What We’ve Uncovered… About the Risk Assessment Standards

When performing peer reviews, reviewers document the areas in which firms struggle to comply with professional standards. The AICPA Peer Review Team compiles and periodically communicates these common areas of noncompliance so that other firms won’t make the same mistakes. This is just one of the many ways in which peer review benefits the profession.

Over the past few months, peer reviewers have reported that firms failed to properly assess risk and properly document IT risk assessments. Some of the most common areas of noncompliance with the risk assessment standards are listed below, along with some advice to help your firm prevent the same mistakes.

The Cloud: Just One SOC Opportunity

It's no secret that an organization's confidential information is vulnerable in today's world of electronic storage. If you have any doubt, just ask The New York Times or The Wall Street Journal – both of which recently reported having their computer systems hacked.

Organizations transferring storage and/or the processing of their data to cloud-based systems are faced with the added complexities of how to best maintain ownership and control data while continuing to assure customers they have controls in place to keep data secure. How can organizations provide their stakeholders with comfort related to this transferred information?

Service Organization Control Reports^SM represent the intersection of cloud computing and the trusted advisor role of the CPA. In 2011, the AICPA introduced three SOC reporting options: SOC 1^SM, SOC 2^SM and SOC 3^SM reports, creating a great opportunity for CPAs to assert their knowledge and capabilities related to examining and reporting on controls at service organizations, including cloud service providers.

Using Technology to Automate Finance and Help You Make Better Business Decisions

Everyone is being asked to do more with less in the current economy; CFOs are no different. Many are looking for ways to enhance and streamline the finance function, from transaction processing to budgeting and reporting. Automation through leveraging state of the art technology is a key component to assist in this endeavor. With advancements in business applications and cloud-based technology like Intacct, Bill.com and others, virtual work environments, mobility and instant data is the new norm.

In the News: You Got Tax Questions? We Got Answers!

It’s been more than a month since my (legendary?) first post of this tax season and there has been a ton of recent media coverage. In my second tax season post, I’ll share a few articles for those of you who haven’t filed yet. In addition, I promise to throw in some good information for people who have their refunds already and are just rubbernecking.

Once again this year, members of the AICPA are using their expertise to answer one daily tax question from USA TODAY readers and help the public understand how to approach some common filing issues.

Thus far, readers have asked questions regarding the requirements for claiming adult children as dependents and how to handle the tax implications of rolling over an IRA.

Readers can submit their questions to taxadvice@usatoday.com through April 15.

9 Tips for Invigorating Weary Brains, Bodies and Balance Sheets

Whew! After months of long hours, you and your colleagues are likely finishing up the first filing deadlines of the year. Nice going!

Even with April 15 clearly in sight, there’s still work to be done by many practitioners. Clients are counting on your smarts like never before to help them make sense of their financial situation in this new environment and find ways to improve it. Let’s face it, you are running on fumes, yet you are far from the finish line and a well-earned break.

The big question you may be asking now is, “How can I get an energy boost so I’ll have the stamina to deliver on the promises I have made to my clients?”   

It’s no secret that when human engines are operating at full throttle they need more than adrenaline to perform their best. Sure, we know that we should eat right, exercise and be good to our bodies and minds if we want to sustain our ability to work at a record pace. The trick is finding the proper balance to yield the needed strength when our days are jam packed with meetings and client commitments.

Here are nine best practices to reinvigorate you so you can be your best. Even better, they are not complicated, expensive or unfamiliar. 

Innovation through Sustainability: It’s as Simple as Soda Pop

Call it what you will: pop, soda, Coke, Pepsi, Cheerwine, bubbly juice… countless Americans have an insatiable thirst for carbonated drinks, but we all know the costs of consuming a lot of soda over time can add up and it’s often bad for us. Plus, the discarded cans and bottles take a heavy toll on the environment, piling up in landfills across the world.

Enter SodaStream, an appliance you can use to make carbonated drinks straight from the faucet. SodaStream International Ltd., the product’s manufacturer, has a completely sustainable business model featuring reusable bottles that can last one year or more, rechargeable CO₂ canisters and any number of flavored syrups to liven up your drink. The result: landfills are spared more than 1,000 plastic bottles per consumer every year, customers reuse system components, and this savvy company gains major profits and a well-earned reputation for being innovative and environmentally conscious. Over the past few years the company has also achieved remarkable growth, increasing revenue by 51% and net income by nearly 60% from 2011 to 2012. What CFO wouldn’t be impressed with that?

Tomorrow's Company and the Ethics of Culture Change

Recently a colleague of mine attended a Tomorrow’s Company lecture in London as a guest of CIMA. Tomorrow’s Company is a London-based think tank that offers lectures and publications on issues like leadership and talent, sustainability and governance. CIMA, as a corporate member of Tomorrow’s Company, sponsors some lectures, as they did on this particular evening. The lecture she attended was given by Dick Olver, Chairman of BAE Systems, one of the world’s largest defense contractors.

Dick’s lecture was titled "A journey of culture change" and centered around his organization’s successful efforts in the area of ethics. With Dick’s appointment as chairman, he ushered in a complete overhaul of the company’s culture. He said, “The culture we’ve tried to develop is one in which our people take the company’s core ethical values into account in every decision they take. One where doing the right thing becomes an almost subconscious response.”

