoing problems, there are clear signs that business optimism is returning among clients in the world’s largest economy. The Q4 2020 CPA Outlook Index published by AICPA found that positive sentiment had risen by a third since the middle of the year. Nearly half (49%) of the CPAs surveyed in North America were optimistic about the prospects for their own organisation on the back of improving consumer demand and the stock market rebound. Average revenues are projected to increase by 1.2% in 2021 with a small increase in profitability of 0.2% and reported spending plans also showed improvement. The International Accounting Bulletin's Paul Golden spoke to John Garvey, CEO of Bland Garvey and Jason Ferguson, Managing Partner at Calvetti Ferguson to find out more. 

You can access the full article in the recent International Accounting Bulletin newsletter HERE>

How has your business been impacted by the coronavirus crisis?

John Garvey, CEO of Bland Garvey, US based PrimeGlobal firm, said: “Quite possibly we did the best and most important work of our careers in the last 12 months. 2020 was the crisis year when we had to step up as business leaders and provide the guidance and counsel our clients needed. This included budgeting and cashflow forecasting, assistance with PPP and EIDL programs and Employee Retention Credits. During the pandemic, we were the calm voice of reason, helping clients make wise and rational decisions for the short-term with an understanding of the long-term impact of these decisions. Bland Garvey is fortunate that we had most of the technology in place prior to the pandemic and were equipped to work in a totally remote capacity. The pandemic has accelerated the use of virtual meetings with clients and MS TEAMS internally. It is hard to believe that the firm had more video meetings in 2020 than in-person meetings in 2019. I am confident much of this is here to stay. I think clients and our team alike appreciate the effectiveness and efficiency of virtual meetings. The pandemic did initially have a negative impact for our restaurant, oil & gas and healthcare clients. Fortunately, healthcare has rebounded, but restaurants and oil & gas industries are still suffering.”

Jason Ferguson, Managing Partner of PrimeGlobal US member firm Calvetti Ferguson said: “During the coronavirus pandemic, we gained a significant number of middle market clients who chose to move from Big 4 accounting firms. We typically have clients who move their tax or audit engagements from large international CPA firms to regional CPA firms like ours; however, in 2020 we saw a larger increase. We also had an increase in revenue due to COVID legislation-related services, like PPP loan forgiveness assistance and employee retention tax credits. One issue encountered during the pandemic was fee compression. While we expect to receive full payment from clients, as business partners, we exist to help our clients and work with those who struggle to pay the full fee due to challenges brought on by the pandemic. When there is economic disruption in the market, there is an opportunity to initiate transactions like acquisitions. The downturn allowed us to close two acquisitions on January 1, 2021. Talent acquisition proved to be an area of success for our firm during the pandemic. Our total staff grew by more than 20% year over year.”

Have there been any regulatory developments in the US market over the last 12 months?

John Garvey said: "Bland Garvey dedicated a group to digest changes and share internally, the rapidly changing guidance from the IRS, SBA and Treasury Department. This enabled the firm to offer consistent guidance to clients, swiftly and accurately. They continued this effective approach throughout the year as the rules were evolving and changing on a daily basis.  

Jason Ferguson said: "Calvetti Ferguson shared that in the last 12 months, the entire business environment has changed significantly as a result of COVID-related executive orders and regulations at the federal, state, and local levels. There have been two significant regulatory programs which have a positive impact on clients. The Paycheck Protection Program (PPP) loans have helped small and middle market businesses across the U.S. stay afloat while they navigate the pandemic. The second program assisting clients is the Employee Retention Tax Credit (ERTC), which allows a quarterly credit against payroll taxes. for qualifying businesses."

How do your clients feel about the country's economic prospects for 2021 and beyond?

“Among our clients there is a split outlook. 50% of our client base were elated and the other half thought the world and business as we know it, will come crashing down. Now that we are removed somewhat from the election turmoil, calmer perspectives are starting to emerge.  Regardless of political party, most of our clients seem to have a positive outlook for the long-term, even though short-term challenges are expected. Enterprises learned that cash and liquidity are king and that overhead needs to be better managed. As a result, many of our clients will emerge from the pandemic with a retooled business better positioned for the future. Remaining optimistic and having faith in the future is key”, said John Garvey, CEO of Bland Garvey.

“With a new administration, clients are a little nervous and uncertain. Most clients have adopted a ‘wait and see’ attitude. Economically, we have heard talk about the potential for inflation in 24+ months. Our clients believe we will be in a better place in 1-2 years, given the shutdowns and resulting economic turmoil from the past 12 months”, said Jason Ferguson, Managing Partner of PrimeGlobal US member firm Calvetti Ferguson.

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