spotlight
Customers of compliance
BY DANIELLE LEE
Increasing regulation makes government
clients valuable, but hard work
There are competitive pressures because the
budget is shrinking — budget pressures are
a unique animal.”
And one that is not likely to be put out to
pasture anytime soon, with the lead into an
election year expected to stymie significant
resolution on the national budget.
Kessler said that while some “companies
get in [the government sector] and don’t
believe [the regulations] are applicable to
them,” they need to respect them, and not just
because they are mandatory. The rules and
restrictions also influence an organization’s
internal business mechanics. “Compliance
really starts with something as simple as employees filling out time sheets and plays all
the way through to what you charge through
to the government,” he said.
Regulations are also beneficial from the
firm’s perspective. “The positive is that [gov-
ernment clients] usually perform well on
contract, go by the rules, get paid, and are not
a big credit risk,” Kessler elaborated. “It’s a big
differential from a commercial customer.”
day operations and we minimize the impact,”
Kies continued.
While Congress debates the debt ceiling
and spending cuts, government contractors
and entities — and the accounting firms that
serve them — are functioning under an increasing regulatory environment that’s testing some of their business fundamentals.
“With the [regulatory] landscape of the in-
dustry, firms and their clients need to create
an infrastructure to make business decisions
quickly,” said Lexy Kessler, lead partner in
the Government Contract Services Group of
mid-Atlantic accounting firm Aronson. “They
have to be nimble and agile.”
Kessler’s team offers traditional tax and
audit services, transactional and advisory
support, and contract solutions to Aronson’s
government clients. She cited one major con-
tactor client tripling its compliance depart-
ment over the last two years as an indica-
tion of the current administration’s focus on
transparency and oversight.
HIGH TOUCH, LOW INTERFERENCE
The scrutiny, of course, remains high when
clients do not fulfill those functions.
“We always apply the headline test,” re-
vealed Scott Kies, managing partner at Ari-
zona and New Mexico CPA firm Heinfeld,
Meech & Co. “We try to keep clients out of the
headlines. They end up in the paper for vari-
ous reasons — it’s the nature of government
and cities, school districts and other entities
we audit — that high level of scrutiny.”
In addition to the firm’s audit services,
which comprise about 75 percent of its work-
load and are provided to entities such as the
Arizona Department of Transportation and
the City of Tucson, the firm also consults for
governmental and nonprofit organizations.
These clients are “definitely needing a really
high level of service right now,” Kies said. “We
are constantly communicating, being a part-
ner in their business. We are looking at it from
their perspective of how to provide value, es-
pecially from an audit perspective, because
otherwise they can just be a commodity.”
Another priority for firms with government
clients, especially in this environment of high
regulation, is striking a balance between
high-touch service and low operational in-
terference. “We have to go above and beyond
for clients, and make the audit as seamless as
possible and as efficient as possible on site
so we do not intrude on business or day-to-
MOVING INTO THE MID-MARKET
As government regulations increase, so do
business expenses and, consequently, the
competition between large and midsized
organizations. “Larger companies are com-
ing downstream,” Kessler observed. “Mid-
dle-market contractors are competing with
large organizations. We are beginning to see
them trickle in their space, and it’s difficult as
a small organization to compete with Lock-
heed [Martin].”
Seth Zarny, information and technology
partner at Washington, D.C.-based account-
ing and technology firm Raffa, has witnessed
the overlap from the other side, noting, “Over
the past eight years or so, the capabilities of
[technology] systems have greatly expanded
and are reaching the lower end of the mid-
market space.”
Beyond taking advantage of this increas-
ing technological advantage, smaller org-
anizations should navigate these newly
overpopulated waters, Kessler stressed, by
differentiating themselves. “They should
make themselves unique to their customer,”
she said. “It’s no different than a commercial
business. There’s plenty of work and there’s
going to be, but it will be more competitive.”
Zarny has similarly tracked “tremendous
similarities” between the government orga-
nizations that make up about 15 to 20 percent
of his practice’s roster and the commercial
clients. For one, the larger government agen-
cies are showing more interest in SharePoint
and portal technology and embracing cloud-
based solutions. “On the cloud-based server
environment, certain applications are use-
ful for various types of collaboration,” he ex-
plained. “It allows organizations to poten-
tially save costs.”
Because cloud computing is still a “broad
topic open to a lot of interpretation,” security
concerns for these shared access points do
crop up, but Zarny said that they have not
proved to be a barrier.
Meanwhile, there is a “slower rollout” in
these services for smaller organizations.
STRATEGIC PARTNERSHIP
Firms with robust government client services
must juggle different sizes, requirements, locations and “personalities” within their roster,
according to Zarny.
See GOVERNMENT on
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