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20 posts from October 2012

SOC Reports Replace SAS 70 [INFOGRAPHIC]

Service Organization Controls reports are designed to help service organizations, organizations that operate information systems and provide information system services to other entities, build trust and confidence in their service delivery processes and controls through a report by an independent Certified Public Accountant.  Each type of SOC report is designed to help service organizations meet specific user needs. This infographic explores the transition from SAS 70 to SOC reports and how they apply.

SAS 70 to SOC Reports Infographic

What Happens When a Lame Duck Meets a Fiscal Cliff?

10 (Tongue in Cheek) Predictions

Fiscal-cliff-questionsLast year, I wrote a blog about the congressional “super committee” created by the Budget Control Act of 2011 to deal with government’s immense debt and the deep deficit hole in which we find ourselves. The super committee of 12 members of Congress was unable to reach consensus on specific ways to wrestle with our unruly fiscal problems. That means, come this January, Washington will face $1.2 trillion in automatic spending cuts (known as sequestration).

What else is staring at us as we head towards the winter solstice? Not too much - there's the 2011 extenders including the AMT patch, 2012 extenders, the 2% payroll tax cut, the debt ceiling limit, expiration of the Bush tax cuts, and oh, the grim reaper is chasing the estate tax yet again. Did I also mention that we have a very contentious presidential election leading up to a lame duck session of Congress? Federal Reserve Chairman Ben Bernanke calls it a “fiscal cliff.” I'm exhausted just thinking about it!

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2012 Presidential Election and the CPA Profession

Election 2012The 2012 presidential election is just around the corner. While it’s not clear who will win the White House, there are many reasons you should be paying close attention. And we’re seeing indications that you’re doing just that. In a CPA Letter Daily poll on Oct. 16, 65% of more than 3,200 respondents said they would be watching that night’s presidential debate.

There is no shortage of issues affecting CPAs and our clients or employers. Highlighted below are some of the important financial issues facing our country:

  • “Fiscal cliff.” The uncertainty surrounding potential tax increases and spending cuts, as well as related issues, has brought Washington to a stand-still. Uncertainties include extension of the Bush-era tax cuts, a fix for the Alternative Minimum Tax, tax increases attached to the Patient Protection and Affordable Care Act, and a package of mandatory federal spending cuts totaling $1.2 trillion over 10 years.

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In the News: Now is the Time to Lower your 2012 Tax Bill

Tax planningFall, or autumn if you’re a season snob, is a busy time of year at the AICPA. Earlier this week, we held our Fall 2012 Governing Council Meeting – but you know that already because we’ve covered all the news earlier in the week. In addition to The World Series and beautiful foliage, fall is also the time to get proactive and take steps to lower your 2012 tax rate if you haven’t already done so.

This year, it is particularly important for taxpayers to pay close attention to the planning process with the uncertainty surrounding the potential expiration of the Bush tax cuts and many widely-used tax cuts which have not yet been renewed for the 2012 tax year . Susan B. Garland spoke to Melissa Labant,director of taxation at the AICPAabout this issue for a recent article in Kiplinger's Retirement Report focused on this issue.

The article calls attention to the fact that one of the biggest changes on the books for 2013 is a 3.8% surtax on investment income for singles with a modified Adjusted Gross Income of more than $200,000 ($250,000 for married couples). The tax applies to the smaller of net investment income or the amount by which taxable income exceeds the thresholds.

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Clarifying Clarified Auditing Standards on Group Audits

Group -auditAs I promised in my blog post “3 Things You Need to Know About Clarified Standards,” here’s an analysis on the changes wrought by the new clarified auditing standards on group audits.  

As I said previously, the key point here is to realize when this section, AU-C 600, Special Considerations--Audits of Group Financial Statements (including the Work of Component Auditors) applies. It applies not only when other auditors perform part of the audit, but whenever the financial statements include financial information of components, such as equity investees, subsidiaries or other business entities and activities that are included in the group financial statements. Even if you are the only auditor, if the financial statements include financial information that is consolidated, combined or aggregated from a separate financial accounting system, the provisions of AU-C 600 apply.

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Day 3 of AICPA Governing Council Fall 2012 Meeting

At the final day of the AICPA governing Council Fall 2012 meeting, the AICPA elected a new chairman of the board of directors, Richard J. Caturano, CPA, CGMA. Follow the "read more" link for a look at the day through the eyes of social media. (If you're viewing this post through our email subscription, please click through to read the entire story.)

