Accountants With a Heart Come to Rescue for Kids

Picture a group of elementary school children sitting around a classroom chattering and laughing while they munch on pizza. Now listen closely as the focus of their enthusiasm becomes clear. It's not video games, television, or the new Britney Spears single; the kids are excited about the stock market.

Kids for Accounting Day became a reality four years ago when Crystal Faulkner and her partners at their accounting firm, Cooney, Faulkner & Stevens, were trying to figure out a way to give back to the community.

"We wanted to get adult professionals into the local schools to make a difference in the life of a child at a grassroots level," recalls Faulkner, chairperson of the program.

They approached other firms as well as the Cincinnati Youth Collaborative with the idea to get volunteer CPAs into schools to expose children to financial concepts. With the help of a hands-on stock market game designed for kids and sponsors such as Huntington Bank and Papa John's, finance professionals from all over the area charged inside Cincinnati public schools on May 1, 2001, to help out.

Students in fourth through eighth grades were given fake money to play a board game that simulated the stock market over 10 years. Being able to see their money grow and having CPAs on hand to answer questions helped the kids interact with the financial concepts they were learning.

"In all my 25 years in public education, I have never witnessed the excitement exhibited by our students during a classroom activity," teacher Joe Wilmers wrote in a letter to Faulkner. "I overheard four students strategizing about opening a restaurant when they got older."

The success of the first Accounting for Kids Day was a start, but Faulkner wanted to become more involved. "Our second goal is to inspire adult professionals to become active as a mentor and make a difference in a child's life," Faulkner says. "I want adults to see how meaningful just a little time can mean to a child."

Each year since, Accounting for Kids Day has been held in the fall as a kickoff event for volunteers to become involved with underprivileged children throughout the school year as tutors. The hope is that students will be able to learn practical knowledge as well as financial concepts that will help them become productive adults.

Today, Accounting for Kids Day has spread to almost 20 cities in Ohio, reaching 5,000 students in 200 classrooms.

"We are trying to get a national initiative where accountants are rolling up their sleeves and going into schools to help kids in their own communities learn financial literacy and be empowered for life," Faulkner says.

If the No. 1 reason new businesses fail is because they're undercapitalized, then why do budding entrepreneurs go forward without the cash to back them?

Because they're entrepreneurs, and by definition they assume risk "” often taking the green light without ample green in their pocket.

That scenario means job security for accountants, who fill a niche as advisers, strategists, systems put-in-placers, and, of course, as friendly federal tax guides. Ethical, experienced, and talented accountants can be smart business owners' best friends. The challenge lies in convincing businesses to invest (what seems like nonexistent money) in their services.

Listen to accountants' tales of turning around businesses gone awry and you'll learn how money managed well is the difference between profit and loss, and whether or not the "Open" sign stays in the window. Armed with calculators and conservative suits, accountants come to the rescue time and again.

Harry Badanes has been crunching numbers for better than 30 years. As a CPA, a CFP, and a CVA (certified financial planner and valuation analyst), and as managing partner at J.D. Cloud & Co. LLP, Badanes has ample experience with companies in jeopardy. He recalls one client, an established manufacturing company, that had chugged along for years, turning profits as it went. However, when competition became fierce, belts had to be tightened.

"We helped a company determine what their true costs of manufacturing were," Badanes says. "Prior to that they didn't have an idea ... and this was really important for them to ... be competitive."

It seems so elementary. How can a manufacturing company survive without knowing what it spent to produce its products? The owners weren't bad businesspeople, but they were sailing through the green lights without looking at their map.

Badanes turned his client around in four to six weeks, but the company had struggled with the issue for years. Not seeking timely advice is a critical problem for business owners, and the problem goes hand in hand with the first issue mentioned "” lack of funds. Though difficult for owners to execute, Badanes' business primer reads thus:

"The way most companies get in trouble ... is because they initially lack capital. So, if you start out and you don't have sufficient capital ... you are strained from the beginning and that plays into No. 2: Companies often will not invest in professional advice to do things right. And they try to shortcut things and that may work for a while but in a lot of cases it doesn't, because you need the advice of wise counselors."

William Hesch, CEO of William E. Hesch CPAs, is also a personal financial specialist as well as a practicing attorney. Like Badanes, he agrees that money, or the initial lack of it, is an evil most businesses face.

"The No. 1 reason businesses fail is because they are inadequately capitalized," Hesch observes. Owners should also "surround themselves with good quality advisers" like bankers, insurance agents, attorneys, and CPAs. But what businesses should not do, Hesch says, is rely on their advisers to solve their problems.

"Successful companies are ones who are able to tackle their problems and use their advisers as advisers," he says, adding that owners must implement the solutions themselves.

One of Hesch's clients did exactly that. The Cincinnati-based manufacturer had been with a large CPA firm for more than 20 years and had been after them for the last three to develop a succession plan so he could eventually retire. After receiving a whopping $90,000 bill for accounting services (and still no plan in place), he no longer perceived the CPA firm of value. Rather than trudge along, status quo, this client went shopping "” and produced results.

"After deciding to work with me, I was able to identify mistakes in their tax returns ... which resulted in going back two years and recovering over $50,000 in property taxes immediately, and then saving another $50,000 in personal property taxes that current year."

Hesch also structured a succession plan that minimized taxes, putting retirement on the owner's immediate to-do list. As Hesch's client learned, having advisers is one thing. Having aggressive, proactive advisers is something altogether different.

Such was the case with another Cincinnati manufacturing company, one that put BKD on the job when another firm failed it.

"They were being served by a much larger, 'big four' international accounting firm, and they were not being served properly," says Bill Wessendarp, CPA and partner at BKD.

During the initial interview process and audit, Wessendarp uncovered a big problem "” the company was unknowingly out of compliance with the Department of Labor and subject to an audit of their employee benefits plan. Catching the problem saved the company significant penalties and was the direct result of working with a professional who asked the right questions.

Wessendarp considers "proactive communication with outside business advisers" the biggest priority. Ultimately, Wessendarp reduced the company's state license tax and put internal controls in place that built in efficiency and increased profit potential.

Often overlooked but no less significant is an accountant's opportunity for perspective. Their ability to stand back and take in the big, unbiased, unemotional picture allows them to see what internal controls need to be established.

Ben Buerger of Buerger & Co. CPAs, a 30-year veteran accountant and former IRS agent, had a retail client with tremendous sales, but little or no profit. After persuading the retailer to develop a controller-type position, profits "” hiding out as poorly managed funds "” began to surface.

"Instead of having trouble paying his bills and his vendors, he was able to not only pay all these people but have quite a lot of money left over for himself," Buerger notes.

Small-business owners can't do it all, but so often think they can or that they can't afford the help.

"It's hard for people to relinquish control, but they don't have to give up power or the purse strings," Buerger points out. "But if your expertise is in sales, does it make sense to spend half your day worrying about finances?"

After all, Buerger notes, race car owners typically hire race car drivers. Like business, the track is fast, potentially deadly, and the light ... perpetually green.