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20 posts from January 2016

IRS Service Levels: Don’t Give Me Excuses!

CartoonHonest disagreement is often a good sign of progress.

-Mahatma Gandhi

Abysmal service levels; I hear you, I really do. It’s been a long time since I’ve been in practice but those busy season scars are still with me. I half joke but the memories don’t go away completely.

So, another busy season and the prospects for easily – wait, reasonably – representing your clients with the IRS appear to be no better than they were last year, when I blogged several times about service issues. In May, for example, you may have read about the AICPA governing Council resolution directing the Institute to intercede on a long-term solution to the service crisis. We started those conversations but, frankly, the environment in Washington got worse. Hard to believe, but it did. In October, House Oversight and Government Reform Committee Chair Jason Chaffetz (R-UT) joined 18 members of the committee in introducing an impeachment resolution against IRS Commissioner John Koskinen. The resolution is pending before the House Judiciary Committee.

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When to Conduct Audits Under PCAOB Standards and GAAS


Client and cpaYour client calls you up asking you to conduct the next audit of their financial statements in accordance with Public Company Accounting Oversight Board standards, however, the entity is not an issuer (as defined by the U.S. Securities and Exchange Commission), nor a broker or dealer registered with the SEC. The audit is not within the jurisdiction of the PCAOB. This seems like a strange request.  Perhaps the client is a clearing agency or futures commission merchant registered with the Commodity Futures Trading Commission, which requires that entities registered with it have an audit performed in accordance with PCAOB standards. Maybe the client has entered into a contractual agreement that requires an audit conducted under PCAOB standards. Or maybe, for whatever reason, the client just wants an audit conducted under PCAOB standards.

Unless the audit is within the jurisdiction of the PCAOB, you are required to conduct the audit in accordance with Generally Accepted Auditing Standards. You may also conduct the audit in accordance with PCAOB standards, but you cannot conduct that audit only in accordance with PCAOB standards.

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Five Ways Finance Pros Can Use Data to Unlock Business Opportunities

Unlock businessMore than 90 percent of finance professionals agree that finance has an essential role to play in helping their organizations benefit from data-related projects. However, organizations looking to use data to its full potential could face a steep learning curve.  In the CGMA report, From Insight to Impact – Unlocking Opportunities in Big Data, the AICPA and CIMA asked more than 2,000 finance professionals around the world about the role of finance in turning data into insights to maximize commercial opportunities. While 87 percent said big data and better analytics will change the way business is done over the next 10 years, 86 percent said their businesses are struggling to get valuable insight from data.

A few months back, I had the opportunity to listen in on a roundtable discussion with CEOs from some major multinationals about the need to make their organizations more data-centric—and the role of the CFO in this endeavor.

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10 Apps to Help You Automate and Streamline Your Life This Busy Season


App image2Busy season is fast approaching. As you prepare this year, consider downloading some time-saving apps that will help automate your life, and as a result, give you back valuable time. Technology has the power to make day-to-day tasks a little bit easier, so why not take advantage of all the following apps have to offer.

  1. Amazon’s Subscribe & Save: Never worry about running out of paper towels, vitamins, shampoo or other household essentials again. Parents—same goes for items like diapers and baby food. With Amazon’s Subscribe & Save service, you can select how often you’d like these products delivered, and Amazon will schedule shipments automatically. Best of all, subscribers receive a discount of up to 15% and receive free shipping on these purchases.
  2. Automatic Online Bill-Pay Services: Eliminate the stress of paying bills. We all know that time is precious, especially when you are working 60-hour, six-day weeks. Because of this, you may want to consider taking advantage of automatic online bill-pay services. Many banks, cable, phone, internet and electricity providers offer this service. By signing up, you ensure that you never miss a payment deadline. An easy choice for peace of mind.

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4 Tips to Prevent Fraud at Faith-Based Organizations

Collection basketContributions - whether by cash, check, or online giving - are the lifeblood of faith-based organizations. Many do not realize how often these donations get into the wrong hands.

There are primarily two types of theft that occur in faith-based organizations –larceny and skimming. Larceny occurs after the money has been counted, deposited, and recorded in the books of the organization. Skimming occurs when donations never get logged in the books; that is, they go missing before ever being recorded. It is the counting and depositing process that opens the organization up to skimming, and that is where fraud can be most difficult to detect. 

Faith-based organizations need to take steps to ensure that contributions make it into the bank in the first place. 

