The corporate management concept in accounting firms.

• Author: Dillon, Fred

We have heard about the staffing crisis in the accounting profession and the dwindling enrollment in accounting programs nationwide. If this is true, the question might arise, Who is going to run your CPA firm when the baby boomer partners retire?

As you review your succession plan for your firm, you may want to consider a relatively new concept in accounting firms that is based on a corporate model of management and the emerging role of the chief operating officers (COOs). This appears to be a growing approach to accounting firm management. In June of each year, the Association for Accounting Administration (AAA) does a salary survey at their National Symposium. Part of the survey asks those in attendance about their job titles. In 2001, 18% of those individuals reporting a title were holding the position of COO or a related title (such as CEO, VP-operations, director of operations).

This article briefly describes the corporate model of management and the responsibilities of the COO.

How does it work?

Firms adopting a corporate structure for operations are attempting to differentiate between the dual roles traditionally served by their partner/shareholders--that is, the role of both manager and employee. In the corporate structure model, when the partner/shareholders attend a meeting of the board of directors (management committee and others), they fill a role as a member of the board. They have responsibility for setting the policy and strategy and helping create the vision of what the firm is and where it is trying to go.

The duration and frequency of these meetings depends on such factors as the size of the firm, the ability of the COO to manage daily operations, and the initiatives being advanced by the firm. The goal is to conduct a maximum amount of business in a minimum amount of time to allow the time saved to be redeployed to business development and client relations.

As soon as partner/shareholders leave the meeting, they assume a role as an employee of the corporation, fully accountable for achieving effective results. These firms are vesting a CEO or COO with significant authority to hold the owner/employees accountable for their results.

A suggested guideline for conducting the board of directors meeting is included in Exhibit 1, "Sample Policies for the Conduct of Board of Directors Meetings."

What does the COO do?

Simply stated, the COO's responsibility is to run the internal operations of his or her firm in an effort to...