Scott Wragg is the managing director of the Providence office of CBIZ Tofias and Mayor Hoffman McCann P.C.-Tofias New England Division. As such he has good view of the business climate in Rhode Island and the accounting profession itself going into 2010. He recently answered a few questions about those topics.
PBN: What impact has the economy had on your firm’s Rhode Island clients and what have you been doing to help them through this tough time?
WRAGG: Thanks to strong management teams, realistic planning and early action, many of our clients continue to do well despite the tough economy. But the downturn means we are also helping some clients navigate through debt restructurings, bankruptcy reorganizations and related issues. We have been focused on cash refund opportunities that may be available for our clients, such as monetizing of research and development credits (which allows certain companies to get a cash refund for R&D activities even if no tax has been paid), reducing property tax assessments and taking advantage of the expanded net operating loss carry-back period, which was recently expanded from a two-year to a five-year carry-back period. Finally, if there’s a silver lining to the economic downturn, it would be that many businesses have declined in value, thereby making it easier to accomplish estate planning and other business restructurings.
PBN: Accounting firms are traditionally known for their audit and tax work. What other services do you provide to assist clients with their businesses?
WRAGG: We offer a wide range of services beyond those typically associated with an accounting provider. During these tough times, companies and executives are seeking advice from professionals with significant expertise in their industries and a breadth of service capabilities. For example, as companies look to be more efficient, we are involved in developing and strengthening their internal controls. Increasingly we are being retained by law firms to do litigation support and forensic accounting for dispute resolution. Valuation, from general business to equipment, property and real estate valuations, is an area of focus, as well as M&A work and retirement plan consulting.
In addition, with more business people looking for strategic help in this economy, we provide executive coaching and retreat facilitation to improve leadership skills and performance, assist in management transitions, and develop and implement business strategies.
PBN: What are some of the major issues that will face Rhode Island businesses in 2010 and perhaps beyond?
WRAGG: Almost everyone is predicting a long, slow economic recovery. So access to capital will continue to be a critical issue. We have relationships with many traditional lenders as well as many private equity and venture capital firms. As such, we often facilitate introductions which provide the capital needed to help our clients grow. Rhode Island taxes, which are among the highest in the nation, are a huge burden for the state’s businesses. We need to find ways to make our tax structure more competitive with other states in order to retain and attract quality companies to Rhode Island. Some of our people are working with business advocacy groups to bring tax reform ideas to the attention of state government.
PBN: You became managing director in charge of the Providence office in 2008. What has been your career path that brought you to this position?
WRAGG: I have a B.S. in accounting and a master’s in taxation, both from Bryant University. I worked for about 20 years with one of the Big Four accounting firms. The Sarbanes-Oxley Act in 2002 made it difficult to act as a consultant and provide guidance to clients. I made the move to Tofias PC in 2004 so I could serve as a true client advocate again and make a difference in their businesses…
PBN: What are the biggest issues facing the accounting profession?
WRAGG: Keeping up with ever-changing tax laws and accounting standards is an ongoing issue. It may become even more so as we move towards switching from the U.S. Generally Accepted Accounting Principles (GAAP) to the International Financial Reporting Standards (IFRS), which the U.S. Securities and Exchange Commission has announced that it will require of public companies by 2014. Fortunately, we have a very intensive in-house and outside training program that far exceeds the minimum hours that CPAs are required to meet. Another big issue for the profession is “mobility.” This is the ability of CPAs to provide services across state borders. Most states don’t allow this. Our national professional association, the American Institute of Certified Public Accountants, is leading a nationwide campaign to change this because it can save our clients time and money to deal with one CPA or firm nationwide.
