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22 posts from May 2016

5 Steps to Transform Leadership Theory into Practice

LeadershipMost of us have read numerous books on leadership development theory, because they are excellent resources that offer valuable insights. However, you need to do more than just read and understand these books for them to have any real value. You need to be personally inspired and motivated to get the most out of such personal success literature. Basically, you have to walk the walk. Embody the teachings found in these books and demonstrate positive leadership behavior every single day. The question is: how?

As everyone knows, old habits die hard. Changing behavior is frustratingly challenging, even if the habits you are trying to adopt are positive. That’s why it’s extremely useful to have a roadmap. Aristotle said, “We are what we repeatedly do. Excellence, then, is not an act but a habit.”

Here are five steps that can guide you in successfully adopting positive leadership behaviors to transform yourself into an authentic leader.

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Here’s How This Millennial Learned How to Budget

Millennial budgetingIf you have some semblance of common sense, then managing your money should be a piece of cake, right? Unfortunately, as I have seen in myself and in those around me, that is not always the case. Financial knowledge is a topic that many people think should be inherent, but in reality, this is oftentimes not true. 

As a millennial, frequent life changes become commonplace, and it can feel overwhelming. Whether transitioning to a new job, moving to a new city or deciding to get married – it’s easy to get distracted by the excitement and let personal finance fall by the wayside. According to a recent survey, over a third of millennials (34%) said that saving money was their top priority this year – more than leading a healthy lifestyle (20%) or losing weight (14%). Yet, millennials’ spending habits may be one reason they struggle to reach their financial goals: 65% of the young adults surveyed said impulse shopping got in the way of saving.

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CPA Success Story: Angela Ho

Angela HoIn celebration of Asian American and Pacific Islander Heritage Month

For Angela Ho, CPA, CGMA, dichotomy has been a constant presence in her life: East and west. Public accounting and business/industry. Young and seasoned.

Born in Virginia as a first-generation Chinese-American, Angela experienced a childhood with one foot in the United States and the other in Hong Kong, where she lived for five years, followed by two years in Tokyo.

Her father’s international work assignments were “my earliest exposure to the business world,” Angela says. “I was surrounded by businesspeople starting at a young age.”

Sage Advice for a Career Path

When it was time to return to the United States for college, many of her father’s colleagues suggested accounting as a major. It didn’t take much convincing for Angela to investigate.

“I didn’t know much about accounting specifically, or the importance of financial statements,” she says. “But I took a fairly assertive approach to learning about becoming a CPA — going to career fairs, talking to Big 4 firms, and seeking out career services. As early as my freshman year at the University of Massachusetts Amherst, I was mapping out credits and requirements to become a CPA.”

Angela never looked back. Well, almost.

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Alternative Investments and UBIT: Knowing is Half the Battle

Part one of a two-part series on tax consequences of alternative investments



Income diversificationIn the aftermath of the Great Recession, charitable organizations emerged as increasingly sophisticated savvy investors. At a time when donations dwindled and endowments were shrinking, the not-for-profit sector sets its sights on income diversification, including alternative investment vehicles such as partnerships, private equity funds, real estate investment trusts and hedge funds. No longer just the bailiwick of elite institutions, alternative investments are continuing to grow in popularity. However, the tax compliance issues associated with these investments can sneak up on unsuspecting not-for-profits, many of whom are unaccustomed to paying federal income taxes due to their preferential, tax-exempt status.

When it comes to understanding unrelated business income taxes (UBIT), knowing is half the battle. I find that it is helpful to explain to clients the history behind the legislation that brought us to where we are today. The tax rules regarding UBIT are a result of legislation passed by Congress in 1950 to ostensibly level the playing field between commercial entities and tax-exempt not-for-profit organizations that would otherwise have a built-in market advantage when conducting similar businesses due to their preferential tax status. Organizations that engage in unrelated activities pay a tax on the income from those activities at corporate rates (or at trust rates for exempt organizations that are created as trusts) unless a specific exemption or exception applies.

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What it Means to Be There for Your Clients as They Age

Elderly couple review financesMost people don’t think they need to plan for getting older. That is, until they are forced to make unexpected, and potentially no-win, decisions, or, perhaps they fall victim to a scam that targets elderly people. In the best cases, the reality of aging means the person merely finds they can’t do something they used to do with ease. Unfortunately, in many cases, the reality doesn’t hit them until after they’ve experienced a problem.