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7 Financial New Year’s Resolutions


Pack lunchAt the start of each New Year, many people make resolutions and vow to stick to them. Some say that they will exercise more frequently or focus on dieting, but what about improving one’s finances? Team AICPA brainstormed some financial New Year’s resolutions to help you meet your 2016 financial goals:

1. Set an achievable budget for the year. Start by reviewing your expenses from last year. Were some of your targeted figures unrealistic? Are there areas where you can cut back? If you’ve never had a budget, now’s the time to make one.

2. Take a deep breath if your December credit card bill is higher than your monthly average. With all of the holiday shopping for family and friends, extravagant parties and meals at restaurants, a larger balance is typical. Remember to reflect on the enjoyment gained from these activities and take the time to plan your upcoming monthly budgets so that you are back on track for the rest of the year. If you really got yourself into an unfortunate financial situation, take time to assess how it happened and address the underlying issues that led you to overspend. Use the 360 Degrees of Financial Literacy credit card pay off calculator to figure out how best to get back on track.

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Leveraging the AICPA | CIMA Competency and Learning Website for Your Development

 

Elizabeth pittelkow headshotThe AICPA | CIMA Competency and Learning website has been a very valuable tool to me since its launch in February. It has helped me both build needed competencies on my team and strengthen my own “strategic skills” in communication and leadership.

I have worked at large firms and now a smaller organization, and based on my experience, I believe the website is beneficial to CPAs from any size and type of organization. It offers small firms a full range of technical and non-technical resources, many of which are free. Larger firms may find that the resources have depth that can complement their in-house learning materials; particularly when it comes to non-technical perspectives, such as developing emotional intelligence.

To help you better understand how to leverage the website, I want to share my favorite resources and how they have helped me.  All the resources mentioned below are free for AICPA members.

Building New Competencies for Your Finance Team

My company has approximately 75 employees. As Director of Accounting and Compliance, I function in many areas, from insurance and risk management to financial reporting and HR. I also assist with legal and marketing.

When we had personnel changes this past year, I turned to the AICPA | CIMA Competency and Learning website to find planning, forecasting and budgeting resources. Using these tools helped my team develop a common language and build new competencies quickly and efficiently. I shared many of the website's resources with a staff person who took over several key responsibilities, and it helped her build needed skills in a short period of time. 

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Top 10 Tax Resources for the 2016 Tax Season

Top 10 Tax Tips 2016Have you “lost” that shiny new FitBit, depleted the family inventory of holiday goodies and now scrambled through the house trying to dig out Aunt Lucy’s famous fruitcake? Rather than investing $2,500 in a standing desk with a treadmill, it may be time to consider a new resolution!

A more practical choice may be to make a commitment that will yield positive results for the next few months. Commit to your staff, your clients, your tax practice and your professional goals during the upcoming tax season.  The AICPA wants to help you jumpstart that success by pointing out useful tools to ensure you flex your tax season muscles.

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Scuba Diving and Risk Mitigation: One CFO’s Perspective

CGMA-Fandango-RobLeffCFO-Photos - Rob Leff011What do swimming with sharks and being a CFO in digital technology have in common? According to Rob Leff, CPA, CGMA, CFO of Fandango, both require risk management techniques. In this AICPA Insights Member Spotlight, we find out how Rob is using his management accounting skills to excel in a field that is changing everything.

Tell me about your day-to-day responsibilities.

My role is multi-faceted: It includes the traditional finance and accounting that most CFOs have and also responsibilities that wouldn’t necessarily fall under the official CFO role, such as mergers and acquisitions and business intelligence. Business intelligence includes business analytics and business intelligence reporting, which is data warehousing, database management and more. Fandango is a digital business and the digital space is constantly evolving and changing with new technologies and partners. Strategically, I partner with our president and executive team on the decisions of the organization. We work together on deciding where we’re going to take the company.

How is your role different from the typical CFO?

One of my goals has been to go beyond the job description and add value to the organization. I’m always evaluating the buy, rent, or build scenarios. If there’s an area of business that we want to expand into, I’ll conduct an analysis with the executive team: What would it take to build it ourselves? Or, are there companies we can acquire to accelerate the time to market? Or, could we “rent” [by building] a commercial relationship instead of buying it? I’m constantly evaluating opportunities to grow Fandango. With all of those functions, I'm able to leverage my experience and partner with the executive management team to drive the business forward.

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Inspiring TV for Auditors: What We Can Learn from Blake Shelton and Kim Kardashian

Kim KardashianAs individuals and as a profession we continuously strive to enhance our value proposition and improve the quality of the audit. It’s hard work, and we all need to find time to relax and recharge. Sometimes, while unwinding, I discover unusual parallels between what is portrayed on the TV shows I admittedly watch and the issues facing the profession. I thought I’d share some of my favorites in hopes that you’ll find in them a useful--if not amusing--way to consider the challenges at hand.