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Day 2 of AICPA Governing Council Fall Meeting 2012

The second day of the fall meeting of the AICPA governing Council happened yesterday and featured a professional issues update from AICPA President and CEO Barry Melancon, CPA, CGMA. Follow the "read more" link for a look at the day through the eyes of social media. (If you're viewing this post through our email subscription, please click through to read the entire story.)

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Wrap Up of AICPA Fall 2012 Governing Council Meeting - Day 1

The first day of the fall meeting of the AICPA governing Council kicked off on Sunday. Follow the "read more" link for a look at the day through the eyes of social media. (If you're viewing this post through our email subscription, depending on your email client, you may need to click through to read the story.)

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How to Leverage Google Places for Your CPA Firm

Google placesLast time I talked about how to use local search to get your CPA firm better prominence in search engine result pages. I want to take a deeper dive into one of the more useful local search engine optimization tactics: Google Places.

Since Google is the leader in search engine usage (66.4% market share), its best to start your local SEO and marketing tactics with Google Places. Your listing in Google Places will not only provide a quick spot for your potential clients to find you online, but will directly affect your search engine result page ranking and how your firm’s listing appears. So let’s walk through the process to setup a Google Places page for your CPA firm.

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Selling a Business or Advising a Seller? Tips to Navigate the Fiscal Cliff

Fiscal cliffWith about 10 weeks left in the calendar year, it would be difficult for even the most motivated business owners to complete their company’s sale by Dec. 31, unless they’re already in process.

Some owners are hustling to get that process done to avoid falling over the tax cliff set to take effect Jan. 1. But the principles of selling a business apply no matter what the calendar says, according to Scott Miller, CPA/ABV, an expert presenter for the Oct. 30 Journal of Accountancy webcast, Inside Buyout Basics and the Tax Cliff: A Timely Combination.

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FATCA: Move Over FFIs, Here Come the NFFEs

Stage-curtainsMost people would agree that the Foreign Account Tax Compliance Act and foreign financial institutions are like peanut butter and jelly.  Whether or not you like the combination, they simply go together. 

Their pairing has been reinforced by the frequent publicity garnered by FFIs and the expanded withholding obligations FATCA has imposed on them.  But CPAs beware!  Lurking backstage is another set of entities affected by the rules of FATCA that you need to keep in mind.

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4 Things to Know About Performing and Reporting on SOC Engagements

Service-organization-control-reports-wordleSo, have you started doing Service Organization Control engagements at your firm yet? You’ll recall in my last blog post that jumping into this niche area is a great way to engage existing clients and new clients in an emerging market.

The AICPA has been fielding a number of questions regarding performing and reporting on SOC 1SM, SOC 2 SM and SOC 3 SM engagements. Here are four of the key queries and their answers to help you and your firm move forward in starting a SOC practice:

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Does Your Organization Invest in its Employees’ Training and Skills Development?

Talent Pipeline Draining GrowthOrganizations around the globe face extraordinary challenges when navigating through the current global economy. To thrive in the long-term, organizations must constantly innovate, evolve and transform.

One of the most critical factors that determines an organization's fate in this environment is the quality of its human capital and the way it manages its talent pipeline.

A recent report from the AICPA and CIMA showed that while most companies understand the importance of human capital, they do not appear to have the right systems, processes and information in place to manage talent effectively. Think about your organization for a minute. Does it invest in training and the development of talent and skills? Or does it view training as a compliance tool?

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In the News: AICPA Financial Literacy Survey Featured on the Today Show

Yesterday, Al Roker and Jean Chatzky of the Today Show discussed the issue of kids and allowance, citing the results of AICPA’s recent survey with Harris Interactive on the subject.

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3 Myths of Succession Planning

Sometimes we CPAs are blind to our own advice. We spend hours every day working with clients, steering them toward financial prosperity, helping them prepare for retirement and ensuring their businesses thrive well into the future. What are we doing for own practices? Not always enough.

Although succession planning is a proven strategy for achieving long-term firm goals, the 2012 PCPS Succession Survey reveals that only 46 percent of multi-owner firms have a written, approved succession plan. In addition, six percent of sole proprietors have a practice continuation agreement however, that’s only a first step toward developing a full succession plan.

