The Blythe Global Advisors Interviews: What You Told Us

Good relationships and good information are critical to overcoming challenges.

Our interviews revealed that while clients and firms have good relationships, clients continue to seek real-world lessons to develop solutions.

In my March 2013 newsletter, I presented the first set of findings from the interviews some of you generously gave to our representatives. In this newsletter, I’ll share the findings from the remaining questions. Before I reveal those findings, let me remind you of the objectives and parameters of the interviews. We had two objectives with the interviews: First, to find out your most urgent needs to ensure we at Blythe Global Advisors are focusing on offerings that provide the greatest value. Second, to use the findings to foster greater understanding and better communication among all of us – clients, accounting firms, audit partners and trusted advisors – in the hope that greater sharing will lead to better solutions. In terms of sampling, we interviewed small to mid-sized clients in different industries as well as Big Four, national and local accounting firms. Once again, let me thank all of you who took time to talk with our representatives. As I reviewed the second set of findings, I was struck again by the trust you exhibited in your responses. To repeat, all responses remain confidential. We focused the interviews on two broad areas: the most pressing challenges in the near term and the client/firm relationship. Where time allowed, we asked company executives how they stay current with constantly changing rules and regulations and with how their peers are responding to those changes. My March 2013 newsletter discussed the challenges. This newsletter will reveal the relationship findings, how clients currently receive information and how they would prefer to get information. I’ll give you my perspective at the end of the newsletter. Relationships In terms of relationships, there’s good news on the client side. Most respondents in our interviews engage more than one firm for a variety of reasons such as geographical proximity to far-flung offices; the execution of strategic moves such as mergers, acquisitions or initial public offerings; etc. For the most part, those multiple relationships were evaluated positively. Comments included “thoroughly enjoys working with the entire … team,” “no major problems,” “no concerns” and “satisfied.” That said, some respondents cited areas for improvement in their respective relationships. Two examples: A private company felt that their accounting firm’s tilt toward public company regulations in all engagements prevented the firm from fully appreciating their specific private-company concerns and risks. A VC-backed company felt their smaller size and smaller fees directly correlated to a lower level of responsiveness from their public accounting firm. On the firm side, all discussions with firm executives regarding relationships boiled down to three elements: The first two – open, frank communication and a strong demonstration of value by the firm – foster the third – trust and respect between the parties. And trust and respect are generally acknowledged as the basis for successful, long-term relationships. Here are two specific observations from firm executives:

• Both parties must be proactive in sharing knowledge and discussing concerns to ensure every issue is approached with a 360-degree view of all possible ramifications and side-effects.
• To sustain long-term relationships, firms must add value to every engagement, issue and work product – at a cost that’s fair to the client and to the firm. Inertia can be costly to the client. Being purely compliant can be a death-knell for the firm.

How Clients Currently Receive Information and How They Would Prefer to Get Information As reported in my March 2013 newsletter, clients cited the constantly changing and expanding universe of rules, regulations and laws as one of their most pressing challenges. When asked how they keep up-to-date, they described a perpetual game of catch-up and voiced little confidence that they are ever truly current. Despite the volume of available printed and electronic information, most clients look to their accounting firm to keep them apprised of changes and to keep their companies in compliance – a process one client called “reactionary.” On the firm side, executives widely acknowledged the burden posed to clients by the continually changing accounting landscape as well as the downstream costs that can accrue when clients are not fully capable of complying with new regulations. In other words, both parties described a process that is simultaneously adequate and inadequate. When asked, however, how they would prefer to receive information, clients drew a different picture. They described small, face-to-face, peer events focused on topics specific to either their industry or to companies of their size. In this preferred venue, they could network, share information and discuss the real-life impact of and possible responses to changing rules, legislation, etc. Interactivity is key. As one executive put it, “… present as opposed to getting lost listening … or watching …” My perspective Regarding relationships, the favorable results bear out what I’ve observed during many Blythe Global Advisors consulting engagements. Time and again, I’ve seen both clients and firms working hard to communicate clearly, to ensure senior management on both sides is sufficiently involved, and to put the right skills and experience in place. Let me add one point about communications. While both parties in our survey assigned themselves the responsibility to keep the lines of communication open and to be proactive in raising issues before they require costly adjustments, it’s my perspective that this responsibility weighs heavier on the client side. Firms can keep their clients aware of changes as they occur, but firms can only assess and advise on the full impact of such changes to the extent that clients keep their firms informed of current activities and strategic plans. If you’d like to read more on this topic, see my October 2010 newsletter, ‘Five Ways to Maximize the Client/Auditor Relationship.’ On the subject of how clients receive information, clients provided a lot to think about. The way clients get information today – mostly from their audit firms and trusted advisors – may not be ideal but it’s expedient. In my opinion, this ad hoc process will continue despite its shortcomings because changes will continue to outpace executives’ ability to keep up with them. When asked how they’d like to receive information, clients identified a different model. Our respondents would prefer small, highly interactive meetings where executives of like positions, industries or company size could discuss similar challenges, possible solutions and lessons learned. I’ve often said that many of us are seeking solutions to the same challenges. Sharing approaches and lessons learned can be a powerful tool in that search by moving the frame of reference from the impersonal directive to real-world application. If you would like to discuss anything in this or any of my newsletters, please contact me. I’d be delighted to talk with you. If you need to fill a gap in financial and accounting expertise, we at Blythe Global Advisors would be honored to help you.

To discuss this important topic further or if you’re looking for general accounting advice and counsel, contact marc@blytheglobal.com