Autograph Your

Work With
Quality
By Gordon Krater

Every job is a self portrait of the

person who did it. Autograph
your work with quality. Just before Plante & Morans Director of
Professional Standards joined the
firms professional-standards department back in 1988, he came
across a poster with those words.
How appropriate, he thought.
He purchased the poster, framed
it and hung it in his office. Its
remained there ever since, a tangible reminder of what we aspire
to every day.
The American Institute of Certified Public Accountants (AICPA) has its own specific views
on quality. Perusing the AICPAs
Code of Professional Conduct,
certain words leap off the page:
integrity, objectivity and due professional care. An unswerving
commitment to honorable behavior. And, of course, quality.
All public accounting firms are
held to these standards. If you
went to 1,000 CPA firms, their
basic quality-control documents
would have a similar theme, and
many written quality-control
policies would be essentially the
same. What would be vastly different is how the written standards are implemented. Some
firms do the minimum required
to claim compliance; others go
above and beyond, adopting the
spirit of the guidelines, not just
the words.
Continued on page 9

Cross-Serving Clients:
Integrating Sales and
Service Delivery
By Russ Molinar

irms often ask themselves this straightforward question:

Where is the best place to get revenue? The answer is fairly obviousthe best place to get revenue is from your
existing clients.
The old adages still ring true: Your current client is your best
client and It costs less to grow a current client than to find a
new one. Existing clients:
Know your firms reputation and brand
Currently pay fees to your firm for assurance, compliance or
advisory services
Enjoy one or more relationships within your firm
Have some level of trust around the services and value that
your firm can deliver
Prospects and targets are different. They are individuals or organizations that typically have little to no knowledge, awareness
or degree of confidence or trust in your firm.
So, if the best place to obtain revenue is from existing clients, why then do most accounting and other professionalservice firms spend most of their marketing and business-development efforts trying to attract new clients? Why are the
partners and marketers in most firms more focused on attracting new clients than expanding their relationships with
current clients?
There is a three-part answer to this question. (1) The realities
and considerations involved in cross-serving clients are complicated; (2) understanding and overcoming some of the internal
barriers can be daunting; and (3) establishing and effectively implementing programs that enhance cross-serving efforts in your
firm is a complex process.
The realities of cross-serving clients
In its simplest form, cross-serving can be defined as the process
of identifying unmet client issues and needs by offering specific
services and solutions to fulfill those individual and organizational
needs. It is the process of enhancing your relationships with clients by expanding the number of services provided to and/or fees
received from your existing clients.

MAY 2010

Autograph Your Work

Continued from page 5

Our firm has always been

willing to go above and beyond. Do the right things for
the right reasons, and theres
no right way to do the wrong
thing are phrases we use a lot.
This kind of thinking is ingrained in our culture. For us,
quality is not simply an ideal
that we write about in our policy manuals; its the way we try
to operate every day. Nevertheless, it takes a lot of work to
achieve. We consistently stress
the importance of quality and
demonstrate, from top management down, that superior quality is nonnegotiable.
A renewed focus on quality
Consider this: After a number
of financial scandals and audit
failures, culminating with the
demise of Arthur Andersen, outsiders raised serious questions
about the role of auditors. Audit firms across the country and
the profession itself have taken
steps to repair the tarnished image created by those events.
For nearly a century, Arthur
Andersen epitomized everything
our industry stood for; in their
words, they had an unwavering
commitment to think straight
and talk straight, the principle
upon which Arthur Andersen
himself built his accounting
practice. There are many theories about the firms demise,
but one thing seems clear. At
some point toward the end of
the companys history, its focus
shifted from delivering superior
quality to revenue generation
and profitability a tough lesson for many of us.