Dispelling the following three common myths may help further grow succession planning’s role in practice management. It may also help CPAs reap a succession plan’s full benefits—client and staff retention, a more comfortable retirement and the peace of mind that comes from being prepared for the future.

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What is a ‘Digital CPA’?

Digital CPA

There’s no question technology is having a huge impact on how CPAs and their clients conduct business, but the adoption rate isn’t uniform within the profession. Some practitioners are taking a wait-and-see approach. Others are sticking their toes in the water. And still another group is fully embracing technology and all that it promises—integrating innovation throughout their firm’s processes and workflows and becoming digitally present in today’s online world.

At CPA2Biz, we use the term ‘Digital CPA’ to describe the latter category. The Digital CPA harnesses the power of the cloud, the broad use of mobile devices and a carefully calibrated online presence to attract clients and build new service lines. It’s inevitable the entire profession will arrive at this same place one day – and that day isn’t far off.

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Value Pricing: Aligning Your Interests with Those of Your Clients

The days of providing services first and billing later are dwindling. As this blog post by Jim Boomer, CIO of Boomer Consulting, Inc. indicates, an increasing number of accounting firms are moving into the digital age and transitioning their practices from billing in arrears to value pricing strategies, in order to better align their interests with those of their clients.

Billing: Where's the Real Client Value?

Value pricingAccounting firms have been billing for, well, forever. Billing may make sense to you as a practitioner, but it may not to your clients.  The truth of the matter is, clients are often baffled by that final bill―which can result in them questioning the real value of your services, or even worse, causing them to look for a better deal elsewhere.

Clients explain the scope of their project (taxes, auditing and the like), firms do the work, tally up the hours spent by partners, junior associates and administrative assistants and send out a bill for services rendered. However, as most firms can attest, a client's reaction to that bill is rarely, “Well that's not so bad at all!” Instead, it will result in an angry client creating perceived indifference between the firm and the client—the number one reason why clients leave. It isn’t about the price, it’s about the surprise of the price. Then before you know it, the client leaves.

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Catch Them When You Can

Catch me if you can frank abagnaleIt seems that the corporate world is rife with fraud these days, and as CPAs on the financial front lines, it’s up to us to protect the public from these crimes.

Just last week prosecutors in the high-profile fraud case against former Nortel executives gave closing arguments, telling a Toronto courtroom three former Nortel executives knowingly breached accounting rules to manipulate financial records and reap millions in bonuses, keeping the now-insolvent tech firm's investors and the public in the dark.

You think it won’t happen to you.

Many years ago, as a first year staff auditor, I was assigned to the audit team of a not-for-profit organization. One of my areas was cash, but after going over budget by many hours, I still couldn’t get the general ledger balance to reconcile to the bank statements. I was convinced that I just didn’t know how to do a proper bank reconciliation, but if they just gave me some more time, I would figure it out.

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5 Improvements to Civil Litigation Procedure for Financial Expert Witnesses

Reducing client costs in civil litigationHow can civil litigation become less costly and complicated and more fair for all involved? Although rules of civil procedure call for a quick, inexpensive and fair determination of all civil actions, those goals often are not met. The AICPA Forensic and Valuation Services Executive Committee and the members of the FVS membership section are well aware of the many problems within the system that can cause lengthy delays and unnecessary expenses. Because CPAs have a unique perspective on the issues involved, the FVS Executive Committee, in conjunction with the Institute for the Advancement of the American Legal System at the University of Denver, surveyed FVS Section members, many of whom are frequently retained as expert consultants or testifying witnesses in civil litigation. Based on the survey findings, the executive committee has released a new report, “Another Voice: Financial Experts on Reducing Client Costs in Civil Litigation.”

The report offers stakeholders in the civil justice system--including judges, attorneys, financial experts and clients--five recommendations to enhance the effectiveness of financial experts and efficiency of their use in the civil pretrial process:

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Optimizing Your CPA Firm for Local Search

More than 167 million people will shop online this year. Social commerce sales are expected to total $9.2 billion by the end of this year and could climb to $14.25 billion in 2013 and $30 billion in 2015. Consumers are not just shopping for the latest gadget; they’re buying everything from groceries to professional services, including those offered by your CPA firm.

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