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Happy New Year to you and your family! 2020 was a year for the history books - we hope for better days ahead in 2021.

Things have slowed down over the holiday season and will likely stay slow until the busy season has passed. There are very few practices on the market and it appears that the practitioners are not rushing to jump in the transition mode. We know of a couple of firms that have express interest to sell in 2021, but they will not come to the table until after the busy season.

In December, we presented our second seminar for Accounting Practice Transition which was well-attended by a great group of people. We hope to continue teaching this course in the future and potentially expanding to other provinces.

Cloud Practice Management

We wanted to open a discussion today about practice transition and the use of cloud management software. We have had quite a few inquiries from potential buyers looking to restructure existing accounting practices into a digital platform. Cloud management tools have been very effective in increasing efficiency in all areas and are an attractive setup for both clients and practitioners.

However, I would caution buyers who are planning to restructure existing practices into the cloud to take a moment and consider the potential consequences. Many sellers who have had an established practice for a long time, rely on clients who value a physical presence. Such a significant change to an existing practice and client base is a risk to the seller. The seller may be hesitant to agree to an earnout when the new plan for the business model is not guaranteed to succeed. Updating to cloud management software and transitioning the business to another practitioner are both major upheavals for the client, so it is best for only one to occur at a time.

Practice Tips

New Standard for Compilation Engagements

As you already know, the standard for compilations will come in effect for year ends on or after December 14, 2021. With the December 2020 compilations being prepared now, this is a great time to discuss the changes with your current clients who will be impacted. For clients that still require a compilation engagement, the working paper files can be upgraded in advance so that less work is required in the year of transition. By starting to look at files now, we can begin to document knowledge of the client business under the new requirements.

We want to emphasize that the new standard applies to most engagements where information will be shared with a third party. Notably, this would include personal clients with business or farm schedules that are sent to banks and used for business loans. We recommend setting yourself up for success and identifying these clients early during personal tax season.

Our Thunder Bay listing continues to be available for inquiries. Get in touch with us anytime if you have any practice management tips or would like to discuss practice transition.