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CPAs and Consultants

CPAs and Consultants. Risks Faced in Accountants’ Professional Liability. Martin W. Terpstra, CPA, CFE Partner, Forensic and Litigation Services. The Accounting Profession. The Big 4 The National Firms The Consolidators – Alternative Practice Structure The Super-Regionals

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CPAs and Consultants

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  1. CPAs and Consultants

  2. Risks Faced in Accountants’ Professional Liability Martin W. Terpstra, CPA, CFE Partner, Forensic and Litigation Services

  3. The Accounting Profession • The Big 4 • The National Firms • The Consolidators – Alternative Practice Structure • The Super-Regionals • The Large Local Firms • The Tax Prep Firms • Small Firms and Sole Practitioners

  4. The Big 4 • 1 – Deloitte; $8.8 billion • 2 – PricewaterhouseCoopers; $6.9 billion • 3 – Ernst & Young; $6.9 billion • 4 – KPMG; $4.8 billion • These firms audit most of the Fortune billion • These firms are international in scope • They are now audit driven

  5. The National Firms • 6 – Grant Thornton; $940 million • 7 – BDO Seidman; $558 million • Adding many public clients, growing fast • Taking many risky engagements turned away by the Big 4 • Considered a merger possibility

  6. The Consolidators • 5 – RSM McGladrey; $1.3 billion national • 8 – CBiz/MHM; $467 million scattered offices • 13 – UHY; $242 million: NE, DET, STL, HOU • Alternative practice structures • RSM purchased AmEx TBS in October 2005 • RSM is owned by H&R Block • CBiZ is publically traded • Few public clients, little appetite for risk • Looking to buy firms to fill in the map • UHY had two deals fall apart recently

  7. The Super Regionals • 9 – Crowe; $423 million: IL, IN, KY, MI, OH, TN • 10 – BKD; $287 million: MO, KS, NB, AR, IN, KY • 11 – Moss Adams; $271 million, West Coast • 12 – Plante Moran; $243million: MI, IL, OH, TN • 14 – Clifton; $198 million: Midwest, 15 states • 15 – Virchow Krause; $182 million: WI, IL, MI, MN • 16 – JH Cohn; $175 million: NJ, NY • 17 – Dixon Hughes; $155 million, South • 18 – Larson Allen; $140 million: MN, MO, PA, FL, AZ • 19 – Reznick; $137 million: MD, VA, GA, IL, CA

  8. The Large Locals • New York – 18 large local firms • Chicago – Blackman Kallick is the only large local left • Midwest – a number of large state-wide firms • Northeast – a number of large firms based in the metro areas • Miami – five large firms • Southeast – a number of large state-wide firms • Southwest & West – a number of large local firms

  9. The Tax Prep Firms • H&R Block – $2.3 billion, parent corporation of RSM McGladrey • Jackson Hewitt – $650 million • Liberty Tax Services – $66 million, founded by John Hewitt

  10. Services Offered • Attest – 86% • Business Valuations – 82% • Litigation Services – 78% • Forensics and Fraud – 77% • Estates and Trusts – 74% • Mergers and Acquisitions – 68% • High Net Worth – 62% • Cost Segregation – 54%

  11. Clients Served • Real Estate – 86% • Manufacturing – 78% • Construction – 69% A&AG • Professional Services – 69% • Nonprofit Organizations – 65% A&AG • Pension Plans – 64% A&AG • Wholesalers and Distributors – 64% • Technology – 56% • Healthcare – 50% A&AG • Government – 40% A&AG/GASB Source: Accounting Today Top Client Categories

  12. CPAs and Consultants

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