Getting older can be a challenge to your clients’ personal and financial security if their physical and mental capacity start to wane. As their trusted adviser, you can help your clients safely ease into the later decades of their lives by organizing, simplifying and monitoring their finances, and building important relationships to help them address senior issues. As you gain more experience in this area of practice, you may find yourself identifying a range of later life planning services that can offer significant practice development opportunities.

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Showcase Your Expertise: How Digital Badges Will Shape Your Profile

MeatballsI make meatballs so delicious they’ll bring tears to your eyes, but only people who come to my house for dinner know that about me.  What if I want others to know? I can post photos to social media, but that really doesn’t demonstrate the depth of my expertise.

As a CPA, you face a similar dilemma when it comes to assessing and showcasing your expertise. Of course, your need to do so is far more important and the stakes significantly higher than my need to publicize my culinary skills.

As you progress in your career, employers and clients alike expect you to continuously build your competence and stay ahead of the learning curve on regulations, standards and other changes. But how do you prove it? 

AICPA digital badges can help. These graphical representations of significant achievements are linked to online descriptions that are fast becoming the standard for recognizing and publicizing your professional development.

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States Moving to Conform Tax Due Dates with Federal Law

ConformityAs you recover from yet another grueling tax season, the optimist (and realist sometimes) in me says next year will be better with fewer practitioner frustrations. After many years of AICPA tax policy and advocacy efforts, Congress enacted several AICPA-supported federal due date changes and a de minimis safe harbor of $100 of income/$25 of withholdings for corrected Form 1099s that take effect for 2016 tax returns (2017 filing season).

New Federal Due Dates

As described in detail in the AICPA summary chart, these federal due date changes should provide a more logical workflow next year. Starting with 2016 returns, business entity investors’ Schedules K-1 are due before the investors’ returns are due, and foreign account information (FBAR) is due (and can be extended) when the individual returns are due. Here’s a brief recap of the new federal tax return deadlines: 

  • Partnership and S corporation information returns are due March 15, providing investor Schedule K-1 information to their partners and shareholders (including corporations) before the investors’ returns are due.
  • Tax returns for calendar-year corporations, individuals, trusts and estates, and FBAR are due on April 15.
  • The extended due date for partnerships continues to be September 15, along with corporations (until 2026). The extended due date for trusts and estates is September 30.
  • The extended due date for individuals and FBARs (and starting 2026, for extended corporations) is October 15.

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Use a Flowchart to Illustrate Client Wealth Transfer Goals

You consider yourself to be proactive. By age X, you have a well-thought-out estate plan. Your will states that 80% of your wealth will be distributed to your two children, while 20% will be donated to a charity close to your heart. All of this is set in stone, right?

Once estate documents are drafted, some may feel confident that their wishes and intent will always be carried out; yet, this is typically not always the case. While estate documents are static, a client’s life is dynamic and ever changing. CPA financial planners are uniquely positioned to ensure a client’s wealth transfer goals are continually being met.

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Asian and Pacific Islanders Have a High Degree of Cultural Diversity but Need Greater Visibility

Darryl NittaMay is Asian American and Pacific Islander Heritage Month, a celebration established in 1992 to recognize the culture, traditions and history of Americans of Asian or Pacific Islander ancestry as well as their achievements and contributions.

Did you know?

  • The term “Asian Pacific Islands” includes more than 50 countries and ethnic groups
  • According to the U.S. Census, Asian and Pacific Islanders are the fastest growing race in the nation
  • About 5.4 percent of the U.S. population is of Asian or Pacific Islander descent
  • As of 2007, there were 1.5 million Asian American-owned businesses in the United States—up 40 percent from 2002 (U.S. Census Bureau's Survey of Business Owners – Asian-Owned Firms: 2007, released May 2011)

Creating Environments Where Asian and Pacific Islanders Can Thrive

Within the CPA profession, there are more Asian and Pacific Islanders represented than any other minority group, including Hispanics and African Americans. Also, the numbers overall are increasing. However, the increase is small, and more can to be done to recruit and retain Asian and Pacific Islanders as well as other minority groups. In our firms, we can help promote Asian and Pacific Islanders by:

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How to Talk to Not-for-Profit Boards About Their Responsibilities


