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Business Q&A -- Mike Lynch

Mike Lynch, 51, is the managing partner at Moss Adams LLP's Medford office.

He began his public accounting career in 1977 and became a certified public accountant in 1979. He graduated from Oregon State University in 1973 and then attended Portland State University, earning an accounting degree and a master of taxation in 1992.

He is a member of the American Institute of Certified Public Accountants, Oregon Society of Certified Public Accountants and Moores Rowland International.

— Q: What is the general impression of the accounting profession and industry today?

We have not attracted much public attention in prior years, but with the Enron and Andersen situations, all the sudden it's heightened people's awareness in accounting and how they interact with clients and provide services.

— Q: So there is more involved than number-crunching?

We always need to be aware of legal issues pertinent to reporting. But certainly now, most of the time we try to defer to attorneys. But with the Enron situation it has just increased the need to be very, very aware of legal ramifications and not to solve questions immediately. But we ought to identify resources to solve them, because making good decisions is very important in the process.

— Q: What is an example of making decisions that will head off problems down the road?

For example with Enron, the situation that caused the most grief for them was a considerable amount of off-balance-sheet assets and particularly off-balance-sheet liabilities. They weren't consolidated with Enron's financial statements as a whole.

Had they been reported with other Enron activity, the assertion is that it would've changed the view of investors and the general public of Enron's performance. Some of these are decision-making situations where management made decisions and they were agreed to or passed on then given blessing by outside accountants. It's important that financial reporting is truly reflective of the company.

— Q: What are the primary differences between regional and national accounting firms?

National accounting firms have offices across the United States, and most of them are international as well. Moss Adams is based almost solely on the West Coast — — Oregon, Washington and California. We do have a small satellite office in New York City that does royalty compliance work for the entertainment industry. That comes out of having a Los Angeles office and getting involved in the entertainment industry.

We also think, with a regional firm, that we're fairly well represented in a lot of the communities where businesses have their accounting work done by us. National firms have offices in places like Seattle Portland, San Francisco and Los Angeles. We have offices in Portland, Eugene, Medford, Vancouver, North Bend and Beaverton in Oregon and, Seattle, Bellingham, Everett, Tacoma and Yakima in Washington.

We get a lot of middle market clients, not necessarily the largest publicly held clients. We specialize in closely held family businesses.

— Q: Who are some of your larger and better-known clients?

We don't have situations like Arthur Andersen, where Enron was its main client in Houston and really dominated the office. We don't have clients that huge that consume all the resources of the office.

Probably Lithia Motors is the largest client in Medford. We have Rogue Disposal, ECS (a Grants Pass medical containers firm) as well as health-care clients, construction companies, other auto dealers, the Oregon Shakespeare Festival.

— Q: How has the accounting profession changed in the past 25 years?

The biggest part has been the influence of computers, not only in the accounting profession but to the business environment in general, where record keeping is done via computer. When I first started, it was done mostly by hand. Now almost all large and small businesses do it on computers.

Clients are doing a lot of the basic bookkeeping that we used to do 25 years ago. The types of services they're asking for are different and there is a higher-level of bookkeeping and record keeping than the past. Now we have more tax planning and more tax strategies, internal business controls. We are providing value-added services. Clients look for compliance service, business assurance work — what we call audited financial and reviewed financial statements. Also, agreed upon procedures engagements.

— Q: Do accounting firms typically have in-house lawyers?

We don't have a legal staff in house. We do from time to time hire estate planning attorneys. As a general rule we don't have attorneys on staff. What we would do for the most part is that we would consult with a client's attorney. If we were uncomfortable with that consultation, we might engage an attorney of our own to further consult. But that's pretty rare.

— To suggest a subject for this column, please contact business reporter Greg Stiles at 776-4463 or e-mail