Cpa Firms Count Recession's Cost -- Industry In Turmoil As Accountants Retrench

The accounting industry in the Pacific Northwest is in turmoil.

Racked by recession so far in the '90s and intense competition in the '80s, many firms have laid off accountants, closed or sold offices and, in at least one case, pulled out of entire lines of business. The only real bright spot is an uptick in business handling bankruptcies.

Most of the "Big Six" major national accounting firms are either currently retrenching or have done so in the past two years. Over the past 12 months, at least two thirds have cut staff at local offices or held their work force at last year's level.

And one big international firm, Pannell Kerr Forster, is shutting down its Seattle office, laying off eight employees.

"The rules - and the things that make you successful - are different than they were a few years ago," said Dan Regis of Price Waterhouse.

The crunch has hit some smaller, regional firms, too. John Plymyr, executive director of the Washington Association of Certified Public Accountants, said a number of smaller accounting firms in the state have been forced to shut their doors because of the pressure on profits.

"It hasn't been the best of times over the last few years," said Dennis Conrad, president of Bellevue-based Sweeney Conrad, one of the largest regional firms in the area. "If somebody is holding their own or growing slightly, they are doing real well."

Among the local offices of the large national firms, part of

the turmoil has been caused by two big mergers - Deloitte, Haskins and Sells combining with Touche Ross & Co.; and Ernst and Whinney merging with Arthur Young & Co.

But many of the problems are also ones the accounting profession created for itself, many CPAs admit. In the 1980s, competition for the profession's bread-and-butter business - performing audits - was so aggressive that prices for audits plummeted to unprofitable levels. And many companies opted to bring their audits in-house.

Recently, major economic changes have added new pressures. The credit squeeze and downturn in mergers and acquisitions have removed a major profit center for many of the largest CPA firms.

On the other hand, the recession has created one of the few growth areas left in accounting - bankruptcies. Most of the Big Six have departments that handle bankruptcies and are actively pursuing this type of business.

Gary Burns, recently named director of bankruptcy services here for Price Waterhouse, said bankruptcy jobs have increased 50 percent a year for the past decade, with an even larger increase recently.

Here is the situation at the Puget Sound area's biggest accounting firms:

-- Deloitte Touche: The largest CPA firm in the area, Deloitte Touche claims Boeing Co. and Microsoft Corp. among its clients. The company is wrapping up details of its merger and recently consolidated its Seattle offices into three floors in AT&T Gateway Tower. Managing partner William Fowler said that although Deloitte Touche's work force is down to 406 workers from 412 last year, the company plans to hire 40 new employees by September. Deloitte Touche, the last major firm with a Bellevue office, has no plans to end its presence on the Eastside.

-- Ernst & Young: The firm cut its staff an estimated 10 percent to 15 percent in early 1990 after the merger of Ernst & Whinney and Arthur Young. Although Karl Guelich, managing partner at Ernst & Young, said the company "went through some of this pain two years ago in anticipation of the downturn," the company trimmed back further last October when it sold its Portland office to Arthur Andersen. It also consolidated its Tacoma office into the Seattle office last February. But Guelich said Ernst & Young now is expanding.

-- KPMG Peat Marwick: The firm recently moved its 50 Eastside employees into its Seattle office. It has cut its staff by 5 percent to 10 percent in the past year. It is focusing on traditional audit jobs and specializing in risk assessment.

-- Moss Adams: The largest of the regional CPA firms, Moss Adams also has a number of other West Coast offices. The company is growing, mainly by grabbing business from the Big Six, said President Robert Bunting. The company has increased its work force by 62, to 261 employees, the past year.

-- Coopers & Lybrand: The only Big Six firm with an office in Spokane, Coopers & Lybrand has maintained its Seattle-area staff at 145 employees for the past year. Its business has gotten a recent boost by handling accounting for the Frederick & Nelson bankruptcy.

-- Price Waterhouse: Staffing at Price Waterhouse has fallen 8 percent to 10 percent over the past year. Although the company has recently seen its consulting business turn around nationally, consulting in this area has fallen.