Board of directorsAs a CPA and community volunteer, I’m often asked to talk to not-for-profit boards about financial and governance topics. My presentations often generate lively discussions. Some people are surprised to learn that although it is not necessary to be a financial or business expert to serve on a board, there are some broad fiduciary responsibilities that apply to all board members. Most nonprofits are formed as corporations under their particular state’s law (I’ll leave the nuances to the lawyers), but a cornerstone of these laws is that board members owe a fiduciary duty to the corporation they serve on. A fiduciary responsibility is defined as the obligation to act in the best interest of another party, and this pertains to all matters regarding the not-for-profit, including its financial oversight. There are three basic responsibilities that apply to board members: the duty of obedience, duty of care and duty of loyalty.

Duty of Obedience

When I explain that all board members can be equally responsible and liable to safeguard the not-for-profit’s assets and interests, the response I often receive is, “The entire board? Even commissioners?” or “But I’m just a commissioner. I shouldn’t be held responsible!” The duty of obedience means board members are accountable for internal laws (that is, bylaws and policies) and all applicable external laws and regulations. For instance, the IRS can hold each board member personally liable for failure to pay certain taxes incurred by the organization. It does not matter if they are the Chair or President or “just” a member at-large; generally, all board members have responsibility.

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Have You Taken a Look at The New Clarified Attestation Standards?


ClarityIf you currently perform attest engagements—or expect to next year—you’ll want to check out the new standard sooner rather than later.

Like other standards released under the AICPA’s clarity project, Statement on Standards for Attestation Engagements No. 18 (SSAE No. 18), Attestation Standards: Clarification and Recodification, released last month, incorporates drafting conventions that make the standard easier to read, understand and apply. The new standard differs from SSAE No. 17.  

SSAE No. 18 introduces a “Common Concepts” section that applies to all attestation engagements. Additionally, the standard includes sections containing incremental requirements and guidance for the three levels of service in the attestation standards. These are: Examinations (reasonable assurance), Reviews (limited assurance) and Agreed-Upon Procedures. SSAE No. 18 also contains sections with incremental requirements and guidance for four specific subject matter areas, including Prospective Financial Information, Pro Forma Financial Information, Compliance with Laws and Regulations, and Controls at Service Organizations.

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One Man’s Journey From Poverty and Neglect to CPA and Inspirational Speaker

A conversation with Frank Thomas, keynote speaker at the 2016 AICPA Accounting Scholars Leadership Workshop

Frank ThomasOn May 18–20, about 100 minority accounting students will assemble in Durham, N.C., for the AICPA Accounting Scholars Leadership Workshop. The annual event draws accounting, finance and tax majors from across the country for an immersion into leadership development, CPA Exam preparation and the infinite benefits of earning the CPA credential.

Frank Thomas, a renowned inspirational speaker, author of RISE: Even Death Can’t Stop Me and previously a practicing CPA, is this year’s keynote speaker. Insights recently spoke with Thomas about his journey to becoming a CPA, overcoming profound childhood obstacles and observations on the future leaders of the profession.

Insights: What memories stand out to you on your path to becoming a CPA?

Thomas: Becoming a CPA is not the easiest thing in the world. Take the CPA Exam for instance, it’s one of the most rigorous exams in the world. It’s a difficult exam to prepare for, and it’s a difficult career path. I just remember how incredibly challenging it was.

I say that as someone who grew up in a home environment that was not ideal. My brother and I were raised by a single mother who gave her best but faced demons of her own. Drugs, alcohol, you name it. We were forced to raise ourselves. So I always knew it was up to me to face challenges and that I had to work twice as hard to make something of myself.

Becoming a CPA was the road I took.

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Hitting it Out of the Ballpark with the IRS’s Future State

Baseball IRSBaseball is ninety percent mental and the other half is physical.

-Yogi Berra

Spring time.  The first busy season is done – that’s when CPAs can catch their breath, relax a little, maybe even catch a baseball game. Speaking of baseball, CPAs are in a league of their own, no question about it, and our Tax Section helps get you there. Baseball also brings me back to my childhood when I was a huge Washington Senators baseball fan. But the future for the Senators was never bright; thoughts of the playoffs, let alone the World Series, were out of the question. But now with the Nationals in town, the future is much brighter.

