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16 posts from September 2015

Back to School: Budgeting 101

College student moneyFor CPAs, budgeting is as easy as debits on the left, credits on the right. It is simply the way it is. But not everyone is a talented budgeter. A recent AICPA survey revealed that college students aren’t as monetarily savvy as they think they are.

Just how much do college students need to brush up on their budgeting skills? While 57 percent of students surveyed rated themselves as having excellent or good personal financial management skills, nearly half reported having less than $100 in their bank account at some point in the last year, 38 percent said they had borrowed money from friends or family in the last year, and 11 percent had missed a bill payment. It is clear that college students’ perceptions of their financial skills and reality are not aligned.

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3 Ways Gen Xers Are the Key to Leading Millennials

Sheryl sandbergOdds are that if you manage a business unit or a large team of employees, you’re part of the group of 74.9 million Baby Boomers. This year, for the first time in your life, your generation will no longer be the largest demographic group in the United States.

Millennials now number 75.3 million, according to the Census Bureau, and due to immigration are projected to increase to 81.1 million by 2036. Although demographers differ on the birth range of Millennials (also known as Generation Y), most fall between 1981 and 2000, which means that the oldest are 34 and the majority are in their 20s.

Millennials have a profoundly different approach to the way they find, use and share information—both socially and at work. They don’t read newspapers, watch TV news shows or use the yellow pages. They read—a lot—but it’s not likely to be on printed paper. They’re great networkers, but the majority of their conversations take place electronically rather than face-to-face or by phone. Many find the constraints of working regular office hours—from the office—burdensome and old fashioned. But that doesn’t mean they’re unwilling to work long hours.

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5 Ways to Create a Sense of Belonging through Sponsorship

Men sponsorshipThis blog post is the second part of a two-part series on intentional sponsorship, or dedicated efforts at a firm to ensure that everyone with leadership potential has access to a sponsor.

At HORNE, we launched a formal sponsorship program at our 525-person firm because we recognized first and foremost from a business case perspective, for us to be relevant in the future, we must develop a diverse leadership team.  Collaboration, connecting and creativity require diverse leadership and we cannot win with less than half the leadership talent.  Failure to develop a diverse leadership team will limit our ability to grow, to attract great talent or to have a sustainable succession plan. We also estimated our tangible cost of our turnover at $3 million a year which includes recruiting, onboarding and training.  We excluded the additional costs of lost knowledge and lost client relationships. 

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Cyber Liability Insurance for CPA Firms

CoveredWe see the mega data breaches on the news, and wonder if our personal information has been stolen.  If some of the world’s largest companies cannot protect personal data with their large budgets, what can a small firm do? One step is to purchase cyber liability insurance. This is a relatively new product offered by a few insurers, and often under a different name and with varying levels of coverage. Being a relatively new product, there’s a lot of catching up to do – so let’s start with the basics for partners to think about.

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Digital Estate Planning: More Than a Lifeline

Digital willWhether you think of our connected world as a benefit or as a time waster, there’s no escaping the complex red tape associated with providing access to our digital assets after we pass away. What lives online is neither easy to access nor is it clear cut as to who can get to it.

This is an important focus for all of us, our families and our companies, but it also provides an opportunity for CPA planners to understand digital estate planning in order to help their clients plan for their future.

Not having a digital estate plan as part of your clients’ wills is the same as not having a will at all. In other words, if there is no specific direction given to provide designees access to files, email and even social media accounts, the clients’ wishes may not be able to be carried out. Although there have been small strides made by some states in this digital space, a digital estate plan is absolutely necessary to avoid any questions or ambiguities. Idaho, Indiana and Oklahoma addressed legislation providing access to social media and blogging accounts, while Connecticut and Rhode Island have dealt with access rights to email.

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Changing the What, When, Where and How of Learning

Do you remember when there was one basic kind of accounting and all accountants did pretty much the same thing?

