One mid-Hudson accountant got excused from shoveling during last weekend”™s snowstorm ”“ he had shoulder surgery ”“ but John Cina, managing partner for D”™Arcangelo & Co. L.L.C. in Dutchess, couldn”™t escape a desk piled high with paperwork, preparing last-minute returns for 2010 filers who got an extension because of Tropical Storm Irene. HV Biz caught up with him at his office in Poughkeepsie.
How have new federal regulations (Sarbanes-Oxley, Dodd-Frank) affected your company and its clients?
“Federal regulations passed under Sarbanes-Oxley have had a fairly substantial impact on the firm and for our clients who are SEC registrants. New areas that needed to be addressed related to disclosures, audit committees, whistleblower policies, conflict of interest and reporting ”“ just to name a few.
“Fortunately, our clients did not have to comply with the independent audit of internal controls provision, which has been extremely costly to larger companies. We did commit resources to training and ongoing subscription services.
“In addition to the triannual peer review most CPA firms go through, we are required to have our jobs related to SEC registrants reviewed at least every three years by the PCAOB (Public Company Accounting Oversight Board.)Â Needless to say, these regulations have added significant cost to what we and our clients must do to comply.
“While these provisions do not apply to private companies and institutions, a number of the requirements of SOX have trickled down to become best practices of a number of our other audit clients. Again, this has added more time and cost to our jobs. Overall, I believe the regulations have helped improve controls in many organizations, but I am still not certain of the cost/benefit.
“As far as the Dodd-Frank Act, we have not seen much if any impact yet on either us or our clients. However, there are some financial disclosure provisions specifically related to executive compensation that will have to be implemented.”
Are you seeing more bankruptcies and foreclosures despite the “official” end of the Great Recession?
“I have not seen as many bankruptcies or foreclosures in the latter part of 2010 as compared to 2009 and early 2010. However, many clients are experiencing more difficulty than ever in collecting receivables and loans. We are also seeing a number of businesses sell out due to a negative long-term outlook of the owners or merge with larger entities to stay competitive. It does not appear that we are out of the woods yet by any stretch.”
What advice do you have for business owners who trying to stay afloat?
“Obviously keeping a close eye on costs is imperative. Cash flow now is more important than ever. If you provide credit to customers, staying on top of receivables is a must. Talk to your banker and/or accountant if you are carrying substantial debt and see if there is some way to refinance to lower interest costs; or, at the very least, spread your payments over a longer period of time.
“If you pay for health insurance, take a fresh look at your plan and see what other options may be available.
“And of course, let your accountant know what”™s going on in your business. Too often, clients will not let us know about something important until the end of the year or worse, when tax filings are due. The result is often lost opportunities to save or at least defer taxes. Keeping lines of communication open is very important.”
What should employers do to prepare for what”™s ahead in 2012?
“Stay on top of what”™s happening. There are a number of tax provisions set to expire at the end of 2011 and 2012. Be sure to take advantage of them if you can as there is no guarantee they will be extended. These include such things as the limits on the 179 deductions (allows businesses to deduct the full purchase price of qualifying equipment and/or software purchased or financed during the tax year), bonus depreciation, tax rates on qualified dividends and long term capital gains and lower Social Security withholding on employees ”“ just to name a few.”