I’m hoping that’s the case with the IRS as well.  Unlike Yogi Berra’s concept of accounting, the numbers have just got to add up for the IRS and, well, the IRS has dropped the ball in service.  We all know that, including the IRS. With two strikes against them in the realm of public opinion, the IRS has unveiled its Future State Initiative. You may know from reading my recent blog on IRS service levels that I thought the signs were starting to look good in terms of possibly starting to move the IRS service needle back in the right direction. 

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The One Career Move That Changed My Life

David Oransky - hi resQ&A With David Oransky, CPA/PFS

Pilot … sailor … entrepreneur … CPA financial planner. David Oransky, CPA/PFS, is open for an adventure in both his personal and professional life. Embodying the ‘can-do’ spirit and desire for ownership that defines the millennial generation, David left public accounting to begin a career in financial planning and now serves as principal and founder of Laminar Wealth. In order to help other young CPAs understand the career possibilities in financial planning I sat down with David to learn how one career-defining move changed his life.

 

Sarah Bradley: What is the one career move that changed your life?

David Oransky: It would have to be when I made the decision to leave my job and join a wealth management firm. I felt I was doing well in my role there, but realized my natural curiosity was in personal, not corporate, finance. When I gave my notice, partners and colleagues expressed concern about my decision. Looking back, I’m glad I listened to my heart. Today, I get out of bed every morning excited that I get to not only do work I find interesting, but also get to make a direct and positive impact on the lives of my clients.

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Not-for-Profit Section Celebrates One Year Anniversary


NFP team photoOn May 2, the AICPA’s Not-for-Profit Section marked its one-year anniversary. Today, as I write this article, our community is more than 3,600 members strong and counting.  As I reflect on my team’s work and that of all the tireless staff and teams of volunteers throughout the Institute who helped us nurture and grow this initiative, I am deeply grateful. I am also inspired by their commitment to providing high-quality specialized resources and learning opportunities for not-for-profit professionals.

About 52 percent of our current members are business advisers to not-for-profits, such as consultants, auditors and tax professionals. The remaining 48 percent are leaders working within the not-for-profit sector, including charities, human service agencies, faith-based organizations, associations, educational institutions and a whole host of other causes that are united by one common focus: achieving a mission to make a difference.

In the last decade, the growth rate of the not-for-profit sector surpassed both the private and government sectors. However, they face unprecedented challenges-- economic, regulatory and financial. Among fundraising organizations, competition for contributions is fierce. At the same time, the donating public wants accountability from not-for-profits. From a regulatory standpoint, state attorney generals are acting aggressively, prosecuting - and making an example out of organizations associated with or involved in wrongdoing. The resulting negative publicity does not just affect the entities involved, but can affect entire communities. It can trigger a ripple effect that becomes an impediment to attracting financial support for not only that specific entity but also related causes. Strong governance oversight and risk management are important for all businesses, especially not-for-profits because they live in the public eye.

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CPA Brand Research: The Good, the Challenge and the Opportunity

Brand infographicWhen most people think about a strong brand, Disney or Apple come to mind.  But when we at the AICPA think of a strong brand, we think of the CPA.  And we are pleased again to report that independent research confirms that CPA stands stronger than ever.

We are always pleased to hear from business decision-makers and investors that CPAs remain the most highly regarded and trusted business professionals, and we look forward to sharing that news with you.

The 2015 independent research commissioned by the AICPA again reveals a long list of affirming statistics about the value that the CPA brings to clients and the value the CPA credential offers the profession. The study also provides insight into global forces at play that both challenge the profession and point to areas of opportunity.

First, the good news: CPAs continue to inspire confidence across our key constituencies. Results of our focus groups, in-depth interviews and four nationally distributed online surveys, conducted by Applied Research & Consulting, show:

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Your Client’s Tax Return is a Gold Mine for Planning Opportunities


Gold mineNow that we’re past the April tax filing deadline, looking ahead to helping clients survive the upcoming 2016 tax year may very well be the last thing on your mind. Nonetheless, proactive CPA financial planners and tax professionals know that Form 1040 is a virtual gold mine with many nuggets of information to offer. The individual income tax return will not only yield opportunities to lower your clients’ tax liability and help them plan for their retirement, but is also beneficial for your practice.