Translate that to todays challenging environment, where

many clients are operating in
survival mode, focusing on
doing more with less. Its easy,
amidst fee pressures from those
clients, to start thinking about
what costs we can cut to remain
profitable. While remaining
competitive and profitable are
necessary considerations, we
have to remember that profitability doesnt trump quality.
It cant. In the end, Arthur Andersen, a firm with thousands
of tremendously talented people and a long history of excellence, made that mistake.
Dont misunderstand: We
need to focus on efficiency to
keep our firms profitable. However, we need to become more
efficient by doing the right
things, the right wayproviding quality services while eliminating waste and excess. Attaining this goal can be difficult, but
its attainable.
Build in quality
How do we create an environment that operates efficiently
without compromising quality?
We strongly believe it starts with
firm management.
If quality is to be built in,
if quality is integral to the
product or service, then
quality is a function of
management.
W. Edwards Deming

Having our origins in Detroit, it may not be a surprise

that we have studied quality
in the automobile industry
and the management philosophies of W. Edwards Deming,
the world-renowned expert
on quality and the individuCPA PRACTICE MANAGEMENT FORUM

al widely credited with teaching the Japanese automakers

about quality. Demings management philosophies mesh
perfectly with our firm philosophies about quality, culture
and spirit created by our cofounder, Frank Moran. Quality
is not the responsibility of quality-control experts and quality
inspectors. In fact, if the only
time a quality inspection occurs
is at the end of the process, it
is too late; its only marginally
effective and extremely costly.
Quality must be built in to every step, and that kind of quality control begins with a mandate from firm management.
A process with quality built in
will lead to higher productivity,
lower costs, more satisfied staff
and, most importantly, satisfied
and loyal clients.
The tone at the top
When the AICPA revised its
quality-control standards in
January 2009, it included, for
the first time, a mandate to accounting firms to have an appropriate tone at the top. The
reason is simple: staff members
tend to follow the example
positive or negativeset by
their leaders.
Like any other requirement,
merely having a rule will not,
by itself, have the desired effect.
An effective tone at the top requires a consistent and constant
message, in actions and words,
that reflects the only acceptable
way to do business. At Plante &
Moran, we have the good fortune to have a culture that embraces quality, and its incumbent upon our leaders to make
sure the message is understood
by every staff member at every

10

MAY 2010
level. We make a conscious effort to spread the message, to
incorporate those ideas and
ideals into recurring activities
at the firm:
We talk about it at core training programs for staff, our annual firm conference and at
partner meetings.
Periodically, I, as managing
partner, leave a voicemail
message for staff to reinforce
our values, share our vision
and inspire our staff to be the
best client servers they can be.
Our most recent tone-at-thetop message focused on quality. It reminded staff that when
faced with a choice between
profitability on one hand and
our compliance with professional standardsquality
on the other, weve always
chosen quality. Cutting corners or taking shortcuts that
short-change our standards so
that we might save a few dollars in the face of current fee
pressures is not acceptable.
While we believe these messages are important, we realize
its all just window dressing if
firm management isnt living by
these values and principles.
Walking the talk
Were inspired by a people-focused environment that places
quality, integrity and service first,
believing that money doesnt
leadit follows. Its our Wheel
of Progress. We believe that hiring good staff who do good work
results in good clients that pay
good fees, which enables us to
pay good wages, which then allows us to retain good staff. Here
are a few examples of programs
weve put in place to ensure that
wheel stays in motion.

Colleague partnering. At
most firms, a client is assigned
a specific partner. We abide by
that philosophy as well, except
that each client is also assigned a
colleague partner who is equally
knowledgeable about a particular industry and/or service area.
This is great not only for clients
but also for staff, as it allows us
to be open to other perspectives
and bounce ideas off of one another, ensuring the highest level
of quality is delivered to our clients each and every time. It also
reinforces the notion that the
client is a firm client, not a client
of an individual partner.
Open-door policy. Plante &
Moran has always had an opendoor policy, meaning that any
staff member can stop by any
partner at any time to ask questions or seek advice. It also facilitates candid top-down and bottom-up communication. And
no one is exemptour managing partners doors have always
been open as well.
Staff development. Generic
human resources quality-control
structures are expected to be in
place. There are minimum education requirements, minimum
evaluation requirements, continuing-education programs,
etc. We go well above and beyond to create practice staff who
arent just money producers, but
who serve our clients effectively.
In a staff members early years,
he or she will receive more than
double the required training
hours, covering a broad array
of technical and nontechnical
topics. Our rigorous technical
training is designed to build the
necessary skills. Our goal, however, is to develop the whole person; in doing so, the end result is
CPA PRACTICE MANAGEMENT FORUM

