Ideas in Motion: Real-Life CPA Firm Disaster Preparedness Techniques: Bourgeois Bennett Rides out Hurricane Katrina
By Scott H. Cytron, ABC
Hurricane Katrina may be old news to most of the world, but it is still very much a reality for residents of New Orleans and others along the Gulf Coast as hundreds of thousands of residents and businesses rebuild their lives and work. This year’s hurricane season was long; at this writing, Hurricane Wilma is just passing over Florida and the National Hurricane Center just announced it was starting over at the beginning of the alphabet with a new potential storm.
It’s no surprise that CPA firms along the coast were displaced shortly before Katrina and most certainly during and afterwards. While article after article – and consultant after consultant – counsel CPA firms and businesses of all sizes to be ever watchful and prepared in the event of a man-made or natural disaster, organizations simply could not have predicted the onslaught involved in dealing with a storm of this magnitude.
To get a handle on technology and disaster preparedness in light of the hurricane, I sat down with George G. “Buddy” Long III, CPA/ABV, CFE, director of Business Valuation for Bourgeois Bennett, LLC, in New Orleans. Les Nettleton, director of Information Technology, also helped answer these questions.
Bourgeois Bennett, one of the largest independent CPA firms in Louisiana – and certainly one of the oldest at age 82 – offers traditional accounting and consulting services along with several niche specialties through 85 staff and 15 members or owners. Its main office is in Metairie, a suburb just west of the city of New Orleans. The firm is also a member of the Financial Consulting Group.
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George G. "Buddy" Long III, CPA
Less Nettleton, Director of IT
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Q – What kind of disaster-ready processes did the firm have in place when Hurricane Katrina occurred?
A – From a data recovery standpoint, the firm backs up all data files daily using a tape backup system, and maintains the tapes on a two-week rotation schedule. We also retain full data backup tapes as of each month end and the end of our fiscal year.
Hurricane Katrina hit New Orleans on Monday morning, August 29. We had performed a full system backup on Friday evening, August 26, and we executed a full system shutdown on Saturday evening, August 27, in anticipation of the storm. Two full backup tapes (Thursday evening and Friday evening) were removed from the premises and remained in Les’s possession during his evacuation to Houston. The full backup tape from Wednesday evening was evacuated with Melissa Russell, our senior IT staff person. These backups contained all firm electronic data, including scanned images of our tax work papers and supporting documents. For context, we moved to a digital office with CCH Prosystem fx Tax in January 2005. We scan our workpapers, supporting docs and final copy of the return in Paperflow and use PaperVision to retrieve the TIF files. For audit, we use a combination of Prosystem fx Engagement and PPC e-Tools.
Most of the laptop computers were removed from the office by the staff to whom they were assigned, and evacuated with them. This would give us the basis to get back online without having to purchase a significant number of end-user computers. Laptops account for approximately 60 percent of our nodes.
Our contract with our ISP provides that they will hold our e-mails for up to seven days when our e-mail server is down. A few days after the hurricane, we were able to get them to agree to hold our e-mails indefinitely until we were in a position to receive them – which turned out to be 17 days later.
Our offices are located on the 17th floor of an 18-story office building. As per our usual hurricane evacuation instructions, the window ledges and adjoining areas of all external offices were cleared in case of a window failure, all electronic equipment was unplugged from power sources on the wall and all office doors were closed. We did not attempt to remove any paper files from the office at that time.
Q – What kind of technologies did you “wish” you had in place now that you’ve been through the disaster?
A – Four key technologies.
1. Voice communication systems other than cell phones. The storm was so destructive that cellular telephone systems, essentially, were shut down. Cellular towers were destroyed, and those that weren’t destroyed were crippled by extensive power outages. Since most of us had cell phones with the same local area code, we were unable to use our phones immediately after the hurricane, and even today, we continue to have cellular telephone issues seven weeks after the storm! As a result, we now will consider purchasing a few cell phones from an outside area code to be distributed to key staff. As an aside, quite a few of our staff evacuated to Houston and purchased Houston cell phones to alleviate the bottleneck experienced by our 504 area code phones. However, three weeks later, Hurricane Rita hit near the Houston area and those newly purchased cell phones became just as useless as the ones with the New Orleans area code. I think a Wisconsin area code would be wiser!
2. Laptops for everyone. Our staff who normally used desktop computers did not have laptops when they evacuated; as a result, they had difficulties getting firm information that was presented on our external bulletin board system. If everyone had a laptop, acquiring firm information would have been more easily accomplished.
3. Scan historical documents. When we implemented our Digital Office, we decided to not scan historical documents. Although this has not been an issue because we were, and still are, able to retrieve files and paper documents from our Metairie office, it would have made for smoother remote operations if the data were digital rather than on paper.
4. Current listings of personal e-mail addresses. Our e-mail server was not operating, cell phones were essentially useless and staff had evacuated to destinations across several states. The Internet became our primary means of communication, and the most effective way of communicating with members and staff. Having a listing of everyone’s personal e-mails would have expedited that process.
Q – Tell me how the firm managed to get up and running again.
A – The nature of this disaster is unprecedented. For the first few days after the storm, personal survival was the most important issue. Not only had our office building become inaccessible, but the homes of all our staff were in areas of mandatory, forced evacuation. Almost all of the staff evacuated with only a few days clothing, thinking that they would have been back home and at work by Wednesday. However, early reports from government officials indicated that it would be months before we would be able to get home.
For the first week or so, personal matters overshadowed everything else. Interestingly, when the hurricane hit, we were running a Class Action disbursement in Lake Charles, La., about 200 miles west of New Orleans. Fifteen of our staff, including several members (owners), were there for the week before and the week after Katrina. However all of their cell phones became inoperable with the passage of the hurricane.