CompetencyNeither do I. But I do know that the demand for broad business knowledge is increasing exponentially. Finance and management disciplines – such as strategy, human resources, risk management and data analysis, to name just a few – are converging, and in today’s business environment, companies expect employees to demonstrate their competence in these areas. This means that CPAs and CGMA® designation holders who want to support their organizations’ growth must develop new competencies.

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4 Steps to Developing Professionals through Sponsorship

Women sponsorshipPromising professionals ascend through the ranks based on their knowledge and abilities, but many also benefit from the support and advocacy of other influential members of the organization—often referred to as sponsorship. It is important to note the difference between a mentor and a sponsor. A mentor talks with you about your career development while a sponsor talks about you. Sponsorship may be formal and methodical or informal, but by its nature is intentional and it can have a significant impact on assignments, visibility and advancement.  

In an effort to develop and retain staff, professional services firms across the U.S. are engaging in formal sponsorship, or dedicated efforts to ensure that everyone with leadership potential has access to a sponsor.

This blog post is the first part of a two-part series featuring one firm’s experience with intentional sponsorship.

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AICPA Accounting Competition Challenges Undergraduates

I’m a pretty competitive person. Whether it’s pickup soccer, playing against my friends in our fantasy football league, or a game of Yahtzee with my wife – I enjoy the thrill of competition. The process of giving it my all is one of the things that keeps me motivated in both my professional and personal lives.

In the spirit of competition, the American Institute of CPAs recently announced the opening of the 6th annual AICPA Accounting Competition. This year, the AICPA is challenging undergraduate students to think like management accountants as they help a business hone its strategic plan. This means students will be analyzing complex financial issues and business operations in the context of the market environment and recommending strategies for growth and sustained success.

The competition has a number of different steps. Fifteen teams will be selected from the first-round submissions as the semi-finalists for the competition. The top three teams will each earn $10,000 as well as an opportunity to present their cases to an executive panel of judges at the AICPA’s offices in North Carolina. Faculty advisors will accompany their teams to support them as they present. The teams will compete for a first place prize of $5,000, a second place prize of $3,000 or a third place prize of $2,000 to be awarded to their schools.


With the deadline for first-round submissions coming up soon (2:59 pm ET on September 28), I sat down with AICPA’s Erin Carson, Manager of Student Recruitment and Engagement, for more details on the competition and what students need to know to put their team in a position to succeed. 

Case Competition Pyramid Infographic-02

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5 Ways CPAs Can Add Value in the Event of a Cybersecurity Attack

Mission impossibleIt’s been 19 years since the first Mission Impossible movie sprang from 60s television and graced the silver screen. This summer, the fifth installment of the Impossible franchise premiered. When we first met Ethan Hunt, it was 1996 and the BMW Z3 made its debut as Agent Hunt’s stylish ride. Despite all the high-tech gadgetry depicted in the film, in real life, the Y2K debacle was the biggest IT security crisis businesses faced. Fast forward nearly two decades; driverless cars are a reality, and a car hacking crisis has put drivers of 1.4 million cars at risk.

Back when Mission Impossible first thrilled us with espionage and national security fantasies, cybersecurity was merely an IT concern. “It’s now a C-suite problem,” former secretary of the U.S. Department of Homeland Security, Tom Ridge, said recently at the AICPA CFO Conference in Denver.

Given the frequency of cybersecurity attacks today, it is important for CPAs to understand their role in this arena. CPAs are well equipped to strengthen the process and evaluate cybersecurity risks. Below are a few examples of where CPAs can add value: 

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5 Ways Not-for-Profits Can Detect and Prevent Fraud

Internal controlsThroughout my career, I have worked with small businesses and not-for-profits, auditing their financial statements and helping them improve their internal controls. On one hand, I love working with nonprofits and discovering their mission and how they are working to improve society. On the other hand, I do not love discovering one or two people taking advantage of poor internal controls to steal from the organization. Many of my clients conduct their work with limited funding, and some rely on volunteers to perform key roles. When I discuss internal controls with my clients, they are often surprised to learn that small improvements can go a long way in preventing theft of assets and unsubstantiated spending, two of the most common types of fraud in not-for-profits.

