American Institute of CPAs Discusses the Relevance of Succession Planning
As per a survey conducted by the AICPA, as many as eighty per cent of the multiple owner Charted Professional Accountant entities are of the opinion that succession planning is going to become a primary cause of concern for their organizations. The American Institute of CPAs have found that seventy nine per cent of the multiple partner entities stated that they feel that it will become a major cause of concern in the coming ten years. Even though the tough economic conditions has forced businesses to focus on bottom line related issues, more and more entities are devising plans for accommodating the retiring plans of senior level leaders.
However, given that the economy is gradually moving toward stability, the existing time is the ideal time to start planning. As and when the existing senior members prepare to retire in the next ten years, there will be additional pressure on professional entities, including accounting firms and others, that haven’t crafted plans for transition. A firm’s ownership is often considered as the Charted Professional Accountant’s biggest finance related asset therefore it is important to create exit related strategies, which can maximize that particular stake’s value when seniors are about to retire.
Mark Koziel of AICPA stated that succession planning is very similar to selling a home. He also stated that charted professional accountants prefer having a proper succession plans as it helps in planning for contingencies as well as incorporates steps for maintaining or increasing the market valuation of their entity. Koziel also mentioned that AICPA has a number of resources that can help companies plan in a better manner. Companies can always begin their planning at the Succession Planning Resource Center. The center can provide members of American Institute of CPA’s Private Companies Practice Section with all the information that they require.
The survey report provides a number of tips to firms with regard to succession planning. The report states that firms should begin with a 3 year plan and define what their firms are going to look like in future. Firms should also create procedures that ensure smooth customer transitions, grooming of future company leaders as well as implementation of policies pertaining to retirement and compensation to be given on exit.
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