 And welcome to Business in Hawaii with Reg Baker. We broadcast live every Thursday from 2 to 2.30 in the downtown studios of Think Tech Hawaii in the Pioneer Plaza. It's a beautiful sunny day here in Hololulu, so if you're on the east coast, my condolences. We have a returning guest here today, Carl Williams. He's a founding partner, owner of one of the larger local firms here in Hawaii, and very successful in being able to recruit a lot of young professionals into the profession. And he's brought one of his young professionals, an auto manager, with him today, MJ. And we're going to talk a little bit about how the industry has transitioned over the years, a little bit on how millennials are fitting into the new environment. And it's going to be a very interesting conversation. The last time Carl was on the show, we talked a little bit about the good old days. And I think today is maybe the better days. So things have changed quite a bit over the years. Welcome back, Carl. MJ, good to have you on the show today. Thank you. Carl, why don't you kind of set the stage for us? MJ has been with the firm for a while, and you brought her on board. And what did she do? I did. It certainly is the better days, by the way, with this electronic environment. Yeah, MJ has been with us for quite a few years. And she joined us when she was a part-time student at the University of Hawaii, getting her back degree. So we're very proud of that, and then full-time after that. But I'm especially proud of our relationship, employee relationship with MJ, because it embodies, I think, that relationship embodies what our firm is all about in terms of family. Because after getting her Master's of Accountancy degrees, she's gone on to raise to ages six and four anyway, two beautiful young children, and that's not easy. It was never easy for a woman in the past, and it's still not very easy these days. So we're especially proud of that. So we have recently, because of her personality and because of her love of the profession, we have recently charged her with our recruiting, being in charge of our recruiting activities, because she connects so well to people, and particularly young people, and can tell the story of our firm and our profession. That must be kind of exciting for you, MJ. It's kind of like on full circle. It has. It has. So you've finished the education, you've been working for a while, now you get to go back and visit with the people, and tell them what kind of great firm you're working for. Yes. So how often do you do that? I do it both for our firm, also with the YCPA squad. So in a typical year, I will go to visit not only the college students, but the high school students with the YCPA, and we go to talk to high school students about our profession, what it's really like. We're not sitting in the cubicle, 12 hours out of the day, we're actually interacting with people. You get to see the sunlight every once in a while. Once in a while. Yeah. Yeah. My nice tan. Very good. And so are you always looking for people? I mean, is this a year-round effort on your part? Yes, it is. Yes, it is. We're always looking for people, and people, students especially, they're in different stages of their lives. So it's important that we don't close that door to them just because they missed the window. Right. Now, you've gone through the education, you started your career. What do you tell people, particularly when you go out to the high schools? I mean, people hear about becoming an accountant or being a CPA, and they've got this image. Right. But it's not always an accurate image. So how do you get people excited to maybe consider being an accountant or a CPA's a career? Right. So Hollywood hasn't done a very good job of portraying our profession, I would say. So we try to connect with them by saying, you know... We don't all look like bad ass like that. No, but we try to connect with them by saying that, you know, with an accounting degree especially, it's so portable, and you can go and work at a hotel, you can go work for the government, you can go into public accounting, you can go into education. And so they don't really know that or realize that. And I know back in high school, I didn't know that. So my big dream was to become that counts payable clerk somewhere because that's what I thought accounting was, but, you know, public accounting is such a great profession because you get to go to all these different companies and see how they operate and where you could potentially end up in the future. Let's see, that's a very good point is that, you know, by coming an experienced accountant that opens up a lot of doors for a lot of different industries and different types of businesses. As a matter of fact, I have to think, I mean, are there any businesses out there that don't have accountants? Not. I'm aware of it. I mean, almost everybody... No legal business. No legal business. Well, even the illegal attribute, you know, I mean, everybody needs an accountant of some sort. And so it really opens up a whole world of possibilities once you get that experience. And Carl, I know from my experience in today's environment, it's really hard to find good accountants. We, when I say we, I mean MJ, but we work very hard at finding the right people. But when you say good accountant, it's not just a skill set. And in fact, there's some really smart people out there, smart accountants out there who are maybe not quote unquote good accountants, because as MJ said, it's very much a people business, at least as an auditor, because we're out working with business owners, working with their personnel week after week, day after day. So it takes a lot of skills beyond book skills, which is part of what we love about this profession is the interaction we get, not only the experience with different types of businesses, but with different types of people. We love it. Right. And that makes you very valuable, valuable to the firm, but also valuable if you ever decide that you want a different career. It gives you a lot of options. Right. Yep, for sure. That's right. So how many people do you talk to and try to convince to maybe explore CW as an option for them? I mean, you must be pretty busy. I constantly talk to students on whether it is a professional mixer with the YCPA squad. We go out to the colleges. We do mock interviews. We