On balance, a good life

March 31, 2003|by ANDREW SCHOTZ

The way Merle S. Elliott describes his love of accounting, it sounds a little like Eastern philosophy.

As best as he can explain, there's an equilibrium in the numbers, the same balance that's at the root of his community activism all these years.

"It's getting inside people's heads, seeking what makes the balance," he said.

The harmony of the balance sheet, the art of the deal.

Elliott calls accounting "the magic of the numbers, the search for errors, the problem-solving," and it's what drew him into the profession.

Forty years ago, Elliott and Earl J. Smith combined their individual practices and formed Smith Elliott & Co.

The firm is now 110 employees and partners strong, with a Maryland office in Hagerstown and Pennsylvania offices in Chambersburg, Carlisle and Hanover.


Smith Elliott Kearns & Co. LLC, as it is now known, conducts audits, prepares taxes, manages payrolls and plans estates. It has expertise in several industries, including construction, banking, not-for-profit organizations and health care, managing partner Edward L. Buchanan IV said.

Elliott, 72, stepped down as managing partner in 1989. He continued to work as a consultant for the company until he retired about three years ago.

Whatever the firm does in the future, it won't sell financial products, such as insurance or money management services, the former and current partners insisted.

"We've always maintained our independence and objectivity," Buchanan, 53, said.

"We don't want our judgment to be impaired," Elliott said.

Elliott recalled some "knock down, drag out" arguments years ago over whether to sell products. He was, and is, firmly opposed.

At the time, he said, the firm talked about getting into software development - before Microsoft became dominant.

'New generation'

About four years ago, as "a new generation" took over, as Elliott put it, the discussion resurfaced. Again, the answer was no.

Elliott remembers a high school bookkeeping class that made absolutely no sense to him. Then, suddenly, it did.

"Why was there even a question?" he thought to himself.

He went to work for local accountant Arthur Moats in 1948, which is when he met Smith.

Elliott opened his own practice in 1956.

Smith went out on his own, too.

They decided in December 1962 to merge at the end of the tax season.

On Feb. 24, 1963, Charles Brunner Carter, a well-known accountant, died in a car accident in Frederick County, Md. Carter was the auditor for the Washington County Board of Education and had resigned as the county's auditor a few weeks earlier.

Elliott and Smith proceeded with their plan to merge. But they also took over Carter's practice. The three firms became one.

There were about 20 employees at the time, Elliott said.

Keeping the books

Smith Elliott & Co. started as a bookkeeping operation. Elliott said he and Smith kept the books for clients, recorded checks and deposits and prepared financial statements. Other functions developed as the firm's stature grew, Elliott said.

Also in 1963, Smith and Elliott acquired another firm, Todd McIntire and Co., which had offices in Chambersburg and Waynesboro, Pa. That firm operated separately until it was absorbed into Smith Elliott & Co. in 1969.

Ronald S. Kearns was with Todd McIntire and Co. when Smith Elliott & Co. acquired it. Kearns went on to succeed Elliott as managing partner in 1989.

Smith has since died.

Buchanan took over for Kearns in 1999.

Kearns and his son, Bradley H. Kearns, are now among the seven partners at Smith Elliott's CPA firm and employee benefits division in Chambersburg.

There are eight partners in Hagerstown, two in Carlisle and two in Hanover.

At one time, Smith Elliott Kearns & Co. had as many as eight or nine offices. The firm closed some of them, including branches in Waynesboro, Martinsburg, W.Va., and Berkeley Springs, W.Va.

The firm still has clients in West Virginia, but "we can serve them just as easily from Hagerstown," Buchanan said.

Buchanan took a summer job with the firm between his junior and senior years at Shippensburg University.

He's now been with Smith Elliott for 33 years.

Buchanan moved from Hagerstown to Chambersburg in 1975 to manage the firm's audit practice there. After about 10 years, he moved to the Hanover and Carlisle offices. Three years later, in 1988, he returned to Hagerstown.

One of Elliott's greatest contributions to the firm, Buchanan said, is the way he got so involved with accounting industry groups and organizations and encouraged others to do the same.

Elliott said this is "extremely valuable" because it helps employees get out of their closed worlds for a little while and find out what else is out there.

Smith Elliott Kearns & Co. belongs to an association of CPA firms called Polaris International. There are 85 members in the United States and 65 abroad, Buchanan said.

An example of how this has come in handy, he said, was when a Smith Elliott Kearns client in West Virginia acquired a company in Denver. The Denver company had a subsidiary in Singapore. Having international assistance made the paperwork and filings easier, Buchanan said.

Computer technology and better planning have helped make the workload more manageable.

Elliott said he sometimes put in 90 or 95 hours a week at work during the tax season.

About 55 or 60 hours is more typical now - partly because the younger generation won't tolerate a lifestyle so tilted toward work, Buchanan said.

Elliott never saw his job that way.

"It's only work if you'd rather be doing something else," he said. By that standard, "I've never worked."

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