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19 posts from June 2016

3 Things CPAs Need to Understand about Crowdfunding


Shutterstock_270504203If a client came to you 10 years ago with an innovative idea for a new product, such as a winter coat that is warmer and lighter than any other on the market—you might say “Great idea. How will you fund development of a prototype?” Back then seeking funding was not yet a simple task. But in 2016, there are myriad crowdfunding sites available to help would-be entrepreneurs take their ideas and make them a reality. As a CPA, you are in a position to help ensure your client seeks this funding properly and in a fiscally responsible manner.

You may not yet be familiar with the rules and regulations surrounding crowdfunding, but the U.S. Securities and Exchange Commission released new rules in May. These guidelines, along with revisions last year to the existing Regulation A rules, expand the opportunities for small business capital raising by simplifying requirements for small businesses to access the capital markets. Both rules were issued by the Securities and Exchange Commission under the Jumpstart Our Business Startups (JOBS) Act.

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The Impact of Brexit on Your Clients’ Investments

BrexitUncertainty related to Brexit – the recent vote in the United Kingdom (UK) to move away from the European Union (EU) – sent shock waves throughout Europe and foreign markets. Here in the United States, investors have also expressed concern about the volatility of their portfolios.

Chances are good that some of your clients have already contacted you with questions about how this will impact their personal finances. To help you have this conversation, we sought advice from three well-known professionals: Chris Benson, CPA/PFS, L.K. Benson & Company; Jean-Luc Bourdon, CPA/PFS, BrightPath Wealth Planning, LLC; and Michael E. Goodman, CPA/PFS, Wealthstream Advisors, Inc. Here are their observations:

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CPA Financial Planning: Rewarding in Every Way

Lori LuckA client comment last week propelled me back to my business decision 15 years ago to jump in with both feet to the world of CPA financial planning.

Pausing on her way out the door after a particularly fruitful discussion, she remarked, “We’ve been together a long time.”

Indeed. I’ve been a CPA and tax adviser for her small business for 25 years. I added the full scope of financial planning and investment monitoring for her when I found that clients needed more focus on these services and I was in the best position as a CPA to give them the advice they were seeking.

We’ve monitored her assets and her retirement planning. We’ve made decisions about Social Security. We’ve helped her iron out various issues with estate planning, as many people have after second marriages. Her children were young when we started; now they’re out of college and on their own. Now she’s retiring and has sold her business. And we’ve been with her every step of the way.

It’s been wonderful, for both of us, really. And it’s that way with many of our clients. Shifting our practice to focus more intentionally on financial planning is one of the best decisions I ever made.

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Lifelong Learning and Leadership: A CFO Perspective

YousefAwwadAs CFO of Portland Public Schools in Oregon, Yousef Awwad, CPA, CGMA, manages an operating budget approaching $1.2 billion annually. He is directly responsible for the school district’s finance, budget, purchasing, risk management, publication services and records management functions, comprising a total head count of 70 directors, managers and employees. Before coming to Portland in 2014, Yousef served as finance director for the Arizona Department of Education and as CFO and deputy superintendent for the Tucson Unified School District.

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Keeping the Cash Method Promotes Simplicity and Economic Growth

We know what we are, but know not what we may be.

   -William Shakespeare

Followers of my blogs know that I periodically write about tax reform, but it’s been a while. So, I’ve decided to dust off this quiz – here we go:

What will be the greatest driver of tax reform?

  • Bipartisan compromise?
  • Congressional leadership changes?
  • Current events?
  • Revenues?
  • Good tax policy?

CompassI know you’re thinking: “Ed, are you forgetting that it’s a presidential election year and you recently predicted that tax reform won’t happen before 2018? Does it really matter?”

Well, it does. (And there may be more than one correct answer to my quiz.) Our profession must remain vigilant on what is being discussed now to safeguard businesses (including our own) and taxpayers later on down the line.

In its current iteration, tax reform has been top of mind on Capitol Hill for about five years. Hearings, task forces, discussion drafts and bills. Lots of conversations. It’s part of the normal vetting process and quite important. It’s how we separate the wheat from the chaff and arrive at much better legislative solutions; a process that continues today even if we “know not” the result.