do workshops regarding interviews, resume writing, and we do the workshop. But after that, it's those five, 10 minutes after the workshop that become extremely valuable, because then we can tell them about our firm, answer any of their questions. And that's important, because if you're not part of a club, like the accounting club or beta alpha side, you don't really get to bridge that gap between school and the professionals. Right. As a matter of fact, some of those firms will actually have like a tour you can go on to go into the firm and take a look at, see what that environment is like. Yes, and we as a firm do participate in that every semester, so the students come, they see where we work, they meet our people, they sit down and have a quick meal and drinks with them. Right. And that's where you really start to find out about the person's interpersonal skill level. Right. Having a meal or maybe even the cocktails afterwards or whatever, I mean it's where you really see the interaction start taking place. Right, right. Yeah, that's very good. Carl, how has that changed from back when we were, you know, I guess in our younger days when we're starting out our career? I think the skill set and the recruiting are still very similar to what we did in the past, but I think of course the millennials and younger people are different than they were and the reward system is I think somewhat different than it used to be. One of my biggest challenges over the years has been to provide opportunities for young people to grow and succeed and to have different experiences. I've been reading a lot of material on generational issues for, well, a number of years now and, you know, that's one of the issues and this idea of having to rotate or move, change jobs every couple of years to get new types of experiences, we try so hard to overcome that sort of mentality by providing new challenges and new experiences. Yes, it's within the public accounting framework, but providing that and to keep our people stimulated professionally and that's the toughest part of my job and I dare say we've had some success mostly by collaborating with the MJs of the firm and others. I think maybe in a public accounting environment such as your firm, because you've got the different companies in the different industries that allows you some opportunity to rotate people around so they can get this intellectual challenge and get that stimulation that they're looking for. Right, right. Yeah, it's very convenient. MJ, explain for those that are about ready to start. What is a typical day for you? And I know today may be different than what it was a few years ago when you were starting out, but when you were first starting out and like your first few weeks on a job, what was it like? Auditing is very exciting. So you actually get to work in a team of at our firm, three or four people, you go out to the client, you get to meet their accounting department, you get to talk to sometimes their CFOs. The first few days is really just learning about how they operate and where there could be challenges as far as on the accounting side and sitting down and talking through and understanding what they do every day so that we can figure out where's the risk or where can we make it better or where can we help them. So that's what we're doing. And so you document all this too? Yes, yes. And you use technology occasionally? Some of it is memo driven. And then yes, we do have software that helps us document our risks than the areas that we want to focus in on more. You know, I just want to elaborate on that a little about the interesting part of being an auditor is risk assessment is a big factor in planning and the beginning part of it. And what risk assessment really means is understanding the business and the people and what they do. So that's what I think we had kind of alluded to earlier. It's just really taking a deep dive into how businesses operate and again, that's the exciting part of our job I think. Very exciting because in the best case scenario you're getting to see firsthand some of the best practices that are out there and you can see how it works. On the other hand, sometimes you see some practices that aren't so good and you get full exposure to that whole scope or range which allows you after a few years' experience to help the client improve their internal processes. Yeah, and there's no bigger compliment, and I've been doing this many years probably obviously I guess, but as have you, but there's no bigger compliment than going to an anniversary, I went to one recently there, 25th anniversary and being singled out as an individual and firm that were part of their success. I mean it's such a wonderful feeling because we're accountants, right? So to be put in that category, it really is. We're going to have to go on break here in a minute, but part of what I want to talk about in the second half is what exactly does a CPA firm do? I mean there may be people out there, maybe in the high school level or maybe in their second year, third year of college or thinking about accounting major, but they're not sure where they want to go, private, public, whatever, so let's talk about the world of public accounting and what that's all about and we'll do that as soon as we get done with this break. This is Business in Hawaii with Reg Baker. We're here today talking with a CPA firm that's going to be explaining a little bit more to us about what they do. You know, for those that don't know what a CPA firm does, we'll be back in about 60 seconds. I'm DeSoto Brown, the co-host of Human Humane Architecture which is seen on Think Tech Hawaii every other Tuesday at 4 p.m. and with the show's host, Martin Desbang, we discuss architecture here in the Hawaiian Islands and how it not only affects the way we live, but other aspects of our life, not only here in Hawaii, but internationally as well. So join us for Human Humane Architecture every other Tuesday at 4 p.m. on Think Tech Hawaii. Aloha, I'm Kili Ikeena and I'm here every other week on Mondays at 2 o'clock p.m. on Think Tech Hawaii's Hawaii Together. In Hawaii Together, we talk with some of the most fascinating people in the islands about working together, working together for a better economy, government and society. So I invite you into our conversation every other Monday at 2 p.m. on Think