  1. The Voice of Learning and Competency

I never cease to be amazed by the talent on each season of NBC’s The Voice. As each season progresses, we see that it’s not enough to have a great voice. Contestants must learn from seasoned pros like Gwen Stefani and Blake Shelton to apply their talent to different types of songs in varying high-pressure situations.

We’ve recently seen a substantial increase in the number of young people graduating with degrees in accounting. Many are opting for careers in auditing. These young professionals are extremely talented, but they need great mentors to harness that talent and teach them the secrets and tricks that seasoned auditors employ, like skepticism and professional judgment.

Like the show’s finalists, practitioners learn from their mentors that the audit is a high value service that helps maintain confidence in financial reporting. At the AICPA, we recognize that the new generation of CPAs learns and works differently--and their expectations can be very different from prior generations. Our Future of Learning initiative is addressing these needs by developing new ways to convert talent into professional competence, both prior to licensure and in ongoing practice.

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A Lesson from 2015: Help Clients Avoid Unpleasant ACA Surprises

ACA surprisesWe made it through last year’s tax season thinking Affordable Care Act (ACA) matters were over with until the 2016 filing season, but we were wrong. Individuals who did not indicate on their Form 1040s that they had received the Advanced Premium Tax Credit were surprised to get an IRS notice at the end of 2015 requiring repayment of the credit.

The IRS identified many cases where taxpayers took the credit, but then did not indicate that they did so on their Form 1040. Tax preparers, unaware of the advance credit, calculated it again on the 1040, so taxpayers were effectively paid twice. The IRS caught these double dips, assessed the difference, and included the 20% accuracy penalty (Section 6662) in addition to repayment of the advanced premium tax credit and interest.

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It’s Just Hitting and Catching (and 1040s and W2s and 1099s and 1095s)

BaseballBaseball offseason: the time roughly between Halloween and Valentine’s Day when Major League Baseball teams take a break from hitting, catching and fielding. While there may be not peanuts, hot dogs, cracker jacks, or $12 beers being peddled at baseball stadiums across North America, it does not mean the teams are idle. In fact, in the days lead up to February 18, 2016 (when pitchers and catchers report!), teams are busy preparing for the coming season, the same way tax professionals are gearing up for the impending busy season.

This work behind the scenes is what ultimately lays the groundwork for a successful tax (or baseball) season. Without adequate preparation, both baseball and accounting organizations would find themselves struggling mightily to keep up with the demands of their professions.

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Three Reasons to Learn More about Audit Analytics

Audit analyticsIn every audit, there are many transactions and accounts that need to be checked, whether they appear especially risky or not. And whether you’re an internal or external auditor, data analytics will help you identify and analyze those audit areas with the same effectiveness as methods auditors have used for decades—maybe even greater effectiveness. Sounds pretty good, right?

So what are the drawbacks preventing further integration of data analytics into the financial statement audit? Most significantly, there’s a need for additional guidance on how to harness the power of audit analytics. Additionally, the profession would benefit from independent research to support the effectiveness of new audit analytics in conducting an audit and meeting audit objectives.

The recently announced Rutgers AICPA Data Analytics Research (RADAR) Initiative seeks to study and find evidence of the effectiveness of automated techniques and data analytics applied in the context of the financial statement audit. This collaborative research effort, which will be hosted by Rutgers University, will explore the application of foundational approaches that can be applied by audit firms of all sizes.

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5 Tips for Developing a Successful Enterprise Risk Management Program

ErmImagine being able to use real time data and analytical tools to help identify and track potential risks that could impact your organization. At IBM, analytics is the next big frontier of risk management, as technology sophistication, coupled with an abundance of data, continues to provide insight into actions.

Effective enterprise risk management programs continually capture, evaluate, analyze and respond to risks arising from changing internal operations such as systems failure or turnover; shifting external markets resulting from political turmoil, a recession or natural disasters; or changing regulations. Risk management requires an organization to align its assets, people, activities and goals, thereby leading to good organizational governance.

IBM has been weaving solid risk management practices into the fabric of our business for nearly a decade. Our program focuses on creating business value and competitive advantage through enhanced risk identification. We embed risk management into the day-to-day operations of our business units and instill a culture that promotes accountability and provides processes and mechanisms for reporting risks.

Is your organization looking to enhance its enterprise risk management program? Following is some advice to help you get started. 