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Change is Scary, but Can Inspire Progress

ChangeEarlier this year, the AICPA decided to phase out the “free/no CPE” option for attending section-sponsored webcasts. This “mixed model” was creating CPE compliance concerns so it was replaced with a selection of free events with CPE while maintaining the event archives for viewing content without CPE.

When the Taxation Team learned that the change would also apply to the Tax Power Hour (TPH), a monthly practice management webcast series, we were concerned about the impact it might have on our members. However, the team quickly came to realize this change was a blessing in disguise.

We had become complacent and had not really followed our own advice: always spend time working on your business, not just working in your business. We had stopped working on our business and were completely consumed with working in our business of serving members with new fresh resources. I’m falling on my sword with a public ‘mea culpa’ in the hopes that our members can learn from our mistakes with this valuable resource. As writer Phyllis Theroux said, “Mistakes are the usual bridge between inexperience and wisdom.

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In the News: CPAs in the Corner Offices Increasingly Concerned about U.S. Economy

Business executives are increasingly less optimistic about the state of the U.S. economy. That’s according to the 3rd Quarter Economic Outlook Survey, a poll of AICPA members serving as CEOs, CFOs and other senior accounting positions.

The survey, which was released late last week, found that respondents who were optimistic dipped below 50 percent--to 48 percent--for the first time since early 2014. The impact of worldwide economic slowdown and domestic regulatory concerns helped fueled this slide.


EOSThe CPA Outlook Index -- a comprehensive gauge of executive sentiment within the AICPA survey -- fell one point in the third quarter to 71, the third consecutive drop from a post-recession high of 78 in the fourth quarter of 2014. The index is a composite of nine, equally weighted survey measures set on a scale of 0 to 100, with 50 considered neutral and greater numbers signifying positive sentiment. 

 

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Help Shape the CPA Exam's Evolution

CPA exposure draftWhether you’re a recently licensed CPA or seasoned veteran with decades of experience, think back to when you first took the Uniform CPA Examination. Were you sitting at a computer in a modern test center or packed into a large hall with pencil and paper in front of you? Everyone has their story, but regardless of how or when you took the Exam, this rite of passage is the great equalizer for all CPAs. Passing the Exam means you have the knowledge and skills required for initial licensure as a CPA.

Since the Exam was first used in the licensing process nearly 100 years ago, alignment to professional practice has been its hallmark. Over that time, the AICPA has led the Exam’s evolution, ensuring its content consistently captures the needs of a dynamic profession that regularly faces changes in technology, business practices, and standards. 

 

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Deflategate, Binkygate & Disclosing Open Tax Years

DeflategateNot many things capture our collective attention like investigations into controversial cases. The NFL’s investigation into underinflated footballs, or the ongoing allegations of corruption in FIFA, to whether or not David Beckham is a shoddy parent for allowing his daughter to continue to use a pacifier at age 4 are just a few examples. The accounting profession has its investigations into controversies too. A recent example is the investigation the Center for Plain English Accounting (CPEA) conducted about the applicability of the disclosure requirement of open tax years associated with FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes. The CPEA issued a report on this investigation in March.

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Are You Prepared for a Cybersecurity Attack?

Cybersecurity 1Is your firm or organization prepared to respond to a cybersecurity attack? What about your clients? A cybersecurity breach could occur at any time. No organization is too small to come under attack, so it is best to be prepared. When a breach occurs, companies without a plan may waste valuable time trying to organize a core team and put a strategy in place. Below are steps that you should consider as you develop a cybersecurity response plan.

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Keeping the Business in the Family

DallasThe fate of a family business can be tricky when the owner is no longer able to remain at the helm. Is there an obvious successor? Is there a succession plan in place? Encouraging your clients to think about succession planning for their businesses is difficult; none of us want to think about the day we can no longer work. However, when the business is a closely held family business, the discussion as to whether to leave the business in the family is often more emotional. After all, we’re talking about a different kind of relationship than we have with our staffs or colleagues.

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