As a CPA, I am often in awe to see a lot of my peers are reading articles or advice provided by others without questioning, be they from the peers in our profession or even others who aren't in any kind of profession at all. An example is this article on billing rates for solo accounting practice and small firms (click to read). The article cited average billing rates for various services provided by small firms or solo practice, and yet it didn't say how many small firms were surveyed and what the sampling methodology was regarding to variances on geographic, years in practice, revenue range and client sizes. All it said was the data was obtained from a "new survey"? But it didn't say conducted by who and where?
According to the article, the average billing rate for tax prep is $110 per hour and $513 fixed flat fee. Throughout my years of hanging around in small firms, I have seen many fixed rate tax returns at $75, and also $150. As for per hour rate, many are charging under $50 and under $75. May be many of these low billing firms are totally eliminated in the survey? Recently, I have been having a hard time trying to get new clients from scratch, because many of them are telling me that they are paying only $125 for their tax returns with their CPAs. And I truly resent these low billing CPAs who are degrading the profession to those tax prep services inside the hair salons. But who can blame them when literally any doofus are allowed to practice tax, bookkeeping and even accounting. Auditing and attestation is the only service that requires a CPA license.
Now back to the topic, am I the only CPA out there who reads articles like this unknown survey and always feel this kind of data reporting should be left to be done by us, the CPAs??? And yet, many CPAs in America are very weak in Mathematics, logic or even basic arithmetic so many of us are totally incapable of writing even an article like that one which I consider it to be very inadequate and unprofessional. Lots and lots of us can't even write an email to begin with. In America, and particularly in California, everybody is providing accounting, tax and bookkeeping services. One of my former tax clients is actually doing it and she is telling me she is studying to become a CPA and she is now having her own bookkeeping practice serving a few law firms already. Her original degree is early childhood education but she couldn't pass the certification test to get a job at the kindergartens. Now she is taking evening accounting classes in some community college while providing book-keeping services. God bless her clients. I took a brief look on a few tax returns she did and they were full of outrageous mistakes. Her clients are unaware of these mistakes and seem to be happy with her because she charges only $30 an hour for her full charge bookkeeping service. Meanwhile, I am having a hard time trying to get anybody to switch to me when I am asking $150 per hour, even though I am a CPA with many years of hardcore tax and audit experiences.
It's really frightening and disheartening to see the billing pressure in the profession, and it actually feels much worse than the article reported.
Showing posts with label Accountants' Knowledge. Show all posts
Showing posts with label Accountants' Knowledge. Show all posts
Sunday, March 9, 2014
Saturday, November 30, 2013
How IRS' New Rules to Restrict Political Lobbying Through 504(c)(4) Organization Impact CPAs?
Recently, the Treasury Department and the IRS has proposed to spell out specific activities for the 504(c)(4) organizations that are considered to be political. The intention of this proposal is to reduce the financial influence that political lobbyists can exert on political campaigns by hiding behind the tax-exempted non-profit organizations.
As a CPA, I am surprised it takes the IRS this long to make such a proposal. As most taxpayers know, any expenses spent on political lobbying is not tax deductible. But contributions to civic leagues or other section 501(c)(4) organizations, while generally are not deductible as charitable contributions for federal income tax purposes, they may be deductible as trade or business expenses, if ordinary and necessary in the conduct of the taxpayer’s business. (This is where it gives a lot of flexibilities to the political lobbyists to fund their politicians buddies.)
Under the current rule, companies and wealthy individuals can donate lots of money to these 504(c)(4) organizations and receive huge tax deduction while financially supporting certain political candidates they affiliate with. On their books, it's usually under the "advertising and corporate sponsorships" or "marketing" expenses to promote their products or services" to the communities blah blah.
In my opinion, this practice allowed under the current law is unjust. The more tax deduction the companies and wealthy individuals pay, the more the IRS need to either cut my future social security benefits or increased my current income tax, which it already did. The more financial influence big money can exert on politicians, the more the system is going to be skewed to benefit the big money at the expense of little me.
As a CPA, I welcome this new proposal from the IRS. But even if this proposed new rule is passed, it will only be effective if only CPAs and auditors who are advising these heavily politically involved 501(c)(4) organizations and their donors, are competent and ethical enough to advise their clients against misclassifying and misallocating political donations as non political expenses on social causes. In my career as an auditor, I had seen CPAs liberally classify a lot of non-deductible expenses as deductible; many are so outrageously misclassified that I can't believe my own eyes . Making sure that donations are classified properly are much more difficult than just proposing a new law.
As a CPA, I am surprised it takes the IRS this long to make such a proposal. As most taxpayers know, any expenses spent on political lobbying is not tax deductible. But contributions to civic leagues or other section 501(c)(4) organizations, while generally are not deductible as charitable contributions for federal income tax purposes, they may be deductible as trade or business expenses, if ordinary and necessary in the conduct of the taxpayer’s business. (This is where it gives a lot of flexibilities to the political lobbyists to fund their politicians buddies.)
