More than just numbers; for William Kanaga, accounting is high adventure

Nation's Business, April, 1985 by Mary-Margaret Wantuck

More Than Just Numbers

WILLIAM S. KANAGA thrives under stress. If a client is in trouble, Kanaga, chairman of the accounting firm of Arthur Young International, thinks nothing of flying off immediately --at times, halfway around the world--to remove a snag holding up a merger or acquisition or to help a company out of a tax quandary.

"I feel comfortable in pressure-cooker situations,' he says.

Observes Arthur Young's managing partner, Bill Gladstone: "He can really maintain his cool; he's the total professional. When you couple this with his ability to really understand a client's problems and see what opportunities are available from the client's perspective, it's a dynamite combination.' Some of the clients Kanaga has served rank among the biggest corporations--Mobil, PepsiCo, American Airlines, American Express and Sperry.

Friends and associates call Kanaga a very positive, can-do person. He radiates energy, and that is an important asset for a job that involves overseeing 23,000 persons--including almost 18,000 accounting professionals --in 351 cities in 66 countries. Arthur Young is the fifth largest accounting firm.

Kanaga turns 60 this August, and company policy dictates that he retire, even though he has the vitality, not to mention the looks (his hair is still glossy black), of a much younger man. He talks of what he has accomplised at Arthur Young during his five years as managing partner and eight as chairman: "If there's anything that the partners will remember me by, it's being available in a crisis.' His achievements extend beyond that, Gladstone counters. "He has led the firm through industry changes from a professional environment to a competitive business environment, making us more responsive to market demands. He has been a very effective leader.'

Kanaga was instrumental in internationalizing Arthur Young in the late 1970s. Although the company has always had offices overseas, the emphasis was on installing American partners abroad to handle the overseas investments and businesses of mainly U.S. corporations. Kanaga felt that Arthur Young should not run "Anglo-Saxon outposts' in other countries but should instead put citizens of those countries in charge. The strategy has been successful. "We are now looked upon as a national firm in each country,' Kanaga says.

He has also led Arthur Young into an era of specialization. He believes strongly that accounting is following the path trod by the medical profession: more specialists, fewer generalists. The firm has not only its traditional functional specialists-- accounting, auditing and tax professionals, management consultants and bankruptcy and litigation support pros--but also more specialized specialists. These are industry specialists, who combine an interest in a particular industry with a love for accounting. They become proficient in speaking that industry's language, able to answer any technical questions that crop up and ready to tackle whatever business or regulatory issues the industry may face. Arthur Young has specialists covering more than two dozen industries.

Kanaga says the growing complexity of industries like high technology, financial services and health care requires that Arthur Young have experts in the field who can tackle a problem at a moment's notice, grasp quickly what is going on and expedite a solution.

Unfortunately for Arthur Young, industry specialization has its costs. "Our clients are apt to steal Arthur Young employes,' Kanaga notes wryly. "Clients see them in action and know just what they can do, so they're much more confident choosing one of our professionals in lieu of someone walking in off the street.'

The blending of specialization and internationalization can be seen readily in Arthur Young's work on foreign taxes incurred by Americans living abroad-- a specialty in which it has emerged the leader.

"The large multinational corporations are sending expatriate personnel into many different parts of the world,' Kanaga explains. "When American executives, for example, go into a foreign country, they have to contend not only with that nation's taxes but with their own country's as well. Then you have cases where an American employe is transferred from Hong Kong, where taxes may be 10 percent of income, to Japan, where they're 60 percent. It's our job to ensure that Americans overseas are not affected by location.'

The entrepreneurial services division, which caters to the concerns of smaller businesses, has also blossomed under Kanaga. It is Arthur Young's role, he says, to guide such businesses through economic changes--helping entrepreneurs build for financial health and assisting them in determining the value of their enterprises; showing them how to keep pace with growth; and giving them whatever advice and assistance is necessary when they go public or merge.

Arthur Young has mounted a marketing campaign to increase public awareness of its services. "We sponsored a marketing survey of how people perceive us, and the findings were a little dismaying,' Kanaga says. "We found that, generally, the public sees accounting firms as coming from the same mold and having no distinguishing features.'