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Dreaming of the Jackpot: 8 Tips to Help You Manage Your Money If You Win Big


JackpotYour own private island. A villa in Tuscany. A sprawling mansion in Malibu. A ticket around the world. Oh, the things you could do with $1.3 billion in lottery winnings. But before you get carried away, consider those past lottery winners who mismanaged vast fortunes, losing everything. Don’t fall victim to the same fate. 

Live life as usual, until you develop a plan for how you will handle your winnings. You’re excited. Who wouldn’t be? But it would not be financially wise to buy a house, boat or luxury car the day after winning big. You will want to consult both a CPA and a tax attorney who have experience dealing with unexpected windfalls. These professionals can help you determine if you should take the lump-sum or annuity payment option, and help you develop a plan for how to use your new-found fortune.

How much money will you actually walk away with? Just because the jackpot is now advertised as about $1.3 billion does not mean that is the amount that will wind up in your bank account. Winnings of more than $5,000 are subject to a 25% federal withholding tax. The actual federal tax rate is likely to be higher — possibly as much as 39.6%, depending upon other factors such as income, deductions and residence. Additionally, depending upon where you live, your winnings may be subject to state and local income taxes. Of course, if the jackpot sum is enormous, this likely will not make a huge difference. However, it is important to keep in mind.

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In the News: CPAs Pessimistic on Economy in 2016

Eos q4With the stock market dropping sharply to begin the new year, Americans are increasingly focused on the health of the economy. CPAs who hold leadership positions in U.S. companies, such as CEOs, CFOs and controllers, are pessimistic on the U.S. economy for the coming year. That’s according to the AICPA’s 4th quarter Economic Outlook Survey.

The survey found that overall expectations for revenue growth had declined to 2.9 percent, down from 3.3 percent in the previous quarter and 4.7 percent in the fourth quarter of 2014. In addition, profit growth expectations slid from 2.6 percent in the third quarter of 2015 to 2 percent last quarter.

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Life Planning: The Conversation of a Lifetime

Life planningIt’s just not enough to give your clients the tools they need for long-term financial planning; to really connect with them, it is good practice to humanize your approach by integrating life goals with financial goals. This is “Life Planning.”

When I started my practice, about 50% of my clients were psychologists, psychiatrists and other mental health professionals. After I began attending their workshops and learned more about human psychology, I started thinking about my own business relationships. To truly be a benefit to my clients, I needed to find a way to develop an authentic relationship they would value.

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10 Steps to Finding a Career Development Mentor

Mentoring keyQuick--what comes to mind when you hear the word “mentor”? Did you envision a well-connected senior leader who is older, wiser and much more experienced than you are? While it’s true that most mentors once fit that description, the current thinking around mentors and mentorship has expanded. Today, we recognize that age, experience or a person’s profession doesn’t necessarily mean they will be an effective mentor. The main requirement is that a mentor is someone you highly respect, who can offer feedback, and is interested in helping you develop professionally and holistically.

Professional development experts have been reassessing other aspects of mentorship as well, including the notion of time. In the past, mentoring relationships were often expected to happen over the course of years, or even without any clear end date. Today, however, professional development experts advocate for mentoring relationships that are for a specific timeframe--ideally, six to 12 months.  

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New Version of Bank On It Teaches Financial Literacy Skills

Bank On ItCPAs have an innate calling to educate the public about their finances. The need for this education has never been greater. A recent online survey conducted by Harris Poll on behalf of the AICPA showed that a staggering 75% of college students acknowledged that their student loan debt would require some sacrifices in their lives after graduation. So how can we help students develop a better understanding of their financial situations prior to attending college, while also setting them on a path to financial success?

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Tips to Make Your Not-for-Profit Clients’ Next Audit a Success

Nfp auditTimes have changed significantly from when I started performing audits over 20 years ago. U.S. Generally Accepted Auditing Standards have evolved, and now emphasize the auditee’s responsibility for financial reporting. Today, not-for-profits are in charge of identifying and recording the adjustments necessary to close their books, gathering the financial statements and designing control systems needed to prevent, detect and correct errors that may occur. As a result, the cost and efficiency of the audit is directly impacted by how well your clients prepare. Here are some best practice tips to help them prepare:

Create a detailed timeline.  It is a good idea to meet with clients at least three months prior to the start of the audit to identify key dates and milestones, such as when the client-prepared information will be completed, when the audit will start, when draft financial statements will be provided to management, and when meetings with the audit or finance committee and board of directors will take place. If your firm is also providing tax services, the timeline should include the expected completion date of the client-prepared tax schedules, as well as the delivery date for the IRS Form 990. All parties should agree to, and receive a copy of the schedule containing these items. This will define each party’s responsibility in meeting the final deadline. 

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