Bill Berry is the lead audit partner and the managing partner for The CPA Firm (TCF), LLP.
He was recently reviewing the firm's income statement for the previous quarter, which showed that auditing revenues were about 5% below last year's totals while tax revenues were about the same. Bill also noted that the income from auditing was 10% less than for the previous year. During the past few years, competition for new audit clients has been intense so TCF partners decided that it would be wise for the firm to lower its hourly billing rates for all levels in the firm.
The firm's client base is closely held firms that are mostly very successful sole proprietors, as well as a number of small- and medium-size companies. Bill and the other partners have been brainstorming ways to expand the revenue base of the organization. Knowing that IT is a tool that the firm can use to develop new lines of business, TCF hired several college graduates over the past few years with dual majors in accounting and information systems or computer science. Given the recent financial results, Bill wants to encourage the other partners to consider the potential to the firm of offering other professional services.
Requirements
1. Would it make the most sense for Bill to consider developing new types of clients or to consider offering different types of services to the types of clients typically served by TCF?
2. Bill remembers that the AICPA developed a list of various types of assurance services that auditing firms might consider offering. Describe three of these assurance services that might be a good fit for this CPA firm.
3. What might TCF do to fully use the combined strengths in accounting and information systems/computer science of its new staff auditors?