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Advising Same-Sex Married Clients After Medicare’s Rapid Changes

Same-sex coupleBy now, most CPAs should be familiar with tax strategies for same-sex couples, but due to a Supreme Court ruling in 2015, one possibly overlooked area CPA financial planners should address is the Medicare benefits available to couples in a same-sex marriage.

Before 2013, married couples of the opposite sex could qualify for Medicare benefits through their spouse, and before the U.S. Supreme Court’s Obergefell vs. Hodges ruling in 2015, state law still controlled whether a same-sex couple was treated as married. In layman’s terms, this resulted in inequality among same-sex couples, where some had full marriage rights because of the state in which they lived, while others were denied marriage rights because of their state of residence.

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360 Degrees of Financial Literacy Introduces Spanish-Language Resources

360FinancialLiteracyThe AICPA constantly searches for ways to enhance the 360 Degrees of Financial Literacy program and provide a wider audience with knowledge that will start them on the path to financial success. For this reason, the AICPA’s 360 Degrees of Financial Literacy program recently launched a new consumer Spanish-language resource center to address the need to educate the growing number of Spanish-language consumers in the United States.

The resource center offers help in several areas, such as fraud, paying for an education, how to raise a saver, tips for online shopping and credit card information. In the next few months, we plan to provide more content for the resource center that touches on popular personal finance issues and questions.

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Alternative Investments and UBIT: Weighing the Options


Keep calmPart two of a
two-part series on tax consequences of alternative investments. Part one can be found here.

Not-for-profits need to weigh their options carefully if they are thinking of adding alternative investments such as partnerships, private equity funds, real estate investment trusts and hedge funds to their portfolios.  As part of a well-designed investment strategy, alternative investment vehicles have the potential to provide greater returns than traditional stocks, bonds or money market funds, with the added benefit that they can counter risk exposure in volatile markets.

However, these investments can trigger tax liability under the unrelated business income tax (UBIT, pronounced “you-bit”) rules, and the resultant taxes (and accrued interest and penalties, if discovered subsequently) can take a bite out of an organization’s budget.

So what can be done to take the bite out of UBIT? 

There are basically three options:

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CPA Exam Q3/Q4 2016 Score Release Timetables

The Q3/Q4 2016 score release timetable is now available. Score release timelines are updated biannually on AICPA Insights and on the CPA Exam website. For more information about score release and the scoring process, please visit the Psychometrics and Scoring page.

The National Association of State Boards of Accountancy releases the scores to candidates and state boards of accountancy based upon the target score release dates listed in the tables below.

July august q3

 

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CPA Execs Grow More Confident about U.S. Economy

2Q16 CPAOIThe latest Economic Outlook Survey found CPA executives are growing more confident about the U.S. economy over the next 12 months. In fact, 37 percent of survey takers now express optimism about the U.S. economy, which is up from a three-year low of 28 percent last quarter. The survey, which polls CEOs, CFOs and other CPAs who hold executive positions in U.S. companies also found that expectations for profit and revenue both increased this quarter.

The AICPA survey is a forward-looking indicator that tracks hiring and business-related expectations for the next 12 months.

The brightest spot for the economy this quarter was likely the outlook on hiring, with 19 percent saying their organizations are ready to hire immediately, up from 15 percent last quarter. The percentage of executives who say their company needs employees but are reluctant to hire also increased from 16 percent last quarter to 18 percent.

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The Internet of Things is Already Here. Are You Ready For It?


Internet of thingsBy 2020, my house will have a smart refrigerator that will alert me when I am out of eggs or cheese. It will 'talk’ to my phone and ping me a list of items that I still need to buy as I'm leaving work and headed to the grocery store. On a macro level, cities will collect data on pedestrian flows and use big data to optimize energy use and traffic patterns. These are just a few of the 50 billion smart devices that we'll have by 2020.

