Wade McKnight, J.H. Cohn LLP

Yes, particularly in the areas of customer credit, inventory control, and the review and evaluation of overhead expenses. Depending on the industry, we have seen tightening of days outstanding, and many of our clients have placed more focus on their monthly budgets and cash flow projections. They are monitoring budget-to-actual results in a timelier manner and are adjusting their operations as needed. Among smaller companies, we also have noted that executive management and owners are more closely monitoring cash disbursements and have extended the disbursement timeline.

We are encouraging our clients to conserve cash to be better prepared as the economy rebounds and to seize strategic opportunities as they become available. We worked with one of our clients, for example, to improve operational efficiency and reduce their cost structure, which in turn led to the buildup of sufficient capital reserves and the financial bench strength to acquire a struggling competitor.

What federal/state regulations have the most significant impact on your clients’ business? Why?

Chris Allen, Deloitte & Touche LLP

Clients are spending a significant amount of time and resources dealing with the additional reporting and tax liabilities associated with the upcoming changes in health care coverage. Many clients also are considering and implementing additional estate and gift planning as a result of the temporary changes made to the gift and estate rules in December, 2010.

Don Williams, Grant Thornton LLP

Companies trying to turn the corner during the down economy have been burdened by limits on their ability to use net operating losses. Taxpayers losing money during a bad economy can normally use their net operating losses to either offset future income or carryback the losses against profitable years to generate tax refunds and reinvest in their businesses. But tax laws under Code Section 382 limit the ability of businesses to use these losses if the business is considered to have undergone an ownership change. Even worse, California has suspended the use of net operating losses since 2007 unless certain narrow criteria apply. With these restrictions and the tough economy, it is more important than ever for businesses to employ available tax planning strategies to ensure they can use as much of their losses as possible. Shane Orr, San Diego Tax Partner, provided this response.

Elsa Romero, AKT LLP

Certain industries have been more directly affected by current legislation than others, but it is safe to say that many of our clients have been impacted by recent legislation. To some they may have had positive results by receiving potential tax credits, but many have had negative effects. For example, the California Legislature has suspended net operating losses for most businesses. This has caused many clients to pay California state tax when they were not expecting to have this liability.