Tech Hawaii Broadcast Network. Join us for Hawaii Together. I'm Kili Ikeena. Aloha. Welcome back. This is Reg Baker, business in Hawaii. We're here today talking with the CPA firm in town and I realize that this is right in the middle of tax season, but rest assured we've got two auditors here today so they were able to sneak out of the office for a little bit. Carl, MJ, good to have you here today. Thank you. There's going to be a lot of people that may be watching that don't really quite understand what a CPA firm is and of course a lot of the knee-jerk reaction, oh, they do taxes. Well, okay, they do, but there's also different pieces of a CPA firm that does different things. Carl, can you just give us a brief outline of what that might be? Sure. So our firm might be a little bit different and just to give a little perspective, about 60% roughly two-thirds of our practice is doing financial reporting, auditing, if you will, and the other 30%, 40% of it is doing tax. We kind of differentiate between what we call compliance work, which is tax work that's required to do, and there are some audits that are required by governmental agencies or by regulation or whatever with what we refer to as the attest function. And so the financial reporting, audits and reviews, we serve in the attest function. We go into the client's business, they give us a set of financial statements that they intend to present to the bank, to the owners, the stockholders, to creditors or whatever, and we do enough testing of that information to attest to it and give an opinion on the fairness and whether it's reasonably accurate. We never say it's precisely accurate, but we're saying it's reasonably accurate. And I've always thought you can kind of liken that a little bit to an insurance policy that if you see financial statements with our name on it and you're intending to invest or loan money to that entity or make a donation in a non-profit, then you have assurance that it is reasonably accurate and that you can rely on that financial information for your decision-making. So that in a nutshell is what we do. And in that type of audit environment, you're pretty much looking to see the results of what the company has put together as far as a set of financial statements, and then you check to see if it's in conformity with the accounting standards or whatever it is. They've got to be in compliance with that. And then that's where you have that opinion later saying that, yeah, it looks okay. So the management is really asserting that's the term we use, but they're asserting that the financial statements are accurate and we are testing those assertions by testing the underlying information and documentation. So now that's the audit side. And now you got the tax side, which also has a compliance component to it. But does your firm get into tax planning at all? Quite a bit. That's the biggest part of it. I think one of the biggest complaints actually about CPAs is they tend to be, particularly in the tax areas, they tend to be too much compliance oriented where they take information, put it in a tax return and send it back. And they do everything strictly by the code. And strictly by the code. Well, you have to do it by the code. Otherwise someone will come knocking at your door. But yeah, being proactive is just a huge part of what we do. We know from studies that have been done for years that business owners and individuals see their attorneys or bankers and their accountants as their business advisors. So we always tell our guys, if you think of yourself as a bean counter auditor or as a tax preparer and limited to that, there's an inherent conflict and you're going to lose because people will want to go to someone else who is more proactive in providing information and helping them with their decisions and trying to get ahead of the curve somewhat, especially these days with new tax laws. Well, and the ever-changing tax laws. Ever-changing tax laws. We just had the tax reform as everybody knows and they're still trying to figure out exactly what we are, how's that going to work. But I guess getting into the tax returns, that also provides a lot of opportunity to do more planning, or maybe some guidance in how to do things that would have a more positive tax effect. It also helps build the relationship with the client a little bit, too. For sure, yeah. So all of that, and do you find, this is kind of a loaded question, but do you find the personalities between the two groups different? I mean, are auditors different than auditors in a CPA firm? That is a loaded question. Somebody was telling me earlier about how to have a good Christmas party. And my answer was you don't invite the CPA. But you had another answer, which we don't have to go into. We're not going to go there. And part of it is because there's, in some ways, two different objectives. There's two different end games here that's involved. That's what they're getting paid for, is to move to that end game. Of course, there's going to be different approaches. And I don't know if this has changed very much from my days, but we used to have another part that was more of a consultancy piece that we would spend some time on, and we would actually get involved. We had some tax, and we probably understood the finances, but we got more engaged with the client and helped them go through some of their management issues. Do we still do that today? Absolutely. I think I referred about 60% of our practice being audited, about 40% or so being taxed. But in the middle, probably 10%, 15% of our practice is the overlap between the two, which I've always referred to as general business consulting. And that includes mergers and acquisitions. One thing we've been doing a lot of in the recent years is business transition. Father to son, uncle to nephew, if it's not just a straight sale. Preparing for that, becoming an ESOP, Employee Stock Ownership Plan, for example, so those kinds of things. And that's, again, that's the fun part where we get to take our auditor hat off, our tax hat where we're constrained by the internal revenue code or general accepted accounting principles, say, what can we do to make this work? And that's the fun part. It is. It's the fun part. And that's where you get a lot of the, you know, thank yous, you know, the client for a job well done. But I