AICPA staff recently gathered over coffee and discussed ideas and insights on the Internet of Things (IoT), a term you may start to hear being used more frequently. It refers to everyday wireless objects that communicate with each other over the internet and send useful information to consumers and businesses.

Truth is, many of these smart devices are already everywhere– and they are not just for the tech-savvy. You may already benefit from this technology without realizing it, like when you receive your online shopping purchases ahead of schedule. Retailers and distributors are employing smarter freight management systems that improve the efficiency of the shipping process.

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The Public Interest: Client Confidentiality Versus Disclosure of an Illegal Act

Muhammad AliThe late Muhammad Ali once said, “Silence is golden when you can’t think of a good answer.” What about when a CPA learns that a client is not complying with laws and regulations? Should the CPA maintain client confidentiality (a paramount pillar of the profession), or disclose information to appropriate authorities in order to protect investors, creditors, employees and even the general public?

In terms of non-compliance, is silence “golden”? Or, is the “good answer” to protect the public by disclosing information that is concealed by the boundaries of the AICPA Code of Professional Conduct (Code)?

Over the next several months, the AICPA Professional Ethics Executive Committee (PEEC) will consider updates to the Code to assist AICPA members in determining the best course of action in such scenarios.

Specifically, the PEEC will consider converging the Code with an April 2016 pronouncement by the International Ethics Standards Board for Professional Accountants (IESBA), which is an independent standard setting body of the International Federation of Accountants (IFAC). The pronouncement provides guidance to professional accountants who encounter non-compliance by a client, employer, those charged with governance, or by management or employees of the client or employer.

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5 Reasons Your Firm Needs Benchmarking Data


BenchmarkingRunning a CPA firm offers many satisfactions and more than a few challenges. It also involves asking yourself a lot of difficult questions - Are we on the right path to meet our short- and long-term goals? Are we competitive in our marketplace? Are we positioned to find the staff we need? When it comes to decision making—whether on day-to-day issues or long-term strategic planning—it’s a lot easier to find answers for those questions when you know how firms like your own are handling similar concerns. The PCPS/CPA.com National Management of an Accounting Practice (MAP) Survey offers the solutions you need, and its benefits are available to US and Canadian Public Accounting firms of all sizes. I encourage you to participate today. The CPA profession’s premier benchmarking study, it provides key metrics broken down by firm size and region that will help you understand where you stand in relation to your peers. Here are five ways your firm will benefit from the survey’s benchmarking data.  

Find out how other firms are performing. You may know you’re doing well, but there’s no way of estimating, for example, how your growth in overall revenues compares with those of other firms of the same size. Similarly, you may have improved your utilization and realization rates over time—or be trying to—but would you do anything differently if you could see how your rates stack up against those of other practices? Once you see the comparison side-by-side, you may decide to set new goals for any number of key performance indicators. On the other hand, the data may confirm that you’re on the right course, which can give you confidence in the way your firm is operating. 

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Four Critical Budgeting Steps Your Not-for-Profit May be Forgetting


BudgetFor any organization, budgeting can be more than just an annual exercise of putting numbers in columns. The budget is the financial interpretation of your work plan. It’s the tool you use to ensure that your finances are on track to meet your goals and that you are making the most of your financial resources— two achievements that are mission critical for not-for-profits. Based on work with not-for-profits over the years, I’ve identified 10 steps that should be a part of every budget process. Unfortunately, though, many organizations omit the last four steps, despite their importance to your process and, ultimately, reaching your strategic goals. Is your organization skipping some key aspects of the budgeting process?

Getting Started

Most organizations follow the first six steps of the budgeting process, so chances are you’ve got these covered:

  1. Put the budget in writing.
  2. Establish a team to oversee and champion the budget.
  3. Create a calendar and timeline for the process.
  4. Set guidelines to help ensure the budget mirrors organizational goals and priorities.
  5. Start drafting the budget.
  6. Have the budget reviewed and approved.

