|What You'll Be Worrying About in 2010
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January 7, 2010
If you think that the pain of the Great Recession is over, then think again. The initial shocks may have passed, but finance and accounting executives will be scrambling all year — and for years to come — to catch up with the downturn and its fallout.
The year 2010 could be just as busy and difficult as 2009 for many finance professionals. Boston Consulting Group, for example, says too many corporate leaders “are underestimating the enduring legacy of the Great Recession” and “failing to plan (the) tough, defensive actions” required.
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Meanwhile, Financial Executives International (FEI) reports “unemployment levels remain extremely high and cash is still hard to come by.” Much like the CPA executives polled by the AICPA, FEI says “companies continue to restructure in light of contractions in the job market.”
The list of what you’ll be worrying about in 2010 could be long. But here’s my take on some of the most treacherous potholes that lie ahead:
If it’s true that the only things certain in life are death and taxes, then you can add one more thing to the list: The accountants needed to sort it all out. Happy New Year.
1. Economic uncertainty — It’s the uncertainty, stupid. CPAs are trained and skilled at dealing with almost any economic problem. But forecasting costs and revenues, access to financing and “Black Swan” catastrophes are not part of Accounting 101.
2. Financial regulatory reform — The whole global system of capital flows is getting an earth-shaking makeover. While Wall Street-based financial jobs got hit hard early in the credit collapse, the demand for accountants now seems to be surging again as clean-up crews move in. At the same time, accountants and auditors around the world are working with governments and regulators to shape the new regulatory order. At the end of it, regulatory accounting may never be the same.
3. IFRS — Financial reporting standards are going international. U.S. Generally Accepted Accounting Principles (GAAP) could someday be wiped out and CPAs would need to learn a whole new body of knowledge. And Financial Accounting Standards Board (FASB) is already moving systematically toward aligning U.S. standards with International Financial Reporting Standards (IFRS). Or both. In any event FAS is out and Accounting Standards Codification (ASC) is in. Even if it represents progress, that’s enough change in one year to make many a CPA grumble.
4. Cloud computing — Otherwise called software-as-a-service, cloud computing is coming to finance and accounting. Intacct, Netsuite, SAP and Oracle are leading the way in accounting systems. Intuit, Thomson Reuters and CCH Wolters Kluwer are doing the same in tax. Even an increasing number of businesses are moving to cloud-based productivity applications as Google nudges into Microsoft’s home turf.
5. Taxes — Aside from the tectonic shifts in capital markets affecting treasury, the most important factors impacting CPAs this year could be huge changes in taxes. You name it — corporate income, individual income, estate, health care fees, retirement planning, even talk of a value-added tax (VAT) — could plague CPAs with new questions and confusion in 2010. There’s some chance lawmakers will deal with the sunsets of the lower individual rates. Health reform, if it ever happens, will include new taxes. And if nothing else goes on with retirement plans, 2010 is the year of the Roth IRA, as you may have heard.
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