Making a Transition

If you listen closely, you might hear a small flurry of activity at Minnesota’s accounting firms. It’s the sound of CPAs bidding on contracts—in many cases, contracts they thought they already had in the bag.

“Right now I’m working on four responses to proposal requests,” says Joshua Bushard, partner at Grant Thornton, LLP, a Minneapolis audit, tax, and advisory firm. “I think it’s probably the first time I’ve ever been working on four at once. We’re a national firm, and I’ve been hearing about similar activity in other parts of the country.”

Bushard says when the economy started taking a dive in the fall of 2008, many companies were bound by agreed-upon fees with their accounting firms. But now that those agreements have expired, they’re testing the market.

“I ask them, ‘What is the reason you’re going out for proposal on this?’” Bushard says. “Every single time, fees are one of the factors. I’ve had a couple who have said, ‘We’re putting all of our vendor contracts out for bid. Sorry, accounting firm, I know you think you’re more than a vendor, but you are a service provider to us, and your contract isn’t immune.’”

Accountants generally work very closely with their clients, and the personal ties between them are important to the success or failure of the relationship. So it’s a risk considering a new CPA firm. But the economy is forcing companies to entertain new possibilities.

In most of these situations, Bushard says, the existing accounting firm is one of the vendors bidding on the work. Clients aren’t bent on changing. In fact, many of them are probably hoping they’ll be able to retain their current firm at a slightly better price.

If the client company isn’t really interested in staying with the same accounting firm, then the economy may not be the biggest issue, says Michael Bromelkamp, principal at Olsen Thielen, an accounting and consulting firm based in Roseville.

“There is an increased realization on the part of all business executives and entrepreneurs that if they are cost conscious, they may have something to gain by going out and getting bids,” he says. “But I still believe that if they are going to go out for bids, it’s either a dissatisfaction with their services or a perception that they are paying more than they should and they are not getting the value out of their services that they should be getting. Of course, that doesn’t change the fact that many clients that I talk to are concerned about their fee levels.”