A century of crunching the numbers

BY DAVID BLANCHETTE

Although figures are their business, a 100-year-old Springfield accounting firm wants customers to know that they are more than just numbers.
“We provide a good service to a lot of people. I enjoy it, because it’s always something different,” said Lori Milosevich, CPA, one of three partners at Estes, Bridgewater & Ogden. “You can get a phone call over 10 different things that are important to them, so it should be important to us as well.”
Estes, Bridgewater & Ogden was founded Jan. 1, 1918, and operated in the Myers Building downtown until the early 1970s, when the firm moved to their current building at 901 S. Second St. Estes, Bridgewater & Ogden provides nonprofit and governmental audits, tax planning and preparation, commercial accounting and auditing, computerized accounting services, estate taxes auditing, estate and trust services, payroll taxes and system installation and consulting.
The firm includes three partners and eight employees. “We bought the three partners out who were here before us, and all three of those partners had 40-plus years here,” said Milosevich, a partner since 1989. “It’s a firm that has been around a long time. Even though we are small, we’ve been able to keep it going. We want to keep it going as long as we can provide the same high-quality work for which we’re known.”
Although Estes, Bridgewater & Ogden offers a full range of accounting services, they concentrate on municipal audits, nonprofit audits and tax preparation. Their local government involvement has allowed them to help steer municipalities through the troubled waters of state budget crises and other fiscal pitfalls.
“Through the state budget crisis, I think a lot of municipalities suffered with their funding. That results in somewhat bad news at their end-of-the-year audit,” Milosevich said. “When you’re not getting the revenues, then you have to cut expenses. So when we do an audit, they either really welcome you, or you have to give them bad news.”
On a positive note, many of the employee benefit plans the firm audits have been doing well. “The market has been up the last few quarters, until this last one, so the ones I’ve seen recently have been pretty healthy,” Milosevich said.
Auditing municipal government entities and nonprofits is an expertise that not all CPA businesses offer, and it’s a service that requires Estes, Bridgewater & Ogden to be audited themselves every three years.
“We hire another CPA firm and they audit our audits, picking one from each industry that we do, to make sure that our work is in accordance with national standards and guidelines,” Milosevich said. “They’re tough. We’ve got one coming up in May or June, and I’m planning for it already.”
The Illinois CPA Society oversees this auditing peer review program, which started in 1990.
“We are one of the few professions that have peer review,” said Todd Shapiro, Illinois CPA Society president and CEO. “The municipal or nonprofit audit itself is to protect the public good. The peer review enhances the quality of the audit process.”
Auditing the auditors ensures that clients receive the best possible fiscal examination and advice, and that’s particularly important for nonprofits, whose financial margins are often quite slim. Those receiving state and federal grants are usually required to have an audit performed, and since state government and many nonprofits are located in Springfield, that’s something Estes, Bridgewater & Ogden is ideally situated to provide.
“Many of the nonprofits we work with get grant money that benefits people, so when you get into it, you can see what good is coming out of it,” said James Legg, CPA, a partner since 2015. “You also see that when Illinois got way behind on their payments, a lot of my people had to go get a line of credit or borrow the money to keep afloat until they were able to get that promised grant money.”
“These are nonprofits; it’s not like a company where they’ve got a big cushion. They are relying on that money,” Legg said. “So you’re looking at the numbers, but beyond the numbers, we look at what that means for individuals and programs.”
Legg said those close examinations of finances and internal controls occasionally turn up bad practices or fraud, and it’s important that organizations find out how and why these things are occurring.
“You hope that you don’t find them, but when you do, there are consequences,” Legg said. “We have to make sure that everything going on inside the organization is up to snuff. It falls back on us. If we ignore it and then something happens, we are who they come to, because we signed that audit report.”
Legg said that Estes, Bridgewater & Ogden’s size is a benefit for clients because it provides continuity and allows staff to become more familiar with the nuances of each client’s operation.
“When we go in to do our field work, they see the same faces every year. Some of the bigger firms aren’t able to offer that,” Legg said. “The size of our firm is a very positive thing because people don’t like change, they want a comfort zone.”
Legg said that helping clients through complex situations is especially rewarding for him.
“It’s like putting a puzzle together, and when that audit report is signed or you’re signing that tax return, it’s a good feeling,” Legg said. “Because the puzzle was in pieces before we got our hands on it.”
Terri Phelps, CPA, has been a partner at Estes, Bridgewater & Ogden since 2010 and concentrates on taxes. She also finds satisfaction in helping people sort through and solve their challenges.
“I love doing the tax returns, the variety that you run into, there are all kinds of different industries that you work with,” Phelps said. “Whether it’s the large corporations or the mom and pop organizations, it’s just nice to help people and clarify stuff that they find confusing. We help them with their bottom line and make things work better.
“My greatest reward is helping them understand, because for some of them it’s like a black hole,” Phelps said. “It’s nice when you talk to them, walk them through it, and show them what they could be doing to help at the end.”
Does Phelps have any of the stereotypical clients who show up a day or two before the April 15 income tax filing deadline with a shoe box full of unsorted receipts?
“Not a lot, but we get some,” Phelps said. “We figure that some of those who show up at the last minute with the shoe boxes are going to be an extension so we at least have time to go through everything.”
The new federal income tax regulations have many wondering if they will gain or lose at tax filing time. Phelps said she thinks more people will benefit under the new guidelines.
“We did a lot of projections when we were doing the 2017 tax returns to get an idea, and overwhelmingly, more people seemed like they would benefit under the new income tax law,” Phelps said. “Not all of the dust has settled and we don’t know how everything is going to shake out, but it does seem to be a better thing.”
Many nonprofits, like those audited by Estes, Bridgewater & Ogden, are concerned that fewer people will be able to itemize their deductions under the new tax code that might mean fewer charitable donations. Phelps hopes that isn’t the case.
“There are a lot of people who give for the right reason, not just for the tax benefit,” Phelps said. “But with the standard deduction doubling, you are going to have to give a whole lot more to charity to be able to still itemize. So for people who are only giving for the tax benefit, it might affect them, but I don’t know that’s how the general public is.”
Does Phelps see a time when the computerized, do-it-yourself accounting programs such as TurboTax or Quickbooks make CPA tax services redundant?
“I can’t ever see it getting to where you don’t need human involvement,” Phelps said. “I have various clients who will say they use TurboTax and they like it, it’s a good program, but you are just reading the screen. What do you not know that’s going to catch you?
“There are tax returns that are easy, they don’t take any time at all, but there are always those returns that require more help,” Phelps said.
All three Estes, Bridgwater & Ogden partners are certified public accountants, and all three say it’s an extremely marketable career that they hope more young people pursue. But they’ve noticed some reluctance among the current generation to complete the five-year CPA degree program and take the notoriously difficult CPA licensing exam.
“I’ve noticed with the younger generation there aren’t as many CPAs out there, because it’s a lot of work,” Legg said. “But there’s a demand, you can go anywhere with it.”