Is Hiring a CPA Worth it? 5 Tips for Getting Your Money’s Worth

Often when people find out I’m a tax accountant, I get asked, “How much does a CPA cost?”  It’s like me asking “How much does a home cost?” We all understand that a 1,000 square-foot home in Kansas has a different cost than a 1,000 square-foot penthouse condo in New York City.  The same concept applies to CPAs.  

The answer to both questions is the same:  it depends.  For example, my uncle has a simple tax return and pays $250 in preparation fees.  On the other hand, I had a client whose return took over a week to prepare when I worked in a large firm, which cost the client around $100,000. 

A good CPA may cost you more upfront but will pay off in the long run because he or she is thorough.  Anyone can drop numbers in software.  However, a CPA will analyze the situation to look for tax savings opportunities and help you plan for next year – in short, they become your trusted advisor.  I once had a client whose former preparer had cost her an additional $4 million in taxes because he didn’t consider accelerating her fourth quarter estimated tax payment to December from January.  

The Dangers of Providing Client Comfort Letters

Every few years, the issue of providing clients with comfort letters – or verification documents – rears its head among our members. Regulators or banks often look for verification that certain items within a financial statement (e.g., revenue) or a tax return (e.g., income) is "right" and they want a CPA to verify it. AICPA members have even received requests for comfort letters from adoption agencies, health insurance providers and state taxing authorities.

According to the AICPA’s Professional Liability Insurance Program, examples of third party verification information requested by lenders and loan brokers include:

• Confirmation of a client’s self-employment status;
• Verification of income from self-employment;
• Verification of a self-employed borrower’s business ownership percentage;
• Profitability or sustainability of a self-employed client’s business; and
• The impact on a self-employed client’s business if money is withdrawn to fund the down payment on a real estate purchase.

Let’s Chat About Business Valuation

I’m not going to pretend I have extraordinary insight into the economy, but I do know that February was a very strong month for IPOs and that signs are pointing to an increase in mergers and acquisitions. These two trends, combined with the fact that business valuation is already one of the fastest growing ‘niche services’ among Accounting Today’s Top 100 firms in both 2012 and 2011 means that this is a great time to learn more about the AICPA’s Accredited in Business Valuation Credential.

 

In addition to the increase in M&As and IPOs thus far this year, valuation professionals said they expect to see increased demand for shareholder/partner disputes, contractual disputes and family law as well as in bankruptcy, insolvency and reorganization in the next two to five years, according to the 2011 Forensic and Valuation Services Trend Survey.

With So Much Information, Who’s to Say What’s Accurate?

"We are drowning in information, while starving for wisdom. The world henceforth will be run by synthesizers, people able to put together the right information at the right time, think critically about it, and make important choices wisely."
--E. O. Wilson, American Scientist

On my smartphone I have four different weather apps. Isn’t it amazing we live in a world where we can find out the weather in seconds on demand? Of course, there’s a price to pay for having so much information available at our fingertips. On any given day, I could consult each app and they each might tell me a different forecast for the day or week. That’s not a huge issue if the difference is a matter of about four degrees in the summertime. I’m not sure I can tell the difference between 74 and 78 degrees, anyway. But what about winter? I may not be able to feel the difference between 31 and 35 degrees, but my steep driveway can definitely convey the difference to me quite well as I spin my wheels on black ice on my way to work in the morning.

That’s why it’s vital that you feel confident about the information you use day-to-day—at home and in business.

In the News: CPAs' Optimism on U.S. Economy Increases, Despite Sequester

Confession time: I am not a Nobel Prize-winning economist. In fact, I dropped Microeconomics my freshman year in college after one class and I never looked back. So when I read that the Dow hit an all-time high this week I wasn’t sure what to think about how the sequester would impact businesses and the economy overall. And since I like to understand what’s going on, all of this confusion made me sad.

Luckily for me, the AICPA just released the results of our Q1 Economic Outlook Survey, which polls members who serve as CEOs, CFOs and controllers as well as other CPAs in U.S. companies who hold executive positions on their views on the economy moving forward.  And this quarter, the ‘survey within a survey’ focused specifically on the potential impact of the sequester on their companies’ business.

As Ruth Mantell reports in MarketWatch, according to the survey results, only 11 percent of the CPAs surveyed believe the massive spending cuts in the sequester will have a “significant” impact on their companies’ business. Thirty percent responded that there would be a “slight” impact from the sequester, with an additional 30 percent reporting that the impact on their business would be “minimal.”

Top 12 Tax Resources (for the 2013 Tax Season)

Finding time to do anything during tax season is tough. This year, with a delayed tax season, it will be an even bigger challenge. So save a little time this year by using the resources developed by the AICPA and its volunteer committees to help members successfully navigate the tax season. If you like free, you’ll love this list of resources as most of them cost nothing. 

An Introduction to Pinterest

Pinterest, how do I love thee? Let me count the ways.

Have you had a chance to try out Pinterest yet? You should! If you are a visual person, this image-driven platform may really hit home for you like it does for me.

 

What is Pinterest?

Pinterest is a fast-growing niche social networking site that has generated a lot of buzz and media coverage. With over 15 million users, Pinterest is the fifth most visited social media site in the US, and generates more referral traffic to other websites than Google+, YouTube and LinkedIn combined.