guess MJ, that just opens up all kinds of opportunities to get that diversified experience that, you know, the millennials are known to be looking for. You know, have you been able to, you know, experience some of that? Just this past week, Carl and I was talking with a client about the potential route they could be taking or just things to think about in the future. And I, starting off as a professional, never thought I would get to sit with the CFOs or the CEOs or the business owners and have those conversations. There was always a thought of, oh, that's for the partners, you know, we're not allowed to go, but our firm is really good about, hey, come with us, let's have a conversation with the client and to see the client's brain start to move and go, oh, and to see the reaction of, oh, yeah, we should be thinking about that. You can actually see the lights go on. Yeah, you really can, actually. Yeah. Yeah, it's kind of a fun process to monitor. And sometimes, you know, from my experience, you'd go in and if you were young, which I used to be, you'd go in and people were kind of, what's this guy going to do, you know? But after they know you, after you've been working with them, after you've been, you know, guiding them a little bit, all of a sudden, the whole dynamics and relationship change and now they're looking at you as somebody that they can rely on. It's very rewarding. I think you would agree, MJ, that when you're newer in the profession, you don't realize how much you know and we have to keep reminding them because after a year or two, CPAs, because you have different experiences almost every day. Every day is an adventure, I like to say. Almost every day you have new experiences. We know more about, in the general accounting and business than most people were going to meet. But when you're young, you're kind of still intimidated by the old guys, right? But that's a very good point. I mean, after you've been doing it for a few years and you've seen all these best practices and worst practices, you can go into almost any company and fairly quickly make an assessment as to where the risk areas are, if a certain person knows what they're doing or maybe they don't and they can take a little advice. I mean, those assessments can be done very quickly after you've been doing this for a while. I go into companies fairly often asking for some advice and I do some virtual CFO work and I can go in and be able to identify the areas that we need to focus on and pay attention to. And they may not need audits and they may not need taxes. But they're very receptive to that and after a few years, if you can't do it already, which I'm sure you probably can do some of that now, but it just can become a very fine-tuned experience, you know, skill set. And to speak to that point, sometimes it's the CPAs or the auditors who are the continuity at the client. So people leave, people turn over and they go, I don't know what to do or how do we do this before? And I said, well, last year we did this and we're moving towards, you know, A, B, or C and you just kind of see a flood of relief, you know, coming to the client's eyes because they're like... And because the companies do go through turnover. And sometimes the accounting department or the senior people in the accounting department, there's not a lot of bench strength. There's not a lot of people there backing them up and if they're gone, the company all of a sudden goes into a panic. And it's nice to have these people that's been doing this for a year to be able to step in and say, hey, don't worry about it. You know, here's some history and we can bring the other person up the board up to speed pretty quick. There's a lot of value in building that relationship with the CPA firm and having somebody to go to when they have questions. You know, that's another part of it, is that you may have a working relationship with clients and if it's a good one, you're going to be one of the first people they call when they have a question. You know, one of the things we've been doing recently kind of along those lines is because we build a database after we've been there for a while and especially with the electronic environment we're in. We set up templates where we can automatically compute financial ratios. So in our exit meetings now, the boards or management or the C-suite, you know, the executive officers is to go through the ratios for five years or maybe more and then the summary of their accounts for five or maybe even up to ten years because we're so often in business focused on this year versus last year and budget versus actual and again, the light goes on. We look at it and many businesses don't realize how far they've come in the last five years where their revenue has doubled or tripled and they're facing new issues say because of growth or whatever and they look at that and go, oh, okay, we need to start thinking differently. So that's fun to do that. Those trends are very revealing sometimes. They can be good ones and negative ones and sometimes unless you see it, graft out, you don't realize how important they can be. But as usual, we have really moved through this entire 30 minutes and we're about ready to wrap up here. I guess we had talked real briefly in a brief response because we do have to close, but you're always looking for good people and if there are folks out there that are looking to become part of the CW team, how would they go about doing it? We have our website that would be the best place www.cwassociatecps.com and you can learn a little bit about our company, our partners, the industries that we work on or give us a call at the office. Five, three, one, ten, forty. Just like the tax return. Ten, forty. Five, three, one, ten, forty. And they can ask for MJ or they can ask for Carl. We're right in downtown Honolulu, so we're easily accessible. Super. Well, thank you again both for coming out during this very busy time of the year and hopefully we'll get another update another few months and we'll see how things are going. This is Business in Hawaii with Reg Baker. We broadcast live every Thursday from two to two thirty from the downtown studios of Think Tech Hawaii. We focus on success stories in Hawaii and those companies that help other companies become successful and that was the topic of today's show. Until next week, aloha.