June 8, 2023


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Accounting Firms Help Businesses Navigate Pandemic Aid Programs

Baker Tilly, which has offices at Westwood Gateway, accelerated its strategy to focus on consulting during the pandemic.

Baker Tilly, which has offices at Westwood Gateway, accelerated its strategy to focus on consulting during the pandemic.

Photo by © RMA Photography Inc.

Accountants are no longer just sharpening their pencils at tax season.
Many firms have begun offering a full range of services year-round, from compliance work to consulting with their clients on how to take advantage of federal programs like the Paycheck Protection Program and the Employee Retention Credit established by the CARES Act.

If anything, the Covid-19 pandemic accelerated a process that was underway at many Los Angeles firms.

The shift came at the right time — especially for retail businesses with brick-and-mortar storefronts or companies in the hospitality sector. Both sectors were hard hit by the pandemic restrictions.

“We and the partners who work with the clients in those industries had to quickly shift into that advisory role,” said Carol Suruki-Carmany, partner-in-charge of Moss Adams’ Westwood office.

Suruki-Carmany noted that the firm has always been advisory-focused. She added that the advisory side of the business likely helped drive the revenue growth the firm experienced last year.

“I think advisory is a key strategy for firms to continue to grow and assist the client base,” she said.

Deciphering PPP loans

Eligibility is a key area of concern for businesses turning to their accountants to see which federal program they qualify for. Early on, there was a public outcry after it was revealed that large public companies like Shake Shack Inc. and the Los Angeles Lakers secured PPP loans.
The loans, according to the Treasury Department, were not intended for “a public company with substantial market value and access to capital markets.” Rather, they were meant to help small businesses cover payroll costs and essential expenses like rent and utilities.

More than $30 billion was returned as of July.

Because of this, clients wanted to make sure they were, in fact, eligible for the loans.
“A significant portion of our clients have their hands full. They’re trying to keep their business open. They’re trying to retain their employees,” said Nicole Szczepanek, tax partner in manufacturing and distribution at Baker Tilly.  

“Now on top of that, they have to digest these complex rules. There’s a tremendous amount of stress there for our clients. What our teams did was dig in and say, ‘Hey there’s a need for our help, and let’s make this as easy and efficient as possible for our clients,’” she added.

Todd Bernhardt, a Baker Tilly partner, is leading the firm’s response to helping clients navigate the pandemic. He said the firm had a week from the time then-President Donald Trump signed the CARES Act to the time businesses could file loan applications with their banks.

‘Round the clock’ scramble

Over a weekend, a team at Baker Tilly created a platform for their clients to set up their PPP loans.
“It was round-the-clock, people learning the laws, taking client calls. This is every firm in the country,” Bernhardt said. “I would say we were as deep in it as any firm, getting guidance out, and it was just learning something brand new.”

Applications for loan forgiveness is another area where business owners have needed help, Bernhardt said.

For firms that were focused on the compliance end, it might have been difficult for them to address their clients’ questions with the fast-paced information coming out of the Small Business Administration, said Craig Weaver, Baker Tilly’s managing partner of tax services in its Los Angeles office.

“I think that a lot of accounting firms were reevaluating their consulting capabilities and needs knowing that they needed to enhance them to be prepared for things like this,” Weaver said.

Baker Tilly had already made a dramatic shift in strategy to focus on consulting, as many compliance-related functions have become automated, he said.

“We had many, many of our folks really step up to the plate and take on something they hadn’t done before,” Weaver said. “It was a challenge, but the passion was there.”

Veena Murthy, a Washington, D.C.-based principal in Crowe’s tax practice who served as an adviser to Congress’ Joint Committee on Taxation, said the pandemic might have been challenging for accountants who didn’t have the expertise to navigate.

“For generalists, maybe they’ve had to think about doing more than just filling out a tax return,” she said. 

IRS is watching

Murthy added that she fears accountants who don’t have a background in tax consulting on compensation and benefits are giving the wrong advice to clients.
As a result, she expects the IRS will conduct audits and examinations of some of the companies that have taken the loans.

“They’re going to be looking at all this post-pandemic because they’ve lost a lot of revenue they need to recover,” she said.

The CARES Act also brought a slew of income tax law changes that aren’t expected to go away. Bernhardt said they are advising clients on what the changes may mean when it comes to tax implications for their businesses.

Clients were also asking about what to do with existing debt, help with cash flow modeling and collections of their accounts receivable, he said.

The pandemic has forced businesses to reevaluate their operations in order to survive, Szczepanek said.

Training and upskilling will be important for firms to adapt to the changing industry, experts say.

“Shifting priorities have upended typical day-to-day tasks for accounting and finance professionals as they are now a go-to source for guidance in a crisis,” Raef Lawson, vice president of research and policy at the Institute of Management Accountants, wrote in a column for AccountingWEB. “To maximize the positive impact on their organizations, finance professionals need to focus upskilling efforts on risk management and cash flow management and forecasting, which have increased in importance over the course of the pandemic.”

Keep reading the 2021 Professional Services Special Report.

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