Businesses looking to cut vendor costs and control expenses are one challenge facing accounting firms today, but New Jersey still provides fertile ground to find clients and top talent.
“The challenge today is, in a recessionary economy, there is more capacity in the accounting industry than there had been in the first decade of the 2000s, and I think adapting to that is the biggest challenge,” said Steven Kass, co-CEO and co-managing principal of Roseland-based professional services firm Rothstein Kass.
Kass — whose father, Irv Kass, and business partner, Marvin Rothstein, founded the firm in 1959 — said in these regulatory heavy times, accounting firms need to remain on top of the evolution and convergence of U.S. Generally Accepted Accounting Principles, or GAAP, and International Financial Reporting Standards, commonly known as IFRS.
Thomas J. Marino, CEO of Roseland-based J.H. Cohn LLP, agreed regulation — and over-regulation — of the industry is top of mind for accounting professionals, adding that the industry needs to be proactive about policing their own.
“The lack of self-regulation is getting to be a concern. You have too many groups outside the profession trying to regulate a profession they truly don’t understand,” Marino said.
Marino added that the industry faces additional potential landmines from mounting frivolous lawsuits directed at accounting firms.
“I think there needs to be litigation reform, because the fact of the matter is, if it gets to a jury trial, jurors don’t understand what an accountant’s role is. They’re not in there to detect fraud,” Marino said.
Even with the increased regulations and risks, Marino, whose firm has done several mergers and acquisitions over the past several years, said he foresees further consolidation in the industry as larger regional firms expand to more national footprints, the largest firms become more global, and small accounting firms look to sell as baby boomers age.
For the accounting industry in general, New Jersey provides fertile ground for accounting firms with headquarters and offices here, Marino said.
“It’s not just the number of businesses that are here, it’s the number of quality businesses in the New Jersey marketplace,” Marino said. “I think accounting firms should want to be in the areas where the business is — where it’s easy to get to, from a service standpoint.”
Rothstein Kass also has been well-served doing business close to its New Jersey roots, while expanding to an international presence with more than 1,000 people now, Kass said, and the firm will add anther office in Boston later this year.
“New Jersey is an interesting business climate. In some respects, it’s a microcosm of New York and, in some respects, it’s very individual,” Kass said. “New Jersey has its own nuances, in part because it’s spread out over a bigger geography, and we’re very close to Manhattan, which is the financial center, certainly, of the United States, if not the world.”
Beyond geography, Kass said, New Jersey is primed for business and ripe with talent.
“There’s, obviously, an excellent, diverse range of industries in New Jersey,” Kass said.
“Everywhere relationships are important. I think in New Jersey, relationships are particularly important.”
One key to success in the firm’s home state has been the people who the firm has been able to hire here, Kass said.
“New Jersey has got a robust talent pool,” Kass said. “Our lifeblood is recruiting people largely on campuses. We like to home grow, and there’s a lot of strong university systems from which to recruit.”
Marino said J.H. Cohn plans to expand to other geographic areas and add depth to its practice areas, but the numbers aren’t a focus.
“We do not have any revenue goals other than what comes in our annual budget,” said Marino. “We want to be profitable, but we want to be the best firm to serve our clients.”