You can expand your scope of services by adopting a more holistic financial planning approach. Portfolio managers, estate attorneys and insurance professionals focus on their specialized fields. However, a client’s CPA is likely the only professional on the team who is going to take the time to analyze the 1040.  This is nothing short of “having the window into everything going on in a client’s life”. For the practicing CPA financial adviser, it provides a natural springboard into deeper client conversations and provides opportunities to discuss new service offerings.

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When it Comes to Financial Literacy, Small Steps Add Up Quick

Stacking cake

When I was just starting out my career, I was in the same boat financially as a lot of recent college graduates. My primary focus was making ends meet. For me, this meant making decisions about how much I could afford for rent and managing my day-to-day expenses so that bills got paid on time.

In the back of my mind, I understood that my student loans and a few thousand dollars in high interest credit card debt also needed to be addressed, and that paying the monthly minimum was a bad look. In those days saving for retirement and building up a nest egg was a nice, if seemingly unattainable idea, like summering in the South of France or playing professional baseball. Surely there are people who do these things, but I had no idea how they made it happen.

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Are You Cybersecurity Ready?

Cyber compliance

 

The interconnected digital world has been referred to as the wild, wild West. Hackers are eagerly looking to exploit the weakest line of code in mobile devices, applications and operating systems. And those are just a few of the types of technology at risk in today’s environment.

You’ve probably heard the old adage, “you don’t bring a knife to a gun fight.” Cybersecurity is no exception. In a cyber “gunfight,” only the most prepared organizations can survive a security breach. To assist organizations in preparing for cyber incidents, the Department of Justice’s (DOJ) Cybersecurity Unit released Best Practices for Victim Response and Reporting of Cyber Incidents, out lining steps to take before, during and after a cyber attack or network breach. 

The DOJ document provides best practices and indicates that organizations connected to the Web should evaluate cybersecurity readiness by preparing prior to, in response to and for recovery from an intrusion.  

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3 Things You May Not Know About Not-for-Profit Board Leadership

NfpIt is an honor to serve on a nonprofit board. In fact, financial professionals often serve in a leadership role as treasurers or finance committee chairs within the board itself. Though board leadership is certainly a meaningful way to give back in your community, it is not without its challenges. Finance committee chairs and treasurers assume additional leadership responsibilities that go beyond the responsibilities of board members at-large. 

Here are three things you may not know about not-for-profit board leadership:

1. Listening skills are paramount and require constant improvement.

You will be working alongside professionals from other fields, typically those with expertise related to the organization’s mission. For example, if your organization serves homeless youth, you may work with professionals from the social-work field. To lend your expertise to business planning and strategy, you will need to spend time talking with your colleagues who are experts on the subject matter and understand the organization’s theory of change. With different viewpoints the board, as a whole, will make better decisions.

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The Benefits of Globetrotting as a Way of Life

PassportJapan, China, Turkey, Italy and the Czech Republic are just five of the 23 countries I’ve visited during my ten years as a CPA in the forensic services arena. In a world that has become increasingly connected, more and more CPAs will find themselves working with clients whose interests and connections lie in one or more countries around the world. Although I’m based in PwC’s Forensic Services practice in Washington, D.C., globetrotting has become a way of life for me.

I believe that international business experience can be a significant enhancement to a CPA’s skill base—and my travel has been personally enjoyable as well. If you’re interested in discovering new places and broadening your career opportunities, here are some things to keep in mind. 

Have your passport ready. When I started with PwC, I was immediately drawn to forensics. After completing some initial assignments in the United States, my Director asked if I had a passport. Since I did (and it was current), he immediately sent me to Dublin to work on a contract compliance engagement. Beginning with that first trip, I learned quickly that by being on the scene, I could establish a personal relationship outside of work with the U.S. or international staff.

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The CGMA Program: Adding the Right Tools to Your Career Basket

GlenneyLucky for me, my career has taken me through several different jobs in manufacturing, and one thing I’ve noticed across the board is that companies are increasingly looking for more diverse skillsets in their management accountants. For CPAs to meet the demand, we have to take a critical look at our own professional development to make sure we foster key talents like strategic thinking, communications, leadership and business partnering. A manager once told me that you have a “career basket,” and you need to fill the basket with the skills that will get you ahead. It’s not always easy to find the resources to develop and hone these skills, but it’s very necessary to getting—and staying—ahead.

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