On Thursday after the storm, using cell phone text messaging, we finally made contact with a few staff, including our senior IT technician, who happened to be working at the Class Action Disbursement. The firm needed to quickly establish a line of communication and share information with the staff. Last year, we set up an external bulletin board system. At that time, we were looking for a venue to share information regarding the implementation and use of several new tax programs we had just acquired. We chose the bulletin board system because of its ability to store historical information in a cleaner format than e-mail. This bulletin board system became our central point for disseminating information during the first few weeks following Katrina. Through it, we not only were able to share our temporary personal contact information, but the system also allowed firm management to apprise staff about plans as they were formulated.
On the Sunday after Katrina, after the conclusion of the Class Action disbursement engagement, the members held a meeting in Lake Charles. This was followed by a staff meeting to update those present as to our recovery plan. Based on information we received that our office had sustained relatively minimal damage in the storm, we anticipated that we would be able to move back into our offices and resume operations in just a couple of weeks, so a decision was made to wait two weeks to see if that panned out.
Once that time passed and our offices were still uninhabitable, it was decided to operate in 2,600 square feet of office space on the floor directly below our Houma, La. Office that we had leased on a short-term basis right after the storm. This seemed like the most logical choice for temporary office facilities because it provided us with all our basic infrastructure needs. With relative ease, we would be able to drop telephone and data cables to the new space. Additionally, we had an existing location with an already-established firm identity. We immediately had our Metairie telephone and fax numbers forwarded to the Houma office. We also arranged to have our mail, both the mail addressed to our office street address, as well as that addressed to our New Orleans P.O. box, forwarded to our Houma box. The post office in New Orleans was also shut down by the hurricane and still has not recovered; receipt of our mail continues to be problematic.
On Monday, Sept. 26, we reopened the Metairie office for business in the new temporary space. Because we had physical access to our main office in Metairie, we were able to retrieve several desktop computers, printers, workpapers and supplies, and transport them to the new office. We also moved several desk chairs from the Metairie office to be used with sturdy folding tables we purchased in Houma. Rather than risk potential damage to our file servers by hauling them down 17 flights of stairs, we decided to leave all our servers in the Metairie office.
Fortunately, we implemented a high speed data line between the Houma and Metairie offices just four months earlier. Using a combination of Citrix, Terminal Services, Remote Desktop and the T1 line, we are able to remotely access all necessary data in Metairie from our Houma location. However, we did lose our two oldest servers in Metairie, but successfully restored the data on them from our tape backup to a newer server.
Approximately two-thirds of our staff members are commuting to Houma on a daily basis, with some staff traveling as many as 2.5 hours each way. Others elected to work from home or to use their accumulated time off. It now appears that we may be able to reoccupy our Metairie office by mid-November.
Q – Can you give me three pieces of advice for any practitioner who might one day face a disaster of this magnitude?
A - This is a great question, since the damage done by Katrina, in structural and humanistic terms, is unprecedented. The magnitude of this disaster is impossible to comprehend. Over 140,000 buildings in greater New Orleans sustained significant damage, nearly 36,000 homes in St. Bernard parish, located just east of New Orleans, was destroyed and 14 of our employees lost everything except the clothes on their backs. Many of the rest of us sustained damage to our homes, several severe enough to require our relocation, at least temporarily. Housing within a reasonable distance from New Orleans is extremely scarce. Many of us are relying on the generosity of family and friends to house us and our families. A significant number of our clients are located in the Greater New Orleans area, the same area that has experienced such unprecedented devastation. Their survival ,coupled with our ability to retain our talented professional staff, will be the factors that ultimately determine our fate. As Ralph Cox, our managing partner said so eloquently “How do you prepare for and recover from a disaster that destroys the entire city in which you do business?”
Now to the advice:
1. Create a “Central Meeting Place” like an Internet-based bulletin board. The board should not be hosted internally. Since our bulletin board is hosted externally, we were immediately able to start posting to it. Make sure your staff knows the URL of the bulletin board by printing cards for them to keep in their wallets. Have a listing of everyone’s personal e-mails and cell phones and keep a copy on the bulletin board.
2. Test and retest your data backup system. Restore data on a regular basis to ensure the backups you make are viable. I’ve heard horror stories of companies who took tape backups with them only to discover that they are incapable of restoring any of the information on them.
3. Any plan and subsequent recovery must be dynamic and fluid. No disaster plan can be written to encompass every aspect and cover every possible interruption. The decision-making process should be driven by the mind and not the heart, a very tough concept in our situation. Take your time, don’t panic, and be sure to allow for staff to accept and grieve over their personal losses.
The incredible ability of the members and staff of Bourgeois Bennett to be creative and flexible has been the backbone of our recovery. Personally, I think the calm and steady manner in which our management group reacted to the challenges that were presented is a testament to the excellent leadership of our firm and will be the foundation of our success as we go forward in this time of uncertainty.
As an aside, where other local firms are in trouble from a personnel and client perspective, I’m proud to say that we have lost only three staff, and we are attempting to hire more auditors and consultants. At Bourgeois Bennett, business is good. Although we are a bit cramped in our temporary office, and things seem a little chaotic at times, a lot of productive work is being accomplished.
About Author:
Scott H. Cytron, ABC, is an accredited communications and public relations consultant working in the accounting, health care, high-tech and finance industries. He also teaches efficient and effective writing to professional services’ groups and can be reached at scott@cytronandcompany.com or through his Web site, http://www.cytronandcompany.com.
About Column:
Ideas in Motion is a monthly column designed to focus on best practices within CPA firms and organizations involved in providing technology related services.
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