Under the current rule, companies and wealthy individuals can donate lots of money to these 504(c)(4) organizations and receive huge tax deduction while financially supporting certain political candidates they affiliate with. On their books, it's usually under the "advertising and corporate sponsorships" or "marketing" expenses to promote their products or services" to the communities blah blah.
In my opinion, this practice allowed under the current law is unjust. The more tax deduction the companies and wealthy individuals pay, the more the IRS need to either cut my future social security benefits or increased my current income tax, which it already did. The more financial influence big money can exert on politicians, the more the system is going to be skewed to benefit the big money at the expense of little me.
As a CPA, I welcome this new proposal from the IRS. But even if this proposed new rule is passed, it will only be effective if only CPAs and auditors who are advising these heavily politically involved 501(c)(4) organizations and their donors, are competent and ethical enough to advise their clients against misclassifying and misallocating political donations as non political expenses on social causes. In my career as an auditor, I had seen CPAs liberally classify a lot of non-deductible expenses as deductible; many are so outrageously misclassified that I can't believe my own eyes . Making sure that donations are classified properly are much more difficult than just proposing a new law.
Monday, October 21, 2013
Gimmicks in Government Economic Statistics and Gimmicks in Accounting
I always wonder why the Government keeps reporting GDP growth and low inflation and yet, I keep having a hard time getting jobs and I am seeing everything cost a higher % of my paycheck than ever. ( Okay, former paycheck. Now I don't even have a paycheck anymore.)
Now that I had quit my job I have a lot more time watching old TV shows and reading up on the internet, I am not surprised to read on the internet that the Government has been manipulating the formulas of all economic statistics to understate inflation and to overstate economic growth. According to the following chart published by Shadowstats.com, inflation would have been a few percentages higher if the government hadn't eliminated, since 1990, certain costs of goods from the formula.
A second chart below pubished by Shadowstats.com shows that economic growth would have been a miserable negative if only the government hadn't tempered with the statistical formula of GDP.
It seems to me that, to keep the music going, and to keep certain people's pockets funded either by their jobs, their clients, their banks, their investors, their voters, gimmicks are frequently used by the government and also certain accountants to fudge the numbers to their advantage. With all these misleading overstatements and understatements everywhere, I can't help wondering if any economists or accountants out there knows how to correctly measure or account for anything anymore? Why are there always so many gimmicks involved, be it inventory valuation, intangible assets impairment, revenue recognition, and economic data of all sorts. I hope I am just being over cynical due to the fact that I haven't had a new job offer yet. Otherwise, the world is just too disheartening.
Now that I had quit my job I have a lot more time watching old TV shows and reading up on the internet, I am not surprised to read on the internet that the Government has been manipulating the formulas of all economic statistics to understate inflation and to overstate economic growth. According to the following chart published by Shadowstats.com, inflation would have been a few percentages higher if the government hadn't eliminated, since 1990, certain costs of goods from the formula.
A second chart below pubished by Shadowstats.com shows that economic growth would have been a miserable negative if only the government hadn't tempered with the statistical formula of GDP.
It seems to me that, to keep the music going, and to keep certain people's pockets funded either by their jobs, their clients, their banks, their investors, their voters, gimmicks are frequently used by the government and also certain accountants to fudge the numbers to their advantage. With all these misleading overstatements and understatements everywhere, I can't help wondering if any economists or accountants out there knows how to correctly measure or account for anything anymore? Why are there always so many gimmicks involved, be it inventory valuation, intangible assets impairment, revenue recognition, and economic data of all sorts. I hope I am just being over cynical due to the fact that I haven't had a new job offer yet. Otherwise, the world is just too disheartening.
Thursday, March 21, 2013
Controller Is No Accountant
Today while working at my client's office. The controller shocked me when I proposed to reclassify cash advance into inventory in transit. The controller told me not to bother because there was no difference between the two and they were all current assets on the balance sheet anyway.
So, according to this controller, may be there is no need to report different types of current assets on the balance sheet, may be GAAP allows us to report all current assets in just one line under "CURRENT ASSETS"?????
This controller is a CPA who claimed to formerly have 2 years' audit experience in a local CPA firm that has over 150 employees. Shocking......If I have my own company, I will not hire this CPA firm because their auditors seem to have very different accounting standards....If you want to know if your company is using this CPA firm, type the firm's name in the comment box below and I will respond with a yes or no....
So, according to this controller, may be there is no need to report different types of current assets on the balance sheet, may be GAAP allows us to report all current assets in just one line under "CURRENT ASSETS"?????
This controller is a CPA who claimed to formerly have 2 years' audit experience in a local CPA firm that has over 150 employees. Shocking......If I have my own company, I will not hire this CPA firm because their auditors seem to have very different accounting standards....If you want to know if your company is using this CPA firm, type the firm's name in the comment box below and I will respond with a yes or no....
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