people who are a product of our

culture and the values in which
were rooted.
Client acceptanceBe honest with yourself. Most firms
recognize the importance of effective client-acceptance practices from a risk-management
perspective. A critical consideration for us is an honest evaluation of our own ability to take
on an assignment. Having staff
with the proper experience and
skill set available to commit the
appropriate resources to the
project is essential to delivering quality.
Commitment to effective
client-continuation practices.
Not all clients are good clients. Sometimes its a matter
of being unwilling to take our
advice; other times its pushing
the envelope beyond a minimal
acceptable level. Weve made the
decision that were better off not
doing business with clients that
dont share our commitment to
quality. Effective continuation
practices depend upon support
from firm management. Managements support enables engagement partners to take a step
back, critically evaluate their
marginal clients and proceed
with the knowledge that discontinuing a relationship that
has undesirable risk or economic characteristics is not only accepted, but encouraged.
Invest for quality. Today,
were reaping the benefits of
investments made years ago.
Things such as our technology
infrastructure, auditing software and services developed
over the last decade may seem
routine today, but the current level of development and
sophistication represents the

11

MAY 2010
benefits of our focused investments in our future. These investments, made at the cost of
maximizing firm profits in prior
years, allow us to optimize profit potential for the long term.
Making these investments is
yet another way we commit to
quality, as this allows us to find
new opportunities to effectively
serve our clients.
Our quality function
Our approach to handling the
quality-control function further demonstrates that managements actions support quality.
Weve had a centralized qualitycontrol function since the early
1960s. Our professional-standards team has responsibility for
developing policies and procedures, monitoring compliance
with those policies and procedures, functioning as a technical
resource for engagement teams
and performing pre-issuance
technical review of the product
we deliver. We have 22 partners and associates dedicating a
majority of their time to being
technical experts and addressing
quality-control issues.
Since we use an industry focus
to provide services to clients, weve
structured our professional-standards team the same way. For each
industry, we have a primary technical resource and, when questions arise, these resources are always available and accessible.
Importantly, a significant portion of time spent by our technical resources is committed to
building quality. We constantly
reevaluate processes and tools

that enable teams to get things

right the first time. Of course,
we still perform a pre-issuance
technical review, but its our
goal, even our expectation, that
there will be no major findings.
We encourage our engagement
teams to use our industry technical specialists for assistance
in resolving specific issues and
general risk assessment and engagement planning (another
build in rather than inspect in
quality practice).
Weve invested significant resources in building the muscles of
our professional-standards team.
These technical experts have a
smaller client load and less direct
billable hours so that they can invest their time building quality
into our tools and processes. The
cost is considerable. The benefit
is significantly more.
Every job is a self portrait
The benefits of focusing on
quality are fairly obvious. Improved productivity. Lower
costs. Lower risk (our professional liability insurance and
related costs, at less than one
percent of revenue, are appreciably lower than most firms
our size). The main benefit,
however, is the impact that being viewed as a quality firm can
have on ones reputation.
At the end of the day, we keep
our good clients, and were successful in obtaining new ones
because of our reputation for
quality work. And its not just
about the clients. (Okayits
mostly about the clients.) Doing the right things for the right

CPA PRACTICE MANAGEMENT FORUM

reasons just feels better. Even

when we have to deliver a difficult message to a client, once
weve helped a client see the light
that the right thing to do is the
right thing, we feel good about
itwhich perpetuates the desire to do things even better the
next time.
And the clients? Most of the
time they appreciate and respect us more because we remained committed to what
was right, not who was right,
demonstrating a level of integrity appropriate for our profession. If they dont, perhaps
theyre not the right clients to
serve anyway.
About the Author: Gordon
Krater became Plante & Morans
Managing Partner in 2009, only
the 6th managing partner in the
firms 85-year history. With more
than 29 years of experience, Gordon leads client service, growth,
people development, risk management and strategic direction
for the firm. Gordons experience
includes manufacturing and governmental audit engagements
and consulting, and he has expertise in operational consulting,
profit improvement and labor arbitration work. Gordon has
been a member of Plante &
Morans senior management
team since 2001, when he became Group Managing Partner
in charge of industries. He has
also lead the firms governmental audit and consulting practice and served as Office Managing Partner of the firms
Southfield, Michigan office.

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