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The Powerful Impact of Women in Accounting and Tax

Superwoman CPAJane Doe, CPA, also known as Super Woman, woke up this morning at 5 a.m., jumped on her computer to address some urgent work emails, proceeded to pack her children’s lunch, get them out of bed (easier said than done), dressed, and off to school – and then worked all day, leading her team and conquering the business world. She runs from one business meeting to the next, finally stopping only to make dinner for her family, help her oldest child with his homework, bathe her two-year-old, and put both kids to bed. Oh, and she also helped her husband with his PowerPoint presentation, fed the pets and paid the household bills. It’s now 9 p.m., time to jump back on the computer and wrap up more business.

Does this sound familiar? We all know women like this in our accounting profession – and these women should be celebrated.

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Client Advocacy: Susan Tillery, CPA/PFS, Takes a Unique Approach

Susan TilleryWhat does an ancient biblical word meaning “holy spirit” have to do with financial planning in the 21st Century? Plenty, according to Susan Tillery, CPA/PFS.

Susan is president and co-founder of Paraklete® Financial, Inc., a fully-integrated personal financial planning (PFP) firm with offices in Georgia, North Carolina and South Carolina. With more than 30 years’ experience in financial services, Susan sticks to one, basic tenet: placing her clients and their financial well-being first. We recently sat down with Susan to learn about her unique service model, business mentality and outlook on the profession.

AICPA: Paraklete operates on a fee-for-service model and your catchphrase is “An Advocate in Financial Services.” What is this model all about, and how does the advocacy tagline ladder up to your firm’s operations?

Susan Tillery: “Your Advocate in Financial Services” comes directly from the meaning of the name of our firm; Paraklete is the Greek word for advocate, counselor and one who walks alongside you, which best describes what our business model is all about and what we offer our clients.

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Are You Helping Protect Your Older Clients From Financial Scams?

Elderly man being scammedMost everyone, at least once, has received an email from a “Wealthy Prince” who claims to know of a massive inheritance in their name. If only you would wire $10,000 U.S. to unlock $10 million … Sounds too good to be true, right? It is. In order to get the inheritance, this “Wealthy Prince” typically requires you send your bank account information, social security number, birthdate and other personal information. This leads to a financial disaster.

Unfortunately, this is just one of an increasing number of financial scams that people have fallen victim to, especially older Americans. Recently, an American World War II veteran was scammed out of $43,000 due to a fake sweepstakes that told him he won $4.7 million and a new Mercedes-Benz, as long as he provided personal information and opened a bank account where the money could be deposited. The elaborate scam involved multiple bank transactions over an extended period of time, each with the purpose of gaining the victim’s trust. Unfortunately, once the money is wired, it is very difficult to recover.

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In Case You Missed It: Golf, Beyoncé, and the Next Version of the CPA Exam

BeyonceAnother busy tax season has passed and I can see the heads of CPAs have now risen from the grindstone. While your focus was on tax business and financial statements over the last several months, you may have missed some important news.

Golfer Jordan Spieth’s dream of winning back-to-back Masters sunk on the 12th hole, Beyoncé (or Queen Bey) released her deeply personal Lemonade album and set off a social media storm, the Villanova Wildcats upset UNC at the NCAA tournament, and the highly anticipated “Batman vs. Superman” movie could barely muster 27% on Rotten Tomatoes.

Oh, and along the lines of something important to the AICPA and the CPA profession, we announced details about the next version of the Uniform CPA Examination, which launches on April 1, 2017.

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Summer Reading Recommendations

Summer readingPart I

Nothing says summer vacation like a few good beach (or mountain, lake, backpacking… you get the picture…) reads. The AICPA Communications staff joined forces to present you with a diverse collection of books we think will make your summer vacation, wherever that may be, even more enjoyable.

Christopher Almonte, Manager, Communications recommends:

  • The Innovator: How a Group of Hackers, Geniuses and Geeks Created the Digital Revolution by Walter Isaacson (2014)

From the author who wrote the biography of Steve Jobs comes the story of how computers and the internet were created.

  • David and Goliath: Underdogs, Misfits and the Art of Battling Giants by Malcolm Gladwell (2013)

Challenge how you think about obstacles, disadvantages and setbacks to reshape the way you think of the world around you.

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